SSRN Id2643279

ISSN:2249-7137
Vol. 5, Issue 4, April 2015
Impact Factor: SJIF 2013=5.099
P ublis he d b y: S out h A s ia n A c ade m ic R es e arc h J our nals
ACADEMICIA:
An International
Multidisciplinary
Research Journal
( A D o u b le B l i n d R e fe r e e d & R e v ie we d I nt e r na t io na l J o ur na l)
AN ANALYTICAL STUDY ON USE OF PLASTIC MONEY IN INDIA:

WITH SPECIAL REFERENCE TO CARD HOLDERS OF GUJARAT
Dr. Kaushal A. Bhatt*
*Assistant Professor,
Faculty of Management,
PG Research Centre for Global Business Studies,
Gujarat Technological University,
Ahmedabad, Gujarat, India.
ABSTRACT
The Banks are the main participants of the financial system in India. The Banking
sector offers several facilities and opportunities to their customers. Indian banking
industry has been divided into two parts, organized and unorganized sectors. Among
e-banking, card banking is the most important form of e-banking products. Important
card banking products are Debit Cards, Credit Cards, Store Card and Smart Card
which are popularly known as Plastic Money. Research design used for this research
is descriptive and method is primary which is collected through structured
questionnaire. Objectives of this study includes to examine the socio-economic
profile of the cardholders so as to ascertain the association of such factors with the
use of debit cards and credit cards; to identify the benefits of plastic money by
cardholders and merchants in business deals; to investigate into the problems
confronted by both types of cardholders and merchants in the plastic money deals,
etc. Scope of this study is limited to State of Gujarat with 384 sample size. Tools used
for analysis is one way ANOVA. There are approximate 24% users who are using
only credit card, 24% using only debit card, 5% using only smart card, 6% using
only store card while there are few card holders who holds more than one type of
card. Suggestion that requires for plastic money industry is that Insurance and other
security should be available for the security of plastic money. Card Issuer Company
has to make their advertisement more effectively to attract more number of people.
In e-shopping, merchant should create trust and loyalty to customers which influence
to purchase on-line.
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KEYWORDS: Credit Cards, Debit Cards, Store Card, Smart Card and Plastic
Money.
______________________________________________________________________________
INTRODUCTION
Financial Services constitute one of the worlds fastest growing industries and the pivot of the
modern economy. It largely depends on the quality and variety of services rendered by financial
intermediaries such as banking and non-banking institutions. Banking Regulation Act in India,
1949 defines banking as Accepting for the purpose of lending or investment of deposits of
money from the public, repayable on demand and withdrawals by cheques, drafts, orders etc.
Plastic money or polymer money, made out of plastic, is a new and easier way of paying for
goods and services. Plastic money was introduced in the 1950s and is now an essential form of
ready money which reduces the risk of handling a huge amount of cash. It includes debit cards,
store cards, smart cards etc. Credit cards, variants of plastic money, are used as substitutes for
currency. There are mainly four types of Plastic Money which is classified as Credit card, Debit
card, Store Card and Smart Card. Smart card is new and emerging concept in Plastic money
which is widely accepted in developed country. Use of Smart card in developing country like
India is very low and not widely accepted.
ADVANTAGES AND DISADVANTAGES OF PLASTIC MONEY
ADVANTAGES OF PLASTIC MONEY
Plastic Money is a must need of our busy life. Today it is very easy to carry money without
having a lot of cash or gold. Keep Credit or Debit cards and forget the cash money. This is a new
idea of present life-style which has made money transition so easy that anybody can carry it with
him or her in a pocket. Today plastic money is the best alternative of the cash.
PURCHASING POWER: Credit or Debit cards made it easier to purchase things. Now
purchaser doesnt have any need to carry hard cash in a large amount. Plastic money is accepted
everywhere, anytime.
TIME SAVING: Through a credit card or debit card you can purchase anything from anywhere
without spend money on fare or cash transition. Just provide card details to seller store or
companies and finalize the order. Now purchaser doesnt have need to worry about time wastes.
Use internet for minimum time consuming.
EXTRA SAFETY: While person are not carrying cash, how can it be lost? But if card has lost,
just contact to bank or financial institution, which provide cards. It will block the account and
nobody can draw a single coin without permission of cardholder. So it is 100% safe without any
tension.
CREDIT LIMITS: Cardholder get an extra amount to spend with his/her card. This extra spent
money can return before a fix time schedule or will have to pay a little interest. So there is no
problem to having less money. Just use money without any tension.
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A need of emergencies: Think, that person have no time to go to bank or someone to get money,
what will he/she do? Definitely he will use credit or debit card which will give confidence in
difficult time.
ADDITIONAL FEATURES: Mostly credit card offer additional benefits, as discount from
some particular stores, bonus in airline fare, free insurance policies and much more. This
discounts and bonus encourages cardholder to purchase more things as it is good for them.
DISADVANTAGES OF PLASTIC MONEY
We cant ignore the necessity of plastic money in our life. This is the one among most important
needs of our life. Plastic money or credit/debit card was a new idea in its starting but it was
welcomed by the people because of its usability and benefits.
There is no doubt that credit/debit cards are useful and essential for us but they have some
disadvantages as their uses. To be habitual of cards may be harmful. Here there are some
disadvantages of plastic money.
OVER BUDGET: Plastic money gives an easy and extended purchasing capacity which results
in an extra and unwanted buying. These cards give discounts and bonus also on particular stores
or items, which encourage getting them and cardholder, use their hard earned money for a nonrequired thing, which affects their budget and they cant handle monthly budget system.
INCREASED DEBT AND HIGH INTEREST RATES: Credit Card provider financial
institutions and companies charge high interest rates (may be 10% to 25%) on extra money if
you fail to pay off up to the fix date of the month. This interest is their earning, for which they
give extra buying limits then the cardholders money. This is not a good idea that owe loan on
high interest rates and spend it in unnecessary things or purchasing. This is complete money
wastages.
FRAUD: Credit cards can be stolen. A thief may be use them directly or to get their information
(which is required in money exchange). In todays technical intelligence it is also possible to get
a clone of any credit card or debit card, which works like original and they can be give you a
heavy financial loss. So be aware from credit cards fraud as they are like stolen your money from
your pocket without your information.
REVIEW OF LITERATURE
Credit Cards as Lifestyle Facilitators Matthew J. Bernthal, David Crockett, Randall L. Rose
(2005) The Journal of Consumer Research, Volume 32, Issue 1, 2005, pages 130-145. Credit
cards are an increasingly essential technology, but they carry with them the paradoxical capacity
to propel consumers along lifestyle trajectories of marketplace freedom or constraint. They
analyse accounts provided by consumers, credit counsellors, and participants in a credit
counselling seminar in order to develop a differentiated theory of lifestyle facilitation through
credit card practice. They use methods through primarily from textual data generated by
nondirective depth interviews of 28 credit card holders, whose credit card debt ranged from zero
to 395% of pretax household income and whose income levels ranged from low to moderate.
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They believe that the use of consumer credit to regulate and manage lifestyle, relative to other
types of money, should be especially prevalent among consumers who are not wealthy. The
skills and tastes expressed by credit card practice help distinguish between the lifestyles of those
with higher cultural capital relative to those with lower cultural capital. Differences in lifestyle
regulation practice are posited to originate in cultural discourses related to entitlement and
frugality.
Determinants of merchant participation in credit card payment scheme by JiaLokeYiing (2007)
Review of network Economics, December, 6 (4). In his study Determinants of merchant
participation in credit card payment scheme" aimed to empirically establish the determinants of
merchant participation in credit card payment schemes. It is also found that a merchants
personal background, type of business and total value of sale are significant in determining a
merchants acceptance of cards in payment transactions. Further, it is also found that customers
usage of credit cards and other merchants acceptance of credit cards in payments have a
significant influence on a merchants decision. Findings also indicated that non-pecuniary
strategic factors are stronger drivers and barriers to a merchants participation in credit card
payments services compared to monetary related factors.
Profiles, Use, and Perceptions of Singapore Multiple Credit Cardholders Lydia L. GAN, Ramin
C. MAYSAMI, HianChye KOH (2005). This study analyses Singapores diverse cardholders in
search of variations among demographic groups, credit card profiles, and their perceptions with
regards to credit card ownership and use, it then discusses possible reasons governing
Singaporeans credit card ownership and use. A survey was conducted (n = 636), decision trees
were then constructed using Chi-square automatic interaction detection algorithm (CHAID) and
SPSS software Answer Tree to examine the association between the number of credit cards
(target variable) and the demographic characteristics, perceptions and other credit card related
variables. The number of credit cards was found to be significantly influenced by income and
gender as well as perceptions that include credit card leads to overspending, savings as
payment source, unreasonable interest rates, credit card as status symbol. The number of
credit cards was also affected by credit card related variables such as missing payments
sometimes, frequency of use, entertainment expenditures, and petrol purchase. This research
provides an in-depth understanding of Singaporean multiple cardholders, thus it is useful in
designing marketing strategies for card-issuers as well as anti-debt strategies for policy-makers
in Singapore. Despite the importance of consumer credit, virtually no literature or research exists
on the ownership and use of credit cards in Singapore, so this paper intends to close this gap.
An Introduction to the Economics of Payment Card Networks ROBERT M. HUNT, Review of
Network Economics Vol.2, Issue 2 June 2003. Open payment card networks typically
coordinate the activities of thousands of financial institutions that issue cards, millions of retail
locations that accept them, and several hundred million consumers that use them. This
coordination can include the collective setting of certain prices and other controversial network
rules. Such practices have recently come under the scrutiny of antitrust authorities in the U.S.
and abroad. This article provides a brief overview of the economics of the payment card
industry, explaining some of the differences from the textbook model of competitive markets.
Such differences are important factors for the antitrust analysis of payment card networks.
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Consumers Use of Debit Cards: Patterns, Preferences and Price Response Ron Borzekowski,
Elizabeth K. Kiser, Shaista Ahmed (2006). Debit card use at the point of sale has grown
dramatically in recent years in the U.S., and now exceeds the number of credit card transactions.
However, many questions remain regarding patterns of debit card use, consumer preferences
when using debit, and how consumers might respond to explicit pricing of card transactions.
Using a new nationally representative consumer survey, this paper describes the current use of
debit cards by U.S. consumers, including how demographics affect use. In addition, consumers
stated reasons for using debit cards are used to analyse how consumers substitute between debit
and other payment instruments. We also examine the relationship between household financial
conditions and payment choice. Finally, they use a key variable on bank-imposed transaction
fees to analyse price sensitivity of card use, and find a 12 percent decline in overall use in
reaction to a mean 1.8 percent fee charged on certain debit card transactions; we believe this
represents the first microeconomic evidence in the U.S. on price sensitivity for a card payment at
the point of sale.
Customers credit card selection criteria in perspective of an emerging market, Babar Zaheer
Butt, Kashif Ur Rehman, M. Iqbal Saif and NadeemSafwan (2010). The credit card market has
expanded radically in Pakistan, both in terms of cards variety and usage. A wide variety of local
and international cards, issued by different domestic and foreign banks, is available in the
market. Despite recent financial crisis, there are still huge potential for future growth and further
penetration existing in Pakistan. The purpose of this study is to explore and investigate various
attributes that customers consider of importance while selecting a credit card in Pakistan. The
sample of this study was 800 credit cardholders. The information was collected from existing
cardholders through a self-administered questionnaire. It contained questions related to credit
card market, cardholder's profile and the relative importance of the main attributes that play a
role in card selection. The data collected were then analysed to find out the important factors that
influence the credit card selection. The results show that convenience, economical use, both local
and abroad, and sense of security are important attributes that customers consider while selecting
a credit card. The findings of this study can be helpful for financial institutions to focus on the
features, which customers consider important while selecting credit cards and can also be used
for optimal marketing mix allocations in prevailing economic situation in the country.
Factors Affecting the Probability of Credit Card Default and the Intention of Card Use in Turkey,
CumhurErdem, International Research Journal of Finance and Economics (2008). Since
socioeconomic consequences of credit card debt have become one of the most common problems
in Turkey, the problem has received widespread attention of media, public policy makers, card
issuers and holders and consumer protection agencies. This paper investigates the factors that
have impact on intention of credit card use and probability of default by using data obtained from
474 card users in Turkey. Ordered probit and the structural equation models were used to meet
the objectives. According to the findings, the factors that affect probability of credit card user
default are total credit card debt to income ratio and the proportional payment of expenses with
credit cards. The number of children, level of education, subjective norm, perceived behavioural
control and attitude toward the behaviour were found to be effective in the formation of the
behavioural intention.

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A Study on Perception and Awareness on Credit Cards among Bank Customers in Krishnagiri
District, Dr. S.Sudhagar, Journal of Business and Management (2012). A credit card is a small
plastic card issued to users as a system of payment. It allows its holder to buy goods and services
based on the holder's promise to pay for these goods and services. The issuer of the card creates a
revolving account and grants a line of credit to the consumer (or the user) from which the user
can borrow money for payment to a merchant or as a cash advance to the user. Since credit card
is a banking product and banks are issuing credit cards, in the analysis of awareness, respondents
were selected from among the bank customers. The tools constructed for the collection of data
were Interview Schedule for the selected bank customers who do not possess credit cards and
Questionnaire for the credit card holders. It is observed from the analysis of bank customers
awareness about credit cards that ICICI credit cards are more popular which followed is by SBI
Card and HDFC Card. Extent of usage of credit cards is smaller among higher proportion of the
card holders. Customers satisfaction is found to be less because of high rate of interest.
Customers perceived core services and facilitating services at higher level. Card holders face the
major problem of lack of proper advice from banks. Credit card market is yet to realize its
potential.
A Study on the Awareness and Utilization of Credit Cards in India, K. Govindarajan, V. Vijay
Anand, S. Balachandran, and European Journal of Social Sciences (2012). Bankers in India are
making hectic efforts to popularize internet banking, Mobile banking, Debit card and credit card
so that their cost of operation will come down. As per the recent Statistics published by the
Reserve Bank of India both debit card and credit figures are picking up. Though in terms of
number of cards in circulation, debit card is higher than that of credit card but in terms of
business credit card is better placed. Users of credit card must be aware of various features of
credit card such as safety and security, utility, operational difficulties and support provided by
the credit card department .Similarly bankers should extend credit card facilities only to the
credit worthy customers This article brings out the relationship if any between age, occupation
and education with reference to use of credit card and also establishes awareness and utilization
of credit cards associated with features of credit card Further this articles brings out the
perception Of debit card holders regarding credit card. Statistical tools such as tabulation, Mean,
standard deviation and ANNOVA is applied to measure the relationship between various
variables identified with credit card.
A Framework for Smart Card Payment Systems, AshutoshSaxena and Aditya Gaiha. This work
is a compilation of current knowledge relating to a new technology known as Smart Card. We
begin by understanding the various physical and technical characteristic features of Smart Cards
and then move on to various operational issues involved in setting up of a Smart Card-based
Payment System. We present a foundation for understanding Smart Cards and follow it up by
specific application software that is required for understanding the technology -- and challenges
associated with the uses of Smart Cards for banking applications. Java Card and Windows for
Smart Cards (WFSC) have also been separately discussed. The paper concludes with an
overview of Smart Cards for payment systems in the country (SMARS) along with emerging
scenarios, and also focuses on the prevailing multi-application on Smart Card.

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RESEARCH METHODOLOGY
STATEMENT OF PROBLEM
Plastic money also has become a part of the modern life style of people today. All these highlight
the scope and potential for plastic money as a payment instrument in India. The growing
recognition of plastic money increases the usage and acceptance of it in the business deals all
over the world. The success of card usage depends upon the cardholders awareness about the
features and benefits of cards, various problems/risks connected with the card, their satisfaction
level and decision to choose the cards in place of cash, promotional measures adopted by
banking authorities and above all the extent to which merchants are ready to accept it as a
medium of payment in the business dealings. Investigation revealed that no detailed study on
plastic money in India has so far been attempted and it is in this context the present An
Analytical Study on Use of Plastic Money in Indian Economic Environment: With Special
reference to Card Holders of Gujarat is undertaken.
OBJECTIVES OF STUDY
Primary objective of the study is to know the perception of people towards use of plastic money.
Secondary objectives are as under.
To examine the socio-economic profile of the cardholders so as to ascertain the
association of such factors with the use of debit cards and credit cards;
To identify the benefits of plastic money by cardholders and merchants in business deals
To investigate into the problems confronted by both cardholders and merchants in the
plastic money deals
To suggest some of the precautionary measures involved in maintaining security while
the cards are used.
DATA COLLECTIONS AND SAMPLE OF STUDY
Current study is purely based on primary data and the data so required is collected from the users
of plastic money i.e. the card holders. The data is collected through structured questionnaires.
There are needed to ensure the content validity of the instruments used for collection of primary
data. Around 400 card users were interviewed and out of them 384 questionnaires were found to
be correct for data analysis and interpretation. The card holders of private banks as well as public
banks were interviewed for the purpose of data collection.
SCOPE OF STUDY
The present study has been conducted in the state of Gujarat which is one of the fastest growing
state of India. The study has been divided into two parts. The first part discusses the operation
and risk associated and the future prospective of plastic money in India. The second part reveals
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the experience of the credit holders collected through a customer survey. The present study
covers four different types of cards i.e. Debit Card, Credit Cards, Store Cards and Smart Cards.
MAJOR HYPOTHESIS OF THE STUDY
H0: There is no significance difference between Age and Usage of plastic money.
H0: There is no significance difference between Occupation and Usage of plastic money.
H0: There is no significance difference between benefits received by credit card holders.
H0: There is no significance difference between benefits received by debit card holders.
H0: There is no significance difference between difficulties in plastic money usage.
LIMITATIONS OF THE STUDY
The sample size is very small compare to population of the study.
Geographically the scope of this study is limited to Gujarat only.
Primary data has its own limitations which might affect the conclusion of this study.
DATA ANALYSIS AND INTERPRETATION
TABLE 1: DESCRIPTIVE ANALYSIS
Category
No. of Respondents
Percentage
240
62
144
38
167
43
26 45
161
42
46 65
054
14
Above 65
002
01
076
19
Businessman
087
23
Govt. Employee
052
14
Gender: Male
Female
Age Group: Below 26
Occupation: Professionals

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Non- Govt. Employee
061
16
Others
108
28
Yearly Income: Below 1 Lakhs
135
35
1 2 Lakhs
109
28
2 4 Lakhs
076
20
046
12
018
05
190
49
Advertisement
067
18
Family
070
18
Friends
057
15
4 6 Lakhs
Above 6 Lakhs
Source of Inspiration: Bank
ANALYSIS
The table shows gender ratio using plastic money. There are 240 male from total respondent of
384 which is about 62% while there is only 38% female using plastic money in Gujarat. This
shows that females are not used to plastic money. The reason for not using may be lack of
knowledge and limitation of usage. The above table also shows people at different age using
plastic money. The highest plastic card holders are in age group of below 26 years, i.e. 167
respondents, while 161 respondents using plastic money belongs to the age group of 26-45 years
from 384 respondents and rest of 54 respondents in the age group of 46-65 years group while
there are only 2 respondents of the age more than 65 who are using plastic money. The research
says that there are only 2 respondents at 65 or more age group. The reason for not using card
may be they are not in a habit or they are not techno-savvy. There are more youngsters using
plastic money which is good sign for awareness of plastic money. The above table shows level of
plastic money users at different occupation level. There are 76 professionals using plastic money
which is 19% of total respondents. There are 87 businessmen, 52 Govt. employees and 61 non
Govt. employees while there are 108 respondents others which are 28% of total respondents
using plastic money. Others may be students or else, who are using plastic money which is
highest about 28% while there are only 14% respondents from government employee using
plastic money. The research shows that plastic money users at different occupation level are
scattered and it is between 15-30% in each and every sector. The above table also represents
income level of plastic card holders. There are 135 respondents which are 35% of total
respondents having income less than Rs.1 lacs and they are the highest plastic card users. There
are 28% at Rs.1-2 lacs income level using plastic money while 20% respondents are having Rs.
2-4 lacs, 12% having Rs.4-6 lacs while there are only 5% respondents at Rs.6 lacs or more using
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plastic money. The highest usage is having less than Rs. 1 lacs income level while the lowest
usage is having Rs. 6 lacs income level or more income level group. The reason may be fewer
respondents from higher income group or there are more people in Gujarat whose income level is
less than Rs. 1 lacs. It can be interpreted that there are 190 respondents from 384 which is about
50% inspire from bank while there are 17.45% who gets inspire from advertisements, 18.23%
who gets inspire from family members while there are only 14.84% respondents who gets inspire
from friends. From the research, it can be proved that more people get inspire from bank rather
than any other source. The research says that advertisements are not as inspire as bank so there
should be better advertisement which motivate or inspire card holders to purchase it.
TABLE 2: USERS OF DIFFERENT TYPES OF CARDS
Types of Cards
No. of Respondents
No. of Respondents (%)
Credit card
91
23.70%
Debit card
93
24.22%
Smart card
19
4.95%
Store card
23
5.99%
Credit & Debit
41
10.68%
Credit & Smart
1.82%
Credit & Store
17
4.43%
Debit & Smart
18
4.69%
Debit & Store
29
7.55&
Smart & Store
0.52%
Credit & Debit & smart
1.30%
Credit & Debit & store
33
8.59%
Credit & smart & store
0.52%
Debit & Smart & store
0.00%
Credit & Debit & smart & store
1.04%
384
100
Total Respondents/Percent

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ANALYSIS
The above graph shows various types of cards that plastic card holders have. There are mainly
four types of cards which are Credit card, Debit card, Smart Card and Store Card. The research
says that there are approx. 24% using only credit card, 24% using only debit card, 5% only using
smart card, 6% using only store card while there are card holders who holds more than one type
of card. There are approximately 11% respondents who holds both credit card as well as debit
card while there are only 1.82% who holds credit and smart card , 4.43% holds credit and store
card, 4.69 % holds debit and smart card, 7.55% holds debit and store card, 0.52% holds smart
and store card, 1.30% holds credit card, debit card and smart card while there are 8.59% who
holds credit card, debit card and store card, there are very fewer respondents who holds debit
card, smart card, and store card while there are only 1.04% who holds credit card, debit card,
smart card and store card all the four card. In single card holding, smart card is the lowest
(4.955%) while highest is debit card (24.22%). There are about 10.68% who holds credit and
debit card which is highest while there are very few respondents (0.52%) who holds both store
card and smart card. As credit card , smart card & store card is little expensive than debit card so
people mostly prefer debit card, but still people have applied for their credit card also. Some
people have two & three card & some have all the debit card, credit card, and smart card and
store card.
TABLE 3: OPINION REGARDING USE OF PLASTIC MONEY AS A PAYMENT
INSTRUMENT
Opinion
No. of Respondents
No. of Respondents (%)
Excellent
184
48%
Good
165
43%
Neutral
19
5%
Bad
2%
Very Bad
2%
Total
384
100
There are 184 respondents from 384 who says plastic money is excellent as a payment
instrument while about 43% says it is good, 5% are neutral about the usage of plastic money
while there are 2% who neglect that plastic money is not suitable as payment instruments. There
are people who believe plastic money is not good for payment instrument, reason for that may be
they are not using much plastic money or lack of knowledge about plastic money.

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TABLE 4: AGE WISE USAGE OF DIFFERENT TYPES OF CARDS

Card/Age
Below 26
26-45
46-65
Above 65
Total
Credit card
92
76
31
200
Debit card
79
114
28
223
Smart card
24
25
57
Store card
38
49
22
110
Total
233
264
89
590
Above table shows that people at different age groups are using various types of cards. People
of different age groups have different choices, needs, buying behavior etc. In below 26 age
groups, use of credit card is more compare to other as there are 92 respondents using credit card
while there are only 24 respondents using smart card. In 26-45 age group, use of debit card is
more compare to any other type of card as there are 114 respondents using debit card while ratio
of smart card is very low i.e. 25. In 46-65 age group, use of credit card is very high compare to
any other type of card as there are 31 respondents using credit card while only 8 using smart
card. In 65 or above age group use of plastic money are very low and there are only 1 credit
card holder, 2 debit card holders and 1 store card holder. It can also be said that use of smart
card is very low in each and every age group.
Ho: There is no significance difference between Age and Usage of plastic money.
TABLE 5: SINGLE FACTOR ANOVA ANALYSIS
ANOVA single factor
Source of Variation
SS
df
MS
F crit
Between Groups
11224.25
3741.417
5.725563
3.490295
Within Groups
7841.5
12
653.4583
Total
19065.75
15
Above table shows ANOVA single factor at 5 per cent significance level. F calculated value i.e.
5.7255 is higher than F tabulated value i.e. 3.4903. So, null hypothesis is rejected. So, there is
significance difference between Age and Usage of plastic money.

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TABLE 6: OCCUPATION WISE USAGE OF DIFFERENT TYPES OF CARDS

Cards/
Occupation
Professio
nal
Businessm
an
Govt.
Employee
Non Govt.
Employee
Others
Tot
al
Credit
47
28
35
31
59
200
Debit
55
52
25
41
50
223
Smart
21
10
16
57
Store
25
20
30
11
24
110
Total
135
121
92
93
149
590
Occupation is another important variable which affect the purchasing and spending behaviour of
people. Above table shows at different occupation level, needs and choice of plastic money
differs. Above table reveals that occupation wise classification of the respondents, On the basis
of their occupation, they are grouped into government employee, non govt. employee, business
people, professional and others. There are 55 debit card holders in professional category while
only 8 smart card holders. In Businessman group, use of debit card is more than any other type of
card while there are less store card holders i.e. 20. In Govt. Employee category, use of credit card
is high compare to any other type of card as there are 35 credit card holders while only 2 smart
card holders. In Non-Govt. Employee, use of debit card is high compare to any other type of card
as there are 41 debit card holders while only 10 smart card holders. In the category of others may
be students, contractors, engineers, etc. use more credit card compare to any other type of card.
H0: There is no significance difference between Occupation and Usage of plastic money.
ANOVA single factor
Source of Variation
SS
df
MS
F crit
Between Groups
3610.6
1203.53
11.5556
3.238872
Within Groups
1666.4
16
104.15
Total
5277
19
Above table shows ANOVA single factor at 5 per cent significance level. F calculated value i.e.
11.5556 is higher than F tabulated value i.e. 3.23887. So, null hypothesis is rejected. So, there is
significance difference between Occupation and Usage of plastic money.
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TABLE 8: BENEFITS PROVIDED TO CREDIT CARD HOLDERS

Rate the Benefits in Credit
Card
Highly
satisfied
Satisfied
Neutral
Dissatisfied
Highly
Dissatisfied
Easy to carry
128
63
Convenient to pay
66
120
12
O.D. Facility
45
105
42
Prestige
40
121
30
Online shopping
45
94
42
16
Emergency fund
52
83
51
11
Motivation to purchase
28
78
61
20
13
The above table shows various benefits received by credit card holders and satisfaction level that
they are getting on different services provided by credit card. There are 128 respondents who are
highly satisfied with that credit card is easy to carry while 1 respondents are not satisfied with
that. There are 66 respondents who are highly satisfied that credit card is convenient for payment
while with that criteria there are no respondents who are against this. There are 45 respondents
who are satisfied with overdraft facility provided to them while 105 are neutral with that and 4
respondents are not satisfied with overdraft facility. There are 40 respondents who highly agreed
that they are getting prestige from credit card while 121 are satisfied and there are no
respondents who are neglected that credit card do not give any prestige. There are 45 respondents
who are purchasing online with credit card while 3 respondents are not satisfied with online
facility. There are 52 respondents who are getting emergency facility with credit card while 3 are
dissatisfied with this facility. There are 28 respondents who are highly satisfied that credit card
motivates to purchase more while 78 respondents satisfied while 13 respondents say that credit
card is not motivating for higher purchase. From the above study it can be seen that respondents
are highly satisfied that credit card is easy to carry and it give prestige to the holder. After getting
research data it is clear that convenient to pay is the most preferred benefit among respondents.
H0: There is no significance difference between benefits received by credit card holders.

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ANOVA- single factor
Source of Variation
SS
df
MS
F crit
Between Groups
39474.29
9868.571
24.1409
2.689628
Within Groups
12263.71
30
408.7905
Total
51738
34
Above table shows ANOVA single factor, at 5 per cent level of significance. It showed that F
calculated value i.e. 24.1409 is higher than F tabulated value i.e. 2.6896. So, null hypothesis is
rejected. So, there is significance difference between benefits received by credit card holders.
TABLE 10:BENEFITS RECEIVED BY DEBIT CARD HOLDERS
Rate the benefit in Debit
Card
Highly
satisfied
Satisfied Neutral
Dissatisfied
Highly
Dissatisfied
Security
128
84
10
Online purchase
61
118
40
Withdraw
99
98
21
No interest
69
90
45
15
Anytime access
74
106
32
Easy to carry
81
98
35
Money transaction
53
93
57
14
Ticket reservation
47
91
61
17
Shopping
56
86
58
14
There are many benefits that are enjoyed by debit card holders from which certain are rated
above. The above chart shows the various benefits rated by debit card holders. The biggest
benefits that are enjoyed by debit card holders are security which is 128 from 223 respondents.
The above graph shows that debit card holders are not using their card for shopping. There are
118 respondents who are using their debit card for online purchases. The ATM card is having
limitation of anytime access. Card holders can access if ATM is available, so there are about 9
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respondents who are dissatisfied with anytime access and shopping with Debit card. Research
says that idea of using debit card by card holders is security, no interest and easy money
transaction.
H0: There is no significance difference among benefits received by debit card holders.
TABLE 11: SINGLE FACTOR ANOVA
Source of Variation
SS
df
MS
F crit
Between Groups
58177.91
14544.47778
64.42102
2.605975
Within Groups
9030.889
40
225.7722222
Total
67208.8
44
Above table shows ANOVA single factor at 5 per cent level of significance. It showed that F
calculated value i.e. 64.4210 is higher than F tabulated value 2.6060. So, null hypothesis is
rejected. So, there is significance difference between benefits received by debit card holders.
TABLE 12: PROBLEMS OF USING PLASTIC MONEY
Problems in Plastic
Money
Strongly
Agree
Agree
Neutral
Disagree
Strongly
Disagree
Feeling of insecurity
167
112
64
36
Fear of losing card
81
176
99
21
Unnecessary formalities
46
163
109
58
Customer services
20
103
137
100
24
Fixing min & max amt.
22
111
134
80
37
The above table shows the various problems faced by plastic card holders. There are 167 card
holders from total who strongly agrees that plastic money gives insecurity while 5 respondents
are not feeling insecurity with using plastic money. There are 176 card holders who strongly
agrees that there is a fear of losing card while 7 are disagree to that. There are 163 card holders
who agrees that credit card is having unnecessary formalities while only 8 respondents are
disagrees to that. There are 137 respondents who are neutral about customer services provided
with plastic money while 20 respondents are agrees and 24 are disagrees to that. There are about
22 respondents who strongly agrees that there is a problem with fixing of limit while 134
respondents are neutral to that and 37 respondents disagrees that fixing limit is a problem. The
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problems in unnecessary formalities in plastic money and customer services are vary with person
to person. In case of security, card holders have to make proper care with their card.
H0: There is no significance difference among problems faced by Plastic Money users
TABLE 13: SINGLE FACTOR ANOVA
ANOVA single factor
Source of Variation
SS
df
MS
F crit
Between Groups
41255.2
10313.8
7.408062
2.866081
Within Groups
27844.8
20
1392.24
Total
69100
24
Above table shows ANOVA single factor at 5 per cent level of significance. It showed that F
calculated value i.e. 7.4080 is higher than F tabulated value 2.8660. So, null hypothesis is
rejected. There is significance difference between difficulties in plastic money usage.
MAJOR FINDINGS OF THE STUDY
Respondent taken for this study are those who are using plastic money in their daily life.
According to demographic wise classification of respondents revealed that 240 (62 %)
are male and 144 (38 %) are female.
The highest number of plastic card holders is in age group of 15-25 years, i.e. 167
respondents, while 161 respondents using plastic card belongs to the age group of 26-45
years from 384 respondents.
Plastic money users at different occupation level are scattered and it is between 15-30%
in each and every selected occupation.
The highest usage of various card used by users is falling between income group of less
than Rs. 1 lacs while the lowest usage is having Rs. 6 lacs income level or more income
level group as this group is using internet as a means of transferring their money.
In single card holding, user of smart card is very low i.e. 4.96% compare to debit card
which is very high i.e. 24.22%. There are about 10.68% card holders who holds credit
and debit card which is highest among the users while there are very few respondents
(0.52%) who holds both store card and smart card.
Some people have more than one type of cards. There are 1.04% card holders who are
having all the four types of card.
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There are approx. 24% users who are using only credit card, 24% using only debit card,
5% using only smart card, 6% using only store card while there are few card holders who
holds more than one type of card.
There are 184 respondents from 384 who says plastic money is excellent as a payment
instrument while about 43% says it is good, 5% are neutral about the usage of plastic
money.
The main reason for using debit card is to get advantage of immediate cash which is 39%
form total respondents. The biggest benefits that are enjoyed by debit card holders are
security which is 128 from 223 respondents.
SUGGESTIONS OF THE STUDY
Use of smart card is very infrequent in Gujarat so certain awareness program and
importance to smart card should be explained to make aware and increase use of smart
card.
Fear of losing card can be avoided with insurance policy. Some insurance players, such
as Tata AIG, have policies for card protection. Here, cost of replacing lost cards, papers,
wallets, and so on is covered. But the list of exclusions rules out compensation for cash
advances made on the card and misuse post-reporting of loss.
In e-shopping, merchant should create trust and loyalty to customers which influence to
purchase on-line. If company can able to create good brand, it will reduce fraud and
customers will purchase more.
CONCLUSION
In the last two years, spending pattern through plastic money has changed drastically. Travelling,
dining and jeweler are the top three purchases that Indians make through credit cards. Fuel
accounts for a very small portion of credit card purchases as these are largely paid through debit
cards. Technology has changed the way we deal with money giving us more convenience and
easy access to fund from anywhere. It all started with a simple credit card that allowed you to
make purchases today and pay later. Further, technological advancements lead to a new trend
where most banks gave you one ATM card or debit card which can be used for withdrawing
money as well as for making purchases or payments-offline as well as online. Consumers prefer
these cards mostly for shopping online E-commerce has given a better way to use the plastic
money. At last it is concluded that plastic money has a very bright future in the coming years
because of the increasing trend of e-commerce.
REFERENCES
1. Amromin, Gene, Carrle Jankowski and Richard D. Porter, Transforming Payment
Choices by Doubling Fees on the Illinois Tollway, 2005. Federal Reserve Bank of
Chicago working paper.
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2. Ashish Das and Rakhi Agarwal, Cashless Payment System in India A Roadmap,
Department of Mathematics, Indian Institute of Technology, Bombay, Mumbai.
3. Borzekowski, Ron and Elizabeth K. Kiser, Network Effects and the Diffusion of Debit
Card Use at the Point of Sale, September 2005.
4. Carow, Kenneth A. and Michael E. Staten, Debit, Credit and Cash: Survey Evidence on
Gasoline Purchase, Journal of Economics and Business, 1999, 51(5), 409-422
5. Dove Consulting and the Americal Bankers Association, Study of Consumer Payment
Preferences 2004/2005, December 2005
6. Evan SD. S. and R. L., Schmalensee (1993) The Economics of the Payment Card
Industry, Cambridge: National Research Associates, Inc.
7. Gans, J. S. and S. P. King (2002), A theoretical analysis of credit cards regulation,
mimeo, University of Melbourne, September.
8. Hancock, Diana and David B. Humphrey, Payment Transactions, Instruments, and
Systems: A Survey, Journal of Banking and Finance, 1998, 21(11-12)
9. Hogarth, J. M. & ODonnell, K. H. (1998), Draft analysis of credit card data from 1997
survey of consumers.
10. Jonker, Nicole, Payment Instruments as Perceived by Consumers a Public Survey,
September 2005.
11. Katz, M. L. and C. Shapiro (1985) Network externalities, competition and compatibility,
American Economic Review, 75:424-444.
12. Kitch E. W. (1990) The framing hypothesis: is it supported by credit card issuer
opposition to a surcharge on a cash price, Journal of Law, Economics and Oganization,
6:217-233.
13. Mantel, Brian, Why Do Consumers Pay Bills Electronically? An Empirical Analysis,
Economic Perspectives, 2000.
14. Rochet J. C. and J. Tirole (2002) Cooperation among competiors; some economics of
payment card associations, RAND Journal of Economics, 33: 549-570.
15. Stefan W. Schmitz and Michael Latzer (2000) Competition in B2C eCommerce:
Analytical Issues and Empirical Evidence

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ISSN:2249-7137

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

P ublis he d b y: S out h A s ia n A c ade m ic R es e arc h J our nals

AN ANALYTICAL STUDY ON USE OF PLASTIC MONEY IN INDIA:

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Non- Govt. Employee

Yearly Income: Below 1 Lakhs

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

No. of Respondents (%)

Credit & Debit

Credit & Smart

Credit & Store

Debit & Smart

Debit & Store

Smart & Store

Credit & Debit & smart

Credit & Debit & store

Credit & smart & store

Debit & Smart & store

Credit & Debit & smart & store

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

No. of Respondents (%)

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

TABLE 4: AGE WISE USAGE OF DIFFERENT TYPES OF CARDS

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

TABLE 6: OCCUPATION WISE USAGE OF DIFFERENT TYPES OF CARDS

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

TABLE 8: BENEFITS PROVIDED TO CREDIT CARD HOLDERS

South Asian Academic Research Journals

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

TABLE 9: SINGLE FACTOR ANOVA ANALYSIS

Vol. 5, Issue 4, April 2015

Impact Factor: SJIF 2013=5.099

Fear of losing card