Major Research Project




Submitted for the Partial Fulfillment of the Requirements of the Degree of

Master of Business Administration (Full Time)

Session (2009-11)

AIMS, Indore



I, hereby declare that the following documented Project work titled “A
CREDIT CARDS IN INDORE” has been prepared under the guidance of Prof.
Vivek Sharma. The project work is the result of my own authentic work and is
original in all respect. Due references have been made to the researches & texts
adopted from various sources.

The Study was undertaken as a part of the course curriculum of MBA Full Time
Program of



This is to certify that, student of MBA IV Semester, of has completed his major

research project entitled “A STUDY OF CONSUMER AWARENESS AND


under my guidance and to the best of my knowledge, this is his original work and

has not been submitted anywhere before.

Date :



I would like to convey my sincere gratefulness to all those who gave me the opportunity to
complete this project. I acknowledge the huge importance of this research and especially of this
project undertaken.


I am grateful to, M.B.A department for opportunities explore my talents and potential to conduct
such interesting topic for my project. I express my thanks to the Director for associating me with
the college and giving me a chance to work on the project.

My deep sense of gratitude to, the H.O.D. for extending his support in imparting me knowledge
and giving me permission to conduct the project, also for the untimed support and guidance over
the academic years.

Also, I am highly obliged to for his untiring help, valuable guidance and kind supervision which
were the main stream to bring this work in present shape. I wish to thank him for his constant
guidance and support in the successful completion of this research work.

I shall be failing in my duty if I do not express my sincere gratitude to my family and friends for
their moral support and encouragement throughout the study. I would like to thank all the
respondents who offered their opinions and suggestions through the survey that was conducted
by me in Indore.










6. 45


8. 49


It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. which can be used like 6 . In contrast. credit cards allow the consumers a continuing balance of debt. subject to interest being charged.[1] 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. A credit card is different from a charge card: a charge card requires the balance to be paid in full each month.CREDIT CARD DEFINITION A credit card is a small plastic card issued to users as a system of payment. A credit card also differs from a cash card.

California. and with its overseas affiliates. a clerk retrieved the plate from the store's files and then processed the purchase. History The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. Charga-Plates were issued by large-scale merchants to their regular customers. However. developed in 1928. which was created partially through a merger with Dine and Sign.S.[2] The modern credit card was the successor of a variety of merchant credit schemes. In some cases. The Diners Club. the ancestor of MasterCard was born when a group of California 7 . the plate was laid into a recess in the imprinter. Charga-Plates speeded back-office bookkeeping that was done manually in paper ledgers in each store. The concept of customers paying different merchants using the same card was implemented in 1950 by Ralph Schneider and Frank McNamara. and are the shape and size specified by the ISO/IEC 7810 standard as ID-1.98 mm (3. The Charga-Plate. specifically to sell fuel to a growing number of automobile owners. city and state.60 × 53. It was embossed with the customer's name. It held a small paper card for a signature. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmericard demonstrated the feasibility of the concept). in the United States.370 × 2. Some charge cards were printed on paper card stock. This is defined as 85. It was a 2½" × 1¼" rectangle of sheet metal related to Addressograph and military dog tag systems. produced the first "general purpose" charge card. until 1958.125 in) (33/8 × 21/8 in) in size. the plates were kept in the issuing store rather than held by customers. much like department store credit cards of today. It was first used in the 1920s. In recording a purchase. no one had been able to create a working revolving credit financial instrument issued by a third-party bank that was generally accepted by a large number of merchants (as opposed to merchant-issued revolving cards accepted by only a few merchants). In September 1958. Bank of America launched the BankAmericard in Fresno. In 1938 several companies started to accept each other's cards.currency by the owner of the card. before computers. with a paper "charge slip" positioned on top of it. to consolidate multiple cards. from the 1930s to the late 1950s. but were easily counterfeited. Most credit cards are issued by banks or credit unions. Bellamy used the term credit card eleven times in this novel. eventually evolved into the Visa system. and required the entire bill to be paid with each statement. was an early predecessor to the credit card and used in the U. founders of Diners Club.[3] Charga-Plate was a trademark of Farrington Manufacturing Co. The record of the transaction included an impression of the embossed information. A dozen experiments by small American banks had been attempted (and had failed). made by the imprinter pressing an inked ribbon against the charge slip. When an authorized user made a purchase. Western Union had begun issuing charge cards to its frequent customers in 1921. In 1966. BankAmericard became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned).

S. were mass produced and mass mailed unsolicited to bank customers who were thought to be good credit risks. In these places. France. such as a bank or credit union. corporate-user credit cards. Canada and the UK in the mid twentieth century. Because of strict regulations regarding banking system overdrafts.where the card design is related to the "affinity" (a university or professional society. many cultures were more cash-oriented. How credit cards work Credit cards are issued by a credit card issuer. In some countries. After 1970. Early credit cards in the U. of which BankAmericard was the most prominent example. drunks. There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions).S. were much faster to develop and adopt chip-based credit cards which are now seen as major anti-fraud credit devices.. population. although an alternative system based on RFIDs inside cellphones has seen some acceptance. or UK. The design of the credit card itself has become a major selling point in recent years. In most cases a percentage of the value of the card is returned to the affinity group. adoption of credit cards was initially much slower. In 1966 Barclaycard in the UK launched the first credit card outside of the U. “They have been mailed off to unemployables. such as Carte bleue or the Eurocard (Germany. Debit cards and online banking are used more widely than credit cards in some countries. it received a significant boost when Citibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969. and were outlawed in 1970 due to the financial chaos that they caused. and others). The fractured nature of the U. a process President Johnson’s Special Assistant Betty Furness found very like ‘giving sugar to diabetics’. or developed alternative forms of cash-less payments. some countries. Although credit cards reached very high adoption levels in the US. acceptance still remains poor as the use of a credit card system depends on the banking system being perceived as reliable.banks established Master Charge to compete with BankAmericard.”[4] These mass mailings were known as "drops" in banking terminology.S. The value of the card to the issuer is often related to the customer's usage of the card. after which cardholders can use it to make purchases at 8 . But.S. but not before 100 million credit cards had been dropped into the U. This has led to the rise of Co-Brand and Affinity cards . or to the customer's financial worth. France in particular. for example) leading to higher card usage. store cards and so on. only credit card applications could be sent unsolicited in mass mailings. Switzerland. Japan remains a very cash oriented society. with credit card adoption being limited to only the largest of merchants. It took until the 1990s to reach anything like the percentage market-penetration levels achieved in the US. including organization- branded credit cards. after an account has been approved by the credit provider. Canada. banking system under the Glass–Steagall Act meant that credit cards became an effective way for those who were traveling around the country to move their credit to places where they could not directly use their banking facilities. narcotics addicts and to compulsive debtors.

Each month. and the Fair Credit Billing Act for details of the US regulations). and the total amount owed. In addition.g. any outstanding fees.. which limits cardholder liability for unauthorized use of a credit card to $50. known as a card not present transaction (CNP). merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card. The credit issuer charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). the three major US credit bureaus (Equifax. and telephone sales). and is implemented as an EMV card. Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase.S. the issuer may impose a "late fee" and/or other penalties on the user. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). and Z)". In the United States. To help mitigate this. and billing address. Merchants often advertise which cards they accept by displaying acceptance marks – generally derived from logos – or may communicate this orally. many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet. the cardholder must pay a defined minimum proportion of the bill by a due date. or "We don't take credit cards". the latter system is called Chip and PIN in the United Kingdom and Ireland. the credit card user agrees to pay the card issuer. Otherwise.merchants accepting that card. TransUnion and Experian) allow consumers to opt out from related credit card solicitation offers via its Opt Out Pre Screen program. The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank. mail order. allowing the verification to happen at time of purchase. A large fraction of junk mail consists of credit card offers created from lists provided by the major credit reporting agencies. § 1643. When a purchase is made. Y. thus avoiding such penalties altogether as long as the cardholder has sufficient funds. Data from the card is obtained from a magnetic stripe or chip on the card. as in "Credit cards are fine" (implicitly meaning "major brands"). or may choose to pay a higher amount up to the entire amount owed. the credit card user is sent a statement indicating the purchases undertaken with the card. CREDIT CARDS IN INDIA 9 . the cardholder may dispute any charges that he or she thinks are incorrect (see 15 U. date of expiry. Also.C. After receiving the statement. some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts. solicitation. if the credit card user fails to make at least the minimum payment by the due date. "We take (brands X. Advertising. For card not present transactions where the card is not shown (e. e-commerce. application and approval Credit card advertising regulations include the Schumer box disclosure requirements.

Some other product innovations of Standard Chartered Bank in India include the 'Sapnay' credit card. 2001) of SCB India is Rs. and is having a combined customer base of 2. easy and continuous payments' structures with each passing day and with every Bank poised to expand its network. there is no doubt that the rise in number of credit card providers and users have come of age. electricity. In the present day world. To add to that. 24515.4 million in retail banking and over 1200 corporate customers. the first to issue Photocard. The intensifying competition prevalent in the present day Indian credit card market has further fuelled the usage of credit cards in the country like 10 . With these positively-influencing trends expected to continue in the near and far-future. The Combined Balance Sheet (as at March 31. Standard Chartered Bank in India is the largest international banking Group in India. The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. the international debit card that provides free access to over 1500 Visa Future of credit cards in India With high and industry-favourable figures as above. the first Picture Card and was the first credit card issuer to be awarded the ISO 9002 certification. multiplexes. The introduction of credit card facilities to pay for mobile. The arrival of malls. The benefits of plastic money have offered unmatched ways to create an equilibrium and offer an amicable solution when it comes to purchases and the inability to possess or carry cash. the writing is on the wall. It will not be wrong to say that such a scenario in context of the Indian market is not driven by style statement and is driven more by needs. no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions. online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. The credit card industry is likely to soar more than any industry segment. The modern day Indian customers find it more easy to make physical payment (credit card payments) rather than carrying too much cash. movie tickets and other related transactions have also contributed to the growth of plastic money in the country. the Indian credit card user community is the biggest beneficiary.India has came out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before.9 cr. Standard Chartered India was the first to issue first global credit card in India.

There are about 250 million mobile phone connections in the country. LIC Mutual Fund and Corporation Bank each have a 5 per cent stake each in the venture. In the very near future. The RBI had also stated that draft guidelines would be placed on its official website by the 15th of June. This has resulted in many countries shifting to the more 11 . The card is named as the 'Go Card'. In the countries like India. In an aim to overpower the peers and to sustain and prosper themselves. are undergoing tremendous changes across the globe. This card offers special reward benefits and good range of travel-related promotional packages to its users. utility service providers.never-before. Therefore. LIC has yet not taken any decision about the remaining 15 per cent stake of the total investments. there might not be any requirement of carrying the credit cards all the time. In another development. 2008. the Banks and financial institutions have started cutting down the interest rates and offering lucrative deals. This channel will certainly assist small value payments to merchants. This venture is an outcome of very solid research works. ABN AMRO and MakeMyTrip. The outcome product of the joint venture between Life Insurance Corporation of India and GE Money is likely to touch the market by the end of this year. Credit cards and debit cards. the company will provide this card to the LIC customers and policy holders only. service providers and industry bodies to develop the payment system for the mobile devices. In order to improve security and reduce frauds in plastic cards and card payment transactions. while LIC Housing Finance Company. Credit card market is going to witness some more innovative changes in the present year. In have launched a distinctive co-branded credit card. Since the mobile number of the user will act as his or her credit card number. commonly referred to as plastic money. authorities. In the first year of its launch. A number of companies are working hard to develop credit cards that are safer and easier to use. researchers and innovators are searching for newer ways. or automated teller machine (ATM) cards. using the mobile phones for making payments may take some more time in getting implemented. whereas the credit card holders are far lower in comparison to number of mobile phone connections. Reserve Bank of India informed that it was in the process of formulating the guidelines for a payment system using mobile devices. a person will not have to carry his plastic money for the payment purposes. the usage of mobile is growing rapidly. the speed with which the money will get transferred at a low cost will make this process really useful. The Life Insurance Corporation will have 40 percent of stake in the company. LIC has invested around Rupees 150 crore in this plan. It includes a 30 per cent stake for GE Money. Reserve Bank of India is discussing with both public and private sector Banks. The RBI said in its policy statement said that the quick elaboration of this mode of payment and transactions have thrown up a new delivery channel for banks. In the recent times.

through ATMs. are also not keen to spend on upgradation.000 ATMs across the country. about 90% of the existing point of sales (POS) terminals in the country. In the period between March 2010 and February 2011. including e-commerce. while there were 5. for plastic cards transactions. In the US. Citibank's experience has been that card usage levels are significantly lower when a PIN is required to be entered at the POS terminal. as profitable revenue channels associated with current interchange fees do not offset the cost of re-carding.6 lakh POS and around 70. early cases of domestic counterfeit and skimming are on the rise. which acts as a deterrent to fraudsters. or even replacement. or PIN verification. the total spends value in India on credit and debit cards. countries like the US. 12 . This means. A majority of the lenders. that many lenders are serving many who are not their customers.2 crore debit cards and 1. Certain issuers such as Citibank and State Bank of India issue Maestro debit cards. Only 50% of the existing ATMs with minimal software and hardware upgrades can accept EMV chip cards. Maestro debit cards are magnetic stripe cards that require a PIN to be entered at the POS terminal. without earning much revenue from these transactions. However. not all ATMs are equipped to do the same. managed by 21 acquirers (among them Axis Bank. the resistance to change is primarily due to the cost of migration to EMV. According to Reserve Bank of India (RBI) rules. any cardholder can use another lender's ATM free of cost. In the same period. However. The industry reported a loss of Rs13 crore due to stolen and counterfeit card frauds. who have installed around 70. In China there is a strong legal framework to handle financial frauds. Interestingly. There is a reason for this. can accept EMV chip cards and PIN. interactive voice response (IVR) and mail order/telephone-order (MOTO) transactions. lenders earn commission on each transaction through the POS terminals. China and India are still using the older magnetic strip cards (MSDs) and signature. India had 22. to enable EMV chip card acceptance.000 ATMs installed.4 basis points (bps). On the other hand. HDFC Bank and ICICI Bank).13 lakh crore. While the fraud-to-sales ratio came at 1. On the other hand. over 99% of the total cards issued in India are based on magnetic strips. No wonder that a majority of cards require the user to use the PIN only for ATM transaction and not at Europay. The rest of the ATMs would need major hardware upgrades.8 crore credit cards. was Rs1. for up to five transactions each month. MasterCard and Visa (EMV) chip cards with personal identification numbers (PIN).

"Aadhaar (issued by the Unique Identification Authority of India . Inferences drawn from case studies clearly indicate the need to have a much stronger authentication mechanism and reiterate the need for a second factor (2FA) for card present transactions. the decision to adopt this would depend on various factors like the number of UIDs issued to the population which transacts through cards. while on paper the use of biometrics as 2FA may sound feasible. Based on international experience. or UID. In this situation. In addition. This can be combined with a second 'What you have' or 'What you know' factor to achieve strong customer identification at the point of sale." the report said. network capability to handle enhanced transaction size and acquiring infrastructure. provides a strong 'Who you are' factor of authentication. "In the absence of 2FA for POS transactions there is a possibility of the fraud losses increasing by more than 200% in a single year. authentication network capability to handle transaction volumes. According to a report by a "Working Group on Securing Card Present Transactions" of the Reserve Bank of India (RBI). in practice. This has forced many countries to adopt the EMV chip card and PIN. EMV chip card and PIN migration typically takes more than five years. however. Therefore. The report discusses new systems like EMV chip cards with PIN that has been adopted by many countries and enhancing the current MSD card system with help from biometric identification. there is a need to put in place a series of measures to strengthen the payments infrastructure and ecosystem in the country. its uses would be limited at specific locations. the error rates. due to insufficient feasibility tests. all these cards use signatures as a second authentication instead of the global practice of using PINs. in the event of a sharp increase in fraud incidents in the country.” While the option to use biometrics from the UIDAI database looks good. MSDs and PIN are susceptible to skimming or counterfeit frauds. these banks are issuing chip-based cards to customers who frequently travel abroad and have high credit limits. However. HDFC Bank and SBI issue EMV chip cards. while for most other banks the host systems are not ready and have not been certified for issuance of chip card.UIDAI) authentication using biometrics. as the second factor in one of the solution sets. it may not be a viable option. There is also a possibility of POS FTS (fraud-to-sales ratio) increasing by around 200 basis points in one year under adverse conditions. EMV chip cards and PIN look like the future proof 13 . which protects against skimming and lost and stolen card frauds. However. "The working committee considered biometric. ICICI Bank." the report said.A few large card-issuing lenders like Citibank. depending on the market size.

this may not be the last in payment transaction systems. This would enable mass transit payments and payments requiring fast-moving queues. In the absence of information and awareness campaigns from the lenders to the end user. as per expectation. while there are nearly 60 crore mobile phone subscribers. IMPS could help revive these accounts. as of April 2011. NFC is also available as a Micro SD card or sticker. internet search giant Google launched 'Google Wallet'. which has the potential to change the payments scenario in the country. is that this solution is extendible to offline modes of payments. In addition. Unfortunately. Google Wallet is based on near field communication (NFC) protocol. Moneylife has been trying to get access and use IMPS for 14 . One of the options available for payment ecosystem players to consider is contactless smart cards. buses. EMV chip and PIN cards require the industry to make a huge investment in the card issuing and acquiring infrastructure. Such technologies will be a huge advantage in India. the initial response for IMPS from lenders and customers has been lukewarm. which allows people with compatible mobile phones to pay for goods and services in shops by just waving their phones. Although on record there are about 31 crore savings bank accounts. Contactless transactions are known to be significantly faster and more efficient than magnetic stripe or contact cards. many of them are either multiple accounts or they are not operational. However. despite the higher costs. According to Juniper Research. ElectraCard Services. One more advantage. which EMV chip cards have. but it would require a very long time (3-5 years) to implement. Transit payments. According to bankers. According to Bhavin Mody. which in itself could be a huge exercise. "EMV chip and PIN is surely a long-term solution. Nevertheless. Last month. which has 24 crore debit and credit cards and 58. one in five smart phones in the world would have NFC capability.system. it involves replacing all the MSD cards that have been issued. for card-based transactions. the IMPS may not take off.1 crore GSM mobile subscribers. by 2013.” he said. like metro rail. toll and loyalty applications and micro- transactions might accelerate the move to contactless cards in India. this system could revolutionise the retail payments process and even overtake the number of payment transactions carried out through cards and the internet . In November last year. the National Payments Corporation of India (NPCI) launched its much- awaited interbank mobile payment service (IMPS). senior product manager. there are less than 20 crore 'active' bank accounts.

Consumer Perception Towards the Purchase of Credit Card Intangibility is the inherent nature of services. facilitating services and supplementary services) in pre-purchase evaluation and to understand the position of 15 . consumers perceive high degree of uncertainty in making a service purchase decision due to lack of tangible cues with service product. Present study has its focus on understanding how consumers' perceive and consider service product features for making purchase of credit cards.subscription services since December last year. The reason is no one from our bank or branch seems to have complete knowledge about IMPS. consumers normally do not consider service product features to evaluate service offer. As a result. Therefore. there is not a single payment transaction system that we can label as future proof. Service is a "performance" rather than a "thing". without any luck so far. There are more of experience and credence qualities with services than search qualities. While the EMV chip card and PIN provide good options for safe and secure card payments. other systems which use mobile phone may turn out to be the dark horse. In the end. Objectives are to analyze the role of service product features (core benefit.

Within the purview of given parameters. a branch of services marketing.e. Supplementary services are those that add value to the core service. this difference is due to resulting extended marketing-mix of 7Ps (Booms and Bitner. 1981). inseparability of production and consumption. for example. creating a need for strategizing the marketing efforts. The data analysis indicates that consumers consider service product features during pre-purchase evaluation of credit cards and respondents find it easy to make a purchase decision on the basis of supplementary services. consisting of a core service plus a cluster of supplementary services. with special reference to credit card services. Responses reveal that existing supplementary service elements are perceived more of expected features than augmented features of credit cards. income level and gender have also been taken into consideration. A positive relationship has been found between the income level of a 16 . Further. the objective is to study the consumer perception towards service product features in pre-purc. heterogeneity and lack of ownership. with emphasis on credit cards. The core elements respond to the customer's need for a basic benefit. This study investigates the shift of consumers towards the use of plastic money. perishability.supplementary services at product levels. . A survey of consumers holding (at least) one or no credit card were used for data collection. the study is carried out in the area of financial services marketing. i. airlines offer transportation. the marketing of financial products has become very competitive. intangibility.. Variables related to demographics such as age. Services marketing differ from goods marketing due to well established service characteristics.. The present study is focused on the fundamental 'P'. This study makes (the) use of descriptive variables in terms of analyzing the general attitude about the use of credit cards and the factors contributing towards the selection of (a) one particular credit card over the other.. The service product is essentially a bundle of activities.. service product which is critical to manage for keeping one's business in market. Thus. With the new reforms in the banking sector. viz.

e. suggestions have also been made for managers to refine the target market. Because of limited alternatives to short-term uncollateralized credit.g. frequent-use awards programs) They are frequently used for convenience. and additional enhancements. The popularity of credit cards as a payment medium has been attributed to the convenience of not carrying cash and checks. expedited dispute resolution. while behavioral attitudes involve actions (e. they may change their minds when the bill arrives. The profession of the person seems to play a very interesting role with their behavior towards credit cards. Heavy use of credit cards results in heavy debt). and automobile 17 . While making the choice of a credit card the trust in a particular brand name seems to hold a very significant importance in the selection of a credit card. before their incomes arrive). My credit card makes me feel happy). Affective attitudes involve emotional feelings (e. sales teams support. the consumers are somewhat sensitive not only to changes in the interest rate but also to the value of other credit-card enhancements such as frequent-use awards. knowledge about the true interest rate imposed by the banks and the concept of financing. etc.. the limited liability of lost/ stolen cards. Many consumers value uncollateralized credit lines for making purchases when they are illiquid (i. The moderating variables include the marketing campaign of a particular bank.e. instead of the logo of Visa or Master card. extended warranties.g. telephone and Internet transactions. even at relatively high interest rates. The behavior and the attitude of the consumer towards the use and acceptability of credit cards differ for psychographic reasons devised a 38-item scale to measure affectiveness. I use my credit card frequently). Our study shows that the bankers hold negative attitude towards the use of a credit card. cognitive attitudes involve thoughts (e. such as dispute resolution services and perks (i. However.g. openness from retailers for accepting credit card instead of cash. the demand for such credit may be fairly in-elastic with respect to price consumers may not even consider the interest rate when making purchases because they do not intend to borrow for an extended period when they make purchases.person and his/her possession of the credit card. Based on an observations. cognitive and behavioral attitudes towards credit cards.

safety. On the other hand. prefer to use cash mostly in book stores. grocery stores. Some of the common methods of exploitation are 18 . The results indicated that customer characteristics affecting credit card choice criteria included age. education. However these two characteristics were less important than the place of residence. and supermarket. gasoline. Generally advertisements do not give all the information that a consumer needs t know or wants to know about a product. marital status. or identification. bank credit while they are making shopping in electronics and furniture stores.rental insurance. Demographics also seem to play a vital role in making a choice and the use of credit cards as a convenience user or revolver. longitudinal study. and night clubs credit card is mostly preferred for the payments of clothing. furnishings. According to the study conducted the probability of having credit cards and the number held was correlated highly with age and occupation. consumers prefer to use other forms of payment such as installment. she agrees that lowering interest rates may attract less creditworthy consumers. income level has been studied previously and suggest some indication for correlation between demographic and use of credit card. It has been suggested that the installment feature of credit is needed by the low income consumer to permit purchases such as automobiles. use of checking and savings accounts. Age. and attitude towards credit. However. Consumers get exploited in the market. those who have credit card. therefore dissuading some credit-card issuers from lowering their interest rates. consumers. low income users of credit cards tend to use the cards for the installment feature rather than for service features such as convenience. and income level CONSUMER AWARENESS Anyone who consumes goods is a consumer. They respond to advertisements and buy goods. and other consumer durables.

Although there have been a number of changes in the industry. we are seeing the acceptance network also grow because merchants are realising that the cost of processing cash is very high and that consumers benefit from the convenience of cashless payments. Substandard Quality –defective home appliances and medicines beyond expiry date 3. Unsatisfactory after sales Service—high cost items like eletronics and cars require constant and regular service. Artifical Scarcity—hoarding and black marketing 8. it is only 3% compared to the global average of 16%. 19 . Uttam Nayak. we have almost 50 banks that issue credit or debit cards and have set up large ATMs and PoS networks. 10. There are 22. New channels like internet and mobile will help accelerate cashless payments and electronic mode of disbursement will be key to ensure the right person receives the right amount. Lack of safety Devices—absence of inbuilt safeguardsin appliances 7. Rough behaviour and Undue conditions—harassment in getting LPG connection or a telephone connection. Do you think the overall picture is changing on how payments are made? In the mid-90's. Under weight and under measurements –not measured or weighed correctly 2. Additionally. if you look at India's personal consumer expenditure (PCE). and safety. only foreign banks like Citibank and Standard Chartered were issuing cards and had set up ATMs for cash withdrawals and point of sales (PoS) terminals at merchant establishments. durability. we will definitely see cardholders move to newer e-payment modes such as mobile payments. False and Incomplete Information—misleading information on quality. 9. In India. there has been an increase in online transactions which is a result of RBI's security mandate of second factor authentication. tells FE's Kumud Das that channels like internet and mobile will help accelerate cashless payments in the country. group country manager (India & South Asia) at Visa.5 crore debit cards in the country and while nine of ten transactions are done at the ATMs. In future. How do you see the electronic payments industry in India? The opportunity in India for electronic payments is huge. First. transactions worth more than $100 billion take place through cards every year. we believe the Indian market will see continued innovation and growth in electronic payments. priority is to make consumers aware of the electronic payment scheme. or the amount spent on a card on an average. Duplicate Articles—selling fake items in the name of the original 5. Adulteration and Impurity—is done to get higher profits 6. Now. only one transaction is done directly at the merchant establishment. High prices—charging above the retail price 4.. Globally. Today. 1.

PCE penetration in India is only around 3%. there are 10 debit cards in the country.a portal which provides a simple.5 crore debit cards in the country and nine of ten transactions are conducted at the ATMs while only one of the ten transactions is done directly at the merchant establishment. convenient. by artificial scarcity etc. All key stakeholders recognise that consumer awareness on electronic payments is a priority. together with its partner banks. To ensure the quality of products. The Indian market requires significant investments for developing world class inter-operable payments infrastructure. to be known as RuPay? How will it change the dynamics? As mentioned earlier. To prevent exploitation by under weighing the products. the key challenge is that the usage of credit/debit cards at PoS is very low and PoS transactions are yet to pick up. There are 22. one of Visa's key initiatives is Visa Bill Pay. However.5 crore customers availing electronic payment. Even though there are over 70.000 ATMs against 5 lakh PoS terminals in the country. we have large retail stores which accept and promote payments through credit/debit cards. How do you differentiate between PoS and ATM usage? Point of sale (PoS) is when a cardholder uses his card to purchase his groceries. To prevent adulteration. Visa. In order to provide convenience to cardholders. ATM usage is when a cardholder withdraws money in cash. We also have almost all important insurance companies in India accepting premium payments online.  20 . To start with. There is an opportunity of increasing PCE penetration drastically and we believe this will happen once more participants come into the industry to achieve faster growth. . National Payments Corporation of India has also joined the space and it is trying to come up with its own card. Debit card market is growing faster compared to that of credit cards as per the data provided in the RBI website. Consumer awareness is necessary for ensuring that you get your money's worth. To ensure hygiene in products. out of which 5. As far as the aviation industry is concerned. it benefits by gaining popularity by offering their customers low fares through e-ticketing.. we see cardholders going to ATMs more often.. The most recent campaign was the cashback programme for cardholders. What are the most popular uses of cards in India? I think electronic payments bind key industries together and enables them to provide value for money to their customers. pay bills at the restaurant or buy movie tickets. Can you throw some light on Visa Bill Pay .. Visa is working with banks to educate cardholders on the advantages of electronic payments. There are 22. secure and reliable way to pay bills with a Visa card.5 crore customers are availing the facility to buy online air tickets only. regularly run a number of campaigns to create awareness among the cardholders. How do you see it? For every credit card.

gives clear choice to the consumer in terms of price. stops the tall claims some products are supposed to do in the adverts. gives clear choice to the consumer in terms of price. quantity and the total value of a product. stops the tall claims some products are supposed to do in the adverts. quantity and the total value of a product. Be aware and be consumer aware. quality. quality. 21 .Consumer Awareness helps the trade to be vigilant of spurious products in the market. Be aware and be consumer aware. Consumer Awareness helps the trade to be vigilant of spurious products in the market.

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Some banks may even be violating the law outright. the median cash-advance and balance-transfer fees jumped by 33%. in part by skirting the new rules. a nonpartisan research group. The Credit Card Accountability Responsibility and Disclosure Act of 2009. then that speaks volumes. J. "Card companies are figuring out how to replace old fees with new ones. was intended to reshape the contours of consumer finance. it forces card issuers to give customers more notice about interest-rate increases and restricts certain controversial billing practices such as inactivity fees. during its second-quarter earnings call with analysts. known as the Card Act. "If you have every major issuer saying that we are losing our shirt. At credit unions. Chief Financial Officer Charles Noski warned that the Card Act and other regulatory changes would prompt the bank." So the banks are getting aggressive. annual fees soared 67% to $25. Morgan Chase & Co. the industry's median annual fee on bank credit cards jumped 18% to $59 between July 2009 and March 2010. these fees should be understood as almost inconsequential compared to the losses. "It's a race between regulators writing ever-more-complex laws and credit-card companies setting up ever-more-complex fees. and Discover Financial Services. Davis. are already rolling out a slew of fees designed to recapture some of their lost income. Robertson says. who has been analyzing how the Card Act will affect consumer banking.By JESSICA SILVER-GREENBERG Protection could find it difficult to keep ahead of the credit-card industry. The Card Act is expected to wipe out about $390 million a year in fee revenue. the nation's largest in assets. 23 . including Citigroup Inc. "Proportionately." The banks have a big gap to fill. the publisher of industry newsletter Nilson Report. an associate economist with the Federal Reserve Bank of Chicago and a professor at the University of California. Yet some of the biggest card issuers in the U. On July 16. According to a July 22 report from Pew Charitable Trusts. to write off up to $10 billion in the third quarter." says Victor Stango. say consumer advocates. according to David Robertson. Bank of America Corp..P.. During the same period.S. Among other things." Mr.

Condon says he was shocked when he opened his credit-card statement dated June 18 and saw that Discover had charged him $39 for a late payment—and had upped his interest rate on future purchases from 17% to 24. then the date is extended. He says the company considered him late because he paid on June 14. Among other things. Alan Condon of Woodstock. of course. even at high interest rates. and even read the Card Act—all 33 pages—after it was passed in May 2009. "We're coming out of a deep recession that issuers are still working through. In the first quarter of this year. a consumer credit lawyer at the National Consumer Law Center. a spokesman for the American Bankers Association." says Josh Frank. the Consumer Federation of America and Consumer Action flagged several "potential violations of the Credit Card Act. Banks and other issuers would have a difficult time extending credit to consumers." says Peter Garuccio. when there is no mail delivery. a senior researcher at the Center for Responsible Lending. instead of June 13. which regulates many of the biggest U." says Discover spokesman Matthew Towson. a coalition of consumer groups including the National Consumer Law Center.99%. is one of many who was hit with a late fee after missing a single payment. Mr. the Card Act stipulates that late-payment fees shouldn't be triggered on a Sunday or holiday. banks. These are like corporate cards but can carry the same terms as consumer cards—and aren't covered under the new law." says the 56-year-old computer-software developer. a Sunday..2 million in the corresponding period last year. In a July 7 letter to the Office of the Comptroller of the Currency. "I just got mad.. Ga. "This can be a very easy way around the Card Act. But we accept payments seven days a week." Other banks are ramping up their marketing of so-called professional cards. The rule "is clearly meant to offer cardholders some semblance of relief so that they don't get saddled with late fees for making a reasonable payment on the next business day. Ga. who says he had never before been late on a Discover payment.S. up from 13. if they couldn't augment those revenues with fee income.S." says Chi Chi Wu. The upshot: Borrowers must be more vigilant than ever—even before they make their first charge on a new credit card. Alan Condon. households. "We were in compliance with the Card Act." 24 . "The law states that if a creditor does not receive or accept payments on weekends or holidays. a consumer group. says he carefully reviews his card statements each month. But some banks may be going too far. according to research firm Synovate. issuers sent out 47 million professional-card offers to U.All of these increases are perfectly legal. a self-employed computer programmer in Woodstock.

"Rebates on finance payments may seem like a good deal.Nevertheless. of the Center for Responsible Lending. How could a $45. but you could end up with a very high interest rate suddenly. "The rebate offer is clear.08 pair of sneakers result in a $70. up from one page a decade ago. Condon's account at The Wall Street Journal's request and decided to waive the late fee and reduce Mr. Frank. and an issuer can revoke them suddenly and hit cardholders with high charges." says Mr. since the mid-'90s they have tripled. let's just say my inattention has had a price. transparent. Still. I called to plead my case. and so began my education in just how much my credit cards were costing me. and understanding all the ways they ding you requires ever more diligence." Turns out she was right. offering to refund up to 70% of finance charges when customers pay on time. Yet the National Consumer Law Center and Consumer Action say they have received complaints from borrowers who allege that their billing cycles have been shortened to fewer than 21 days. they send 25 . Disclosures now run 20 pages on average. Yours might too--especially if. you have been carrying around the same cards for years and have not bothered to check the fine print lately. and everybody does it. Without getting too personal. The net result is the same as raising rates—and because it is perfectly legal. The Kohl's rep's response: "It's perfectly legal." says Citigroup spokesman Samuel Wang. Credit-card companies are constantly adjusting their rates. I was two days late. The problem: Rebate offers aren't governed by the Card Act.. Condon's interest rate to its earlier level. And though late fees are hardly new.58 charge? O. customers have little recourse. Shortening the billing cycle is another new tactic some banks may be using.K. penalties and fees. The Card Act requires companies to provide a window of at least 21 days from when a statement is mailed and when payment is due. Discover reviewed Mr. Citibank rolled out rebate-card offers to some of its customers last fall. to about $30 on average--commonly going as high as $39. The Card Act also stipulates that issuers can't jack up rates on existing balances unless a cardholder is at least 60 days late. the $25 late fee and 50¢ finance charge came to a whopping annualized penalty rate of more than 21. But there is a creative maneuver around that: the so-called rebate card. By Daniel Kadlec After getting socked with a late fee and finance charge on my Kohl's account in May. "Sure. and we believe fully within the spirit of the Card Act.000%. like me. A local loan shark would have cut me a better deal.

academic level. and Yarbrough (2001). which can lower your credit rating. reported that many college students are living on the verge of a financial crisis. First. 246). If you're paying more than 14%. What's next? Card companies are weighing a fee for people who pay their balance every month. 26 . credit card ownership. A concurrent purpose was to test the factors associated with students' attitude toward credit cards. twice the share it was 10 years ago. writing in this Journal. avoiding 21. using a sample of 242 undergraduate and graduate students from a southwestern state a consumer-education website. Managing your credit cards takes some effort. and of those who do have a budget few young people actually use it. "But your eyes just glaze over. They determined that university students "are vulnerable to financial crisis" (p. Henry et al. or APR. You may have signed up for a card with no annual fee. College students' use of credit cards has recently received increased visibility throughout the media (Hayhoe. Another addition is a fee for foreign-currency conversions. Look for recurring fees. Making a comeback is the balance-transfer fee (about 3%). If you are a good customer. the issuer may let you off the hook once or even twice. 2002).000. It has long been thought that the smartest way to purchase goods overseas is with a credit card because you'll get a fair deal switching from. It was determined that. Watch out for that one. • Henry. but that doesn't mean one wasn't tacked on. which is your total cost of carrying a balance. And when you get a bill. Weber. new fees are sneaking in. make the minimum payment immediately and another payment as soon as you are able. Ethnic/racial background. and locus of control were associated with college students' credit card attitudes. dollars to euros. some card issuers will raise your interest rate to punitive levels--even if you are paying in a timely manner.'s assertion that students are vulnerable to a financial crisis was confirmed. How can you avoid penalties? Call the card issuer and ask to have them notification. founder of Credit. The purpose of this study was to further consider this assertion by examining college students' credit card use behavior and attitudes. say. That may still be true. But many cards now tack a 3% conversion fee on top of the profit built into the conversion rate. concluded that in addition to credit problems many students do not have a written budget. and Yarbrough (2001). check the annual percentage rate." Meanwhile. money ethic. says Levin. ask why. you could get socked with a $300 charge." says Adam Levin. And if your credit rating falls.000% interest is worth it. Henry. If you transfer $10. There is also a fee (up to $39) for spending beyond your credit limit and one for paying by phone ($15). Penalty fees account for a third of the industry's revenue. parents' credit card use. Weber. Some companies already close accounts that are inactive. writing in this Journal. A yearly review of your credit cards is a good idea.

& Anderson.The staggering number of credit cards in circulation exemplifies this crisis. More than a decade ago Churaman (1988) reported on college students' use of consumer credit. Noring. 2000). equals about 12 cards per household (Sullivan. Warren. The growth of credit cards on college campuses has tended to minor the credit saturation found in the general public (Xiao. This figure has been on the rise as some 70% of all undergraduates at four-year colleges have at least one credit card today. Currently. 2000).3 billion credit cards in circulation. which. It was during this period that the banking industry began permeating the student credit card market in the late 1980's (Manning. Churaman reported that in 1985-86 over half of all college students had bank credit cards. 1995). & Westbrook. there are 1. as does the number of cards carried by the average student. 27 . when averaged.

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29 .security and thus has multipurpose benefits of it.Rationale Of The Study The purpose of this study is to understand the use of credit card in the changing environment of the world and banking system . This study is just about going through its benefits . It provides many benefits to the credit card holder and has various dimensions providing insurance .that how much consumers are aware and their perception about credit.

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METHOD/TOOLS OF DATA COLLECTION The data used for the project is primary as well as secondary data. to be used are discussed in the methodology. 2. and the research instrument. the research design. as follows. To study about the consumer awareness of credit card. SAMPLE SIZE: The sample size for the study would be around 100 person of different level in the city. the population to be studied. D) RESEARCH METHODOLOGY Research Methodology describes the methods to be used. The method of data collection used for this project is both primary data and secondary data.OBJECTIVES:- 1. B). or tools. Research methodology is a way to systematically solve research problems. Sources of primary data-  Interview  Questionnaire Sources of secondary data-  Journals  Books  Magazines  Reports C).A). Primary Data Primary data is the freshly collected data for specific purpose for specific research project. 31 . To study about the consumer perception of credit card.

Method Of Collection Of Secondary Data Bank website-people and private sector.Method of collection of Primary Data Questionnaire Method Mailed Questionnaire Method Observation Secondary Data Secondary data is the data that already exists somewhere. Tools For Data Collection Questionnaires Personal Interviews Observations 32 . This is not collected specifically for the research work being now undertaken. bank website thought internet study of various articles about credit card. This may have been collected by someone or some organization under different context for different purpose.

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0 2 10 10. 34 .0 90.0 10.0 90. Account in a bank Frequency Percent Valid Percent Cumulative Percent Valid 1 90 90.0 100.0 Total 100 100.0 100.0 Frequencies variable : Account to our study above graph shows that 90% people have account in bank and 10% people do not have account in bank.

0 Frequencies variable: Account to our study above graph shows that 92% people have saving a/c.0 2 92 92. 16 % have current a/c and 2% have recurring a/c in bank.0 2.0 6.0 3 6 6.0 2. 35 .0 100.0 92.0 Total 100 100. Types of account Cumulative Frequency Percent Valid Percent Percent Valid 1 2 2.0 100.0 94.

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such as a bank or credit union. people need to develop consumer awareness to protect themselves from fraud and poor purchasing decisions. The concept of using a card for purchases was described in 1887 by Edward Bellamy in his utopian novel Looking Backward. the first Picture Card and was the first credit card issuer to be awarded the ISO 9002 certification. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. the first to issue Photo card. Developing consumer awareness can help people save money and prevent fraud. SUMMARY A credit card is a small plastic card issued to users as a system of payment. It was first used in the 1920s. credit cards allow the consumers a continuing balance of debt. consumer awareness programs create more informed buying decisions. Protection could find it difficult to keep ahead of the credit-card industry. With the help of this the customers need or expectations from the product . Making existing and potential customers knowledgeable about products/services. The Credit Card Accountability Responsibility and Disclosure Act of 2009. It is essential that consumers understand how to make knowledgeable purchases and avoid obvious scams Before positioning of a particular brand it is very important for the brand to know what does a consumer think about the product or service which is going to be launched by the brand. after which cardholders can use it to make purchases at merchants accepting that card India has came out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before Standard Chartered Bank in India is the largest international banking Group in India Standard Chartered India was the first to issue first global credit card in India. In a complicated marketplace. which can be used like currency by the owner. In contrast. its ideal pricing etc. it forces card issuers to give customers more notice about interest-rate increases and restricts certain controversial billing practices such as inactivity fees. A credit card also differs from a cash card. in the United States. This involves an intensively planned research methodology that helps a manager to plot a graph with respect to the results received and get an idea about the perpetual spacing of the mind of the consumer. A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. Consumers cannot purchase products and services if they do not know they exist. was intended to reshape the contours of consumer finance. At the same time brands also try to find out about the other brands and their image in the minds of the consumer. 46 . specifically to sell fuel to a growing number of automobile owners. Credit cards are issued by a credit card issuer. Among other things. subject to interest being charged. after an account has been approved by the credit provider.[1] 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. the mind of the customer. can be found out. known as the Card Act. This ultimately helps a brand to identify the ideal positioning strategy that will occupy the desired imagine in.

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US & FCS Poland: Effective Post Needs Attention to Certain Management Issues Inspection Report No. International Trade Administration. Shah M Tarzi (2000). Political Risk and International Marketing". Sivakumar (1997). G. Re-Emerging Markets. Emerging Market Conditions and Their Impact on First Mover Advantages an Integrative Review. Multinational Business Review p. Hot Money and the Emerging Markets: Global Political and Economic Determinants of Portfolio Capital Flows. and Economic Studies. 6(1). 63-74. Locational Determinants of Foreign Direct Investment in An Emerging Market Economy: Evidence from Turkey. TX. 6th ed. p. 53 (1) The Interbank Card Centre (BKM). Journal of Financial Services Marketing. Fort Worth. International Marketing. Fuat Erdal and Ekrem Tatoglu (2002). 461- 485. REFERENCES Cheryl Nakata and K.html V.bkm.htm) R. Yearly Statistics Reports (2005) (http://www. pp. 23(4). 25 (1). Master Index Pazar Araştırması. 50-69. Kale (1989). Vol. 49 . Sarathy (1994). Journal of Financial and Quantitative Analysis. (http://www. Gill and S..mastercard. 24-39. IPE-9288 / April 1997. 1-32. Vol. International Marketing Review. p. 10 (1) p. William N Goetzmann and Philippe Jorion (1999). J. Vol. Erdener Kaynak and Talha Harcar (2001). 27-49. Consumers' attitudes and intentions towards credit card usage in an advanced developing country. 14(6). 34 (1). Kasım 2002. The Dryden Vol. Dealer Dependent Levels and Reciprocal Actions in a Channel of Distribution in a Developing Country". The Journal of Social. Vol. Vol. Journal of Marketing. Kim (1988). Columbia Journal of World Business. Terpstra and R. Vol. Political. p. 21-27. Friedman and J.

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