A PROJECT REPORT

ON

“A STUDY ON THE PLASTIC MONEY”

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Management Studies

Under the Faculty of Commerce

By

PRIYAL ANCHALIYA

Under the guidance of

PROF. SHARAVATHI.C

MAHATMA EDUCATION SOCIETY’S

PILLAI COLLEGE OF ARTS, COMMERCE & SCIENCE,

PLOT NO 10, SECTOR-16, NEW PANVEL -410206

2019-2020

(Autonomous)

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 CERTIFICATE

This is to certify that Ms/Mr. PRIYAL ANCHALIYA has worked and duly completed
her/his Project Work or the degree of Bachelor in Commerce (Accounting & Finance)
under the Faculty of Commerce in the subject of PROJECT WORK SEM-VI TY BMS
and her/his project is entitled, A STUDY ON THE PLASTIC MONEY under my
supervision.

I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is her/his own work and facts reported by his/her personal findings and investigation.

Project Guide
Asst. Prof. Sharavathi. C Asst. Prof. Nithya Varghese
co- ordinator

Dr. CA Gajanan Wader External Guide

I/C Principal

Date of submission:

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 DECLARATION

I the undersigned MISS PRIYAL ANCHALIYA here by, declare that the work embodied
in this project work titled “A STUDY ON PLASTIC MONEY ”. forms my own contribution
to the research work carried out under the guidance of Asst Prof. Sharavathi C. is a
result of my own research work and has not been previously submitted to any other
University for any other Degree/Diploma t this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

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 Acknowledgement

To list who all have helped me is difficult because they are so numerous and the depth is
so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity t thank the university of Mumbai for giving me the chance to do
this project.

I would like to thank my Principal, Dr.Gajanan Wader for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator, Mrs. Nithya Varghese, for the moral
support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
Sharavati C whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related t my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me
in the completion of the project especially my Parents and Peers who supported me
throughout my project.

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 INDEX
CHAPTER CONTENT PAGE
NO. NO.

I. Chapter 1: Introduction To Plastic Money

 History
 Debit card
 Credit card
 Types of plastic cards

II. Chapter 2 : Research Methodology

 Method of data collection
 Objective of study

III. Chapter 3: Review of literature

IV. Chapter 4: Conceptual Framework

 History
 Advantages/ Disadvantages
 Types of plastic money
Credit card
Debit card
ATM card
Rechargeable calling cards
Store-Value card
Prepaid card
Gift card
ATVM cards

V. Chapter 5: Data Analysis And Interpretation

VI. Conclusion
VIII. Bibliography
IX. Appendix

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 CHAPTER I
INTRODUCTION TO PLASTIC MONEY
I.1.1 INTRODUCTION
Concept of plastic money 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 credit cards, debits cards,
ATMs, smart cards, etc. This assignment on plastic money is divided into two
portions titled Concept and Experiences.

The former covers the emergence of plastic money, different types of plastic cards,
their growth in India. Plastic money are the alternative to the cash or the standard
'money'. Plastic money is used to refer to the credit cards or the debit cards that we
use to make purchases in our everyday life. Plastic money is much more convenient
to carry around as you do not have to carry a huge some of money with you. It is
also much safer to carry it along or to travel with it as if it is stolen one can consult
the bank whose service you are using and get it blocked hence saving your money
from getting stolen or even lost.

Nowadays, even developing countries like India are encouraging the use of these
plastic money more than cash due to these reasons. Furthermore these credit and
debit cards also have plastic used in their making and that is where the name 'plastic
money has originated from.

I.2. The History Of Credit Cards and Debit Cards In Plastic Money

The history of Credit cards and Debit cards have evolved into a safe and secure
manner to purchase goods and services. The Internet has given credit card users
additional purchasing power. Banks have options like cash-back rewards, savings
plans and other incentives to entice people to use their cards.

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Debit cards allow people the convenience of cards without the worry of racking up
debt. The convenience, security and rewards offered by credit and debit cards keep
shoppers using their cards as opposed to checks or cash.

I.2.1CREDIT CARD ORIGINS

The first credit cards were issued by individual stores and merchants. These cards
were issued in limited locations and only accepted by the businesses that issued
them. While the cards were convenient for the customers, they also provided a
customer loyalty and customer service benefit, which was good for both customer
and merchant. It was not until 1950 that the Dinner's Club card was created by a
restaurant patron who forgot his wallet and realized there needed to be an
alternative to cash only.

This started the first credit card specifically for widespread use, even though it was
primarily used for entertainment and travel expenses. The first Diner's Club cards
were made out of cardboard or celluloid.

In 1959 American Express changed all that with the first card made of plastic.
American Express created a system of making an impression of the card presented
at the register for payment. Then that impression was billed to the customer and
due in full each month. Several American Express cards still operate like this as of
2010.

It was not until the late 1980s that American Express began allowing people to pay
their balance over time with additional card options. Bank Card Associations In
1966, Bank of America created a card that was a general purpose card or "open
loop" card. These "closed loop" agreements limited cards like Diners Club and
American Express to certain merchants, unlike the new "open loop" cards.

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The new general purpose system required interbank cooperation and additional
regulations. This created additional safety features and began building the credit
card system of today. Two systems emerged as the leaders--Visa and Master Card.
However, today there is little difference between the two and most merchants
accept both card associations.

I.2.2. DEBIT CARD EMERGE

The Visa association of cards took credit cards to a new level in 1989 when they
introduced debit cards. These cards linked consumers to their checking accounts.
Money was now drawn from a checking account at the point of sale with these new
cards and replaced cheque writing.

This helped the merchants check that money was available and made it easier to
track the customer if the funds could not be obtained. Consumers liked the
convenience of not having to write cheques at the point of sale, which made debit
cards a safe alternative to cash and cheques.

Then in Future there were almost 29 million debit card users as of 2006, with a
projected 34.4 million users by 2016. However, online services like PayPal are
emerging as a way for people to pay their debts in new, secure and convenient
ways. Technology also exists to have devices implanted into phones, keys and other
everyday devices so that the ability to pay at the point of sale is even more
convenient.

I.2.3 PLASTIC FRAUD

State-of-the-art thieves are concentrating on plastic cards.

In the past, this type of fraud was not very common. Today, it is a big business
for criminals. Plastic cards bring new convenience to your shopping and banking,

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but they can turn into nightmares in the wrong hands. This pamphlet describes
credit and debit cards and some common schemes involving card fraud with tips
to help you avoid them

The following are the types of frauds

1. Stolen Cards at the Office
2. Extra Copies of Charge Slips
3. Discarded Charge Slips
4. Unsigned Credit Cards
5. Loss of Multiple Cards
6. Strange Requests for Your PIN Numbers
7. Legitimate Cards 8. Altered Cards
9. Counterfeit Cards

I.2.4 ADVANTAGES AND DISADVANTAGES

ADVANTAGES :-
1. Plastic money, unlike paper money, will not burn easily and can resist higher
temperatures than paper money.
2. You have no fear to be theft.
3. And its easy to use.
4. Paper money also picks up dirt and stains more easily than plastic money.
5. Plastic money is the debit and credit cards.
6. Plus point of plastic money is that you won't have to carry your cash around all
the time.
7. It also doesn't tear after time as paper does nor does it rip and tear.
8. Give you incentives, such as reward points, that you can redeem.
9. Be more convenient to carry than cash.
10. Provide a convenient payment method for purchases made on the Internet and
over the telephone.
11.Help you establish a good credit history.

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DISADVANTAGES :-
1.Cost much more than other forms of credit, such as a line of credit or a Personal
loan, if you don't pay on time.
2. Damage your credit rating if your payments are late;
3. Allow you to build up more debt than you can handle;
4. Have complicated terms and conditions;
5. Paper money also picks up dirt and stains more easily than plastic money.
6. I can't really see any advantages to have paper money, unless it is cheaper to
make.
Its disadvantage is that, some extra money will be deducted for the bank services.
It’s around 2.5% of the money you spent

I.2.5 TECHNOLOGY AND INFRASTRUCTURE

One of the most important features that Plastic Money offers is the technology
associated with this business. Although a third world country, with lot of
insecurities and almost no infrastructure, Pakistan has no exception when it
comes to credit card business. There is approximately 3000 Point of Sale
Terminals (POST) present on merchant's site connected with bank host system.
Inter-city connectivity is accomplished through X.25 networks. Perhaps, it is the
most important time in the history of Pakistan as the parameters of its
Infrastructures are coming into existence.

There is an immense need of reliable wide area connectivity and this market is so
huge and lucrative that it can accommodate many more industry giant .

I.2.6 TECHNOLOGIES
A number of International Organization for Standardization standards, ISO/IEC
7810, ISO/IEC 7811, ISO/IEC 7812, ISO/IEC 7813, ISO 8583, and ISO/IEC

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4909, define the physical properties of payment cards, including size, flexibility,
location of the magnetic stripe, magnetic characteristics, and data formats. They
also provide the standards for financial cards, including the allocation of card
number ranges to different card issuing institutions.

I.2.7 EMBOSSING
Originally charge account identification was paper-based. In 1959 American
Express was the first charge card operator to issue embossed plastic cards which
enabled cards to be manually imprinted for processing, making processing faster
and reducing transcription errors. Other credit card issuers followed suit. The
information typically embossed are the bank card number, card expiry date and
cardholder's name. Though the imprinting method has been predominantly
superseded by the magnetic stripe and then by the integrated chip, cards continue
to be embossed in case a transaction needs to be processed manually. Cards
conform to the ISO/IEC 7810 ID-1 standard, ISO/IEC 7811on embossing, and
the ISO/IEC 7812 card numbering standard.
Magnetic stripe

A Person

An example of the reverse side of a typical debit card:

1. Magnetic stripe
2. Signature stripe
3. Card Security Code

When you use a credit card you are not declared a defaulter even if you miss your
due date. A 2.95 per cent late payment fees (this differs from one bank to

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another) is levied in Magnetic stripes started to be rolled out on debit cards in the
1970s with the introduction of ATMs. The magnetic stripe stores card data which
can be read by physical contact and swiping past a reading head. The magnetic
stripe contains all the information appearing on the card face, but allows for faster
processing at point-of-sale than the then manual alternative as well as
subsequently by the transaction processing company. The magnetic stripe is in
the process of being augmented by the integrated chip.

I.2.8 TYPES OF PLASTIC MONEY

Credit card
A credit card is plastic money that is used to pay for products and services at
over 20 Million locations around the world. All you need to do is produce the
card and sign a charge slip to pay for your purchases. The institution which issues
the card makes the payment to the outlet on your behalf; you will pay this 'loan'
back to the institution at a later date.

Debit card
Debit cards are substitutes for cash or check payments, much the same way that
credit cards are. However, banks only issue them to you if you hold an account
with them. When a debit card is used to make a payment, the total amount
charged is instantly reduced from your bank balance.
A debit card is only accepted at outlets with electronic swipe- machines that can
check and deduct amounts from your bank balance online.

Charge card
A charge card carries all the features of credit cards. However, after using a
charge card you will have to pay off the entire amount billed, by the due date. If

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you fail to do so,you are likely to be considered a defaulter and will usually have
to pay up a steep late payment charge your next billing statement.

Amex card
Amex stands for American Express and is one of the well-known charge cards.
This card has its own merchant establishment tie-ups and does not depend on the
network of MasterCard or Visa.

Credit cards
This card is typically meant for high-income group categories and companies and
may not be acceptable at many outlets. There are a wide variety of special
privileges offered to Amex cardholders.

Dinner club card

Diners Club is a branded charge card. There are a wide variety of special
privileges offered to the Diners Club cardholder. For instance, as a cardholder you
can set your own spending limit. Besides, the card has its own merchant
establishment tie-ups and does not depend on the network of MasterCard or Visa. •
However, since this card is typically meant for high-income group categories, it
may not be acceptable at many outlets. It would be a good idea to check whether a
member establishment does accept the card or not in advance.

Global card
Global cards allow you the flexibility and convenience of using a credit card rather
than cash or travellers cheque while travelling abroad for either business or
personal reasons.

Co-branded card
Co-branded cards are credit cards issued by card companies that have tied up with
a popular brand for the purpose of offering certain exclusive benefits to the

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consumer. A debit card with a difference. For example, the Citi-Times card gives
you all the benefits of a Citibank credit card along with a special discount on
Times Music cassettes, free entry to Times Music events, etc.

Master card & Visa

MasterCard and Visa are global non-profit organizations dedicated to promote the
growth of the card business across the world.They have built a vast network of
merchant establishments so that customers worldwide may use their respective
credit cards to make various purchases.

Smart card
A smart card contains an electronic chip which is used to store cash. This is most
useful when you have to pay for small purchases, for example bus fares and
coffee. No identification, signature or payment authorization is required for using
this card. The exact amount of purchase is deducted from the smart card during
payment and is collected by smart card reading machines. No change is given.
Currently this product is available only in very developed countries like the United
States and is being used only sporadically in India.

Photo card
If your photograph is imprinted on a card, then you have what is known as a photo
card. Doing this helps identify the user of the credit card and is therefore
considered safer. Besides, in many cases, your photo card can function as your
identity card as well.

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 CHAPTER II: RESEARCH METHODOLOGY

Primary Data: Data which has not been previously published i.e. the data is
derived from a new or original research study & collected directly from first hand
sources by means of surveys observation or experimentation is known as Primary
Data.

Secondary Data: Data, which has already been collected, by someone or an

organization for some other purpose or research study is known as Secondary
Data.

Research
Methodology

Secondary
Primary Data
Data

Books Newspapers Internet

Method of Data Collection:

Secondary Data: Secondary Data was collected from various sources such as
books, internet and newspapers.

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II.1.2 OBJECTIVE OF THE STUDY

 To study the concept of Plastic Money.

 To study different types of Plastic Money.

 To analyze the awareness among people and society regarding Plastic

Money.

 To prevent online and offline frauds in banking.

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 CHAPTER III: REVIEW OF LITERATURE

Many empirical studies have been conducted on the subject of ‘Plastic Money’ in
India and abroad. The major emphasis of research has been on various issues like
frauds, security, usage pattern, new method of e-payment, etc. The previous work
done on plastic money needs perusal. It has been reviewed to indicate in a general
way the type of work done on this subject in India. It is expected that the critical
examination of the studies would give focus to our problem and help to indicate the
areas which have remained neglected at the hands of the researchers. From the
review of literature, it was found that hardly there was a study which examined the
perception of both users and traders on the usage of plastic money. Also, many
studies concentrated on individual cards, for instance, credit or debit card and
neglected the joint effect and new innovative cards like smart card, charge card and
check card. In this study, an attempt is made to include all types of cards in the
analysis.

Handelsman and Munson (1989), “Switching behaviours from credit card to cash
payment among ethnically diverse retail customers” shows that the credit card sales
constitute an important revenue source for many retailers. Their ever increasing use
and evaluation into other forms, such as debit and electron cards, demands that
retailers gain a more complete understanding of how they are used by diverse
consumer segments. Particularly needed is a better understating of the propensity to
switch over from credit card to cash payment and the incentive required to initiate
switching. In view of the cost to the retailer of administering credit card payment
systems, the retailer’s overall profit position may be enhanced by converting a
larger proportion of credit card sales to cash sales. Four aspects of credit card usage
and switching ethnicities are investigated, propensity to switch over from credit
card to cash payment at various levels of monetary incentive, the effect of product
price on propensity to switch, the frequency of credit card usage, and the preferred
method of payment of credit card balances (installment versus full payment).
Several significant differences are shown among the three ethnic groups studied
(Anglo-American, Chinese-American and his panic-American) in these usage

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behaviours such differences might even be Review of Literature 32 extended to
international comparisons involving consumers domiciled in different countries.

Barker (1992) in his study, Globalization of credit card usage: The case of a
developing economy” investigate the attitude of Turkish consumers towards credit
cards, and the approach of card issuers by surveying two samples of 200 card
holders and non-holders. The better educated, middle aged members of the upper
middle class seem to be the prime target; the most important reasons for using a
credit card were “case of payment”, followed by “risk of carrying cash”, Non
holders do not carry credit cards because they do not know much about it; informal
sources of information appear to be more influential than mass media advertising in
penetrating the market; proposes that the usage and the administration of credit
cards are influenced very much by the infrastructure of the country and hence,
credit card companies have to modify their marketing and administrative
procedures rather than following a standardized approach.

Natarajan and Manohar (1993) “Credit Cards–an Analysis”. A study has been
attempted to know that to what extent the credit cards are utilized by the
cardholders and the factors influencing the utilization of credit cards. The study is
confined to cards issued by the Canara Bank. A random sampling technique is used
to collect the data. Ten components i.e. numbers of purchases, shops, percentage of
purchases, place, frequency, type of product, type of services, cash withdrawal
facilities, add on facility, insurance schemes are identified and used for the
measurement. Chi square test has been conducted to know the level of utilization.
For this, both personal and nonpersonal factors also have been taken into
consideration. Chi square test reveals that sex, age, educational qualification of card
holders has no relationship with utilization of Can Card. While occupation, income,
employment status of spouse, mode of getting card has relationship with utilization
of Can Card.

Vora and Gidwani (1993), “Plastic at a premium” show the usage facilities and
varieties of cards. The research shows that credit card is extremely useful to those
people who use it as to increase their purchasing power through the plastic card.

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Different cards provide the different packages to attract the customers like
teleticketing, discounts, insurance coverage and provide reward points etc.
According to Review of Literature 33 author, the card holders market has a
potential to grow to 7 million, if all tax paying citizens are taken into account. But
these manful efforts at upgrading services can only have a limited impact as long as
the Indian customer remains credit shy. For this, they have to change their spending
habits and keep their card active, so that a piece of plastic becomes a premium card
in an effective way.

Nash and Sinkey (1997), On competition, Risk, and Hidden Assets in the Market
for Bank Credit Cards” show that the market for credit cards has been the subject of
recent attention and controversy because of “High” profits earned on credit cards
and substantial premiums on the resale of credit card receivable. This paper
estimates risk-return profiles for credit card banks and explores the role of
intangible assets in determining resale premiums on credit card receivable. In
addition, the effect on resale market of securitization and the opportunity cost of
acquiring new accounts are analyzed. Using alternative measure of risk and
alternative control groups, authors find, for the year 1989 to 1995, that Credit-Card
banks earned significantly higher return on assets but that these returns were
associated with greater risk-taking.

Black and Morgan (1998), “Risk and democratization of credit cards”. Research
paper show the dramatic rise in credit card charge-offs in the midst of a vigorous
expansion suggest that bank card borrowers have become inherently riskier. This
paper investigates how the mix of credit card borrowers has changed in recent
years, and how those changes affect delinquency risk. The new card holders seem
riskier along several dimensions. They tend to earn less, and as a result, they owe
relative to income. This rise in debt burden almost certainly contributed to the rise
in charge offs, since debt burdens are a key determinant of delinquency risk.
Cardholders are also more likely to work at relatively unskilled blue collar jobs.
This occupation shift may also have contributed to the rise in charge-offs, since
delinquency rates are higher in those occupations, perhaps income is more cyclical.

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 CHAPTER IV: CONCEPTUAL FRAMEWORK

A. SECONDARY DATA
IV. DEFINITION

A slang phrase for credit cards, especially when such cards used to make purchases.
The "plastic" portion of this term refers to the plastic construction of credit cards, as
opposed to paper and metal of currency. The "money" portion is an erroneous
reference to credit cards as a form of money, which they are not. Although credit
cards do facilitate transactions, because they are a liability rather than an asset, they
are not money and not part of the economy's money supply.

IV.1. CREDIT CARD

IV.1.1 INTRODUCTION :

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 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.

Usage of the term "credit card" to imply a credit card account is a metonym. When
a purchase is made the user would indicate consent to pay by signing a receipt
with a record of the card details and indicating the amount to be paid. Issuer agrees
to pay the merchant and the credit card user agrees to pay the card issuer.

In other words, A credit card can be viewed as a payment mechanism which

enables the holder of the card to purchase goods (or services) without parting with
immediate cash and make a one-time payment at the end of a specified period

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(known as the billing cycle which is usually a month) with a provision for
spreading this payment over several easy instalments.

Again this card will permit the card holder to withdraw cash from an ATM, and a
credit card will allow the user to purchase goods and services directly, but unlike a
Cash Card the money is basically a high interest loan to the card holder, although
the card holder can avoid any interest charges by paying the balance off in full
each month.

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.

The Credit Card is built around the revolving credit concept. The card carries a
preset limit for spending which can be utilized by the cardholder during the
specified period. At the end of the month, the holder needs to pay about 5 to 10
percent of the outstanding value of purchases and liquidate the balance in easy
installments over the next few months.

IV.1.2.TECHNICAL SPECIFICATIONS :

The size of most credit cards is 85.60 mm × 53.98 mm (3.370 in × 2.125 in) and
rounded corners with a radius of 2.88–3.48 mm, conforming to the ISO/IEC 7810
ID-1 standard, the same size as ATM cards and other payment cards, such as debit
cards.

Credit cards have a printed or embossed bank card number complying with the
ISO/IEC 7812 numbering standard. The card number's prefix, called the Bank
Identification Number, is the sequence of digits at the beginning of the number

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that determine the bank to which a credit card number belongs. This is the first six
digits for MasterCard and Visa cards. The next nine digits are the individual
account number, and the final digit is a validity check code.

Both of these standards are maintained and further developed by ISO/IEC JTC
1/SC 17/WG 1. Credit cards have a magnetic stripe conforming to the ISO/IEC
7813. Many modern credit cards have a computer chip embedded in them as a
security feature.

In addition to the main credit card number, credit cards also carry issue and
expiration dates (given to the nearest month), as well as extra codes such as issue
numbers and security codes. Not all credit cards have the same sets of extra codes
nor do they use the same number of digits.

IV.1.3. BASIC TERMINOLOGIES

The balance outstanding at the end of a month carries a rate of interest of 2 percent
to 3 percent per month.

Parties involved:
Cardholder: The holder of the card used to make a purchase; the consumer.

Card-issuing bank: The financial institution or other organization that issued the
credit card to the cardholder.

Acquiring bank: The financial institution accepting payment for the products or
services on behalf of the merchant.

Merchant account: This could refer to the acquiring bank or the independent
sales organization, but in general is the organization that the merchant deals with.

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Credit Card association: An association of card-issuing banks such as Discover,
Visa, MasterCard, American Express, etc. that set transaction terms for merchants,
card- issuing banks, and acquiring banks.

Transaction network: The system that implements the mechanics of the

electronic transactions. May be operated by an independent company, and one
company may operate multiple networks.

Affinity partner: Some institutions lend their names to an issuer to attract

customers that have a strong relationship with that institution, and get paid a fee or
a percentage of the balance for each card issued using their name.

Insurance providers: Insurers underwriting various insurance protections offered

as credit card perks.

IV.1.5 ADVANTAGES & DISADVANTAGES OF CREDIT CARD

ADVANTAGES OF CREDIT CARD

The benefits of credit card can be grouped as follows:

(A)BENEFITS TO THE BANK

a) A credit card is an integral part of banks major services these days. The credit
card provides the following advantages to the bank: the system provides an
opportunity to the bank to attract new potential costumers.

b) To get new customers the bank has to employee special trained staff. This gives
the bank an opportunity to find the latent talent from among existing staff that
would have been otherwise wasted.

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c) The more important function of a credit card, however, is simply to yield direct
profit for the bank. There is a scope and a potential for a better profitability out of
income /commission earned from the traders turn over.

d) This also provides additional customer services to the existing clients. It

enhancesthe customer satisfaction.

e) More use by the car holder and consequently the growth of banking habits in
general.

(B) BENEFITS TO CARD HOLDER

The principal benefits to a card holder are:

a) He can purchase goods and services at a large number of outlets without cash or
cheque. The card is useful in emergency, and can save embarrassment.

b) The risk factor of carrying and storing cash is avoided. It is convenient for him
to carry credit card and he has trouble free travel and may purchase his without
carrying cash or cheque.

c) Months purchases can be settled with a single remittance, thus, tending to

reduce bank and handling charges.

d) The card holder has the period of free credit usually between 30-50 days of
purchase.

e) Cash can usually be obtained with the card, either on card account or by using it
as identification when encasings a cheque at the bank.

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(C) BENEFITS TO THE MERCHANT ESTABLISHMENT

The principal benefits offer credit card to the retailer is :

a)This will carry prestigious weight to the outlets.

b) Increases in sale because of increased purchasing power of the cardholder due

to unbilled credit available to the card holder.

c) The retailers gain from the impulse buying and trading up the tendency to buy
the bigger or better article.

d) Credit card ensures timely and certainly of payments.

e) Suppliers/sellers no longer have to send reminders of outstanding debits.

IV.1.4. DISADVANTAGES OF CREDIT CARD

The following are the common disadvantages of the credit card:

a) Some credit card transactions take longer time than cash transactions because of
various formalities.

b) The customer tends to overspend out of immerse happiness.

c) Discounts and rebates can rarely be obtained.

d) The cardholder is responsible for charges due to loss or theft of the card and the
bank may not be party for loss due to fraud or collusion of staff, etc.

e) Customers may be denied cash discount for payment through card.

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IV.1.6. USAGE

A credit card issuing company, such as a bank or credit union, enters into
agreements with merchants for them to accept their credit cards. Merchants often
advertise which cards they accept by displaying acceptance marks – generally
derived from logos – or this may be communicated in signage in the establishment
or in company material (e.g., a restaurant's menu may indicate which credit cards
are accepted). Merchants may also communicate this orally, as in "We take
(brands X, Y, and Z)" or "We don't take credit cards".

The credit card issuer issues a credit card to a customer at the time or after an
account has been approved by the credit provider, which need not be the same
entity as the card issuer. The cardholders can then use it to make purchases at
merchants accepting that card. When a purchase is made, the cardholder agrees to
pay the card issuer. 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). Also, many merchants now accept
verbal authorizations via telephone and authorization using the Internet, known as
a card not present transaction (CNP).

IV.1.7 INTEREST CHARGES

Each month, the cardholder is sent a statement indicating the purchases made with
the card, any outstanding fees, and the total amount owed. In the US, after
receiving the statement, the cardholder may dispute any charges that he or she
thinks are incorrect. The Fair Credit Billing Act gives details of the US
regulations. The cardholder must pay a defined minimum portion of the amount
owed by a due date, or may choose to pay a higher amount. The credit issuer
charges interest on the unpaid balance if the billed amount is not paid in full
(typically at a much higher rate than most other forms of debt).

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For example, if a user had a $1,000 transaction and repaid it in full within this
grace period, there would be no interest charged. If, however, even $1.00 of the
total amount remained unpaid, interest would be charged on the $1,000 from the
date of purchase until the payment is received. The precise manner in which
interest is charged is usually detailed in a cardholder agreement which may be
summarized on the back of the monthly statement. The general calculation formula
most financial institutions use to determine the amount of interest to be charged is
(APR/100 x ADB)/365 x number of days revolved. Take the annual percentage
rate (APR) and divide by 100 then multiply to the amount of the average daily
balance (ADB). Divide the result by 365 and then take this total and multiply by
the total number of days the amount revolved before payment was made on the
account..

IV.1.8 GRACE PERIOD

A credit card's grace period is the time the cardholder has to pay the balance
before interest is assessed on the outstanding balance. Grace periods may vary, but
usually range from 20 to 55 days depending on the type of credit card and the
issuing bank. Some policies allow for reinstatement after certain conditions are
met.

Usually, if a cardholder is late paying the balance, finance charges will be

calculated and the grace period does not apply. Finance charges incurred depend
on the grace period and balance; with most credit cards there is no grace period if
there is any outstanding balance from the previous billing cycle or statement (i.e.
interest is applied on both the previous balance and new transactions). However,
there are some credit cards that will only apply finance charge on the previous or
old balance, excluding new transactions.

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IV.1.9 TYPES OF CREDIT CARDS

1. BALANCE TRANSFER CARDS:

They are a type of temporary low-interest card that is meant to help you
consolidate your debt. They work this way: if you have several credit cards with a
balance, you can get a balance transfer card. You then transfer all your credit card
debt onto the new card and work to pay it off. Since the new card has a low
interest rate, you can quickly repay your bills. If you are in debt, a balance transfer
card can be a great way to get out of debt. It offers the convenience of one bill and
low rates. However, some cards have high fees.

Also, if you run up your other cards after consolidating your debts or if you are
unable to pay off your new card in the limited time before the low interest rate
increases, you may find yourself even more in debt than before.

2. REWARDS CREDIT CARDS:

They offer you points, rewards, or bonuses for every cash purchase made with
your credit card over time. As you accumulate rewards or points, you can redeem
your bonus for entertainment events, purchases, travel, and other fun prizes. Some
cards even offer customers extra automatic-enter sweepstakes and draws. Each
time you use your card, you are entered into a draw to win specific prizes. These
types of cards are really a marketing tool for card companies

Companies know that customers love rewards and prizes and so offer these
enticements to lure customers. The major advantage of these cards is that they can
help you get more cash value for your money. They can also be fun and rewarding
for almost any credit card customer.

3. CASH BACK CREDIT CARDS:

Cash back credit cards give you money rewards. When you make a purchase with
this type of credit card, you get some points based on the amount of money you

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have spent with your credit card. When you accumulate enough points, you get
cash back. On most cards, you can get back about 1% of your total purchases.
These cards are great for those who are budget-conscious as they give you some
money back from your purchases. However, there are several drawbacks to these
types of cards. Some cards have low cash- back percentage rates. Some charge
high fees or have limits on how much money you can get back each year

4. AIRLINE CREDIT CARDS:

This type of card allows you to accumulate frequent flyer points on all your credit
card purchases. If you travel a lot or love to travel, this card can help you
accumulate points for a free trip or for a discount ticket. In many cases, these cards
are great because they allow you to gather points for every purchase. However,
these cards can also charge high fees. In some cases, your points will expire if you
do not use them within a specified time. Worse, some airline credit cards make use
of a point system that is not very user- friendly. You may have to slowly
accumulate an enormous amount of points to qualify for a trip. If you do not love
to travel and if you do not use your Credit card a lot, then, your ability to get
rewards you like may be very limited.

5. CREDIT CARDS FOR BAD CREDITORS:

Bad credit credit cards are designed for people with poor credit histories. These
card generally have very low credit limits and charge extra fees. This is because
they are designed for people who are considered far less likely to repay their debts.
If you have a bad credit rating, these types of credit cards can be a great way to
rebuild your credit history. These cards can also allow you to have credit even if
you would be rejected for most other cards due to your credit history. Student
Credit Cards Student credit cards are cards meant to attract college and university
students. These cards often offer sign-up bonuses for students. They are also easier
to apply for, since credit card companies recognize that students have much
shorter credit histories than the average customer.

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IV.1.10. TYPES OF CREDIT CARDS OFFERRED BY INDIAN
BANKS

Silver credit cards rank lowest among the metal named cards, and, because of
lower prestige to gold and platinum cards are commonly knowns as basic and
standard cards. Silver credit cards come with advantages such as lower annual
membership fees if there is any, and a lower threshold salary which banks use to
evaluate your application in case you should apply. Silver credit cards will provide
you with almost the same credit limit as other cards provided you have a good
credit history. You can also avail of 0% interest balance transfer schemes which
are made available for a period of 6-9 months for silver card holders.

There are also some disadvantages to using silver credit cards. One would be the
lower cash advance limits, less rewards and promotional packages, and less travel
perks compared to gold and platinum cards. HDFC Bank, ICICI offer silver credit
cards through their HDFC Bank Silver cards and ICICI Sterling Silver credit card
Gold and Platinum Cards Gold and platinum credit cards are a status symbol for
any credit card holder, bringing prestige since getting gold and platinum cards
usually require that you have good cr rating and a higher income levels. Gold and
platinum cards offer higher limit for cash advance withdrawals and sometimes can
provide higher credit limits as compared to standard or silver cards.

Some popular gold and platinum cards available are the American Express Gold
card, and the ICICI Solid Gold Credit Card. It is not possible to cover them the
exact offerings of these cards but I will highly advice you to check all these
websites of the banks to get all the info about the credit cards they are offering.
Also try to talk to your friends who are having credit cards to get more info.

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Types of Credit Cards offered By Indian Banks

Credit Card Data Credit Card is either Visa or MasterCard which is the Most
popular and in some instance American Express.

The Top 10 Credit Card Issuers in India are as follows,

1. ICICI Bank
2. HDFC Bank
3. SBI Cards
4. Citibank
5. HSBC Cards
6. ABN Amro
7. Axis Bank
8. Deutsche Bank
9. American Express
(Data Courtesy - The Reserve Bank of India )

IV.2.1. DETERMINANTS TO CARDHOLDERS

1.HIGH INTEREST AND BANKRUPTCY

Low introductory credit card rates are limited to a fixed term, usually between 6
and 12 months, after which a higher rate is charged. As all credit cards charge fees
and interest, some customers become so indebted to their credit card provider that
they are driven to bankruptcy. Some credit cards often levy a rate of 20 to 30
percent after a payment is missed. In other cases, a fixed charge is levied without
change to the interest rate. In some cases universal default may apply: the high
default rate is applied to a card in good standing by missing a payment on an
unrelated account from the same provider. This can lead to a snowball effect in

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which the consumer is drowned by unexpectedly high interest rates. Further, most
card holder agreements enable the issuer to arbitrarily raise the interest rate for any
reason they see fit. First Premier Bank at one point offered a credit card with a
79.9% interest rate. However, they discontinued this card in February 2011
because of persistent defaults.

WEAKNESS SELF REGULATION

Several studies have shown that consumers are likely to spend more money when
they pay by credit card. Researchers suggest that when people pay using credit
cards, they do not experience the abstract pain of payment. Furthermore,
researchers have found that using credit cards can increase consumption of
unhealthy food.

IV.2.2. DETERMINANTS TO SOCIETY

1. INFLATED PRICING FOR ALL CONSUMERS

Merchants that accept credit cards must pay interchange fees and discount fees on
all credit-card transactions. In some cases merchants are barred by their credit
agreements from passing these fees directly to credit card customers, or from
setting a minimum transaction amount (no longer prohibited in the United States,
United Kingdom or Australia). The result is that merchants are induced to charge
all customers (including those who do not use credit cards) higher prices to cover
the fees on credit card transactions. The inducement can be strong because the
merchant's fee is a percentage of the sale price, which has a disproportionate effect
on the profitability of businesses that have predominantly credit card transactions,
unless compensated for by raising prices generally. In the United States in 2008
credit card companies collected a total of $48 billion in interchange fees, or an
average of $427 per family, with an average fee rate of about 2% per transaction.

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 2. BENEFITS TO MERCHANTS
An example of street markets accepting credit cards. Most simply display the
acceptance marks (stylized logos, shown in the upper-left corner of the sign) of all
the cards they accept.

For merchants, a credit card transaction is often more secure than other forms of
payment, such as cheques, because the issuing bank commits to pay the merchant
the moment the transaction is authorized, regardless of whether the consumer
defaults on the credit card payment (except for legitimate disputes, which are
discussed below, and can result in charges back to the merchant). In most cases,
cards are even more secure than cash, because they discourage theft by the
merchant's employees and reduce the amount of cash on the premises. Finally,
credit cards reduce the back office expense of processing checks/cash and
transporting them to the bank.

3. COSTS TO MERCHANTS
Merchants are charged several fees for accepting credit cards. The merchant is
usually charged a commission of around 1 to 4 percent of the value of each
transaction paid for by credit card. The merchant may also pay a variable charge,
called a merchant discount rate, for each transaction. In some instances of very
low-value transactions, use of credit cards will significantly reduce the profit
margin or cause the merchant to lose money on the transaction. Merchants with
very low average transaction prices or very high average transaction prices are
more averse to accepting credit cards. In some cases merchants may charge users a
"credit card supplement" (or surcharge), either a fixed amount or a percentage, for
payment by credit card.

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IV.2.3. SECURITY

Credit card security relies on the physical security of the plastic card as well as the
privacy of the credit card number. Therefore, whenever a person other than the
card owner has access to the card or its number, security is potentially
compromised. Once, merchants would often accept credit card numbers without
additional verification for mail order purchases. It's now common practice to only
ship to confirmed addresses as a security measure to minimize fraudulent
purchases. Some merchants will accept a credit card number for in-store
purchases, whereupon access to the number allows easy fraud, but many require
the card itself to be present, and require a signature. A lost or stolen card can be
cancelled, and if this is done quickly, will greatly limit the fraud that can take
place in this way. European banks can require a cardholder's security PIN be
entered for in-person purchases with the card.

The Payment Card Industry Data Security Standard (PCI DSS) is the security
standard issued by the Payment Card Industry Security Standards Council (PCI
SSC). This data security standard is used by acquiring banks to impose cardholder
data security measures upon their merchants.

The goal of the credit card companies is not to eliminate fraud, but to "reduce it to
manageable levels". This implies that fraud prevention measures will be used only
if their cost are lower than the potential gains from fraud reduction, whereas high-
cost low- return measures will not be used – as would be expected from
organizations whose goal is profit maximization.

CODE 10

Code 10 calls are made when merchants are suspicious about accepting a credit
card. The operator then asks the merchant a series of YES or NO questions to find
out whether the merchant is suspicious of the card or the cardholder. The merchant

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may be asked to retain the card if it is safe to do so. The merchant may receive a
reward for returning a confiscated card to the issuing bank, especially if an arrest
is made.

IV.2.4 COSTS

Credit card issuers (banks) have several types of costs:

1. INTEREST EXPENSES

Banks generally borrow the money they then lend to their customers. As they
receive very low-interest loans from other firms, they may borrow as much as their
customers require, while lending their capital to other borrowers at higher rates. If
the card issuer charges 15% on money lent to users, and it costs 5% to borrow the
money to lend, and the balance sits with the cardholder for a year, the issuer earns
10% on the loan. This 10% difference is the "net interest spread" and the 5% is the
"interest expense".

2. OPERATING COSTS

This is the cost of running the credit card portfolio, including everything from
paying the executives who run the company to printing the plastics, to mailing the
statements, to running the computers that keep track of every cardholder's balance,
to taking the many phone calls which cardholders place to their issuer, to
protecting the customers from fraud rings. Depending on the issuer, marketing
programs are also a significant portion of expenses.

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 3. CHARGE OFFs

When a cardholder becomes severely delinquent on a debt (often at the point of six
months without payment), the creditor may declare the debt to be a charge-off. It
will then be listed as such on the debtor's credit bureau reports. (Equifax, for
instance, lists "R9" in the "status" column to denote a charge-off.)

A charge-off is considered to be "written off as uncollectable". To banks, bad

debts an fraud are part of the cost of doing business. However, the debt is still
legally valid, and the creditor can attempt to collect the full amount for the time
periods permitted under state law, which is usually three to seven years.

IV.2.5. REWARDS

Many credit card customers receive rewards, such as frequent flyer points, gift
certificates, or cash back as an incentive to use the card. Rewards are generally
tied to purchasing an item or service on the card, which may or may not include
balance transfers, cash advances, or other special uses. Depending on the type of
card, rewards will generally cost the issuer between 0.25% and 2.0% of the spread.
Networks such as Visa or MasterCard have increased their fees to allow issuers to
fund their rewards system. Some issuers discourage redemption by forcing the
cardholder to call customer service for rewards.

On their servicing website, redeeming awards is usually a feature that is very well
hidden by the issuers. With a fractured and competitive environment, rewards
points cut dramatically into an issuer's bottom line, and rewards points and related
incentives must be carefully managed to ensure a profitable portfolio. Unlike
unused gift cards, in whose case the breakage in certain US states goes to the
state's treasury, unredeemed credit card points are retained by the issuer.

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IV.2.6. FRAUDS

In relative numbers the values lost in bank card fraud are minor, calculated in 2006
at 7 cents per 100 dollars worth of transactions. In 2004, in the UK, the cost of
fraud was over £500 million.. When a card is stolen, or an unauthorized duplicate
made, most card issuers will refund some or all of the charges that the customer
has received for things they did not buy. These refunds will, in some cases, be at
the expense of the merchant, especially in mail order cases where the merchant
cannot claim sight of the card. In several countries, merchants will lose the money
if no ID card was asked for, therefore merchants usually require ID card in these
countries.

Employees that are specialized in doing fraud monitoring and investigation are
often placed in Risk Management, Fraud and Authorization, or Cardsand
Unsecured Business. Fraud monitoring emphasizes minimizing fraud losses while
making an attempt to track down those responsible and contain the situation.
Credit card fraud is a major white collar crime that has been around for many
decades, even with the advent of the chip based card (EMV) that was put into
practice in some countries to prevent cases such as these. Even with the
implementation of such measures, credit card fraud continues to be a problem.

IV.2.7. REVENUES

Offsetting the costs are the following revenues:

1. INTERCHANGE FEE
In addition to fees paid by the card holder, merchants must also pay interchange
fees to the card-issuing bank and the card association. For a typical credit card
issuer, interchange fee revenues may represent about a quarter of total revenues.

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These fees are typically from 1 to 6 percent of each sale, but will vary not only
from merchant to merchant (large merchants can negotiate lower rates), but also
from card to card, with business cards and rewards cards generally costing the
merchants more to process. The interchange fee that applies to a particular
transaction is also affected by many other variables.

2. INTEREST ON OUTSTANDING CHARGES

Interest charges vary widely from card issuer to card issuer. Often, there are
"teaser" rates in effect for initial periods of time (as low as zero percent for, say,
six months), whereas regular rates can be as high as 40 percent. In the U.S. there is
no federal limit on the interest or late fees credit card issuers can charge; the
interest rates are set by the states, with some states such as South Dakota, having
no ceiling on interest rates and fees, inviting some banks to establish their credit
card operations there. Other states, for example Delaware, have very weak usury
laws. The teaser rate no longer applies if the customer does not pay their bills on
time, and is replaced by a penalty interest rate (for example, 23.99%) that applies
retroactively.

3. FEES CHARGED TO CUSTOMERS

The major fees are for:
i.Late or overdue payments

ii. Charges that result in exceeding the credit limit on the card (whether
deliberately or by mistake), called over limit fees

iii. Returned cheque fees or payment processing fees (e.g. phone payment fee)

iv. Cash advances and convenience cheques (often 3% of the amount)

v. Transactions in a foreign currency (as much as 3% of the amount). A few

financial institutions do not charge a fee for this.

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vi.Membership fees (annual or monthly), sometimes a percentage of the credit
limit.

4.OVER LIMIT CHARGES

Consumers who keep their account in good order by always staying within their
credit limit, and always making at least the minimum monthly payment will see
interest as the biggest expense from their card provider. Those who are not so
careful and regularly surpass their credit limit or are late in making payments are
exposed to multiple charges that were typically as high as £25–35 until a ruling
from the Office of Fair Trading that they would presume charges over £12 to be
unfair which led the majority of card providers to reduce their fees to £12.

IV.3.1CREDIT CARDS IN ATMs

Many credit cards can also be used in an ATM to withdraw money against the
credit limit extended to the card, but many card issuers charge interest on cash
advances before they do so on purchases. The interest on cash advances is
commonly charged from the date the withdrawal is made, rather than the monthly
billing date. Many card issuers levy a commission for cash withdrawals, even if
the ATM belongs to the same bank as the card issuer. Merchants do not offer
cashback on credit card transactions because they would pay a percentage
commission of the additional cash amount to their bank or merchant services
provider, thereby making it uneconomical.

Discover is a notable exception to the above. A customer with a Discover card

may get up to $120 cash back if the merchant allows it. This amount is simply
added to the card holder's cost of the transaction and no extra fees are charged as
the transaction is not considered a cash advance.

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Many credit card companies will also, when applying payments to a card, do so,
for the matter at hand, at the end of a billing cycle, and apply those payments to
everything before cash advances. For this reason, many consumers have large cash
balances, which have no grace period and incur interest at a rate that is (usually)
higher than the purchase rate, and will carry those balances for years, even if they
pay off their statement balance each month.

IV.3.2 CREDIT CARDS AS FUNDING FOR

ENTREPREUNERS
Credit cards are a risky way for entrepreneurs to acquire capital for their start ups
when more conventional financing is unavailable. Len Bosack and Sandy Lerner
used personal credit card to start Cisco Systems. Larry Page and Sergey Brin's start
up of Google was financed by credit cards to buy the necessary computers and
office equipment, more specifically "a terabyte of hard disks".

Similarly, filmmaker Robert Townsend financed part of Hollywood Shuffle using

credit cards. Director Kevin Smith funded Clerks in part by maxing out several
credit cards. Actor Richard Hatch also financed his production of Battlestar
Galactica: The Second Coming partly through his credit cards. Famed hedge fund
manager Bruce Kovner began his career (and, later on, his firm Caxton Associates)
in financial markets by borrowing from his credit card. UK entrepreneur James
Caan financed his first business using several credit cards.

IV.3.3 PROBLEMS

Travellers from the U.S. had encountered problems abroad because many
countries have introduced smart cards, but the U.S. had not. As of 2010, the U.S.
banking system had not updated the cards and associated readers in the U.S.,
stating that the costs were prohibitive. As of 2015, the smart cards had been
introduced and put into use in the United States. Other problems with credit cards

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have involved mis-sold policies on top of the products, such as the additional sold
policies which is still causing problems for clients in the UK.

IV.4 . DEBIT CARD

IV.4.1 INTRODUCTION

A debit card (also known as a bank card or check card) is a plastic card that
provides an alternative payment method to cash when making purchases.
Functionally, it can be called an electronic cheque, as the funds are withdrawn
directly from either the bank account or from the remaining balance on the card. In
some cases, the cards are designed exclusively for use on the Internet, and so there
is no physical card. In many countries the use of debit cards has become so
widespread that their volume of use has overtaken the cheque and, in some
instances, cash transactions.

Some cards may bear a stored value with which a payment is made, while most
relay a message to the cardholder's bank to withdraw funds from a payer's
designated bank account. In some cases, the primary account number is assigned
exclusively for use on the Internet and there is no physical card.

Unlike credit and charge cards, payments using a debit card are immediately
transferred from the cardholder's designated bank account, instead of them paying
the money back at a later date.

Debit cards usually also allow for instant withdrawal of cash, acting as the ATM
card for withdrawing cash. Merchants may also offer cashback facilities to
customers, where a customer can withdraw cash along with their purchase.

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IV.4.2 BENEFITS & FEATURES OF DEBIT CARDS

BENEFITS OF THE DEBIT CARD

• FREE WITH OUR BANK ACCOUNT Obtaining a debit card is easy. If we

qualify to open a bank account, we usually get a debit card, if our bank offers the
service.

• NO BACKGROUND CHECK When we are applying for a debit card, the bank
does not need to look into our credit history. All we need is the documentation to
open a bank, account, and money in our bank when we use our debit card.

• CASH WITHDRAWALS The customer can withdraw a minimum of Rs. 100/-

and a maximum Rs.10, 000/- per day

• CONVENIENCE : A Debit card fees us from carrying a lot of cash or a cheque

book. In case, we are an international traveller, we don’t need to stock up on
Traveller’s Cheques or cash. We can use our debit card to withdraw Cash from
over 500,000 ATMs around the world in over 100 countries. We can withdraw in
the local currency of the country we are in, limited only by the money we have
back home in our account, and Business Travel Quota (BTQ) limit arability.

• FAIR EXCHANGE If we return merchandise or cancel services paid for with a

Debit card, the transaction is treated as if it were made with cash or a check.
Customers usually get cash back for offline purchases; for on-line transactions, the
amount is credited to our account.

• STATEMENT OF ACCOUNT A statement of transactions can be obtained

from the customer’s branch. For example, a mini statement containing the last four

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transactions and balance can be obtained at a State Bank Group during the
working hours of the customer’s branch.

• BANKING CUM SHPPING CARD Your Debit card can be used as ATM card
at any ATM across the world, as well as for making purchase at merchant
locations. You can also withdraw cash from any of the 12000 ATMs in India.

WIDELY ACCEPTED, INTERNATIONALLY VALID

2. FEATURES OF DEBIT CARD

The following are features of Debit cards :

A) It is a combination of a Cheque and ATM card. Therefore, there are no fees for
using the ATM for cash withdrawal, or as a debit card for purchase, Carte Bleue in
France, EC electronic cash (formerly Eurocheque) in Germany, UnionPay in
China, RuPay in India and EFTPOS cards in Australia and New Zealand. The use
of a debit card system allows operators to package their product more effectively.

B) The Debit Card services in meant for withdrawals against the balance already
available in the designated account.

C) It is the card holder’s obligation to maintain sufficient balance in the designated

account to meet withdrawals and service charges.

D) A Debit card is more affordable than credit card. We just our bank account for
all our transactions. No credit period. Our bank account is debited immediately.

E) No credit check is required to get a Debit card.

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IV.4.3 TYPES OF TRANSACTIONS

There are currently three ways that debit card transactions are processed:

1. EFTPOS (also known as online debit or PIN debit),

2. offline debit (also known as signature debit) and

3. TheElectronic Purse Card System.

One physical card can include the functions of all three types, so that it can be
used in a number of different circumstances.

Although the four largest bank card issuers (American Express, Discover Card,
MasterCard, and Visa) all offer debit cards, there are many other types of debit
card, each accepted only within a particular country or region, for example Switch
(now: Maestro) and Solo in the United Kingdom, Interac in Canadamonitoring
customer spending.

IV.4.3.1 ONLINE DEBIT SYSTEM

Online debit cards require electronic authorization of every transaction and the
debits are reflected in the user’s account immediately. The transaction may be
additionally secured with the personal identification number (PIN) authentication
system; some online cards require such authentication for every transaction,
essentially becoming enhanced automatic teller machine (ATM) cards.

One difficulty with using online debit cards is the necessity of an electronic
authorization device at the point of sale (POS) and sometimes also a separate PIN-
pad to enter the PIN, although this is becoming commonplace for all card

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transactions in many countries. Overall, the online debit card is generally viewed
as superior to the offline debit card because of its more secure authentication
system and live status, which alleviates problems with processing lag on
transactions that may only issue online debit cards. Some on-line debit systems are
using the normal authentication processes of Internet banking to provide real-time
on-line debit transactions.

IV.4.3.2 OFFLINE DEBIT SYSTEM

Offline debit cards have the logos of major credit cards (for example, Visa or
MasterCard) or major debit cards (for example, Maestro in the United Kingdom
and other countries, but not the United States) and are used at the point of sale like
a credit card (with payer's signature). This type of debit card may be subject to a
daily limit, and/or a maximum limit equal to the current/checking account balance
from which it draws funds. Transactions conducted with offline debit cards require
2–3 days to be reflected on users’ account balances.

IV.4.3.3 PREPAID DEBIT CARD

Prepaid debit cards, also called reloadable debit cards or reload able prepaid
cards, are often used for recurring payments. The payer loads funds to the
cardholder's card account. Prepaid debit cards use either the offline debit system or
the online debit system to access these funds. Particularly for companies with a
large number of payment recipients abroad, prepaid debit cards allow the delivery
of international payments without the delays and fees associated with international
checks and bank transfers. Providers include Caxton FX prepaid cards, [Escape
prepaid cards and Travelex prepaid cards. [ Whereas, web-based services such as
stock photography websites (stockpot), outsourced services (odes), and affiliate
networks (Media Whiz) have all started offering prepaid debit cards for their
contributors/freelancers/vendors.

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IV.4.4. IMPACT OF GOVERNMET– PROVIDED BANK
ACCOUNT

In January 2016, the UK government introduced fee-free basic bank accounts for
all, having a significant impact on the prepaid industry, including the departure of
a number of firms.

IV.4.5. CONSUMER PROTECTION

Consumer protections vary, depending on the network used. Visa and MasterCard,
for instance, prohibit minimum and maximum purchase sizes, surcharges, and
arbitrary security procedures on the part of merchants. Merchants are usually
charged higher transaction fees for credit transactions, since debit network
transactions are less likely to be fraudulent. This may lead them to "steer"
customers to debit transactions. Consumers disputing charges may find it easier to
do so with a credit card, since the money will not immediately leave their control.
Fraudulent charges on a debit card can also cause problems with a checking
account because the money is withdrawn immediately and may thus result in an
overdraft or bounced checks. In some cases debit card-issuing banks will promptly
refund any disputed charges until the matter can be settled, and in some
jurisdictions the consumer liability for unauthorized charges is the same for both
debit and credit cards.

In some countries, like India and Sweden, the consumer protection is the same
regardless of the network used. Some banks set minimum and maximum purchase
sizes, mostly for online-only cards. However, this has nothing to do with the card
networks, but rather with the bank's judgement of the person's age and credit
records. Any fees that the customers have to pay to the bank are the same
regardless of whether the transaction is conducted as a credit or as a debit
transaction, so there is no advantage for the customers to choose one transaction
mode over another swiping.

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IV.4.6 FINANCIAL ACCESS

Debit cards and secured credit cards are popular among college students who have
not yet established a credit history. Debit cards may also be used by expatriated
workers to send money home to their families holding an affiliated debit card.

IV.5. CHARGE CARDS

With charge cards, the cardholder is required to pay the full balance shown on the
statement, which is usually issued monthly, by the payment due date. It is a form
of short-term loan to cover the cardholder's purchases, from the date of the
purchase and the payment due date, which may typically be up to 55 days. Interest
is usually not charged on charge cards and there is usually no limit on the total
amount that may be charged. If payment is not made in full, this may result in a
late payment fee, the possible restriction of future transactions, and perhaps the
cancellation of the card.

IV.6. FLEET CARD

A fleet card is used as a payment card, most commonly for gasoline, diesel and
other fuels at gas stations. Fleet cards can also be used to pay for vehicle
maintenance and expenses, at the discretion of the fleet owner or manager. The use
of a fleet card reduces the need to carry cash, thus increasing the security for fleet
drivers. The elimination of cash also helps to prevent fraudulent transactions at the
fleet owner's or manager's expense.

Fleet cards provide convenient and comprehensive reporting, enabling fleet

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owners/managers to receive real time reports and set purchase controls with their
cards, helping to keep them informed of all business related expenses.

IV.7. SMART CARD

Smart card used for health insurance in France. A smart card, chip card, or
integrated circuit card (ICC), is any pocket-sized card with embedded integrated
circuits which can process data. This implies that it can receive input which is
processed — by way of the ICC applications — and delivered as an output. There
are two broad categories of ICCs. Memory cards contain only non-volatile
memory storage components, and perhaps some specific security logic.
Microprocessor cards contain volatile memory and microprocessor components.
The card is made of plastic, generally PVC, but sometimes ABS. The card may
embed a hologram to avoid counterfeiting. Using smart cards is also a form of
strong security authentication for single sign-on within large companies and
organizations. EMV is the standard adopted by all major issuers of smart payment
cards.

IV.8. PROXIMITY CARDS

Proximity card (or prox card) is a generic name for contactless integrated circuit
devices used for security access or payment systems. It can refer to the older 125
kHz devices or the newer 13.56 MHz contactless RFID cards, most commonly
known as contactless smartcards.

Modern proximity cards are covered by the ISO/IEC 14443 (proximity card)
standard. There is also a related ISO/IEC 15693 (vicinity card) standard. Proximity
cards are powered by resonant energy transfer and have a range of 0-3 inches in
most instances. The user will usually be able to leave the card inside a wallet or
purse. The price of the cards is also low, usually US$2–$5, allowing them to be

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used in applications such as identification cards, keycards, payment cards and
public transit fare cards.

IV.9. RE-PROGRAMMABLE MAGNETIC STRIPE CARD

Re-programmable/dynamic magnetic stripe cards are standard sized transaction

cards that include a battery, a processor, and a means (inductive coupling or
otherwise)of sending a variable signal to a magnetic stripe reader. Re-
programmable stripe cards are often more secure than standard magnetic stripe
cards and can transmit information for multiple cardholder accounts.

IV.10. ATM CARD

IV.10.1 INTRODUCTION

An ATM card is any payment card issued by a financial institution that enables a
customer to access an automated teller machine (ATM) in order to perform
transactions such as deposits, cash withdrawals, obtaining account information,
etc. ATM cards are known by a variety of names such as bank card, MAC
(money access card), client card, key card or cash card, among others. Most
payment cards, such as debit and credit cards can also function as ATM cards,
although ATM-only cards are also available. Charge and proprietary cards cannot
be used as ATM cards. The use of a credit card to withdraw cash at an ATM is
treated differently to a POS transaction, usually attracting interest charges from the
date of the cash withdrawal. Interbank networks allow the use of ATM cards at
ATMs of private operators and financial institutions other than those of the
institution that issued the cards.

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IV.10.2 DIMENSIONS

The size of ATM cards is 85.60 mm × 53.98 mm (3.370 in × 2.125 in) and
rounded corners with a radius of 2.88–3.48 mm, in accordance with ISO/IEC 7810
, the same size as other payment cards, such as credit, debit and other cards. They
also have a printed or embossed bank card number conforming with the ISO/IEC
7812 numbering standard.

IV.10.3 ATM USES

All ATM machines, at a minimum, will permit cash withdrawals of customers of

the machine's owner (if a bank-operated machine) and for cards that are affiliated
with any ATM network the machine is also affiliated. They will report the amount
of the withdrawal and any fees charged by the machine on the receipt. Most banks
and credit unions will permit routine account-related banking transactions at the
bank's own ATM, including deposits, checking the balance of an account, and
transferring money between accounts. Some may provide additional services, such
as selling postage stamps.

IV.10.4 NON-ATM USES

Some ATM cards can also be used at a branch, as identification for in-person
transactions ability to use an ATM card for in-store EFTPOS purchases or refunds
is no longer allowed, however, if the ATM card is also a debit card, it may be used
for a pin-based debit transaction, or a non-pin-based credit-card transaction if the
merchant is affiliated with the credit or debit card network of the card's issuer.
Banks have long argued with merchants over the fees that can be charged by the
bank for such transactions. Despite the fact that ATM cards require a PIN for use,
banks have decided to permit the use of a non-PIN based card (debit or credit) for
all merchant transactions. For other types of transactions through telephone or

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online banking, this may be performed with an ATM card without in-person
authentication. This includes account balance inquiries, electronic bill payments,
or in some cases, online purchases .

IV.10.5. MISUSE

Due to increased illegal copies of cards with a magnetic stripe, the European
Payments Council established a Card Fraud Prevention Task Force in 2003 that
spawned a commitment to migrate all ATMs and POS applications to use a chip-
and-PIN solution until the end of 2010. The "SEPA for Cards" has completely
removed the magnetic stripe requirement from the former Maestro debit cards.

IV.11.RECHARGEABLE CALLING CARDS

IV.11.1 INTRODUCTION

A rechargeable calling card is a type of telephone card that the user can
"recharge" or "top up" by adding money when the balance gets below a nominated
amount. In reality the rechargeable calling card is a specialized form of a prepaid
or debit account. To use the phonecard, the user would call an access number
(which is usually a toll-free telephone number), enter the "card number" (also
called the PIN) and then dial the desired telephone number. The user could add
value to the card at the same time as making a call.

After transferring funds to the card company, the ID can be provided electronically
by email, by SMS, over the internet, a coupon printed by a cash register at a store,
or any other way. Also, as the card balance is actually recorded on the card
company's database, topping up can be effected in any manner that funds can be
transferred to the company.

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IV.11.2 RECHARGING

Cards can be recharged or topped up in a variety of ways:

• Credit card
• Cash at convenience stores/corner shops
• Swipe card machines
• Internet
• Coupons
• Bank account
• Debit card

IV.11.3 A CARDLESS FUTURE

As international travel became cheaper and more people started to travel the
international phone card became an essential part of a travelers` itinerary,
previously customers would have to carry one or more cards when traveling and
the cards could only be used in certain phones. Phone companies such as Pure
Minutes began to release "cardless" phone cards, instead of being issued with a
real card, the user will be given a list of access numbers for various countries and a
pin which they can use to log into their account. This allowed people to call from
any phone in any country and still be able to top-up their credit.

IV.12. STORE –VALUE CARD

IV.12.1 INTRODUCTION

A stored-value card is a payments card with a monetary value stored on the card
itself, not in an external account maintained by a financial institution. Stored-value
cards differ from debit cards, where money is on deposit with the issuer, and credit
cards which are subject to credit limits set by the issuer. Another difference

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between stored-value cards and debit and credit cards is that debit and credit cards
are usually issued in the name of individual account holders, while stored-value
cards may be anonymous, as in the case of gift cards. Stored-value cards are
prepaid money cards and may be disposed when the value is used, or the card
value may be topped up, as in the case of telephone calling cards or when used as a
fare card.

The term closed-loop means the funds and or data are metaphorically 'physically'
stored on the token or card, in the form of binary-coded data. In the case of Bitcoin
and other crypto currencies, this information is stored in the network on a so called
blockchain and maintained by the network itself. With prepaid cards the data is
maintained on the card issuer's computers. The value can be accessed using a
magnetic stripe embedded in the card, on which the card number is encoded; using
radio-frequency identification (RFID); or by entering a code number, printed on
the card, into a telephone or other numeric keypad or in the case of crypto
currency, by signing over the value to another party. In contrast, open-loop stored
value cards are credit and debit payment cards such as MasterCard Contactless,
Visa payWave, American Express ExpressPay and Discover Zip.

IV.12.2. USES

A VENDING MACHINE

Stored-value cards are most commonly used for low-value transactions, such as
transit system farecards, telephone prepaid calling cards, cafeterias, or for
micropayments in shops or vending machines. They also have an advantage over
most other payment cards in that when making, say, a purchase telecommunication
facilities are not needed, which may be important in situations where the
availability or reliability of these facilities are uncertain or costly, especially for
low-value transactions. A benefit to the merchant is that bank transaction fees are
not incurred as the transaction is processed offline and there need not be a

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reference to the bank for processing. A limitation is that these cards cannot be used
for online, telephone, mail order and other "card not present transactions". The
German Geldkarte and the Austrian Quick card can also be used to validate a
customer's age at cigarette vending machines.

IV.13.PREPAID CARDS

IV.13.1 CLOSED SYSTEM PREPAID CARDS

Closed system prepaid cards are cards issued by a merchant and may only be
redeemed for purchases from the merchant. They are typically of fixed amounts
and are commonly known as merchant gift cards or store cards. These cards are
typically purchased to be used as gifts, and are increasingly replacing the
traditional paper gift certificate. Generally, few if any laws govern these types of
cards. Card issuers or sellers are not required to obtain a license. Closed system
prepaid cards are not subject to the USA PATRIOT Act, as they generally cannot
identify a customer.

As debts owed to consumers who purchased the card, these purchases remain on
the books of a merchant as a liability rather than an asset. Consequently, gift
certificates and merchant gift cards have fallen under state escheat or abandoned
property laws (APL). However, the emergence of closed system prepaid cards has
blurred the applicability of APL. North Carolina and Illinois have excluded these
types of cards from APL provided the card has no expiration date or a service fee.

IV.13.2 SEMI-CLOSED SYSTEM PREPAID CARDS

Semi-closed system prepaid cards are similar to closed system prepaid cards.
However, cardholders are permitted to redeem the cards at multiple merchants
within a geographic area. These types of cards are issued by a third party, rather

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than the retailer who accepts the card. Examples include university cards and mall
gift cards. The laws governing these types of cards are unsettled. Depending on the
state, the issuer may or may not be required to have a money transmitter license or
other similar license.

Under 18 USC section 1960, it is a crime for an issuer to conduct a money

transmitting business without a license. Cardholders generally suffer from the
same redressability problems that closed system card holders suffer. It is unclear
whether or not Chapters 7 and 11 of the Bankruptcy code are applicable to these
types of cards.

MONEY LAUNDERING

It is common for countries to place limits on how much currency may be taken out
of or brought into a country. However, these limits generally do not apply to
money leaving a country in non-cash forms such as on stored-value cards. There is
concern that stored- value cards can be used for money laundering, that is, moving
offshore funds derived from criminal activities such as drug trafficking. There are
reports of these cards being used by Mexican drug cartels to transfer money across
borders.

For example, in the United States, it is legal for anyone to enter or leave the
country with money that is stored on cards, and (unlike cash in high amounts) does
not have to be reported to customs or any other authority. Some members of the
U.S. Congress are considering creating laws that would require travellers crossing,
entering, or leaving the country to report these cards. The Financial Crimes
Enforcement Network of the U.S. Department of the Treasury has published a
notice of proposed rulemaking on stored- value cards in the June 28, 2010 edition
of the Federal Register. The proposed rules would require sellers of prepaid cards
to register with the government and keep records on transactions and customers.

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IV.14. GIFT CARDS

IV.14.1 INTRODUCTION

A gift card (also known as gift certificate in North America, or gift voucher or
gift token in the UK) is a prepaid stored-value money card usually issued by a
retailer or bank to be used as an alternative to cash for purchases within a
particular store or related businesses. Gift cards are also given out by retailers and
marketers as part of a promotion strategy, to entice the recipient to come in or
return to the store, and at times such cards are called cash cards.

Gift cards are generally redeemable only for purchases at the relevant retail
premises and cannot be cashed out, and in some situations may be subject to an
expiry date or fees. Visa and MasterCard credit cards produce generic gift cards
which need not be redeemed at particular stores, and which are widely used for
cashback marketing strategies. A feature of these cards is that they are generally
anonymous and are disposed of when the stored value on a card is exhausted.

IV.14.2. FUNCTIONS AND TYPES

A gift card may resemble a credit card or display a specific theme on a plastic card
the size of a credit card. The card is identified by a specific number or code, not
usually with an individual name, and thus could be used by anybody. They are
backed by an on-line electronic system for authorization. Some gift cards can be
reloaded by payment and can be used thus multiple times.

Cards may have a barcode or magnetic strip, which is read by an electronic credit
card machine. Many cards have no value until they are sold, at which time the
cashier enters the amount which the customer wishes to put on the card. This

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amount is rarely stored on the card but is instead noted in the store's database,
which is crosslinked to the card ID. Gift cards thus are generally not stored-value
cards as used in many public transport systems or library photocopiers, where a
simplified system (with no network) stores the value only on the card itself.

The magnetic strip is also often placed differently than on credit cards, so they
cannot be read or written with standard equipment. Other gift cards may have a set
value and need to be activated by calling a specific number.

Gift cards can also be custom tailored to meet specific needs. By adding a custom
message or name on the front of the card, it can make for an individualized gift or
incentive to an employee to show how greatly they are appreciated.

Bank-issued gift cards may be used in lieu of checks as a way to disburse rebate
funds. Some retailers use the gift card system for refunds in lieu of cash thereby
assuring that the customer will spend the funds at their store.

A Charity Gift Card allows the gift giver to make a charitable donation, and the
gift recipient to choose a charity that will receive the donation.

IV.15. ATVM CARD

II.15.1 INTRODUCTION

Long hour queues and shortage of coins (change given back to passengers) is what
the born of such machines to save time and travel fast. Basically their are two
types of ATVM machines, Currently their is Smart Card operating Machine and
coming up and planned by Mumbai Railway is Coin operating ATVM, expected
soon. This Automatic ticketing machines were introduced and launched on 10th
October 2010, as easy to get travel ticket system for public travelling by Local

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Trains in Mumbai by Western Railway and then adopted by Central railway route
also. About 7 to 10 Millions commuters who daily travels uses this alternative
ATVM machine, which is time saving compared to CVM and UTS.

Its called the ‘SMART CARD’ which is used by this ATVM machine to get your
journey ticket valid for next 1 hour. Smart cards are available at selected ticket
counters from where the general local train tickets are purchased. One NOT need
to be in queue to purchase ready to use Smart Card which do not require any
identity proof to be purchased.

This card will cost and initial amount of Rs.100, from which the first time usable
amount will be Rs.52 to get tickets from ATVM machine and some Rs.30 to
balance amount is kept by Railway as one time security deposit (Refundable). At
any given time you can cancel and return the smart card which will cost you Rs.10
as cancellation charges. Recharge of ATVM smart cards can be done on any ticket
booking counters, Currently their is no online recharge facilities for same
Recharge process and Validity and other details of same is follows :

Recharge of ATVM smart cards can be in multiple of Rs.50, Maximum up to

Rs.500 in single card.

Validity of this travel card is 12 months from purchase date or recharge date.
Travel within 1 hour limited time using this card tickets.

Railway authority offer 5% extra on every recharge to promote more usage of this
cards.

IV.15.2 ATVM Machines - FACTS AND FIGURES

Out of about 1 million daily ticket buyer local train travelers, 13 to 15 percent of
them use this smart cards. Total ATVM Machines installed at Mumbai (Western &

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Central Railway) Suburbs are 250. New 135 Such Machines will be installed in
Central Railway, Out of which 86 to be installed on Main Line, 43 on Harbour
Route and 6 at Trans-Harbour lines. Major stations like Thane, CST, Kalyan and
Vashi commuters getting relief from long queues to get tickets.

Total of 40 Lakh commuters daily commute on Central Railway route via local
trains. The AVTM users have increased from 5% during 2011 to 25% now in
2013. Till date total of 386 ATVMs are operating and Railway plans to add more
286 soon possibly in early 2014.

II.15.4 ADVANTAGES OF USING ATVM

Unlike the seasonal pass (Monthly, Quarterly and Yearly) which required identity
proof of purchaser, Anybody from your family and friends can purchase and use
this card to travel around Mumbai western and Central Railway routes.

The time printed on Ticket by validating machine is generally rounded in hour (60
minutes), So if for example the Machine has timing of 5:05 Pm and you request
printing a journey ticket at that time, then it will print 6:00 pm, Wow this is a
bonus of 55 Minutes extra which is added to 1 hour duration time which calculates
the total journey valid time as 1 Hour (As per ticket rules) and 55 minutes extra.
We really don’t know if the new ATVM machines will have this facilities kept of
be removed with printing exact timings of 1 hour valid journey.

1. You will not miss that special convenient train by standing in queue to get you
ticket.
2. No need to keep exact fare amount or change coins which are generally asked
on Counter.
3. No queue to purchase smart card or recharge same.
4. No Huge queue at ATVM machines, as practically CVM coupons are more
widely used too.

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 CHAPTER V: DATA ANALYSIS AND INTERPRETION

B. PRIMARY DATA

DATA COLLECTION AND RESEARCH ANALYSIS

The primary data was collected by conducting a survey by circulating an E-form/

questionnaire among a number of people. In which 105 individuals have
responded.

Q 1. GENDER*

o MALE
o FEMALE

GENDER

36%
FEMALE
MALE
64%

INTERPRETATION:

According to the survey, 63.8% of the respondents are Male and 36.2% are
Female.

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Q2. AGE*

o 18-25
o 25-35
o 35-50
o 50 and above

AGE
2%

26%
18-25
25-35
35-50
50 and above
72%

INTERPRETATION :

According to the survey, 72.2% of respondents are of the age group of 18-25 years.

Whereas 25.7% of respondents fall in the category of age group of 25-35 years.

And a mere 1.9% of respondents are of the category of age group of 35-50 years.

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Q 3. PROFESSION*

o STUDENT
o GOVERNMENT EMPLOYEE
o BUSINESS
o SERVICE
o OTHER____________

Profession
1% 2%
1%

Nothing
Govt employee
Business
36%
Service
56% chef
Pvt company
Student
2%
2%

INTERPRETATION :

According to the survey, 56.2% of respondents were students;

And 36.2% of the respondents were doing service (such as Doctor, Teacher etc)

And many others had respondents etc. such as chef, nurse, executive-digital service
etc.

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 Q 4. ANNUAL INCOME

o Upto Rs.180,000
o 180,000- 300,000Rs.
o 300,000- 500,000Rs.

Annual Income

30%
42% Upto 180,000
Rs 180,000 - 3,00,000
Rs 3,00,000 - 5,00,000

28%

INTERPRETATION:

According to the survey, 41.9% of the respondents were earning an annual income
upto 180,000 rs.

While 28.4% of the respondents were having annual income between 180,000-
300,000 and 29.7% of the respondents have an annual income of 300,000- 500,000.

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Q 5. MARITAL STATUS*

o MARRIED
o UNMARRIED

Marital status

7%

Married
Unmarried

93%

INTERPRETATION:

According to the survey, 93.3% of the respondents are unmarried and a mere 6.8%
of the respondents are married.

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Q 6. NUMBER OF FAMILY MEMBERS*

________________________

84.80%

46.70%

31.40%

17.10%

6.70%

Specific outlet ATM card Credit card Debit card None of the above

INTERPRETATION:

According to the survey, every family has an average of 4 family members.

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 Q 7. DO YOU HAVE ANY IDEA ABOUT “PLASTIC MONEY”?

o YES
o NO
o MAYBE

Do you have any idea about 'PLASTIC MONEY'?

2%

8%

YES
NO
MAYBE

91%

INTERPRETATION:

According to the survey, 90.5% of the respondents do know what is PLASTIC

MONEY. And about 1.5% of respondents are confused about the term and around
8% of the respondents sincerely don’t kmow about the term PLASTIC MONEY.

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Q 8. DO YOU HAVE ANY OF THE CARDS GIVEN BELOW ?

o DEBIT CARD
o CREDIT CARD
o ATM CARD
o SPECIFIC OUTLET CARDS
o NONE OF THE ABOVE

Do you have any of the cards given below ?

None of the
above

Specific outlet

ATM Card

Credit card

Debit card

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

INTERPRETATION:

According to the survey, 84.8% of the respondents have debit card and 31.4%
respondents have credit card ; 46.7% have ATM Card and 17.1% have special
outlet cards and 6.7% of the respondents have none of them.

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Q 9. ACCORDING TO YOU WHICH IS THE MOST CONVENIENT WAY TO
PAY?

o PAPER MONEY (CASH)

o PLASTIC MONEY (CREDIT CARD)

According to you, which is the most convenient way to

pay ?

21%

Paper Money
Plastic money

79%

INTERPRETATION :

According to the survey, 79% of the respondents claim that PLASTIC MONEY is
the most convenient way to pay. Whereas, 21% of the respondents say that PAPER
MONEY is the most convenient way to pay.

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Q10. HOW DO YOU PREFER TO PAY YOUR UTILITY BILL ?

o CASH
o CARD
o DD
o CHEQUE

How do you prefer to pay your bills ?

7%

27%
Cash
Card
Cheque

66%

INTERPRETATION :

According to the survey, 65.7% of the respondents say that they prefer to pay their
utility bill with credit card ; 26.7% say they would pay with cash and around 7.6%
respondents say they would prefer to pay their utility bill via cheque.

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Q 11. HOW DO YOU MAKE PAYMENT FOR THE PURCHASES MADE
TOWARDS HOUSEHOLD CONSUMABLES?

 CASH
 CHEQUE
 CARD

How do you make payment of purchases made of household consumables ?

Cash 62.90%

Cheque 1.90%

Card 56.20%

INTERPRETATION :

According to the surve, 62.9% claim that they would prefer to pay via cash for
their purchases towards household consumables ;

Whereas 1.9% say they would make payment with cheque and 56.2% say that they
would prefer to make payment with card.

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Q12. HOW DO YOU MAKE PAYMENT FOR THE PURCHASES OF LUXURY
AND DURABLE PRODUCTS ?

o CASH
o CHEQUE
o CARD

12%

14%
Cash
Cheque
Card

75%

INTERPRETATION :

According to the survey, 72.2% of the respondents claim that they would make
payment towards purchase of luxury and durable products via credit card ;
Whereas, 14.3% claim that they would make purchase with cheque and other
10.5% say they would pay by means of cash.

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Q13. WHILE TRAVELLING, ACCORDING TO YOU WHICH IS THE
PREFFERED WAY OF PAYMENT ?

o CASH
o CARD
o TRAVELLERS CHEQUE

While travelling, According to you which is the

preferred way of payment ?
1%

33%
cash
card
Travellers cheque
66%

INTERPRETATION :

According to the survey, 65.7% of the respondents say that they would prefer to
make payments while travelling by means of card; while 33.3% claim that they
would pay with cash and a mere 1% say that they would use travellers cheque.

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Q14. DO YOU FIND USE OF CREDIT CARD/ PLASTIC MONEY TO BE
SAFEST MODES OF TRANSACTION ?

o YES
o NO
o MAYBE

Do you find use of Credit/ Debit card to be the

safest mode of transaction ?

41% YES
NO
51%
MAYBE

8%

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 Do you find use of Credit/ Debit card to be the
safest mode of transaction ?

41% YES
NO
51%
MAYBE

8%

INTERPRETATION :

According to the survey, 51.45% of the respondents consider use of credit card/
plastic money to be the safest mode of transaction;

While 7.6% strictly disagree to the statement, whereas 41% of the respondents are
confused about the statement.

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Q15. WHY DO YOU PREFER PAPER MONEY AND PLASTIC MONEY?
(ANSWER THIS ONLY IF ANSWERED ‘NO’)

COMMENT :

1. The reason is that you don’t get to use it in some places. Since it’s card so
sometimes it may get misplaced or it can be stolen like travelling or so. So we have
to take good care of it. And this card can be used life long which can be carried and
kept easy.

2. Not accepted everywhere. Retailers have their own rules like minimum 100rs.
transaction.

3. Fear of being hacked.

4. Frauds and cloning of cards can happen.

5. Not convenient due to network issue, payment is not accepted.

6. Cash can be easily carried and its safe.

7. As it have a lot of variables to be working correctly for it to work. Like one
server crash from the bank and millions won’t have access to their own money
easily.
8. It’s readily available and once you have it you feel a sense of security as paper is
accepted everywhere.

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Q16. WHY DO YOU PREFER PLASTIC MONEY AND NOT PAPER MONEY?
(ANSWER THIS ONLY IF ANSWERED “ YES”)

COMMENTS :

1. Yes I do prefer plastic money because they are convenient.

2. It’s difficult to find change in case of paper money.
3. As it is the safest mode of payment.
4. At times paper money can be risky at certain places and it would be not that
comfortable to carry too much paper money in a wallet. Though paper
money is also required at those places and shops where card won’t be
accepted. So carrying equal amount of money at certain places in wallet as
well as in card would be helpful.
5. Paper money fear of being damaged easily and plastic money is water
resistant too.
6. A card is more portable and allows to access money globally.
Debit card makes shopping easy.

7.Plastic money provides more flexibility.

8. Paper money have limitations and make trouble if amount is high.

9.You have all the details of the transaction.

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Q17. DO YOU FIND CREDIT CARD TO BE EXPENSIVE AS MANY OTHER
CHARGES ARE CHARGED ON IT?

o YES
o NO

Do you find credit card to be expensive as many other

charges are charged on it ?

31%

YES
NO

70%

INTERPRETATION:

According to the survey, 69.5% of the respondents consider Credit card to be

expensive as many other charges are charged on them., Whereas 30.5% of them
disagree.

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Q18. WHICH ONE DO YOU CONSIDER MORE RELIABLE AND SECURE ?

o PAPER MONEY
o PLASTIC MONEY
o BOTH

Which one do you consider to be more reliable

and secured?

40% Plastic money

46%
Paper money
Both

14%

INTERPRETATION :

According to the survey, 45.7% of the respondents consider PLASTIC MONEY to

be reliable and secured ; while 40% consider paper money to be more reliable and
secured , whereas 14.3% of the respondents prefer both.

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Q19. WHICH CAN BE CARRIED AND KEPT EASILY AND HAS MORE
LIFE?

o PAPER MONEY
o PLASTIC MONEY

5%

PAPER MONEY
PLASTIC MONEY

95%

INTERPRETATION :

According to the survey 95% of the respondents prefer plastic money and a mere
5% prefer paper money.

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Q 20. WHICH TYPE OF SECURITY MEASUREMENT YOU EXPECT FOR
STOPPING MISUSE OF PLASTIC MONEY ?

o PASSWORD
o PIN
o BIOLOGICAL IMPRINT
o OTHER

Which type of security measurement you expect

for stopping misuse of plastic money ?

11%

Password
PIN
30% Photo card
54%
Biological imprint

5%

INTERPRETATION :

According to the survey, 54.3% of the respondents consider biological imprints to

be applied to stop misuse of plastic money.

While 29.5% say PIN number is good for it ; whereas 11.4% prefer password and
other go for photo card.

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Q 21. DO YOU THINK THAT THERE SHOULD BE ANY LIMIT ON DAILY/
MONTHLY TRANSACTION VALUE ?

o YES
o NO

Do you think there should be any limit on daily/ monthly transaction value ?

43%
YES
NO
57%

INTERPRETATION :

According to the survey, 56.7% of the respondents consider that there should be a
limit on daily / monthly transaction made ; while 43.3% of respondents disagree.

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Q 22. DO YOU THINK PLASTIC MONEY WILL PENETRATE IN SOCIETY
MORE IN FUTURE ?

o AGREE
o DIAGREE
o BOTH

Do you think that plastic money will penetrate in society

more in future ?

30%
Agree
Disagree
Maybe
3% 67%

INTERPRETATION :

According to the survey results, 66.7% of the respondents agree to the statement
made and strongly believes so ; and 2.8% of them strongly disagree while a mere
2.8% of them are not sure about the statement made.

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23. DO YOU THINK MORE CREDIT CARD/ DEBIT CARD TRANSACTION
IN COUNTRY OVER CASH TRANSACTION WILL HELP TO CURB BLACK
MONEY CIRCULATION IN ECONOMY ?

o YES
o NO

Do you think more credit card / debit card transaction in country over cash
transaction will help to curb black money circulation in economy ?

14%

YES
NO

86%

INTERPRETATION :

According to the survey results, 88.7% of the respondents agree to the statement
made and strongly believes so ; and 14.3% of them strongly disagree.

24. IF YOU WERE TO BE A FINANCIAL MINISTER OF OUR COUNTRY,

WOULD YOU PREFER ON HIGHER PROPORTION ?

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o PAPER MONEY
o PLASTIC MONEY
o BOTH IN EQUAL PROPORTION

If you were financial minister of the country, what

would you prefer on higher proportion ?
2%

Paper money
50%
Plastic money
49%
Both

INTERPRETATION :

According to the survey, 48.6% of the respondents claim that they would prefer
PLASTIC MONEY on higher proportion than paper money ;

While 49.5% of respondents consider using both in equal proportion, whereas, a

mere 1.9% of the respondents still would PAPER MONEY to be a higher
proportion than plastic money.

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25. WHERE DO YOU SEE THE FUTURE OF CASH AND CREDIT / DEBIT
CARD ?

COMMENTS :

1. Paper money will be stop and credit/ debit card will take place majorly unless
bank stop charging interest and taxes over the cards. In a battle for survival.
1. Most developed countries already use credit and debit cards almost
exclusively. It is only in India where we are still holding on to cash transaction out
of fear and corruption.
2. It all depends on the economic situation faces. But surely plastic money will
take over cash and its more fast and safe way for transactions.
3. Seeing the digital era I think digital payments and use of credit/ debit card
would be not only convenient but also preferable.
4. In future everyone will be using plastic money.
5. It will be the only method to give and take money.
6. Debit card would more preferable by people and safe to carry out so there is
brighter future which saves time as well as risk of carrying hard cash.
7. No cash all cards.
8. I think it will take a long journey before it get an importance.
9. Hope it will be easiest and safest mode in future.
10. The scope of the usage of plastic money is incredibly rising in today’s
world, hence I think it will go on increasing in future as well.

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 CHAPTER V : CONCLUSION

Card makes economy more efficient. It helps user to do transaction whenever he

wants. The amount of black money injected every year in our Indian economy is
unaccounted for and is to pervasive as we know it. Thus reforming the informal
sector is a task that will require persistence efforts and revised intellectual
engagement in coming up with sustainable solutions and one of them is the mode of
using plastic money such as credit card, debit card, ATM card, rechargeable calling
card, store value cards, gift cards, flit card, ATVM cards etc. which helps to curb
black money.

 In the last two years, spending pattern through plastic money has changed
drastically.
 Travelling, dining and jewellery are the top three purchases that Indian
makes through credit cards.
 Fuel accounts for a very small proportion of credit card purchases as these
are largely paid through debit cards.
 Consumers were not only more open to the possibility of owning a financial
card, but were also more than willing to use their cards to settle dues.
 The status symbol aspect of owning and using cards too played its part on
bringing about such robust growth over the space of a single year.
 Consumers are preferring these cards mostly for shopping online e-
commerce has given a better way to use the plastic money.
 According to projections for the 2003-2016 periods the number of financial
cards in circulation will register a compounded annual growth rate of nearly
51% and the satisfaction of consumers has also increased.
 There are many ethical issues and challenges for plastic money issuing
banks/ companies.
 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.

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 SUGGESTIONS

On the basis of analysis, the following suggestion can be given to on increase the
Plastic Card usage:-

1. It was found that people don’t prefer to pay their utilities bills like Telephone
bills, Electricity Bills etc. by cards. In the changing scenario of today where
everything is going paperless and cashless, there is a great need to educate and
motivate the people to pay their utility bills by Plastic money.
2. Safety measures pertaining to the fund transfer need to be increased to
encourage and assure people so that the use of Plastic money increases.
3. Safety in Plastic money is an important factor that induces its usage. Multiple
level of security to be insured like Password, OTP (One Time Password), use of
Shttp instead of http etc.
4. Transactions charges on online transactions should be waived off to induce the
people to use Plastic cards more.
5. Subsidy on Electronic transactions can also lead to increased usage of Plastic
cards.
6. People should be motivated to make more use of Plastic cards while travelling.
Travel Companies can give discounts to lure the customers to make the use of
Plastic cards.
7. It can play a very important role and in fact a major role in the eradication of
corruption in India. These are the reasons that how are it possible:-
• Every money transaction is maintained and recorded and also the transactions of
crores and crores of money cannot go unrecorded.
• None of money transactions are illegal. As, all the money transfer and transaction
happens through bank accounts, none of the illegal money can be transferred.
• The number of fraudulent money Practices are reduced as no fake paper notes can
be printed as they are not useable.

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 BIBLIOGRAPHY

 http://www.mbaskool.com
 http://www.studymode.com
 http://business-finance.blurtit.com
 www.rbi.org
 www.wikipedia.com
 www.infosee.com
 www.indiamba.com
 www.indiabanking.com

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 QUESTIONNAIRE

1. Gender?
o Male
o Female
2. Profession?
o Student
o Govt employee
o Business
o Service
o Other
3. Annual income?
o Upto 180,000rs
o 180,000 – 300,000rs
o 300,000 – 500,000rs
4. Do you have any idea about plastic money ? Which of them are you aware of?
o Credit card
o Debit card
o ATM card
o Others
o All of them
5. Do you have any of them?
o Debit card
o Credit card
o Specific outlet card
6. According to you, which is the most convenient way to pay?
o Cash
o Card
o Both

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7. How do you prefer to pay your utility Bills?
o Cash
o Card
o Cheque
o Online
8. How do you make payment for purchases of household consumables?
o Cash
o Card
o Cheque
9. How do you make payment for purchases of luxury and Durable goods?
o Cash
o Card
o Cheque
10. While traveling, According to you which is the preferred way of payment?
o Cash
o Card
o Travellers cheques
o Cheque
o DD
11. Do you find the use of credit card/Plastic money to be safest modes of the
transaction?
o Yes
o No
12. Why don’t you prefer plastic money?
o Unstable income
o Lack of knowledge
o Malpractices by outlet owners
o Malpractices by Bankers
o Misuse by others

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13. Give your preference in rank 1 to 3; when you do not prefer Paper money?
o Fear of Theft 1 2 3
o Increasing Duplicity 1 2 3
o Tear of paper money 1 2 3
14. Do you find Credit Card to be expensive as many other charges are charged on
it?
o Yes
o No
15. DO you find it cheaper and Beneficial as if gives you one Month Credit for
Payment?
o Yes
o No
16. Which of the options given you consider more reliable and secured?
o Paper money
o Plastic Money
o Both
17. Which can be carried and kept easily and has more life?
o Paper money
o Plastic money
18. Which Type of security measurement you expect for stepping misuse of Plastic
Money?
o Password
o Photo card
o PIN
o Biological Imprints
19. Do you use credit or debit card online?
o Yes
o No

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20. How often do you visit the bank for cash withdrawal?
o Once a week
o Once in a month
o Once in a year Never
21. Have you been a victim of any credit/debit card fraud?
o Yes
o No
22. Rate the following on a scale of agreement. Strongly Agree on Agree Neutral
Disagree Strongly Disagree -
a. Customer care support provided by credit/debit card provider
b. The OTP [One Time Password] protection is enough for any online transaction
c. Offers and Discounts while shopping is attractive
d. Security of money
e. Plastic money will penetrate in society more in future
23. Do you think that there should be any limit on daily/monthly transaction value?
o Yes
o No
24. Do you think that more credit card/Debit card transaction in the country over
cash transaction will help to grab black money circulation in the economy?
o Yes
o No
25. If you are a financial minister of the country, what would you prefer on higher
proportion?
o Paper money
o Plastic money
o Both in equal ratio
26. Do you think the telephonic connection or SMS alerts make your each
transaction much more secure?
o Yes
o No

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