Professional Documents
Culture Documents
INTRODUCTION
Plastic money or polymer money, made out of plastic, is a new and easier way of paying for
goods and services. Plastic money was introduced in the 1950s and is now an essential form of
ready money which reduces the risk of handling a huge amount of cash. It includes debit cards,
ATMs, smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for
currency. This book on plastic money is divided into two sections titled Concepts and
Experiences. The former covers articles on the emergence of plastic money, different types of
plastic cards and their growth in India and other related issues. An experience discusses the
experiences of banks like Standard Chartered, Citibank, which deal with plastic money and their
growth in the market.
Plastic money are one of those types of innovation through which the customers can
make use of banking services just by awning the card issued by bank and too without restricting
himself in the official banking hours. Plastic money as the component of e banking has been use
in the country for many years now. Payment by card is now becoming a much preferred mode
for making retail payment nowhere days. Thus, plastic money are such payment tool which
gives a customer an opportunity do non cash payment of good and services.
MEANING
Plastic money refers to credit cards, you use them whenever you want and pay later (with
interest, of course). It makes it too easy for people to buy things they normally could not afford,
which makes it easier to get into debt.
PLASTIC MONEY: SIGN OF MODERNIZING ECONOMY
Money is always regarded as an important medium of exchange and payment tool. Initially
barter system was used as the significant mode of payment. Over the years, money has
changed its form from coins to paper cash and today it is available in formless form as
electronic money or plastic card. Hence, the major change in banks which has been brought
in by technology is through introduction of products which are alternative to cash or paper
money. Plastic cards are one of those types of innovations through which the customers can
make use of banking services just by owning the card issued by bank and that too without
restricting himself in the official banking hours. Payment by cards is now becoming a much
preferred mode for making retail payments in the country. Thus, plastic cards are such
payment tool which gives a customer an opportunity of non cash payment of goods and
services and are designed to facilitate small value retail payments by offering a substitute for
bank notes and coins and thus to complement traditional payment instruments.
ADVANTAGES OF PLASTIC MONEY
1. Plastic money, unlike paper money, will not burn easily and can resist higher
temperatures than paper money.
3. Plastic money, unlike paper money, will not burn easily and can resist higher
temperatures than paper money.
4. Paper money also picks up dirt and stains more easily than plastic money.
5. Plastic money is the debit and credit cards. Plus point of plastic money is
6. That you won't have to carry your cash around all the time.
7. It also doesn't wear after time as paper does nor does it rip and tear.
8. Give you incentives, such as reward points, that you can redeem.
10. Provide a convenient payment method for purchases made on the Internet
1. Cost much more than other forms of credit, such as a line of credit or a
6. It also doesn't wear after time as paper does nor does it rip and tear.
7. Paper money also picks up dirt and stains more easily than plastic money.
8. I can't really see any advantages to have paper money, unless it is cheaper to make.
9. Its disadvantage is that, some extra money will be deducted for the bank services.
TYPES OF PLASTIC MONEY
1. 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.
2. 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. Don't borrow on your credit card! Here's why a debit card is only accepted at
outlets with electronic swipe-machines that can check and deduct amounts from your bank
balance online.
3. 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 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. 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
4. 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: Remember these dos and don'ts. This card is typically
meant for high-income group categories and companies and may not be acceptable at many
outlets.
6. Master & visa card: -
Master and Visa card 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
7. 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
CREDIT CARD
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.
DEFINATION
The credit card can be defined as “A small plastic card that allows its holder to buy goods
and services on credit and to pay at fixed intervals through the card issuing agency
MEANING
A credit card is a card or mechanism which enables card holder to purchase goods,
travels and dine in a hotel without making immediate payments. The holders can use the cards to
get credit from banks up to 45 days.
TYPES OF CREDIT CARD
Credit card now is of various types with different fees, interest rates and rewarding programs.
When applying for a credit card, it is important to learn of their diverse types to know the one
best suited to their lifestyle and financial status.
Credit limit: - The credit cardholder enjoys the facilities of a credit limit set on his
card. This limit of card is determined by the credit card issuing entity only after analyzing
the credit worthiness of the cardholder
Record keeping of all transaction: - Credit card entitle like banks or NBFCs
keeps a complete record of all transaction made by their credit cardholder. Such a record
helps these entitles to raise appropriate billing amounts payable by their cardholder,
either on a monthly or some periodic basis.
Regular charges: - Regular charges are basic routine charges charged by the credit
card issuing entity in the usage of credit card by its cardholder. These charges are
nominal in nature
Goods and services can purchase in large number of outlets without cash or cheque. The card
is useful in emergency, and can save embarrassment.
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.
Months purchases can be settled with a single remittance, thus, tending to reduce bank and
handling charges.
The card holder has the period of free credit usually between 30-50 days of purchase.
The credit card saves trouble and paper work to traveling business man.
Some credit card transactions take longer time than cash transactions because of various
formalities.
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
Credit cards are increasingly being used in buying and selling online as well as offline. This is an
age of e-commerce. Along with this increasing use of the card comes the valid fear of theft.
Large amounts of money have been stolen from various people's bank accounts because of this
undercover illegal activity.
Guarding the details of our credit card is more important than that required for our debit card.
Theft of credit cards/their information not only deprives us of our money but at times even of our
own identity. Out there are not just money thieves but identity thieves as well!
We may be making purchases offline with a credit card at a grocery store or paying up at a
restaurant. At the counter our credit card needs to be swiped to deduct the payment from the
bank. That is the time one has to be very alert. We should make sure that there is no magnetic
reader connected behind the scenes which can read the card's full details within seconds.
Immediately inform the company/the bank in case the credit card/its details are stolen.
Maintain great precautions with your credit card. Ensure to keep it on you all the time. Do not
ever give away any of its information to strangers or even friends. Keep one copy of the card
details like its number, expiry date and the security number safely somewhere e.g. in the house,
and another on your person but never keep with the credit card or in the wallet.
Online use of the credit card is just as important as its use offline since either way, it is the
details of the card the thieves are after.
When making online purchases, ensure to send your credit card details on an encrypted
connection. This can be checked on the address bar of the web browser. A website with the link
'https' is secure, as the link is using Secure Sockets Layer protocol, a powerful encryption
system. If it is without he’s’ i.e. just 'http' it is not an encrypted connection and therefore unsafe
for credit card transactions.
At the same time make sure that the person on the other side of the 'https' is not a thief himself!
You will be confidently sending all your credit card details right into his lap! Actually, such
vendors give themselves away because they themselves are selling illegal things like drugs
without prescriptions, pornography etc... So beware.
Ensure that the website domain is proper and not an imitation e.g. 'paypal.com' and not
'paypals.com'. Another worthwhile precaution is never to click on any link sent by an unknown
person through email.
Because of the fragility in use of permanent credit cards, nowadays, disposable, single use credit
cards are increasingly being used ensuring enhanced safety and peace of mind while making
online money transactions.
STEPS FOLLOWED IN CREDIT CARD TRANSACTION
1. AUTHORIZATION
For Internet Merchants, the shopping card is connected to or integrated with a Payment Gateway.
For Retail Merchants, the card is swiped through a magnetic reader on the point of sale terminal
the authorization is transmitted to the appropriate card issuer for approval. The issuing bank of
card issuer authenticates the card holder and approves or declines the transaction amount.
2. Merchant balancing
This is also known as batching out. Most pos terminals and all payment gateway per firm an auto
close functions at the end of the day and batch out automatically.
3. Capture
The front end processor matches the authorization data to the settlement data and transmits the
card capture file to a back end processor for V/MC transactions or to the appropriate card issuer
for other card types.
4. Clearing
During this stage the back end processor performs compliance checks and risk management
procedures and transmits the transaction to V/MC or to the appropriate card issuer for other card
types.
7. Merchant ACH
During this stage the acquiring bank or card issuer transmits the merchant deposit to the
merchant’s checking account.
If you are planning to get a credit, the first thing you should know is which the credit card
issuing banks in India are. There are several banks which provide credit cards in India. Given
below is a list of Credit Card service providing banks along with the various types of Credit
Cards they offer.
Axis Bank
Bank of Baroda
Canara Bank
Corporation Bank
HDFC
ICICI Bank
Indian Overseas Bank
Kotak Mahindra.
Major Foreign Banks which offer Credit Card service in India are:
ABN Amro
American Express
Barclays Bank
Citibank
HSBC
Standard Chartered
DIFFERENT CLASSES OF CREDIT CARD
SILVER CARD
Silver credit cards rank lowest among the metal named cards, and, because of lower
prestige when compared to gold and platinum cards, are commonly known as basic and standard
credit 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.
GOLD CARD
Individuals with higher income can avail a gold credit card from any bank in India. Applicants
for any type of gold credit card should have a good credit score. The common features available
with a gold credit cards are - higher cash withdrawal limits, higher credit limits, add-on card
facility for family members like spouse, parents or children, travel insurance, cash back offers,
rewards program and much more.
PLATINUM CARD
As one of the most popularly availed credit card category, Platinum credit cards come loaded
with exciting benefits ranging from lifestyle to dining to entertainments to shopping. Platinum
credit cards come with slightly higher annual, joining and renewal fees when compared to other
category of cards. As a superior card, Platinum credit card offers some of the best benefits on the
planet. Every Platinum credit card come with an exceptional welcome package with gift
vouchers from retail brands, annual spend rewards, accelerated rewards points, cash back offers,
Priority Pass membership with access to premium airport lounges, renewal gift vouchers, global
lifestyle and golfing privileges, easy cash withdrawals, fuel surcharge waiver, add-on cards for
family, emergency card replacement services, etc. Platinum card members generally also get
other exclusive privileges, deals and offers with every card availed, depending on the financial
institution they are banking with.
CREDIT CARD OPERATIONS OF BANK
RBI guidelines
Pursuant to the announcement made in the Annual Policy Statement 2004-05, the
Reserve Bank of India had constituted a Working Group on Regulatory Mechanism for Cards.
The Group has suggested various regulatory measures aimed at encouraging growth of credit
cards in a safe, secure and efficient manner as well as to ensure that the rules, regulations,
standards and practices of the card issuing banks are in alignment with the best customer
practices. The following guidelines on credit card operations of banks have been framed based
on the recommendations of the Group was also the feedback received from the members of the
public, card issuing banks and others. All the credit card issuing banks / NBFCs should
implement these guidelines immediately.
Each bank / NBFC must have a well documented policy and a Fair Practices Code for
credit card operations. In March 2005, the IBA released a Fair Practices Code for credit card
operations which could be adopted by banks / NBFCs. The bank / NBFC's Fair Practice Code
should, at a minimum, incorporate the relevant guidelines contained in this circular.
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.
Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike
credit cards, the funds are transferred immediately from the bearer's bank account instead of
having the bearer pay back the money at a later date.
Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash and as a cheque guarantee card. Merchants may also offer cash back facilities
to customers, where a customer can withdraw cash along with their purchase.
The Debit Card services in meant for withdrawals against the balance already available in
the designated account.
It is the card holder’s obligation to maintain sufficient balance in the designated account
to meet withdrawals and service charges.
A Debit card is more affordable than credit card. We just own bank account for all our
transactions. No credit period. Our bank account is debited immediately.
Use of card is terminated without notice, upon the death, bankruptcy or insolvency of the
cardholder or for other valid reasons.
Always cards are much more comfortable than cash. Literally a thin card is better than 20 or
30 notes in your wallet. It makes very fewer chances of loose your money to thieves.
Unlike credit cards, debit cards are easy to get from the bank. Just do some paper works and
you will get your debit card in 1 or 2 weeks once you are eligible to use.
After all, we all are human beings. If we have more money, we spent more. This is the
chance for credit card suppliers; they provide more money and encourage us to spend more.
But as long as you only have debit cards, you never exceed the budget limits.
Having a debit card is protecting you in some way. There is some everyday ATM withdrawn
limit which is good for you. if someone steal your card, they won’t withdraw all amount from
you card in a day. Next day bank will deactivate your card as soon as you inform them.
Debit card means whatever you earn can spendable and no more. You won’t get any benefits
from your debit cards. But some banks like NatWest bank in the UK provides debit cards,
named Platinum or Silver or Gold. If you get one of these cards, you will get some benefits
but you need to pay some extra money monthly to the bank.
Fees applied in different ATMs There are some charges applied when you withdraw money
from different bank ATMs.
When you have a debit card, fees are likely a part of your life as well. Banks inflict a wide
variety of different fees to debit card holders, which can add up very fast. Some of these
include monthly use charges, major overage fees, and transaction fees or limits.
If the card holder forgot the password of the debit card then the card holder cannot withdraw
the money.
In case of theft if thief got the card password he can withdraw money and this money is
deducted from your savings, this does not happen in case of credit card money is not
deducted for your savings.
Internet scams are commonplace. If you use your debit card to purchase goods online then
you have to be careful. Your information can get lost in cyberspace and fall into the wrong
hands.
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 and some online cards require such
authentication for every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards. One difficulty in 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 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. The most notable of these are Ideal and POL.
Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit
cards (e.g. 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. In some countries and with some banks and merchant
service organizations, a "credit" or offline debit transaction is without cost to the purchaser
beyond the face value of the transaction, while a small fee may be charged for a "debit" or online
debit transaction (although it is often absorbed by the retailer). Other differences are that online
debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the
merchant supports that functionality); also, from the merchant's standpoint, the merchant pays
lower fees on online debit transaction as compared to "credit" (offline) debit transaction.
Electronic Purse Card System
Smart-card-based electronic purse systems (in which value is stored on the card chip, not
in an externally recorded account, so that machines accepting the card need no network
connectivity) are in use throughout Europe since the mid-1990s, most notably in Germany
(Geldkarte), Austria (Quick), the Netherlands (Chipknip), Belgium and Switzerland (CASH). In
Austria and Germany, all current bank cards now include electronic purses.
Prepaid debit cards, also called reload able 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.
An offline debit card transaction is still the way most merchants accept debit cards.
This is essentially the same as processing credit cards. You swipe your customer’s debit card
through a credit card terminal and have them sign the receipt. If you choose to accept debit cards
offline, be sure that the debit card has a VISA or MasterCard logo. Otherwise, the debit card
won’t be approved and you won’t be able to process the debit card offline
The most advantageous way to process debit cards is to do it online. You will still be able
to accept debit cards at the point of sale, but you will need to install a PIN pad on your credit
card terminal.
An online debit card transaction works much like a credit card transaction,
except that after your customer swipes his or her debit card, they will enter a PIN instead of
signing the receipt.
At this point the encrypted debit card information is sent to the customer’s bank for
authorization, and you’ll receive the funds just as you would for a credit card transaction. Your
business has many advantages when you accept debit cards.
For example, you pay a flat fee for each debit card transaction that you process, instead the flat
fee plus percentage rate that you are charged when you accept credit cards. Over time, this can
potentially save you a lot of money.
Another advantage when you process debit cards is that you can’t be charged higher
“downgrade” fees.
In a credit card transaction, you are usually charged the “discount rate.” However, some
transactions are considered to be a higher risk or expense to the bank, and you are charged a
higher rate as a result. But when you accept debit cards, you always pay the same flat rate, with
no danger of the rate increasing.
Credit 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. 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.
CREDIT 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 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.
1. Customers or Cardholder: The authorized person holding the card and can use it for purchase
of goods and services also.
2. Card issuing bank: The bank or institution which issues the card to its eligible customers.
3. Merchants: Entities which sell the goods and services to the cardholder and duly agree to
accept the card for payment.
4. Bank Card Association: The associations (VISA, Master Card, American Express)
MASTER CARD
History
NOTE: other than master card there are more financial services association who provide
process payments between the banks of merchants and the card issuing banks or credit unions of
the purchasers
For example: - visa card, maestro card, rupay card.
PLASTIC MONEY FRAUDS
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, 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
Credit card fraud takes place every day in a variety of ways. You can’t always prevent it
from happening, but you can create some obstacles and make it tougher for someone to get hold
of your cards and card numbers. Treating your credit cards and account numbers like cash that is,
very carefully — is one way to head off potential misuse.
How Does Credit Card Fraud Happen?
Theft, the most obvious form of credit card fraud, can happen in a variety of ways,
from low tech dumpster diving to high tech hacking. A thief might go through the trash to find
discarded billing statements and then use your account information to buy things. A retail or
bank website might get hacked, and your card number could be stolen and shared. Perhaps a
dishonest clerk or waiter takes a photo of your credit card and uses your account to buy items or
create another account. Or maybe you get a call offering a free trip or discounted travel package.
But to be eligible, you have to join a club and give your account number, say, to guarantee your
place. The next thing you know, charges you didn’t make are on your bill, and the trip promoters
who called you are nowhere to be found.
Don’t give your account number to anyone on the phone unless you’ve made the call to a
company you know to be reputable. If you’ve never done business with them before, do an
online search first for reviews or complaints.
Carry your cards separately from your wallet. It can minimize your losses if someone
steals your wallet or purse. And carry only the card you need for that outing.
During a transaction, keep your eye on your card. Make sure you get it back before you
walk away.
Never sign a blank receipt. Draw a line through any blank spaces above the total.
Save your receipts to compare with your statement.
Open your bills promptly — or check them online often — and reconcile them with the
purchases you’ve made.
Report any questionable charges to the card issuer.
Notify your card issuer if your address changes or if you will be traveling.
Don’t write your account number on the outside of an envelope.
Report Losses and Fraud
Call the card issuer as soon as you realize your card has been lost or stolen. Many
companies have toll-free numbers and 24 hour service to deal with this. Once you report the loss
or theft, the law says you have no additional responsibility for charges you didn’t make; in any
case, your liability for each card lost or stolen is $50. If you suspect that the card was used
fraudulently, you may have to sign a statement under oath that you didn’t make the purchases in
question
The keys to credit card safety and help protect against fraud.
Peoples use credit cards more than ever these days which makes credit card protection more
important than ever. There's a lot you can do to help protect your credit cards, and most of it
comes down to common sense. Read these credit card safety tips and learn simple ways to
safeguard your card.
When a credit card is lost or stolen, it may be used for illegal purchases until the holder notifies
the issuing bank and the bank puts a block on the account. Most banks have free 24-hour
telephone numbers to encourage prompt reporting. Still, it is possible for a thief to make
unauthorized purchases on a card before the card is cancelled. Without other security measures, a
thief could potentially purchase thousands of dollars in merchandise or services before the
cardholder or the card issuer realizes that the card has been compromised.
The only common security measure on all cards is a signature panel, but, depending on its exact
design, a signature may be relatively easy to forge. Some merchants will demand to see a picture
ID, such as a driver's license, to verify the identity of the purchaser, and some credit cards
include the holder's picture on the card itself. In some jurisdictions, it is illegal for merchants to
demand card holder identification. Self-serve payment systems (gas stations, kiosks, etc.) are
common targets for stolen cards, as there is no way to verify the card holder's identity. There is
also a new law that has been implemented that identification or a signature is only required for
purchases above $50, unless stated in the policy of the merchant. This new law makes it easier
for credit card theft to take place as well because it is not making it necessary for a form of
identification to be presented, so as long as the fraud is done at what is considered to be a small
amount, little to no action is taken by the merchant to prevent it.
A common countermeasure is to require the user to key in some identifying information, such as
the user's ZIP or postal code. This method may deter casual theft of a card found alone, but if the
card holder's wallet is stolen, it may be trivial for the thief to deduce the information by looking
at other items in the wallet. For instance, a U.S. driver license commonly has the holder's home
address and ZIP code printed on it. Visa Inc. offers merchants lower rates on transactions if the
customer provides a ZIP code.
In Europe, most cards are equipped with an EMV chip which requires a 4 to 6 digit PIN to be
entered into the merchant's terminal before payment will be authorized. However, a PIN isn't
required for online transactions, and is often not required for transactions using the magnetic
strip. However magnetic strip transactions are banned under the EMV system (which requires the
PIN). In many/most European countries, if you don't have a card with a chip, you will usually be
asked for photo-ID - e.g. national ID card, passport, etc. at the point of sale. Many self-service
machines (e.g. ticket machines at railway stations and self-service check-in at airports) require a
PIN and chip in EMV-land (i.e. which is most of Europe, Asia, and Middle East etc.).
Requiring a customer's ZIP code is illegal in California, where the state's 1971 law prohibits
merchants from requesting or requiring a card-holder's "personal identification information" as a
condition of accepting the card for payment. The California Supreme Court has ruled that the
ZIP code qualifies as personal identification information because it is part of the cardholder's
address. Companies face fines of $250–1000 for each violation Requiring a "personal
identification number" (PIN) may also be a violation.
Card issuers have several countermeasures, including sophisticated software that can, prior to an
authorized transaction, estimate the probability of fraud. For example, a large transaction
occurring a great distance from the cardholder's home might seem suspicious. The merchant may
be instructed to call the card issuer for verification, or to decline the transaction, or even to hold
the card and refuse to return it to the customer. The customer must contact the issuer and prove
who they are to get their card back (if it is not fraud and they are actually buying a product).
In Australia, there is a service called "Pay pass" or more colloquially known as "tap and go".
This is where a person can purchase goods or services and can just tap the credit (or debit) card
on the card reader. If the transaction is less than Aud$100.00, no PIN or signature is required. A
stolen credit or debit card could be used for a significant amount of these transactions before the
true owner can have the account cancelled.
ANNUAL PERCENTAGE RATE
What is an APR?
If you’re like millions of credit card holders, you’ve probably seen the phrase “annual percentage
rate” or “APR” on your monthly statement, but you may not truly understand what an APR is, or
know how it’s calculated. Fortunately, it’s not difficult to understand—and knowing what an
APR is can help you make more informed credit card decisions.
The annual percentage rate or APR is the interest rate charged on the amount borrowed. It
reflects the annual cost of borrowing money. APR makes it easier to compare different loan and
credit card, because you can easily see which loan/ credit card would be cheaper. For example, a
loan with a 10% interest rate is less expensive than a loan with 15% interest rate (assuming other
things are equal).
One of the most important features that Plastic Money offers is the technology associated
with this business.
Credit card businesses rely on very reliable and secure technology and demands very
Strong connectivity backbone.
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 sites
connected with bank host system.
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
SMART CARD
A smart card, chip card, or integrated circuit card (ICC) is any pocket-sized card that has
embedded integrated circuits. Smart cards are made of plastic, generally polyvinyl chloride, but
sometimes polyethylene terephthalate based polyesters, acrylonitrile butadiene
styrene or polycarbonate. Since April 2009, a Japanese company has manufactured reusable
financial smart cards made from paper.
Smart cards can be either contact or contactless smart card. Smart cards can provide personal
identification, authentication, data storage, and application processing. Smart cards may provide
strong security authentication for single sign-on (SSO) within large organizations.
Benefits
The benefits of smart cards are directly related to the volume of information and applications that
are programmed for use on a card. A single contact/contactless smart card can be programmed
with multiple banking credentials, medical entitlement, driver’s license/public transport
entitlement, loyalty programs and club memberships to name just a few. Multi-factor and
proximity authentication can and has been embedded into smart cards to increase the security of
all services on the card. For example, a smart card can be programmed to only allow a
contactless transaction if it is also within range of another device like a uniquely paired mobile
phone. This can significantly increase the security of the smart card.
Governments and regional authorities save money because of improved security, better data and
reduced processing costs. These savings help reduce public budgets or enhance public services.
There are many examples in the UK, many using a common open lasseo specification.
Individuals have better security and more convenience with using smart cards that perform
multiple services. For example, they only need to replace one card if their wallet is lost or stolen.
The data storage on a card can reduce duplication, and even provide emergency medical
information.
Advantages of smart card
The first main advantage of smart cards is their flexibility. Smart cards have multiple functions
which simultaneously can be an ID, a credit card, a stored-value cash card, and a repository of
personal information such as telephone numbers or medical history. The card can be easily
replaced if lost, and, the requirement for a PIN (or other form of security) provides additional
security from unauthorized access to information by others. At the first attempt to use it illegally,
the card would be deactivated by the card reader itself.
The second main advantage is security. Smart cards can be electronic key rings, giving the bearer
ability to access information and physical places without need for online connections. They are
encryption devices, so that the user can encrypt and decrypt information without relying on
unknown, and therefore potentially untrustworthy, appliances such as ATMs. Smart cards are
very flexible in providing authentication at different level of the bearer and the counterpart.
Finally, with the information about the user that smart cards can provide to the other parties, they
are useful devices for customizing products and services.
Other general benefits of smart cards are:
Portability
Increasing data storage capacity
Reliability that is virtually unaffected by electrical and magnetic fields.
QUESTIONNAIRE
Here some FAQ on the most popular plastic cards used in India.
21ST Century banking has become wholly customer-driven & technology driven by challenges of
competition, rising customer expectations & shrinking margins, banks have been using
technology to reduce cost & enhance efficiency, productivity & customer convenience.
Technology intensive delivery channels like net banking, mobile banking, etc.
I have concluded from my project that demand of plastic money increasing rapidly as the
population of the world is increasing. According to top banking professionals, the credit card
business will grow by over 100% every year.
From educating customers about credit cards there is a need to educate them about the
differentiating factors of the cards. Because visa and master card are advertising regularly and
thereby increases awareness. The strategy should be to emphasize on its differentiating
characteristics.
BIBLIOGRAPHY
WEBSITS
www.scribd.com
http://en.wikipedia.org
www.360financialliteracy.org
www.slideshare.net
REFERENCE BOOK