PLASTIC MONEY IN INDIA

CHAPTER NO-1

INTRODUCTION

1.1 Introduction
1.2 Definitions
1.3 Features of plastic money
1.4 Need of plastic money
1.5 Scope of plastic money
1.6 Plastic money system
1.7 Why we use plastic cards
1.8 Advantages of plastic money
1.9 Disadvantages of plastic money
1.10 Types of plastic cards
1.11 Types of frauds
1.12 Prevention and detection
1.13 RBI Guidelines
1.14 Challenges faced
1.15 Future Prospectus

- Page 1
 PLASTIC MONEY IN INDIA

1.1-INTRODUCTION:-

Plastic money or polymer money, made out of plastic, it 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 credit cards in India gaining ground. A
number of banks in India are encouraging people to use credit card. The concept of
credit card was used in 1950 with the launch of charge cards in USA by diners club and
American Express credit card however became more popular with use of magnetic strip
in 1970.

Credit card in India becomes popular with the introduction of foreign banks in country.
Credit cards are financial instruments, which can be used more than once to borrow
money or buy products and services on credit. Basically banks, retail stores and other
businesses issue these. It was introduced around and has now become an essential from
of ready money. One of the main reasons for introducing plastic money, especially
credit cards is to reduce risk of handling a huge amount of cash by individuals. The
growth and popularity of plastic money in India has been phenomenal in the last few
years. In present world, no one wants to be bothered by the presence of huge cash in his
or her wallet and the Indian are no exceptions. The unprecedented growth in the number
of credit card users has stimulated the Indian economy significant extent. The arrival of
malls, multiplexes, online shopping stores, has contributed to the growth of the use of
plastic cards. The best credit cards in India are usually meant for specific user group
such as women, students, small business owners. These cards are offered to the
prospective customers with appealing deals.

Over the years, Indian has been averse to credit cards. This primarily because they
believed that spending through credit is a sure shot way of getting into debt trap. Of
course, movies highlighting the sad state of a borrower did not exactly help matters.
And local kirana shops have the famous lines "Aaj Nagad, kal Udhari (cash today,
credit
 PLASTIC MONEY IN

tomorrow)". But the situation is not actually that scary. And it is all about right timing.
Credit cards can be useful tool at the hands of savvy customers who can effectively use
benefits offered by cards. It is important to know that credit card is a financial tool that
needs to be used responsibly. While is ensures cash flow, it is not advisable for
customers to borrow for a longer period of time. Use it effectively and take good
advantage of the time line and clear your debt, without any additional costs
.
It may be explained in brief as "Banking is what a bank does." But it is not clear enough
to understand the subject in full. The Oxford Dictionary defines a bank as "an
establishment for the custody of money which it pays out on a customer’s order" But
this definition is also not enough, because it considers the deposit accepting and
repayment function only. The meaning of the bank can be understood only by its
functions just as a tree is, known by its fruits. As any other subjects, it has its own
origin. Growth and development.

Indian banking is the life line of nation and its people. Banking has helped in
developing the vital sectors of economy and usher in a new dawn of progress on the
Indian horizon. The sector has translated the hopes and aspirations of millions of people
into reality. But to do so, it has had to control miles and of difficult terrain, suffer the
indignities of foreign rule and the pangs of partition. Today. Indian banks can
confidential compete with modern banks of the world.

Now-a-days, bank money acts as the backbone of modern business. Development of

any country mainly depends upon the banking systems o in short a bank is a financial
institution which deals with the deposits and advances and other related services. It
receives money from those who to save in the form of deposits and it lends to those
who need it
 PLASTIC MONEY IN

1.2-DEFINITIONS:-

“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 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 the liability rather than asset, they are not money and not
a part of economy's money supply.”

"A card that allow a person to purchase and services by paying with the money
borrowed by the creditor. The borrower than borrow the credit card company often
with interest. "A plastic card, with magnetic stripe or embedded microchip, connected
to a credit account and used to buy goods or services.

Crowther defines a bank as,

"One that collects money from those who have it to spare or who are saving it out of
their income and lends the money so collected to those who require it.”

Dr. L. Hart, says that the banker are;

"One who in the ordinary course of business; honours cheques drawn upon him by
persons from and for whom he receives money on current accounts."

Sir Kinley,
"A bank is an establishment which makes to individuals such advances of money as
may be required and to which individuals entrust money when not required by them for
use."
 PLASTIC MONEY IN

1.3-FEATURES OF PLASTIC MONEY:

Plastic money is growing because of its various features it provides.

Some of are listed below:

Convenience:
Credit and debit cards offer no hassle shopping-no cash, no cheques, no additional
identification.

Security:
Lost cash can be used by anyone. If you lose a credit or debit card, you can call 24X7
helpline number and report to the bank and thus get protected from unauthorized use of
your card. However different banks may different liability policies consult your bank if
they offer any liability waiver.

Emergency protection:
A credit card will get you through almost any emergency you can think of. It like a
security blanket that will cover you for e.g. airline insurance life insurance ETC
depending upon the credit card.

Universal Acceptance:
Most credit and debit cards are accepted worldwide. Try that with a personal check! If
you need cash, you can make withdrawals from ATMs or banks around world that
accept your credit or debit card.

Simplified Record Keeping:

Credit and debit cards give you a record of all you transactions for the month, so
keeping track of were your money goes is easier.
 PLASTIC MONEY IN

Hygienic:
Paper money is dirty and unhygienic as it travels from one person to another whereas
on the other hand plastic money usually remains with 2.3 individuals maximum
therefore it is clean and hygienic.

Environment Friendly:
One of the major causes of deforestation is paper and this is where plastic money is
better than paper money as it reduces deforestation.

Value- added Benefits:

Many credit cards offer rebates, cash refund, and contributions to your favorite charity.
Or other special value added services that won’t get with paying by cash.

1.4-NEED OF PLASTIC MONEY:

It is rightly said the plastic money is need of ours. People are using these cards on vast
scale. But after considering the review of literature it's seen the whole payment process
of processing these cards is not safe and customers are facing many problems relating to
plastic money. That's why study is focused on consumer's perception regarding plastic
money Need of plastic money is get to know about the comparative analysis of plastic
money. There are many ethical challenges in the market of plastic money .which is
required to be studied.

Plastic money is used in various types of places after the change in the economy.
After demonetization the usage of plastic currency has taken n huge place in peoples
mind.
 PLASTIC MONEY IN INDIA

1.5-SCOPE OF PLASTIC MONEY:

ATM cards are slowly being transformed into value added cards. Bankers and analysts
see tremendous scope for growth in debit cards "there is tremendous potential for debit
cards. It will soon be substituting cheques. Utility payments will be soon made through
debit cards, either at ATM's or at the counters. The debit cards can be used to withdraw
cash from ATMs of other banks depending on whether the debit cards-maker has a visa
or master tie- up. Visa and master cards both confirmed yesterday that they had been
notified the branch and had in turn notified several banks and credit cards companies
have been notified. Credit cards as well as convenient, assessable credit, credit card
offer costumers an easy way to track expenses, which is necessary for both monitoring
persons expenditures and the tracking of work related expenses for taxation and
reimbursement.

1.6-PLASTIC MONEY SYSTEM:-

The evolution of plastic money industry was quite obvious as people are getting more
dependent on technology and plastic money business is just the best outcome of
technology in banking business. The banking system of India should not only be hassle
free but it should be able to meet new challenges posed by the technology and any other
external and internal factors However, mere technology upgradation or introduction of
innovative products cannot improve the state of affairs until customers don't respond to
it positively. Hence, it becomes very necessary for the banks to offer the services or
products while taking into consideration the customer s needs, preferences, perceptions
and convenience.
 PLASTIC MONEY IN INDIA

The role of various parties involved in plastic cards payment:

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
customer.
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, and American
express)

1.7-WHY WE USE PLASTIC CARDS:-

Credit cards are so much easier to carry than cash that it is not too shocking that the
former is taking over as the most preferred mode of payment. A credit card occupies
very little space in our wallets, and yet. Carries much more power than a few bundles of
cash. Paying by credit card is also a good way of keeping tabs on where all our money
keeps going. While making cash payments, it tends to get difficult to keep a track of
anything
 PLASTIC MONEY IN

But the largest bills. But in the case of credit cards, our credit card slips and our
monthly statements clearly tell us where all our money keeps disappearing.

Thanks to credit cards we can purchase anything we like at any time these days. This is
such a change from the older days when we had check whether cards were accepted.
The world is now a changed place. Today, everybody from retailers to lenders to
aircraft carries, accept credit cards. Attitudes to the credit card have changed a great
deal. Whereas people used to be vary of the idea of using the card, that it’s no longer
the case. The people of today prefer to whip out there cards as soon as they manage to
reach payment counter. A swipe and a sign is all it takes, and one can walk home with
the bill and the stuff to go with it.

Moreover, it has become a whole lot easier to get credit cards these days. Constantly2
have cold callers telephoning to update me about "a great new credit card deal".
Salespersons occasionally walk into our office offering discounts if a group of people
decides to take up that card at once. Why Credit card vendors even put up stalls at
strategic locations and these attract quite a few customers.
 PLASTIC MONEY IN

1.8-ADVANTAGES OF PLASTIC MONEY:-

1. Purchasing power:

Credit or debits cards made it easier to purchase things. Now we don't have any need to
carry hard cash in a large amount. Plastic money is accepted everywhere any time. So
plastic money is here, there and everywhere.

2. Time saving:

Through a credit card or debit card you can purchase anything from anywhere without
spend money on fare or cash transaction. Just provide your credit details to seller store
or companies and finalize your order. Now you don't have to worry about time wastes.
Use internet for minimum time consuming.

- Page 10
 PLASTIC MONEY IN
3. Extra safety:

While you are not carrying cash, how can it lost? But if your card has lost, just contact
to your bank or financial institution, which provide you cards. It will block the account
and nobody can draw a single coin without your permission. So it is 100% safe without
any tension.

4. Credit Facility:

In case of credit card you have the option of buying on credit or paying later. Although
the charges are high, it helps you in case of emergencies and Contingencies.

5. Risk of Loss or Theft minimized:

In case of cash there is a high risk of losing cash and a chance of cash getting stolen.
However, in case of debit/credit card you can report the matter to the bank and block
the card to avoid misuse.

6. Cash vs Card: which one will you go for? If you are the one who always forgets
your PIN number, cash is the best option for you. As saving the PIN in mobile is not a
good idea. What if mobile gets lost? We need to think about all possibilities as it is our
hard earned money. There are many advantages of carrying plastic money. The
convenience, the quality of cards when compared to bank notes, difficulty to duplicate
easily like notes ETC are a few to name. You need to get a better idea of the
advantages, isn't it? Let us learn in detail the advantages of using plastic money instead
of cash.
 PLASTIC MONEY IN INDIA

7. Cards fit into the wallet easily:

It is essential that we need to have some sort of money in hand always as we never
know when a need arises. But carrying a lot of cash in hand is not at all a wise idea.
Also, who would want to carry a lot of cash in hand and make their wallet bulge out. In
such situations, plastic money comes for help. Your wallet will remain perfect and your
cash needs will also be sorted out. If required you can take cash using plastic cards.
Also, it is safe when you have a card with you as even if it is lost, you can always call
the bank and ask them to block it. This avoids misusing the card by any. But when it is
cash, you are not left with that option and you will end up losing your money. Cards are
waterproof hence you don't have to get panicked even if water spilled over your wallet.
They are strong and
durable.

8. Crime rates will decrease:

We are living in a world where thefts and crimes are on the increase. Keeping cash in
hand is not a safe thing to do. It will not give you peaceful nights. So be practical and
opt for plastic money. You do not have to worry when someone runs away with your
wallet, as long as you only have plastic money in it. The guy needs, PIN number to use
it hence he can't take the cash or swipe it. As soon as you know that you are
pickpocketed, you can call the bank and ask them to block or cancel the card. If it was
actual cash in its place, then it is easy for the thief. He can easily take the cash and
throw the wallet somewhere. But with plastic money, his job has become a difficult one.
He needs to know cracking techniques to find the PIN number to use the cards. Hence
worries associated with theft will be less in case of plastic money. Another merit is that
the fingerprints on a plastic card are more
Clear than that on bank notes.
 PLASTIC MONEY IN

1.8.1-DISADVANTAGES OF PLASTIC MONEY:-

1. Terms & Conditions:

Have you heard the phrase 'All that glitters are not gold"? Though debit/credit cards
may have innumerous benefits, most of them usually come with complicated terms and
conditions, which you might not understand or comprehensive initially. However, with
time, as you get to know the nuances of these 'dirty' terms and conditions, it might be
too late.
 PLASTIC MONEY IN

2. Too Much Of Credit:

One of the most evident and apparent problems with plastic money, mainly credit cards,
is that it gives you unwanted freedom. As a result, you go on a shopping rampage,
without even once bothering about the consequences. Plastic money allows people to
build up more debts than what they can handle. While you may be in high spirits after
the recent shopping expedition, be vary that cost may be too much to handle.

3. Risk of Loss &Misuse:

The danger of losing a debit/credit card is something, which most card owners' fear.
Though you might start thinking of the world as a good place and people living in it as
angels and seraphs, reality is not all that sweet, especially when you have lost or been
robbed of plastic money. It is seen that hefty purchases are made under the name of the
account holder after the card gets lost or stolen and you end up paying for things, which
you have neither bought nor own.

4. Less global availability:

There are many cases where various companies do not permit their cards to be used in
areas where they have a regional dispute with an purposes.

5. Plastic Money is also not 100% safe:

There is a certain amount of risk involved in transactions which involves plastic money
as well. Especially when doing online shopping. We are exchanging the details relating
to our card over the internet which is not always a safe place. Some websites are just set
up to steal our financial information and loot money thereby. We should not fall in to
such scams and hackers.
 PLASTIC MONEY IN

1.9-TYPES OF PLASTIC CARDS:-

 PLASTIC MONEY IN

CREDIT CARD:

In very simple words credit card can be termed as an unsecured personal loan offered to
customers by the banks where the card holder could purchase Good and services form
authorized merchant of the bank up to fixed limit on credit. Such credit is normally
made available for a period of 30 to 45 days. A credit card can also used to secure
Airline tickets and car rentals. Having a Credit card can make purchases easier,
however a credit card should be used responsibly so that the customers does not over
extend his finance.
 PLASTIC MONEY IN

DEBIT CARD:

Debit card are substitutes for cash or cheque 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 payment, the total amount charged is instantly
reduced from you bank balance. Don't borrow on your credit card! Here's why. A debit
card is only accepted at outlets with electronic swipe-machine that can check and
deduct amounts from your bank account.
 PLASTIC MONEY IN

CHARGE CARD:

A charge card carries all 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 considering as defaulter and usually have to pay up a steep late
payment charges. When you use a credit card you are not declared a defaulter even if
you miss your due date. A 2.95% late payment fees (this differ from one bank to
another) is levied to your next billing statement.
 PLASTIC MONEY IN

Forex card:

Forex cards are the latest entry into the travel currency market. These cards have seen a
steady increase in their popularity over the past few years. Forex cards are an easy way
of carrying currency from country to country. They are easy to buy and load with money
for your next trip abroad Forex cards are useful financial instruments for anyone that is
traveling abroad. Forex cards are a great option for individuals that lack access to a
credit or banking services. You can use the forex card at lots of different retail stores,
merchants, hotels and business establishments.
 PLASTIC MONEY IN

Cash card (ATM):

A cash card can be any card that you can insert into an ATM or other cash dispenser or
pre-paid credit card with a present cash value from a particular store which is read by a
cash reader and used to pay for products or services at that retailer.

- Page 20
 PLASTIC MONEY IN

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 fare and coffee. No
identification, signature or payment authentication is required for using this card. The
extract amount of purchase is deducted from smart card during the payment and is
collected by the smart card reading machine. No change is given, currently the product
available only in very developed countries like untied state and is being used only
sporadically in India.
 PLASTIC MONEY IN

PHOTO CARD:

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

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 customers. A
debit card with a difference For example, the city-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.
 PLASTIC MONEY IN

GIFT CARD:

A prepaid payment card that contains a specific amount of money and that anyone can
purchase and use, regardless of their credit store. Gift cards can be used for May
purposes as credit card, but because they do not involve taking on debt, they do not
require a credit check. Gift card fill the role that paper gift certificates used to play, but
Additional features thanks to improvement technology.
 PLASTIC MONEY IN

1.10-IMPACT OF PLASTIC MONEY ON INDIAN

BANKING TRENDS:-

Indian economy has flourished with the advent of liberalization, privatization and
globalization. Banking sector is not an exception too. These reforms have presented a
challenge before Indian banking sector to shake hands with pace of new technology.
Hence, it becomes necessary for the banks to offer the services or products while taking
into customer's needs, preference and convenience. As electronic banking and plastic
cards is the new trend significantly adopted by banking sector worldwide due to its
wider scope for the customers as well as banks at large now become possible for banks
to deliver products and services efficiently to improve customer base without opening
new branches.

Due to the technological revolution in financial sector, the payments in banking system
have undergone a tremendous change. The Number of innovative products for making
payment has developed after the privatization and globalization. Customers have
showed
 PLASTIC MONEY IN

Their preference over the usage of the plastic money generally over a period of time in
the banking process. Plastic money is an alternative to the cash or the standard ‘money'.
Plastic money is referring to the credit cards or the debit cards that we use to make
purchases. Various other types of plastic cards provided by banks in India are ATM
cards, Smart cards. The current study presents overview of the development of banking
in the plastic cards usage trends since these have been introduced in Indian banking
sector. The factors for adoption of plastic money in replacement of cash and paper
money have been identified which shows the preference of the customers for plastic
cards over the cash and paper money. Some future plans made by various banks and
institutions for avoiding the frauds arisen due to the credit and debit cards are also been
discussed in a way that it depicts the picture of its future growth and prospects in India.
 PLASTIC MONEY IN

1.11-TYPES OF FRAUDS:-

Application Fraud:
The fraudster obtains all information of a person who would be eligible to get a card. He
then applies to the issuer with that person's information except for the address. The
residential address of that person is substituted within fraudster's temporary address. A
variation of this fraud is that the fraudster obtains the card details of a genuine card-
holder. He then calls up the issuer pretending to be the genuine cardholder to report his
card as lost and to request the issuer to send the card at the new address. If the bank does
not call up the card holder to confirm or verify the change in address, the fraudster will
get a genuine card on which he can run up whopping bills.

Duplicate Card:
The duplicate fraudulent credit cards are those where the defrauders have made sincere
efforts to duplicate the original cards through photomechanical processes. They follow
the footsteps of the original manufacturers of the genuine credit cards to produce as
close a replica of the genuine card as possible, employing similar materials and
similar
 PLASTIC MONEY IN INDIA

Processes of printings and embossing, besides magnetic encoding. In fact the work is
being professionally done by some gangs.

Terminal Takeover Fraud:

In this fraud, the fraudster does not collude with the merchant, instead he possess as the
acquirer's employee and proceeds to examine the working of the terminal. He will find a
fault in the machine and replace it with another machine. This machine is capable of
performing the same functions as that of the bank's terminal and in addition also has the
facility to store the credit card information obtained through the magistrate. After a few
days, the fraudster returns the machine claiming that it has been repaired. He replaces
his own machine with the original machine and disappears - along with all the
confidential credit card data.

Identity Theft:
One of the boom fraud type is identity theft. The simple fact, however, is that identity
theft existed long before the internet. What the internet has done is to facilitate both the
ease with which other people's information can be obtained and then used. Identity theft
is a blissfully concept; the fraudster illegally acquires and uses an innocent person's
personal details, credit as account information to obtain money, credit goods, services
and anything else of value. All such spending or goods ultimately end up being
recorded on the innocent victim's credit record. There have been numerous way of
acquiring the required personal information to commit identity theft including stealing a
wallet or a purse, going through trash and picking out financial statements or credit card
slips or taking mails directly

Shoulder Surfing:
This is another very simple technique where the fraudster employees to get himself into
possession of an innocent customer's confidential financial information. The fraudster
stands behind the genuine customer at ATM center and pretends that he is on queue to
get
 PLASTIC MONEY IN INDIA

Cash withdrawal from ATM. While the genuine customer performs the banking
function, he steals the PIN numbers to use it in fraud after the customer has gone. These
cases are becoming common as ATM machine are not monitored an account of how
many customers entering the ATM machine room. Banks should increase security like
closed circuit camera which is monitored 24 x 7, to mitigate this kind of menace.

1.12-PREVENTION &DETECTION:-

In the retail environment, there is a need for verification of the card holder's Identity at
the point of sale. Current techniques, such as the visual inspection of Signatures or the
use of holograms offer some protection against plastic card fraud. Unfortunately,
knowledge can be stolen or replicated and signature can be forged. While photographs
and PINs discourage forgery, they fail to link the card uniquely with its authorized user.
Many banks use sophisticated "artificial intelligence" of neutral networks, statistical
models and other predictive techniques to find unusual spending patterns and thereby
pre-empt fraudulent transactions. “Smart cards" use embedded Computer chips instead
of
 PLASTIC MONEY IN INDIA

Magnetic strips to secure information. France has used this technology successfully but
the option has not succeeded globally yet. While biometric technologies have the
potential to reduce plastic card fraud. Using biological traits such as retinal or iris
scanning, finger prints, or face recognition - is routed as the future of the payments
industry. But there are several problems which must be addresses before they can be
used in retail environments. One of prime concern is the recognition performance of the
biometric technology sometimes even legitimate user may object to providing prints.
Ideally, the technique used must cope with the requirements that it must reject all
imposters while at the same time not rejecting valid customers. Most biometric
technologies are still in the early stages of the development life cycle. To improve
reliability and reduce costs in the long term, it is difficult to predict which of the
biometric technologies will become dominant Merchant and customer’s ignorance
about card security features and guidelines frustrate card issuers.

At institutional level all card issuers like VISA, MASTER and AMEX must have their
own unique features to prevent the fraud or misuse of the credit cards. Computer edits
are inbuilt in some cards, so that the user is fixed a limit in terms of number of times the
card is used or the amount of money spent in a particular month. Credit card fraud could
be reduced substantially by giving holders a secret Personal Identification Number
(PIN) that they have to punch in before every transaction. Cards with PINS are
available in many countries, but switching to such a system a complicated and
expensive.

At merchant level staff members handling cards should be trained on card Security like
hot listed cards and suspicious behaviour of cardholders. Merchant establishments
should maintain card data securely in computer systems and records. They should keep
a close tab on employees handling credit cards. They should be subject to the same
level of safeguards as if they were handling money. For security precautions such as
store cameras and staff identification should adequately maintained.

At cardholder level, cardholder should always keep the card in a safe place and never
lend to anyone. If the card is lost, stolen, retained by ATM or there has been an
- Page 30
- Page 31
 PLASTIC MONEY IN INDIA

Unauthorized transaction, cardholder should notify their financial institution

immediately. For this, cardholder should always examine the charges on credit card
statement before paying them. As a precautionary measure, the cardholder should not
give credit card number, personal information, and bank account number over the phone
or to any person or company having only a web site or mailbox drop. It is advisable for
the cardholder not to carry extra credit card or other important identity documents
except when needed. Some preventive tips should be followed by the cardholder like
don't allow sales clerk to copy credit card numbers on checks for additional information
or to use credit card as identification, use a credit card instead of a debit card; debit card
don't have maximum liability for fraudulent use, sign credit cards in permanent ink as
soon as they are obtained, don't let waiters, sales clerks or gas station attendants
disappear from view with credit or debit card; to avoid "skimming". Crooks can copy
the information from card's magnetic strip.

By Installing firewalls and virus detection software on home computers can discourage
hackers. If cardholder becomes a victim, they should immediately report the crime.
Filing a report with local police and keeping a copy with themselves will make it easier
to prove their case to creditors and merchants and may help them to build lawsuit if
cardholder have to sue to recover losses. As long as credit cards in existence, the related
credit card frauds are bound to Happen. Many fall prey to the fraud. The issuer looks
for newer methods to prevent such frauds. It is in their own interest that the cardholders
should keep their cards safely and use the cards wisely to protect themselves from
frauds.
 PLASTIC MONEY IN

1.13-RBI GUIDELINES:-

Issue of cards:
Banks should assess independently the credit risk and ensure prudence while with no
issuing credit cards to persons, especially to students and others with no independent
financial means. As holding of several credit cards enhance the credit limit to the credit
card holder, banks should assess the credit limit on the basis of self-declaration/credit
information.

Banks should convey in writings the main reason/reasons for rejection of the loan
applications for credit cards.

The card issuers are solely responsible for fulfilment of all KYC requirements, even
where DSAs /DMAs or other agents solicit business on their behalf.
 PLASTIC MONEY IN

While issuing cards, the most important terms and conditions for issue and usage of a
credit card should be mentioned in clear, unambiguous and simple language (preferably
in English, Hindi and the local language) comprehensible to a card user.

Interest rates and other charges:

Banks are required to maintain transparency in respect of prescribing ceiling rate of
interest and they should publish through their website and other means the interest rates
charges to various categories of customers. Banks should upfront indicate to the credit
card holder, the methodology of calculation of finance charges with illustrative.

The banks should not levy any charge that was not explicitly indicated to the credit card
holder at the time of issue of the card and without getting his/her consent. Changes in
charges (other than interest) may be made only with prospective effect giving notice of
at least one month There should be transparency (without any hidden charges) in
issuing credit cards free of charge during the first year.

Banks/NBFCs have to ensure that there is no delay in dispatching bills and the customer
has sufficient number of days (at least one fortnight) for making payment before interest
starts getting charged so as to obviate the frequent complaints of delayed billing they
may also consider providing bills and statements of accounts online, with suitable
security built therefore.

Wrongful billing:
Bank should ensure that wrong bills are not raised and issued to customers. Any
grievances, on this count, should be redressed amicably to the customer within a
maximum period of sixty days.
 PLASTIC MONEY IN

Protection of Customer Rights:

Customer's rights in relation to credit card operations primarily relate To personal
privacy, clarity relating to rights and obligations, preservation of customer records,
maintaining confidentiality of customer information and fair practices in debt
collection.

Use of DSAs/DMAs and other agents:

Bank while outsourcing the various credit card operations, should extremely careful that
the appointment of such service providers does not compromise with the quality of the
customer service and the bank's ability to manage credit, liquidity, operational risks and
the confidentiality of the customer's records, respect customer privacy, and adhere to
fair practices in debt collection Banks should prescribe a Code of Conduct for their
Direct Sales Agents (DSAs) whose services are engaged by banks for marketing their
products/services and further ensure that the DSAs scrupulously adhere to the Code of
Conduct and the same may be displayed on the individual bank's website and be
available easily to any credit card holder.

The bank should have a system of random checks to ensure that their agents have been
properly briefed and trained and conveying the correct terms and conditions of the
product on offer and customers' privacy, etc. The card issuing bank would be
responsible as the principal for all acts of omission or commission of their agents
(DSAs/ DMAs and recovery agents).

Right to privacy:
Card issuing banks avoid issuance of unsolicited cards which attracts penalty besides
such persons approaching the Banking Ombudsman for compensation for loss of time,
expenses, harassment and mental anguished.

It is the responsibility of the card issuing bank for any misuse of the unsolicited cards
and the person in whose name the card is issued cannot be held responsible for the
same.
 PLASTIC MONEY IN

The consent for the cards issued or the other products offered along with the card has to
be explicit and should not be implied. Unsolicited loans or other credit facilities should
not be offered to the credit card customer .The card issuing bank/NBFC should not
unilaterally upgrade credit cards and enhance credit limits or effect any change in terms
and conditions without prior consent of the card holders.

Maintenance of the Do Not Call Registry (DNCR) and strict compliance of avoiding
unsolicited calls/SMS for marketing of the products should be put in place.

Proper monitoring of the calls being made by DSAs/ DMAs /Call Center’s for
marketing purposes should be made so as to have a healthy practice.

Customer confidentiality:
Confidentiality in respect of customer details should be maintained and banks should
not reveal any information without obtaining specific consent of the customers in
writing .In case of providing information relating to credit history / repayment record of
the card holder to a credit information company (specifically authorized by RBI), the
bank may explicitly bring to the notice of the customer that such information is being
provided in terms of the Credit Information Companies (Regulation) Act, 2005.

Reporting default status of a credit card holder to the Credit Information Bureau of
India Ltd. (CIBIL) or any other credit information Company authorized by RBI, banks
should ensure that they adhere to a procedure, duly approved by their Board, including
issuing of sufficient notice to such card holder about the intention to report him/ her as
defaulter to the Credit Information Company.

Insurance cover to cardholders:

Banks may arrange for insurance cover to their credit card holders, of course upon
obtaining in writing the details of nominee/s, etc. for settlement of any claim in future
and the same may be forwarded to the insurance companies.
 PLASTIC MONEY IN

Redressal of Grievances:
Bank should constitute in house Grievance Redressed machinery and genuine
grievances of credit card subscribers are redressed promptly without involving delay.
Generally, a time limit of 60 (sixty) days is given to the customers for preferring their
complaints / grievances.

Bank is required to dispose of the complaint within a period of 30 days of lodgement

of the same. The complainant can approach Ombudsman for redressal of his grievances
in case he does not receive satisfactory response within the timeframe. Bank would be
held responsible and liable to pay compensation for the any consequences. The name,
designation, address and contact number of important executives as well as the
Grievance Redressal Officer of the bank may be displayed on the website.

Internal control and monitoring systems:

Standing Committee on Customer Service in each bank is required to review on
monthly basis the credit card operations including reports of defaulters and credit card
related complaints so as to ensure improvement in the services for an orderly growth in
the segment. Card issuing banks should have in place a suitable monitoring mechanism
to randomly check the genuineness of merchant transactions also.

Fraud Control:
Banks should set up internal control systems to combat frauds and actively participate
in fraud prevention committees/ task forces which formulate laws to prevent frauds and
take proactive fraud control and enforcement measures.
With a view to reducing the instances of misuse of lost/stolen cards, it is recommended
to banks that they may consider issuing (i) cards with photographs of the cardholder (ii)
cards with PIN and (iii) signature laminated cards or any other advanced methods that
may evolve from time to time.
 PLASTIC MONEY IN

Additional authentication/ validation based on information not visible on the cards for
all on-line card not present transactions including IVR transactions (RBI Cir.
RBI/DPSS No.2303/02.14.003/2009-2010 dated April 23, 2010)
A system of "Online Alerts" to the cardholder for all 'card not present' transactions of
the value of Rs.5000/- and above. (RBI Cir. DPSS.CO.PD.2224/02.14.003/2010-11
dated March 29, 2011).

Banks are advised to block a lost card immediately on being informed by the customer
and formalities, if any, including lodging of FIR can follow within a reasonable period.

Right to impose penalty:

Reserve Bank of India reserves the right to impose any penalty on a bank under the
provisions of the Banking Regulation Act, 1949/the Reserve Bank of India Act, 1934,
respectively for violation of any of these guidelines.
 PLASTIC MONEY IN

1.14-CHALLENGES FACED:-

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. have created a win-win situation by extending great convenience & multiple
options for customer. 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. They also need to identify potential
customers and target those using mailers. As internet is growing at a fast rate the net
users can be targeted by having interactive sites. The prospective company’s card
personality could also be used in the home page to solve customer queries in the Best
Possible Manner. Overall, there is currently a lot of innovation taking place in the
following areas in India, which will encourage development of a cashless society and
help the market move towards the idea of new payment methods.
 PLASTIC MONEY IN INDIA

1.15-Future prospects:-

Smooth, simple and secure payment processes will help bring about Behavioural changes
And faster adoption of digital payments and banking among un-banked segments, when
new players enter the market, each with a slightly different take on the market and with
differing business models, the increased competition will help the environment and
offer more options for consumers to choose from. A larger pie with more players is
definitely good for the changing dynamics of the payments industry, which is still
nascent in India.

Indian consumption is still dominated by cash, with cards contributing only 5 per cent
of the personal consumption expenditure. In developed countries, 30-50 per cent of
spends happen through cards. So there is huge growth opportunity.
The rapid growth of smart phones, Internet penetration and e-commerce is
complementing these; card payment volumes have been growing in excess of 25 per
cent
 PLASTIC MONEY IN INDIA

y-o-y. “We expect this trend to continue, aided by the continued increase in debit card
activation and usage; debit card transactions have been growing at 31 per cent each
year.

Intense competition and strategic collaboration among existing and new market
participants like the payments and small banks and wallets will help scale up acceptance
and foster more creativity, innovation and consumer choice. According to him, the
future holds exciting times for the payments industry in India, as all stakeholders and
regulatory authorities come together to achieve a “less-cash dependent” and eventually
“cashless” society. The credit card industry in India sees greater acceptance among
consumers this year. According to World line India Card Payment Report 2014-15, the
credit card base grew at 9.8 per cent in the past year. World line India is a leader in the
payment and transactions services in the country. Alternative methods like mobile
wallets and prepaid cash cards accounted for 3 per cent of digital transactions. This
industry has been growing steadily over the past few years. Card transactions, both by
debit and credit cards, are on an upward trajectory. There are interesting dynamics at
play in the Indian Payments industry.

- Page 40
- Page 41
 PLASTIC MONEY IN

CHAPTER NO-2

RESEARCH METHODOLOGY

2.1 Research and methodology

2.2 Executive summary
2.3 Objectives
2.4 Limitations of the study
 PLASTIC MONEY IN

2.1-RESEARCH AND METHODOLOGY:-

The methodology indicates the various sources through which the data have been
collected for preparing the project “PLASTIC MONEY IN INDIA”.

The Project will be prepared with the combination of theoretical knowledge as well as

practical knowledge and a blend of advices and suggestion from the guide of the

project.

• Various books, websites and Magazines will be scrutinized in extracting the

theoretical element. All these activities will be conducted as per the guide consent.

• Questionnaire will be prepared for both Customers and Bank Managers for

primary data collection of the project. The data collected through Primary method

will be represented graphically and Findings and Suggestions will be drawn.

• Finally, the project will be advantageously finished with various kinds of

experiences gained throughout.

PRIMARY DATA:-

This data has been collected with help of face to face interview with the branch
manager of AXIS BANK.ULHASNAGAR-5 using ‘Questionnaire’ as a tool of
research.

SECONDARY DATA:-

This data has been collected from google form, websites, newspaper, books.
 PLASTIC MONEY IN

2.2-EXECUTIVESUMMARY:-

The whole project is divided into four parts include the various chapters with sub
parts in it.

The first part of my project consists of introduction banks, its origin, Functions of
bank, importance and innovation in banks.

The second part of my project consists of research and methodology. Field study of
project is based on primary data exclusively. Field study itself consist of actual.

The third part of my project consists of finding and analysis. It includes types of
plastic card, why we use plastic money, future prospects of plastic money.

The fourth part is the concluding part of my project. It consist of conclusion,

annexure and bibliography.

2.3-OBJECTIVES:-

 To know the perception of people towards plastic money.

 To study the benefits of plastic money.

 To study the types of plastic money.

 To know the present scenario of plastic money.

 To enhance my practical knowledge about plastic money.

 PLASTIC MONEY IN

2.4-Limitations of the study:-

 This paper studies about awareness and growth of E-Marketing in Ulhasnagar

city from consumer perception only.

 The study is restricted to 52 respondents only.

 Findings of the research study do not have universal applicability due to small
sample size.
 PLASTIC MONEY IN

CHAPTER NO-3

LITERATURE REVIEW

Review of literature
 PLASTIC MONEY IN

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 patter, new method of e-payment, etc.

Vora and gidwani (1993), "plastic at premium" show the usage facilities and
varieties of cards. The research shows that a credit card is extremely useful to those
people who use it as to increase their purchasing power through the plastic card.
Different cards provide the different packages to attract the customers like tele-
ticketing, insurance coverage and provide reward points etc. According to author, the
card holder 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 customers remains credit shy. For this, they have to
change their spending habits and keep their cards active, so that a piece of plastic
becomes a premium card in an effective way.

Almedia (1995), “The future in cards" shows that credit card business is booming as
more than 1.1 million Indian have credit cards with them. Their numbers are expected
to g row at an even faster pace as issuing banks get aggressive. Studies show that more
than 4000 business establishments in the country accept credit cards. The country now
provides all the ingredients for a healthy credit industry: a rapidly expanding,
increasingly acquisitive middle class and greater transparency in financial system.
Acquiring banks for business from merchant establishment has brought the commission
down and if the issuing banks happens to be also the acquiring banks, it get the entire
merchant discount. Finally, no payment system can ever replace cash in India on wide
spread basis.

Magenty (1996), "Changing Dimension" the author discusses the emerging trends
and importance of debit cards in daily lives of Indian society. Debit cards are expected
to be in use in places where most transaction are done by cash or cheque in
supermarkets,
 PLASTIC MONEY IN INDIA

Petrol station, convenience stores. There cards are designed for customers who like
paying by plastic card but do not want credit. These cards not only keep the cardholder
debt free but also provide a detailed account spending. These types of cards are ideal for
those for have tight budget and want to keep within it. Study shows that there are types
of debit cards I.E. on line and off line debit cards. With the computerization and
modernization plastic money will become the status symbols in the 21 century of Indian
traditional bound society.

Gupta (2003),"legal and regulatory framework of credit cards" asserts that the
regulations of credit card business in India is diffused and need to be streamlined.
Whereas in developed countries the law on credit card business in comprehensive and
straight forward, its Indian version requires a structural changes. Hence there is a need
to explore that version requires a structural change. Hence, there is need to explore that
version legislative premises of the inferior and unclear Indian version for protection of
interest of cardholders and healthy growth of the industry.

Loewenstein and Hafalir in (2012) conducted a study on "The Impact of Credit

Cards on Spending". The study focused on two types of customers, revolvers (who
carry debt) and convenience users (who do not carry debt), and measured the impact of
payment with credit card as compared with cash by an insurance company employees
spending on lunch in a cafeteria. It was found that there was change in the diner's
payment medium from cash to a credit card when an incentive to then found out that
credit cards do not increase spending. However, the pay with a credit card was given. It
was use found credit cards has a differential impact on spending for revolvers and
conenience users. Revolvers spend less when induced to spend with a credit card,
whereas convenience users display the opposite pattern.

P Manivannan (2013) in his research paper "Plastic Money a way for cash Less
Payment System" examined that Plastic Money i.e. usage of Credit card was measured
a luxury, and has become needed. These plastic money and electronic payments was
and
 PLASTIC MONEY IN

Used by only higher income group. This facility extended not only to customers in
urban areas or cities, but also to customers residing in rural area. However, today, with
development banking and trading activity, the fixed income group or salaried classes ar
also start using the plastic money and electronic payment systems an particularly Credit
cards.
 PLASTIC MONEY IN

CHAPTER NO-4

DATA ANALYSIS AND INTERPRETATION SURVEY

DATA ANALYSIS

INTERPRETATION OF SURVEY
 PLASTIC MONEY IN

Total number of people survey:-54

- Page 50
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
PLASTIC MONEY IN
 PLASTIC MONEY IN

- Page 60
PLASTIC MONEY IN
PLASTIC MONEY IN
 PLASTIC MONEY IN

CHAPTER NO-5

CONCLUSION AND SUGGESTIONS

Conclusion

Bibliograp

hy
 PLASTIC MONEY IN

CONCLUSION:-

In the last two years, spending pattern through plastic money has changed drastically.
Travelling, dining and Jewellery are the top three purchases that Indians make through
credit cards. Two years ago, it was jewellery and apparel purchases that formed the
largest chunk of purchases through plastic money. Fuel accounts for a very small
portion 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 in bringing about such robust growth over
the space of a single year. Debit cards, in particular, proved immensely popular.

Today it is impossible to imagine modern bank operations, commercial transactions and

other payments without using the plastic cards. Plastic currency is now gradually
becoming the norm across the globe as more and more developed countries are opting
for plastic compared to paper as there are several inherent advantages. The growing
incursion of smart phones has made technology applications much more accessible to
users. The Government’s also move forward for a “Digital India” and its focus on
growing electronic payments is significant drivers of growth in replacing physical
payments with technology-backed solutions. India is at the cusp of a tectonic shift
towards electronic money from traditional cash. for instance the Pradhan Mantri Jan
Dhan Yojana (PMJDY), is slowly building recognition among people to move from
paper to electronic money. The PMJDY alone has seeded over 150 million Rupay cards
in the last year, in addition to the 400 million debit cards already in circulation. There is
still emergence for significant increase in the usage of debit cards in the years to come
as card.
 PLASTIC MONEY IN

SUGGESTIONS:-
From the above conclusion, we had Came to know the importnace and usage of the
plastic money. So, each and every person has to uses the plastic money as it saves
times, efforts, and many more things.
And also the availability of the plastic money can be as more as possible.
 PLASTIC MONEY IN

BIBLIOGRAPHY:-

BOOKS REFERRED:
Principles & Practices of Banking & Insurance an Overview of Banking Sector

WEBSITES REFERRED:

▪ www.scribrd.com
▪ www.slideshare.com
▪ www.rbi.com
▪ www.axi sbank.com
 PLASTIC MONEY IN

QUESTIONS AND ANSWERS (FROM CUSTOMERS):-

1) Age:
o 18-25
o 25-35
o 35-50
o Above 50 years

2) Profession:
o Student
o Business
o Service
o Other

3) Annual income:
o 0-180000
o 180000-300000
o 300000-500000
o Above 500000

4) Idea about plastic

money? o Credit
card
o Debit card
o ATM card
o other
 PLASTIC MONEY IN

5) Do you have?
o Credit card
o Debit card
o ATM card
o Specific outlet card

6) According to you, which is convenient way to

pay? o Cash
o Card
o ECS
o Cheque
o DD
o other

7) How do you prefer to pay your utility

bills? o Cash
o Card

o ECS

o Cheque

o DD

o other
 PLASTIC MONEY IN

8) How do you make payments for purchase of luxury & durable

goods? o Cheque

o Cash

o Card

o ECS

9) While travelling according to you which is the preferred way to

payment? o Cash

o Card

o Cheque

o Traveller’s cheque

o DD

10) Do you find use of credit card/plastic money to be safest modes of

transaction? o Yes

o No

o No comments

12) Why do not prefer plastic money?[Answer this question only If answered ‘NO’ in
question above question]

o Instable income

o Lack of knowledge

o Malpractices by banks

o Lack of trust

o Misuse by others
 PLASTIC MONEY IN

13) Do you find credit card to be expensive as many charges are

charged? o Yes

o NO

14) Which you consider more reliable &

secured? o Paper

o Plastic

o Both

o No comments

- Page 70