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Winter Project Report SSCMR 2009-2011 TABLE OF CONTENT 2
CHAPTER NO. 1. Winter Project Report SSCMR 2009-2011 2. TOPIC OBJECTIVE OF STUDY NEED &SCOPE OF THE STUDY INTRODUCTION PAYMENT OPTIONS C ONCEPT OF CREDIT CARDS DEFINITION OF CREDIT CARDS PAGE NO. 4 5 6-8 3. 4 HISTORY OF CREDIT CARDS 8-10 5. PARTIES INVOLVED IN CREDIT 11 CARDS 6. 7. 8. 9. 10. DIFFERENT TYPES OF CREDIT 11-13 CARDS PROCESS OF CREDIT CARDS FUNCTIONS OF CREDI T CARDS FEATURE OF CREDIT CARDS ADVANTAGES DISADVANTAGES OF CARDS NEED OF CREDIT CARDS INTRODUCTION OF DEBIT CARDS TYPES OF DEBIT CARD SYSTEMS WORKING OF DEBIT CARDS ADVANTAGES DISADVANTAGES OF 14 15 16-17 & 19-21 CREDIT 22-24 25 26 27 AND 29-31 DEBIT 32-33 34 34-39 11. 12. 13. 14. 15. 16. 17. 18. CARDS DEBIT CARDS V/S CREDIT CARDS TYPES OF DEBIT CARDS RESEARCH COMPARISION BET WEEN HDFC 3 19. BANK & ICICI BANK FINDINGS & 40
Winter Project Report SSCMR 2009-2011 OBJECTIVES OF STUDY Primary objectives • To know the perception of people towards plastic money.
Secondary objectives • • • • • To know the importance of plastic money in the daily life of consumers’ W.R.T cre it and debit cards. To study the benefits of debit card and credit cards. To fin d out the market leader among the various banks/companies issuing credit and deb it cards To know the problems faced by respondents using plastic money. To study the satisfaction level of consumers towards plastic money. 4
Winter Project Report SSCMR 2009-2011 NEED AND SCOPE OF THE STUDY Need of the study It is rightly said the plastic money is need of hour. Corporate might. There are ma ny ethical issues and challenges in the market of plastic money which is require d to be studied. Reputation boosting. That’s why study is focused on consumer perception regarding the plastic money. Need of the study is to get to know about the comparative analysis of plastic money. The float. This study is concerned with the Seven perks of plastic money C onvenience. Scope of study: the following are the areas covered by plastic money: 5 . Cops and robbers. Openness to negotiations. But after considering the review of litera ture it is seen the whole payment process of processing these cards is not safe and customer are facing many problems relating to plastic money. People a re using these cards on a vast scale. Budgeting technology.
is a new and easier way of paying for goods and services. etc. ATMs. credit cards offer consumers an easy way to track expenses. Plastic money was introduced in the 1950s and is now an essential form of ready money which reduces the risk of handling a huge a mount of cash. Credit cards As well as convenient. Credit cards are fi nancial instruments. which is necessary for both monitoring personal expenditu res and the tracking of work-related expenses for taxation and reimbursement pur poses. The concept of credit card was used in 1950 with the launch of cha rge cards in USA by Diners Club and American Express. Basically banks. They declined to say how many companies have been notified. It includes debit cards. INTRODUCTION Plastic money or polymer money. Credit cards. A number of banks in India are encouraging people to use credit card. Credit card in India became po pular with the introduction of foreign banks in the country. "There is tremendous p otential for debit cards. One of the main reasons for introducing plastic money. Visa and MasterCar d both confirmed yesterday that they had been notified of the breach and had in turn notified several banks and credit card companies of the potential data comp romise.Winter Project Report SSCMR 2009-2011 ATM cards are slowly being transformed into value-added debit cards. Credit card however became more popular with use of magnetic strip in 1970. especially c redit cards is to reduce the risk 6 . Utility payments will soon be made through debit cards. It will soon be substituting cheques. either at the ATMs or at the counters. It was introduced around and has now become an essential form of ready money. smart cards. are used as substitutes for currency Credit cards in In dia are gaining ground. va riants of plastic money. retail stores and other businesse s issue these. which can be used more than once to borrow money or buy pro ducts and services on credit. accessible credit. Bankers and analysts see tremendous scope for growth in debit cards. T he debit card can be used to withdraw cash from ATMs of other banks depending on whether the debit card-maker has a Visa or a Maestro tie-up. made out of plastic.
Major Banks issuing Credit Card in India • • • • • • • • State Bank of India credit card (SBI credit card) Bank of Baroda credit card or BOB credit card ICICI credit card HDFC credit card IDBI credit card ABN AMRO cre dit card Standard Chartered credit card HSBC credit card 7 . The Be st credit cards in India are usually meant for specific user group such as women . Use it effectively and take good advantage of the time line and clear your deb ts. And even the local ki rana shops have the famous lines Aaj Nagad. While it ensures ca sh flow. The growth and popul arity of plastic money in India has been phenomenal in the last few years. credit tomor row). Credit cards can be a useful tool at the hands of savvy consumers who can e ffectively use the benefits offered by cards. Kal Udhari (cash today. The arrival of malls. Indians have been averse to cre dit cards. The unprecedented growth i n the number of credit card users has stimulated the Indian economy by a signifi cant extent. multiplexes. online shopping stores and shopp ing complexes have contributed to the growth of the use of plastic cards. This is primarily because they believed that spending through credit is a sure shot way of getting into the debt trap.It is important to know that credit card is a financial tool that needs to be used responsibly. In th e present day world. students and small business owners. no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions.Winter Project Report SSCMR 2009-2011 of handling a huge amount of cash by individuals/merchants. These cards are offered to the prospective customers with appealing deals. it is not advisable for customers to borrow for a longer period of time . without any additional costs.But the situation is not actually that scary. And it is all about right tim ing. movies highlighting the sad state of a borrower did not exactly help matters. Over the years. Of course.
Winter Project Report SSCMR 2009-2011 • Citibank Credit Card Global player in Credit card market are Master Card.previously known as bank identificati on number (BIN). Diners Club International. American Express .These identify the institution that issued the to the card holde r The IIN ranges used by the major card schemes are VISA: Card number start with a 4.51 and 55 Diners Club: Card number beginni ng 36 or 38 Amex Ex: Card number beginning 34 or37 PAYMENT OPTIONS Concept of credit card 8 . Master Card: Card start with No. VISA Card. The first 6 digits of credit cards number are known as the issuer identification number (IIN).
In very simple words credit card can be termed as an unsec ured personal loan offered to customers by the banks where the card-holder could purchase goods and services from authorized merchant or merchant establishments (MEs) of the bank up to a fixed limit on credit. form booklet or other document or thing given to an individual b y a person carrying on a consumer credit business. who undertakes:• • That on the production of it (whether or not some other action is also That were . Consumer Cr edit Act 1974 of the UK which defines a credit-token as a card. It allows the card issuers to limit the sum of money the card-holders wish to spend. however.Winter Project Report SSCMR 2009-2011 Progress in civilization in its turn has brought out radical changes in the mann er of trading. Such credit is normally made a vailable for a period of 30 to 45 days. coupon. Definition of credit card A credit card is a credit-token within the meaning of section 14(1). cash. voucher. A credit card can also be used to secure airline tickets and car rentals. a credit card should be used 9 . in return for payment to h im by the individual. goods and services ( whether or not deducting any discount or commission). cheque. goods and services (or any of them) on credit. and this is where plastic cards have proved their worth. Cash in the form of currency notes and coi ns makes up just one form of the payment system. he will supply. The spending o f cardholders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared. the third party supplies cash. The requirement for greater flexibility and convenience has led to electronic paymen ts. stamp. on the production of it to third party (whether or not any other required). Development in banking while al so giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Having a credit card can make purchases and re servations easier. or action is also required).
the credit card became a part of the information age. commer cial and agricultural transactions. electronics and telecommunications. With the magne tic strip in 1970. cheques. In the 1920s shopper’s plate – “buy now. In 1951. Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants. future society. While ancient society was confronted with the problems of ad justing mutually satisfactory rates and basis of exchange. HISTORY OF CREDIT CARDS Our society was once upon a time functioning without money. From the 18th century until the early part o f the 20th.. currency notes. Money as a medium of exchange will serve its function. would settle financial transactions instantly. Diners Club and American Express launched their c harge cards in USA. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. It could only be used in s hops which issued it. with the help of computers.000 years ago. The first adver tisement for credit was placed in 1730 by Christopher Thornton who offered furni ture that could be paid off weekly. The bill of exchange – the forerunner of bank notes .Winter Project Report SSCMR 2009-2011 responsibly so that the consumer does not over extend his finances. Credit cards are usually issued by banks or other financial institutions.was established in the 14th century. 10 . In 1950. India has entered the stage of credit card system an d credit cards are gaining increasing relevance to facilitate industrial. The differenc e will be that in future coins. credit cards. they were called “tallymen” because they kept a record of tally of what people had brought on a wooden stick. the first ‘plastic money’. Debts settled by one-third cash and two-thirds bill of exchange paper money followed only in the 17th century. it is again likely t o become moneyless. Some c redit cards may be available online. etc. Credit was first used in Assyria. pay later” system – was introduced in USA. Babylon an d Egypt 3. tallymen sold clothes in return for small weekly payments. telepho ne and other modern means of communications. will be dispensed with in favour of records.
Carrying cash is no more a pain in the neck as consumers are relying more on the plastic card which gives them money on credit. and the bank billed the customer for the total scrip issued. The soiled notes are definitely out. signatu re of the cardholder made of plastic. New York. silver. The programme featured a fo rm of scrip that was accepted by local merchants for small purchases. 11 ¡ ¡ . Plastic money basically mea ns debit cards and credit cards which is having a magnetic stripe. global. while Hongkong Bank has 0.67 million. The industry. Currently four major bishops are rulin g the card empire---Citibank. SBI tops the list with 0.the list is endless. having issued 1. Biggins launched a credit plan called Charge-It. which is catering to over 3. According to a study conducted by State Ban k of India.22 million. smart to secure….3 million credit card customers.Winter Project Report SSCMR 2009-2011 The origins of the bank credit card have been traced to John C. Parties involved: • Cardholder: The owner of the card used to make a purchase. After the sale was completed. F rom just two players in early 80s. Credit Cards have finally arrived in India . the merchant deposited the scrip in a bank account. Among the nationalized banks. the consumer. logo. Biggins. the industry now houses over 10 major players vying for a major chunk of the card pie. HSBC and State Bank of In dia (SBI). In 19 46. Stanchart follows way behind with 0.5 million cards so far. Standard Chartered Bank.8 million card users. The card industry which is growing at the rate of 20% per annum is flooded wit h cards ranging from gold. followed by Bank of Baroda at 0. is ex pected to double by the fiscal 2003. Plastic Money: the Currency of Modern India Indian consumers have never had it so good.28 million cards. Citibank is the dominant player. a consu mer credit specialist at the Flatbush National Bank of Brooklyn.
I f you fail to do so. acquiring bank. organization. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. 12 . by the due date. American Express. American Express and Discover were pre viously the only cardissuing banks for their respective brands. Paymentech. services sold to the cardholder services on behalf of the merchant. and VisaNet. • • • • • Merchant: The individual or business accepting credi t card payments for products or Acquiring bank: The financial institution accept ing payment for the products or Independent sales organization: Resellers (to me rchants) of the services of the Merchant account: This could refer to the acquir ing bank or the independent sales Credit Card association: An association of car d-issuing banks such as Visa. Nova. but as of 2007. this is no longer the case. Nabanc o. etc. but in general is the organizati on that the merchant deals with. MasterCard. Discover. th at set transaction terms for merchants. and one company may ope rate multiple networks. Transaction processing networks include: Cardnet.Winter Project Report SSCMR 2009-2011 • Card-issuing bank: The financial institution or other organization that issued t he credit card to the cardholder. and acquiring banks. Omaha. Vital. • Transaction network: The system that implements the mechanics of the electronic transactions. Concord EFSnet. DIFFERENT TYPES OF CREDIT CARDS • Charge card A charge card carries all the features of credit cards. May be operated by an independent company. cardissuing banks. after using a c harge card you will have to pay off the entire amount billed. However. NDC Atlanta. you are likely to be considered a defaulter and will usuall y have to pay up a steep late payment charge.
Cu rrently this product is available only in very developed countries like the Unit ed States and is being used only sporadically in India. The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. • Diners Club card Diners Club is a branded charge card. • Smart card A smart card contains an electronic chip which is used to store cash.Winter Project Report SSCMR 2009-2011 At the time of using the card he is not declared not as a defaulter even if miss es due date. For instance. signature or payment authorisation is required for usin g this card. This is mo st useful when you have to pay for small purchases. It would be a good idea to check whether a member establishment does accept the card or not in advance. as a cardholder you ca n set your own spending limit. • Photo card 13 . Besides. for example bus fares and co ffee. No change is given. There are a wide variety of special privil eges offered to the Diners Club cardholder. A 2. No identification. s ince this card is typically meant for high-income group categories. it may not b e acceptable at many outlets. This card has its own merchant establishment tie-ups and does not depend on the netw ork of MasterCard or Visa. the card has its own merchant establishm ent tie-ups and does not depend on the network of MasterCard or Visa. • Amex card Amex stands for American Express and is one of the well-known charge cards.95 per cent late payment fees (this differs from one bank to an other) is levied in the next billing statement. However.
• Co-branded card Co-branded cards are credit cards issued by card companies that have tied up wit h a popular brand for the purpose of offering certain exclusive benefits to the consumer. Besides. They have built a vast network of merchant establishments so that customer’s world-wide may use their respective cr edit cards to make various purchases. When the card is used. in many cases. California.000 financial institutions that issue and market Visa products including credit and debit cards. USA. The name change occurred in the fall of 2007 as a part of Visa’s restructuring and IPO plan. is an economic joint venture of 21.. • Global card Global cards allow you the flexibility and convenience of using a credit card ra ther than cash or travellers checks while travelling abroad for either business or personal reasons. Doing this helps identify the user of the credit card and is therefo re considered safer. The company is based in San Francisco. 14 .Winter Project Report SSCMR 2009-2011 In this photograph is imprinted on a card. a certain percentage is contributed to the organization /institution by the card issue • Mas terCard and Visa MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. Visa card: Visa. and then you have what is known as a photo card. The company was originall y named Visa International Service Association. . commonly called VIS A. • Affinity card The card issuer ties up with popular organizations/ in stitutions which are often non-profit organizations (Citi-WWF card or the stanch art-Cricket cards) to offer an affinity card. your photo card can function as you r identity card as well. Inc.
credit cards have many functions and are very versatile. They can be summ arized into the following functions: 15 .Winter Project Report SSCMR 2009-2011 PROCESS OF CREDIT CARDS FUNCTIONS OF CREDIT CARDS Today.
Quasi Card and Private Label Card which may have some of the above functio ns mentioned above. the debi t will be made from the credit card account and not from the holder s bank accou nt. Although they can be used to obtain cash via ATM. Cheque encashment Cheque guaranteed as above may be used to obtain cash from branches of most banks. 16 ¡ . without charge provided no cash advance has been taken. Some bank card may have all of the above functions and some ma y not. The credit cards discussed above are bank cards. International If the card is a member of Visa Intern ational or MasterCard International. although a charge may be levie d in certain circumstances. Different bank cards have d ifferent card functions. you can use your card at many countries whe re there are a lot banks who are members of them. There other credit cards that are issued by retail stores such as Petrol Card. Charge The holder can repay the whole amount at the end of the month. Cheque guarantee A cheque drawn on a bank may be guaranteed up to a published limit provided it is accompanied by a Cheque Guarantee Card (or in some cases a Visa or MasterCard card) issued by th e bank on which it is drawn. subject to check. Cash On presentat ion at the appropriate banks.Winter Project Report SSCMR 2009-2011 Credit The holder may obtain extended credit up to an agreed limit at a publishe d interest rate. cash can be obtained. they are not debit cards. Perhaps the most significant f act to emerge from the summary of card functions is that strictly speaking. In most ca ses can also be used in ATMs to obtain cash. The functions of bank cards really depend on the indivi dual bank itself.
Winter Project Report SSCMR 2009-2011 FEATURES OF CREDIT CARDS All credit cards offer a variety of features. you can often nego tiate this fee away if you call and speak to a customer service representative. unlike a regular purchase. Fees Most credit cards charg e fees for various things. Knowing and understanding these fe atures will help to decide which card is right for. Many card companies are competing for your business and are now offering an introductory 17 . These fees can vary but are usually somewhat hefty. Plus. Because of stiff competition. The annual fee Some credit card companies charge you an annual fee just for using their card. but the interest rate for this money will be at a conside rably higher rate. Cash Advance Fee Most credit card companies will charge you a fee for cash advan ces. cash advances accrue interest charges from da y one. and it is important to know what these fees are and h ow to avoid them. Not only will they char ge you a one-time fee. where interest begins accrui ng after some grace period passes.
se t-up fees. This lowe r rate can be applied to any balances you may wish to transfer from another card . Know what the fee is before you transfer any balances. Of course. Just simply by using their card you can accumulate points that will in turn earn you rewards. Adding incentives to their offers is one of the more popular ways to ti p the scales in their favor. some companies will charge you a fee for the transfer .Winter Project Report SSCMR 2009-2011 cash advance and balance transfer rates for a specific amount of time. Incentives Since there are so many credit card companies. they are hop ing that with all this traveling. For those of you who collect and use your frequent flyer miles. frequent flye r miles on certain airlines. Incentives like rebates on purchases. Since you c an t accumulate these points without charging things on your 18 ¡ . they also have added incentives like travel insurance and car rental insurance for your convenience. What k ind of reward depends solely on the amount of points you accumulate. competition i s stiff. Although it sounds good. over-the-credit-limit fees. and return-item fees are all quite common these days and can represen t a serious amount of money out of your pocket if you get whacked for any of the se fees. Rewards Many card companies are looking to keep your business and are therefore making it worth your while to use their card. Miscellaneous Fees Things like late-payment fees. and extended warranties on purchases are just a few of the bonuses that card companies will now offer. you are using their card to foot at least some of the bill.
APRs can be fixed or variable. this is a classic case of you have to spend money to save money. No sense in paying for any features that you won t use. APR The annual percentage rate (APR) is the interes t rate applied a balance carried beyond the grace period.Winter Project Report SSCMR 2009-2011 card. balance transfers and cash advances typically do not have a grace period. If y ou carried a balance from the previous month. but the creditor m ust inform you in writing before changing the rate. Bottom line is this: Know what you need and what you don t. Your APR may increase when you re late on your payment to a particular cre ditor. and other creditors if your card agreement includes a universal default c lause. balance transfers or purcha ses. In addition. Credit cards can have different APRs for different types of balances. To find out the length of the grace period ref er to the credit card application or your credit card agreement. e. 19 ¡ ¡ ¡ ¡ ¡ ¡ . interest is applied right away. Grace Period The grace period is the amount of time you have to pa y your balance in full before a finance charge is applied to your purchase. you may not have a grace period fo r your new purchases. A variable APR changes from time to time. Your monthly st atements should also include the number of days in the grace period. A fixed APR can change. Balance transfers and cash advances usually have higher APRs than for purch ases.g. When balances don t have an applicable grace period .
• Protection of Purchases Credit cards may also offer you additional protection if something you have boug ht is lost. and car rental agencies).Winter Project Report SSCMR 2009-2011 ADVANTAGES AND DISADVANTAGES OF CREDIT CARDS ADVANTAGES OF CREDIT CARDS • Purchase Power and Ease of Purchase Credit cards can make it easier to buy things. Having a credit card and using it wisely (making payments on time and in full each month) will help you build a good credit history. not only when applying for cred it cards. In addition. but also when applying for things such as loans. While you should avoid sp ending outside your budget (or money you don t have!). putting purchases on a cred it card can make buying things easier. damaged. some credit card companies offer insu rance on large purchases. sometimes emergencies (su ch as your car breaking down or flood or fire) may lead to a large purchase (lik e the need for a rental car or a motel room for several nights. or stolen. If you don t like to carry large amounts of cash with you or if a company doesn t accept cash purchases (for exam ple most airlines. • Emergencies Credit cards can also be useful in times of emergency. • Building a Credit Line Having a good credit history is often important. hotels. or even some jobs. rental applications.) 20 ¡ ¡ ¡ . Both your credit card statement (and the credit card company) can vouch for the fact that you have made a purchase if the origin al receipt is lost or stolen.
some credit cards offer additional ben efits. This means that if you have $100 balance that you don t pay off.000 on your credit card.) While most of these benefits are meant to encourage you to charge more money on your credit card (remember. This means that you owe almost $30 interest (plus the origin al $100) at the end of the year. A good way to look at this is in comparison to what you would earn in interest from a bank or owe in interest to a bank loan: S avings accounts may pay you around 21 ¡ ¡ ¡ ¡ ¡ ¡ .0 to 2.) Consider this: If you have a $100 in savings. High Interest Rates and Increased D ebt Credit card companies charge you an enormous amount of interest on each bala nce that you don t pay off at the end of each month. This is how they make their money and this is how most people in the United States get into debt (and even bankruptcy.and the longer you wait. the more money you will owe since credit card companies charge you interes t each month on the money you have borrowed. most banks will give you at the most 2.5% interests on your money over the course of the year. and special insurances (like travel or lif e insurance.00 . bonuses such as fr ee airline miles or travel discounts. DISADVANTAGES OF CREDIT CARDS Blowing Your Budget The biggest disadvantage of credit cards is that they encour age people to spend money that they don t have. you may be able to spend up to $500 or $1. Most credit cards do not require you to pay off your balance each month. such as discounts from particular stores or companies.$2. While this may seem l ike free money at the time.50 a year on your $100 savings. This means you earn $2. Most credit card s charge you up to 10 times that amount of interest on balances.Winter Project Report SSCMR 2009-2011 • Credit Card Benefits In addition to the benefits listed above. so even if you only have $100. you will have to pay it off -. you will be charged 20-25% int erest on that $100. credit card companies start making the ir money when you can t afford to pay off your charges!) the benefits are real a nd can be helpful as long as you remember your spending limits.
Credit cards can make life easier and be a great tool . Even if you don t realize your credit card number has been sto len (sometimes you might not know until you receive your monthly statement). mos t credit card companies don t charge you or only charge a small fee. Don t spend outside your budget. 22 ¡ ¡ ¡ ¡ ¡ . o ur Personal Safety course.Winter Project Report SSCMR 2009-2011 2% interest. Pay off your balance on all of y our credit cards at the end of each month. if you owe money to a credit ca rd company. remember these simple rules: • • • Keep track of all y our purchases. like $25 or $50. if you have a loan from a bank you may pay them around 10% interest (5 times as much as you earn off your savings).) Credit Card Fraud Like cash. over the phone. sometimes credit cards can be sto len. The good news is that. but if they aren t used wisely they can become a huge financial burden. charges are yours. report it to your credit card company Don t loa n your credit card to anyone and only give out your credit card Check your state ment closely at the end of each month to make sure all You can find out more abo ut protecting your personal information by visiting immediately. If you do decide to use credit cards. you may pay them around 20% interest (10 times as much as you earn o ff your savings. unlike cash. even if the thief has charged thousands of dollars to your card. or from a Web site) a nd use your card to rack up debts. There are several things you can do to prevent credit card fraud: • • • • If you lose your card or wallet. you will not be charged for any purchases that someo ne else has made. information to trusted companies or Web sites. They may be physically stolen (if you lose your wallet) or someone may stea l your credit card number (from a receipt. if you re alize your credit card or number has been stolen and you report it to your credi t card company immediately.
Winter Project Report SSCMR 2009-2011 Don t loan your credit or give out your credit card information to anyone but re liable companies NEED OF CREDIT CARDS There may be many people who suggest that you get a credit card. You destroy your credit when you do not pay y our bills on time. You can build enough credit to qualify for a home loan by paying yo ur rent on time for several years. except spend money that you do not have. but you should be very careful as you try to do so. You may find it a little easier to do with a credit car d. 2. You do not need a credit card to bu ild your credit history. when used properly (paid in full every month). 1. Although a credit card can be a useful tool. You sho uld not be doing that anyway. it can be a bi gger liability than an asset. The answer is that you can get by without a credit card. Credit Card to Shop On line or Rent a Car Since debit cards have been introduced you no longer need a c redit card to do these things. Here are five common misconceptions about needing a credit card. Credit Card to Build Credit You build credit by paying your bi lls on time. but before you do you should carefully decide whether or not you really need a credit card. Debit cards can be used 23 ¡ . The utility companies and other businesses can send you to a collection agency if you do not pay on time. In fact you can do everything with a debit card t hat you can with a credit card.
Stores do not offer cards to give you discounts. This completely debunks the statement that you need one to rent a car. This much money should be able to handle any emergency that comes your way . This means that the y make more money off the customers. Additionally it is important to remember that the c redit card offers its rewards. few actually do.00 in it. 3.Winter Project Report SSCMR 2009-2011 anywhere a credit card can. Your emergency fund should have at least $1000. If you are responsible and pay off your balance in full each month. Credit Card to Earn Rewards This is a dangerous game to p lay. because the company realizes that most people are not going to pay off their credit cards in full each month. They make more back on interest than they the discount they offer to you. you may consider having a rewards credit card. they offer c ards because they realize that while most people intend to pay the card off ever y month. Credit Card for Emergencies If you plan well you should se t up an emergency fund for emergencies. 5. but you should try to have three to six months of expenses save d up. Credi t Card to Save Money on Purchases Many stores will offer discounts for having a store credit card. Fraud Question What kinds of credit card frauds are more prevalent? Counterfeit and CNP (card n ot present) continue to be the two main types. 4. You should make sure that you have a cre dit card with no annual fee. If you are stranded on the road and need to be towed you can use your debit ca rd to pay for the tow. then rewards they give out. and your emergency fund to cover those expenses. Physical 24 .
etc. and the transac tion won t be complete. What is being done to prevent such fraud? Visa is doing a number of things in partnership with issuers to introduce measures which can easily preven t such frauds. Why is a chip card safer? It is very difficult to copy. In Ind ia. even if a card is counterfeited. So. Since online transactions typically don t r equire the card to be presented. We would lik e all banks to issue chip cards to increase security.Winter Project Report SSCMR 2009-2011 theft of cards is not such an issue. the information sitting on the card and other c ustomer authentication details are sometimes compromised and used for transactio ns. Some are rule-based tools. we are increasingly encouraging issuers t o opt for chip cards. Since the prevention of theft is of utmost important.Also. as a unique cryptogram or code is generated for ea ch transaction.If there is a deviation from these. depending on their us age pattern. banks are o ffering customers the option of opting for alerts whenever there is a transactio n. What are some of the most effective fraud detection tools that Visa has? Some very sophisticated ones are in place. places of transactions. In the USA. which can go a long way in controlling fraud. However. wherein a custome r transacting online must also have a T-Pin for transactions where the card is n ot present. it will be declined. This measure is immediate in nature and can help the customer know about his or her transactions in real time. neural networks (artificial intelligence) ar e being deployed to 25 ¡ ¡ . India has been pro-active in this r egard and has introduced the two-factor identification system. This is becoming a big problem. banks are selectively issuing chip cards to consumers. wher ein a customer can define a set of rules for transactions like a spending limit.
the number of debit cards in circulation was approximately 19 m illion. MEANING AND FUNCTIONS OF DEBIT CARDS Two decades ago. These networks basically study t he pattern of usage by a customer and any deviation comes up for further verific ation. As it stands. to challenge the credit card as the preferred payment card. debit card has grown from accounting for 274 million tra nsactions in 1990 to 8. the debit card industry is a m ulti-billion dollar engine that helps drive bank profits and point-of purchase c onsumer sales . 26 . where your card can be skimmed INTRODUCTION OF DEBIT CARDS The debit card has emerged from the shadow of its older sibling. and so there is no physical card . benefits.15 billion transactions in 2002. the cards ar e designed exclusively for use on the Internet. or from the remaining balance on the card. Also. a customer gets a call if there is a deviation from his or her set pa ttern. Second would be dynamic authentication by using chip cards. This figure is projected to cross 34. the credit card . such as food stamps. they should be careful of hidden camer as in ATMs and should watch for fake ATM fronts.Winter Project Report SSCMR 2009-2011 ensure the authentication sits on the back-end. What can a customer do to avert card-related frauds? They should first op t for customer alerts each time there is a transaction. as the funds are withdrawn directly from either the bank account. it can be call ed an electronic check. A debit card (al so known as a bank card or check card) is a plastic card that provides an altern ative payment method to cash when making purchases. and payroll . In some cases. Functionally.but is also beginning to redefine traditional payment options in the business and government sectors.4 million by 2016. Over the past decade. So.
Mer chants may also offer cash back facilities to customers. Debit cards may also allow for instant withdrawal of cash . Types of Debit Card systems • • • • Online Debit Card Offline Debit Card Electronic Purse Card System Prepaid debit cards Debit card 27 ¡ . Like credit cards. cash transactions. where a customer can wi thdraw cash along with their purchase. Debit cards can also allow for instant wi thdrawal of cash. the funds are transferred immed iately from the bearer s bank account instead of having the bearer pay back the money at a later date. Merchants can also offer "cash back"/"cash out" facilities to cust omers. unlike credit cards. debit cards are used widely for telephone and Internet purchases and.Winter Project Report SSCMR 2009-2011 In many countries the use of debit cards has become so widespread that their vol ume of use has overtaken or entirely replaced the check and. acting as the ATM card for withdrawing cash and as a cheque gu arantee card. acting as the ATM card for withdrawing cash and as a check guarantee card. where a customer can withdraw cash along with their purchase. in some instances.
EMV chip 3. Cardholder s name An example of the reverse side of a typical debit card: 1. Issuing bank logo 2. Card number 5.Winter Project Report SSCMR 2009-2011 An example of the front of a typical debit card: 1. Card Security Code 28 ¡ . Hologram 4. Signature strip 3. Card brand logo 6. Expiration date 7. Magnetic stripe 2.
Transactions conducted with offline debit cards require 2–3 days t o be reflected on users’ account balances. The transaction may be ad ditionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction. One difficul ty in using online debit cards is the necessity of an electronic authorization d evice at the point of sale (POS) and sometimes also a separate PIN pad to enter the PIN Offline Debit System Offline debit cards have the logos of major credit cards (e. Electronic Purse Card System 29 ¡ . Although many debit cards are of the Visa or MasterCard brand. and/or a maximum limit equal to the current/checking account balance from which it draws funds. essentially becoming enhanced automatic teller machine (ATM) cards. Online Debit System Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately. there are many other types of debit card. This type of debit card may be subject to a daily limit. offline debit (also known as signature debit) and the Electronic Purse Card System. each accepted only within a par ticular country or region. Visa or MasterCar d) or major debit cards and are used at the point of sale like a credit card (wi th payer s signature). It should be noted that one physical card can include the functions of an online debit card. an offline debit card and an electronic purse card.Winter Project Report SSCMR 2009-2011 There are currently three ways that debit card transactions are processed: onlin e debit (also known as PIN debit).g.
by filling an application form. The card company then couriers the card across around a week’s time. so that machines accepting the card need no network connectivity are in use throughout Europe since the mid-1990s. prepaid debit cards allow the deliver y of international payments without the delays and fees associated with internat ional checks and bank Working of Debit Card The user has to present the card to merchant who will swipe it through the elect ronic terminal and enter the amount of purchase. not in an externally recorded account. Debit Card can b e used to access the Account from over 5.000 at ATMs. also called reloadable debit cards or reloadable prepaid ca rds. The payer loads funds to the cardhol der s card account.Winter Project Report SSCMR 2009-2011 Smart-card-based electronic purse systems in which value is stored on the card c hip. Particularly for companies with a large number of payment recipients abroad. Prepaid debit cards Prepaid debit cards. The Debit card does have a daily limit which could be somewhere around Rs.000 at merchant locati ons. Account will be automatically debited for the amount of the pu rchase and the transaction can be verified by entering the PIN. The customers need to sign the transaction slip. are often used for recurring payments.It can also be used at over 4 mi llion Visa Electron merchant locations and equally strong MasterCard outlets. It is necessary to have a savings or current account with the de bit card issuer. Department Stores.000 Shops. and Rs. 10. 15. This again is subject to the balance available in the account. Petrol Pu mps and Restaurants and over 235 ATMs in India . 30 ¡ . Prepaid debit cards use either the offline debit system or t he online debit system to access these funds. card companies protect from fraudulent usa ge at the loss. If Debit Card ever gets lost or stolen.
a debit card may be used to obtain cash from an ATM or a PI Nbased transaction at no extra charge. merchants generally do not bel ieve that a payment via a debit card may be later dishonored. but not online debit card transactions.Winter Project Report SSCMR 2009-2011 Advantages and Disadvantages of Debit Cards The widespread use of debit and check cards have revealed numerous advantages an d disadvantages to the consumer and retailer alike. legislation often prevents minors from tak ing out debt. • Unlike a credit ca rd. allowing him/her to ma ke plastic transactions. other than a foreign ATM fee. which includes the use of a credit card. or to write an insecure check cont aining the account holder s personal information. thereby finalizing the transaction at the time of purchase. Disadvantag es of debit cards • Use of a debit card is not usually limited to the existing funds in the account to which it is linked. • Like credit cards. most banks allow a certain threshold over the available bank balance which can cause overdraft fees if the users transaction does not reflec t available balance. Unlike personal checks. 31 ¡ ¡ . For example. which charges higher fees and interest rates when a cash advance is obtained. Check cards debit funds from the user s account on the spot. Advantages of debit cards • A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card. thereby making transactions qu icker and less intrusive. • For most transactions. a check card can be used to avoid check wr iting altogether. debit cards are accepted by merchants with less identification and scrutiny than personal checks. and bypassing the requireme nt to pay a credit card bill at a later date.
which is of ten waived by the bank. • In some countries debit cards offer lower levels of security protection than credit cards. as with a credit transaction PIN i nput. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. thus causing penalty fees f or overdrafts. amounts not available causing further rejections or overdrafts. laws protect the c onsumer from fraud much less than with a credit card. the consumer may be held liable for hundreds of dollars. and even attempted but refused transactions by th e merchant (some of which may be unknown until later discovery by account holder ). payee name. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card. amount and currency. How ever. over-the-limit. • Many merchants mistakenly believe that amounts owed can be "taken" from a customer s account after a debit card (or number) has been presented. and the c onsumer will have no recourse Debit Cards Benefits Debit Cards offer the following benefits: 32 ¡ ¡ ¡ .Winter Project Report SSCMR 2009-2011 • Many banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations. • In many places. theft of users PIN codes using skimming devices can be equally easily acc omplished with a debit transaction PIN input. this time may be up to 60 days. or even the entire value of fraudulent debit transactions. and theft using a signature-based credit transaction is equally easy as th eft using a signaturebased debit transaction. and rejected transactions by some banks. A thief who obtains or clones a debit card al ong with its PIN may be able to clean out the consumer s bank account. without ag reement as to date. The consumer also ha s a shorter time (usually just two days) to report such fraud to the bank in ord er to be eligible for such a waiver with a debit card. whereas with a credit car d.
herby the limited amount of funds deposited for the card. 33 . • • • offering more safety. They provide freedom from carry ing cash checks while traveling. Debit cards and credit cards can be used to make online payments wit h the help of the pin number assigned to them. Credit Cards: Similarities and Differences Similarities The same financial institutions offer both debit cards and credit cards. such as points and cash back on purchases made throug h the card. since one cannot splurge with A person with poor credit can obtain a debit card too much trouble. Both ca rds offer special rewards.Winter Project Report SSCMR 2009-2011 • They help people to be disciplined financially. Debit cards ca n be used to make online purchases and payments. Debit Cards: Issuers The banks issuing debit cards include: Bank of America Citibank American Express Standard Chartered HSBC Debit Cards vs.
TYPES OF DEBIT CARDS 34 . the funds are automatically taken from the account and customer is burdened wi th attempting to get the money back. he may experience cash flow prob lems and the legitimate checks could bounce. Differences In the case of a credit card. A credit car dholder therefore has a monthly bill to pay in every month that the card is used . Debit Card Problems can be worse than Credit Card Problems When an improper charge appears on the credit card it cannot automatically out t he money and simply need to work with the credit card issuer to have the charge removed from the bill. Traveling with your Debit Cards The reverse side of the debit card will display the names or symbols of the various ATM systems that will accept the card.Winter Project Report SSCMR 2009-2011 They can be used to withdraw money from ATM’s depending on the cash limit availabl e on these cards. When obtaining funds at an ATM in a foreign country the funds dispersed will be in the currency of the coun try going to visit. Debit card can be used at any ATM in the world as long as the ATM displays one of the same system names or symbols that is on debit card. When an improper charge occurs with a debit card. high interest charges are applied. Meanwhile. the issuer offers credit and overdraft facilities. A debit card hol der is free from the hassle of paying those bills and from the risk of building up large debts to credit card companies. which will only debit payment s from existing and available funds within the cardholders account. however . This facility is not available with a debit card. If they don’t pay that bill.
Winter Project Report SSCMR 2009-2011 DEBIT CARDS Combining the wide acceptability of a credit card and the thoughtful prudence of an ATM card. No more fear of overspending. Only more comfort and convenience in the debit cards provided by ICICI. No more searching for the nearest ATM. TYPES OF DEBIT CARDS Easy Shop International Debit Card Easy Shop International Gold Debit Card 35 . the ICICI Bank Debit Card is the most convenient acces sory. Various Products • • • • • The ICICI Bank Private Banking Debit Card The ICICI Bank Gold Debit Card The ICI CI Bank HPCL Debit Card The ICICI Bank Ncash Silver Card The ICICI Bank Ncash De bit Card DEBIT CARD HDFC BANK Debit Cards give you complete and instant access to the mon ey in accounts without the risk or hassle of carrying cash.
India The Housing Development Finance Corporation Lim ited (HDFC) was amongst the first to receive an in-principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. HDFC Bank commenced operations as a Scheduled Commerc ial Bank in January 1995.HDFC Bank Limited. 36 ¡ ¡ ¡ ¡ ¡ ¡ . as part of the RBI s liberalization of the Indian Banking Industry in 1994. India.Winter Project Report SSCMR 2009-2011 Easy Shop International Business Debit Card rd Kisan card Easy Shop Woman s Advantage Debit Ca RESEARCH COMPARISION BETWEEN HDFC BANK AND ICICI BANK About . The bank was in corporated in August 1994 in the name of HDFC Bank Limited . with its registere d office in Mumbai.
Mauritius (IFHL) (both funds advised by J P Morgan Part ners. with the objectiv e of creating a development financial institution for providing medium-term and long-term 37 ¡ ¡ . NRIs/OCBs while the balance i s widely held by about 214.M. The shares are listed on The Stock Exchange.5% of the bank s eq uity. t he Government of India and representatives of Indian industry.000 shareholders. Vasudev Pralay Mondal About – ICICI Bank Limited. Roughly 27. Mumbai and the National Stock Exchange.5% of the equity is held by FIIs. The bank s American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB" BOARD OF DIRECTORS Managing Director Executive Director Executive Director Chair man Assets and Credit Cards Aditya Puri Paresh Sukhthankar Harish Engineer C. In 1955..Winter Project Report SSCMR 2009-2011 Capital Structure The Indian Private Equity Fund. Mauritius (IPEF) and Indocean Financial Holdings Ltd. formerly Chase Capital Partners) together hold about 5. The Industrial Credit and Investment Corporat ion of India Limited (ICICI) was incorporated at the initiative of World Bank.
2010. ICICI Banking Corporation was later renamed as ICICI B ank Limited Capital structure ICICI Bank is India s second-largest bank with to tal assets billion (US$ 108. Formerly known as Industrial Credit and Investme nt Corporation of India.Winter Project Report SSCMR 2009-2011 project financing to Indian businesses. BOARD OF DIRECTORS Managing Director and Chief executive Officer DeputyManaging Director Executive Director Chanda Kochhar Sandeep Bakhshi N. TYPES OF CREDIT CARDS OF HDFC BANK • CLASSI C CARDS Silver Credit Card Value plus Credit Card 38 ¡ ¡ ¡ ¡ .S. In 1994.7 billion) at March 31. ICICI established Banking Corpo ration as a banking subsidiary. ICICI Bank s equity sh ares are listed in India on Bombay Stock Exchange and the National Stock Exchang e of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).Kannan CREDIT CARDS OF HDFC BANK CREDIT CARD: HDFC bank credit cards provide a facility of easy availability of c ash and convenience to the cardholder.
TYPES OF CARDS • • • • • • Premium Cards Classic Cards Value for Money Cards Co Branded Cards Affinity Card s EMI Card Who s the banking king? ICICI or HDFC? Their offices reflect their attitudes. is all for growth and hungry for market share. By January 2000. travel discounts and much more. anywhere in the world.The two banks ha ve carried forward their style statement in their approach to business. discoun ts. These benefits range from life t ime free cards. ICICI Bank s headquarters in suburban Mum bai is a huge. convenience and a range of benefits.ICICI Bank began its retail banking venture in mid-1999. Insurance benefits. utility payments.Winter Project Report SSCMR 2009-2011 Health plus Credit Card Gold Credit Card Titanium Credit Card CREDIT CARDS OF ICICI BANK CREDIT CARDS ICICI Bank Credit Cards give you the facility of cash. global emergency assistance service. it had moved on to 39 ¡ ¡ ¡ . without taking any undue ris ks.HDFC Bank is more c onservative and cautious. HDFC Bank s office in cent ral Mumbai is comparatively smaller and more sedately furnished. ICICI Ba nk thinks big. grows at a measured pace. imposing edifice in glass and granite.
its credit cards were launched only two years ago. gave it a ready-made corporate clientele. credit and market risk. By then ICICI Bank had been present in the credit card business for nearly three years. HDFC Bank. The flip side was that ICICI Bank had Rs 10. head. But in products like credit cards. personal loans and credit cards. Reminisces Paresh Sukthankar. it was slow to get off the mark.7 .723 40 Mar-10 Branches ATMs Cities Total assets (USD) ICICI Bank 2016 5219 932 108. "Although the asset yields may have been lower. According t o some industry experts." HDFC Bank ventured into retail lending in 1998.Winter Project Report SSCMR 2009-2011 introducing home loans.The merger of the erstwhile financial institution ICICI Limited with the bank in April 2002. HDFC Bank kick started its operations in 1995 wi th a focus on corporate banking. BETTER PICK UP The number tell story Share of the wallet HDFC Bank 1725 4232 789 39. On the other hand. we were able to cross-sell products so that the ove rall returns were better. a year before ICIC I Bank. car loans.000 crore (Rs 100 billion) of restructured assets for which it had to make provisions. growth for ICICI Bank may have come at the cost of qual ity. The acquisition of Bank of Madura in March 2001 added 263 branche s. many of them in cities where ICICI Bank did not have a presence. For instance. the bank started building a branch and a n ATM network. We may have grown slower than our peers.Realising the need for a bigger retail deposit base. but the risks were lower. targeting the top-end of the market.
it was a challenge to make it work with other products. HDFC Bank chose to rely on the trusted lineage of its housing finance parent. But round one of the banking sweepstakes has clearl y gone to ICICI Bank.the upper-middle class.6 12 3. The marketing channels used by both. industry observers point out th at ICICI Bank s effective users for credit cards may not be high. "While HDFC Bank has about two years to get ready for the future. While ICICI settled for nothing less than film star Am itabh Bachchan as an ambassador." Should HDFC Bank and its parent be merged.that is more than twice the n umber of HDFC Bank s credit card users.843 ICICI Bank has issued 5. Yet .032 59.599 5. including direct sales agents (DSAs). Hence. it could ca tapult them to a new league. Says a banking consultant . However. consu ltants believe that HDFC Bank could have leveraged its parent s customers far mo re effectively to cross-sell products and grow faster." 41 ¡ ¡ ¡ .Winter Project Report SSCMR 2009-2011 Revenue(Rs crore) Credit cards (Mn) customers (Mn) Profit (crore) 20. ICICI Bank p robably has three years. Housing Development Finance Corporation (HDFC). " While HDFC was no doubt a great brand. there was a difference.666 2. were the same.14 24 4. Calling the customer Both players targeted the same customer -. However. it was a single-product brand.14 million credit cards -.
42 . It should provide better career opportunities for the retention of its potential advisors.e. ICICI has spent Rs 185 crore). the bank has spent less than Rs 100 crore (Rs 1 billion) on advertising and publicity (In comparison. HDFC Bank says that its spends have always focused on other channels such as direct sales and phone banking rather than mainstream advertising. it has to position itself in the minds of prospects in a better way in comparisons to others. though that HDFC Bank is well-known even in smaller towns. It made sense to get the direct communication right rather than focus on the masses. Meeting the cus tomer face-to-face is important. i. . People who deal with customers should have complete knowledge about the differen t products and their features." Is the brand visible enough? The ICICI brand d oes have greater visibility.Winter Project Report SSCMR 2009-2011 In the past two years. FINDINGS AND RECOMMENDATION ICICI Bank and HDFC bank has to improve its brand image.
CONCLUSION In the last two years. too. proved immensely popular. Two years ago. Fuel account s for a very small portion of credit card purchases as these are largely paid th rough debit cards. but were also more than willing to use their cards to settle dues. Travelling. spending pattern through plastic money has changed drasti cally. It should provide online training and for those who are in jobs and want to beco me advisors ICICI should provide evening training classes. According to projections for the 200 3-2008 period. in particular. There are many ethical issues and challenges for plastic mo ney issuing banks/companies. 43 . as it is the most powerful tool to posi tion ant brand in the mindsets of customers. it was jewellery and apparel purchase s that formed the largest chunk of purchases through plastic money. so that they can join the training after doing there jobs.Winter Project Report SSCMR 2009-2011 It should more emphasize in advertising. The status symbol aspect of owning and using cards. Security relating to card should be first priority for each bank/company. played its part in bringing about such robust growth over the space of a single year. dining and jewellery are the top three purchases that Indians make through credit cards. Consumers were not only more open to the possibility of ownin g a financial card. Debit card s. the number of financial cards in circulation will register a comp ounded annual growth rate of nearly 51 per cent so the satisfaction of consumers has also increased.
google. After doing a research and studying the materials available on internet.hdfcbank.icicibank. C. Kothari Websites • • • www. At last it is concluded that plastic money has a very bright future in the coming years because of the increasing tr end of ecommerce. newspapers.R.com www. and journals.com • 44 . Philip Kotler Research Methodology (2nd Editi on).com www. I want to conclude that people prefers ICIC I Bank more than HDFC BIBLIOGRAPHY Books • Marketing Management (10 Edition).Winter Project Report SSCMR 2009-2011 Consumers are preferring these cards mostly for shopping online E-commerce has g iven a better way to use the plastic money.