Customer Satisfaction Towards Credit Card

By:

Susmita Mahat

Symbol no: 1652315

T.U. Registration number: 7-2-391-889-2015

A Summer Project report submitted to

Faculty of Management, Tribhuvan University

In partial fulfillment of the requirements for the Degree of

Bachelor of Business Administration

at the

Shanker Dev College

Tribhuvan University

Putalisadak, Kathmandu

April 2019
 STUDENT DECLARATION

This is to certify that I have completed the summer project entitled “CUSTOMER
SATISFACTION TOWARDS CREDIT CARD” under the guidance of Mr. “Bharat Raj
Panta” and Mr. “Dhan Raj Chalise” in partial fulfillment of the requirements for the
degree of Bachelor of Business Administration at faculty of management, Tribhuvan
University. This is my original work and I have not submitted it earlier elsewhere.

Susmita Mahat

Date:

i
 CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled “CUSTOMER SATISFACTION

TOWARDS CREDIT CARD” is an academic work done by “Susmita Mahat” submitted in
the partial fulfillment of the requirements for the degree of Bachelor of Business
Administration at Faculty of Management, Tribhuvan University under my guidance and
supervision. To the best of my knowledge, the information presented by her in the summer
project report has not been submitted earlier.

Signature of the Supervisor Signature of the supervisor

Name: Bharat Raj Panta Name: Dhan Raj Chalise

Designation: Designation:

Date: Date:

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 ACKNOWLEDGEMENTS

This dissertation would not have been possible without the guidance and the help of several
individuals who in one way or another contributed and extended their valuable assistance in
the preparation and completion of this study.

I would like to express my gratitude to Shanker Dev Campus which has provided an
opportunity to gain practical working experience in the organization. Also, I would like to
thank my research supervisors Mr. Bharat Raj Panta and Mr. Dhan Raj Chalise for going
through the project and helping me to complete my project.I would like to extend by gratitude
to Dr. Sajeeb Shrestha, Faculty of Shanker Dev Campus for his guidance and support. This
project would have not been completed without his guidance.

I would like to thank Ramesh Kumar Poudel, Director of Shanker Dev Campus. Also, I would
like to thank Tribhuvan University for providing such an opportunity. Also I would like to
thank all management team of Shanker Dev Campus who has provided an opportunity to gain
practical working experience in the organization.

Moreover, I would like to thank all those people who have helped me directly and indirectly
throughout this study.

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Contents
Chapter I................................................................................................................................................1

INTRODUCTION.................................................................................................................................2

1.1 Context information....................................................................................................................2

1.2 Statement of the problem............................................................................................................2

1.3 Purpose of the Study...................................................................................................................2

1.4. Significance of the Study............................................................................................................2

1.5 Literature Survey........................................................................................................................2

1.6 Conceptual Framework..............................................................................................................2

1.7.Research Methods used for Data Collection and Analysis.......................................................2

1.7.1. Research Design...................................................................................................................2

1.7.2. Population............................................................................................................................2

1.7.3. Sample and Sampling Method............................................................................................2

1.7.4. Data Collection Method......................................................................................................2

1.7.5. Data Analysis Tools.............................................................................................................2

2.1.1Gender wise distribution...........................................................................................................2

2.2 Descriptive Statistics Analysis....................................................................................................2

2.2.2 Correlational analysis..............................................................................................................2

2.2.3 Analysis of Demographic Variables........................................................................................2

2.2.4 Regression Analysis....................................................................Error! Bookmark not defined.

Chapter III.............................................................................................................................................2

CONCLUSION AND ACTION IMPLICATIONS.............................................................................2

3.1 Conclusion...................................................................................................................................2

3.2 Action Implication.......................................................................................................................2

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Reference...............................................................................................................................................2

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LIST OF TABLES

Table 1: Gender...........................................................................................................................2

Table 2: Age................................................................................................................................2

Table 3: Income...........................................................................................................................2

Table 4: Descriptive Analysis of Security...................................................................................2

Table 5: Descriptive Analysis of Convenience...........................................................................2

Table 6: Descriptive Analysis of Realiability..............................................................................2

Table 7:Descriptive Analysis of Responsivenes..........................................................................2

Table 8: Descriptive Analysis of Tangibility..............................................................................2

Table 9: Descriptive Analysis of Customer Satisfaction.............................................................2

Table 10: Summary Table...........................................................................................................2

Table 11: Correlation Analysis....................................................................................................2

Table 12:Gender versus Customer Satisfaction...........................................................................2

Table 13: Relevancy of Age........................................................................................................2

Table 14:Relevancy of Income Level..........................................................................................2

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 Executive Summary

Ubiquitous in society, credit cards have become a fact of life for most consumers in and are a
part of the consumer culture in developed countries. Staggering credit card statistics provide
evidence of their pervasiveness worldwide. The number of Credit Card users around the world
has been steadily growing and this growth has provided the impetus and the opportunities for
global and regional Credit Card Companies. Credit Cards is form of debt designed with the
concept of spend now and pay later. (Federal Reserve G.19 March, 2012) Credit card is a
small plastic card with a unique number attached with an account. It has a magnetic strip
embedded in it or chip based mechanism that is used to read the credit card via card readers.
Credit cards offer two transactional advantages over cash and checks. Credit Card services
history in Nepal is associated with a travel agency rather than a financial institution or bank.
The service was provided by a travel agency named Alpine Travel services Private Limited
(ATS) which obtained the license from Visa and Master Card International in 1985 A.D. as
the representative of Chase Manhattan Bank. In context of Nepal, Credit Card is not new
financial service but still credit card literacy is limited to very small population. Credit card
seems to be a new term to many Nepalese. The general purpose of the study is to identify
satisfaction level of customer and current situation of credit Card services in Nepal.The
purpose of the study is as follow: To measure the perception and satisfaction with Credit Card
of private bank customers. To examine the factors influencing utilization of credit cards. To
find out the yearly growth rate of credit card holders. To identify the weakness and problem of
the credit card services.
This is an empirical study based on structured questionnaire. Descriptive and correlational
designs were used. The construct are based on literature review and are measured using five
point likert scale. The questionnaire designed based on likert type statement about which
respondent were asked to indicate their degree of agreement or disagreement using five-point
scale(with anchors 1=strongly disagree and 5 = strongly agree).The population comprised of
all the consumers using credit cards of private banks. Samples are selected within the
Kathmandu valley. .Independent sample t-test and ANOVA were used to measure the effect of

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moderating variables on dependent variable.SPSS25 was used for data analysis by calculating
descriptive statistics, correlation and multiple linear regression.

Among the 47 respondents, the majority of the respondents were female 51.1% i.e.24
respondents and remaining 48.9% i.e. 23were male respondents. Analysis shows that this is
due to reason that in most of the household in Nepal . Maximum age group respondents fall
under the category of 25-35 years with 38.3 percent i.e. 18respondents and minimum age
group respondents fall under the category of below 25 with 10.6 percent i.e.5 respondents.
Monthly income of the respondents is categorized in to 4 categories. The result shows that
majority of respondents i.e. 21(44.7%)respondents fall under per month income group 60000-
90000, followed by 30000-60000 income group respondents i.e. 16 (34%)respondents,
remaining 100000 and above income level and below 30000 income level have same number
of respondents i.e.5 (10.6%). Out of the total responses, convenience is ranked 1st having
highest mean i.e4 which means while applying for the Credit Card Service, it is the most
important factors affecting customer satisfaction. Likewise Security is ranked 2nd with mean
3.6383.Tangibility is ranked 5th with mean 3.2606.Calculation of Mean Value by the use of
the constructs in Likert Scale showed that while all the independent variables had significant
relationship with dependent variables i.e. Mean of Independent variables being greater than 3,
it is Convenience with a mean value of 4.000 which had the most significant relation. This
was followed by Security (3.6383), Responsiveness (3.4113),Reliability (3.3277),
Tangibility(3.2606).The calculation of Standard Deviation showed the fair representation of
the study in the data collected. The relevancy of Income Level with credit card satisfaction
and from the above table we can see that the value of the test statistic F equals 0.296 the
corresponding p value of which equals 0.828 which is greater than the confidence level of α =
0.05. This means that there is no any significant difference between income level and credit
card satisfaction.

There are five independent factors that show how those factors have a real tie impact on the
customer satisfaction. Namely those independent factors are Security, Convenience,
reliability, responsiveness and tangibility. Credit Cards services are like the stone rolling down
the hill which can’t be stopped. Today or tomorrow we should adapt it in our lifestyle and

viii
culture. The focus should be that Credit Card services should be the component which can
bind the society rather than cause conflict and chaos in the society. The benefits of the Credit
Card services should be gratifying to the individuals and the society which will help people be
more dynamic and adaptive in the electronic payment system. To encourage customers to
change their habits in making payment from using cash to using credit cards, commercial
banks must pay attention on many issues related to different stages that credit card users
involved with, from the opening the cards, using and getting familiar with credit card to
solving problems occurred with card usage.

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 Chapter I

INTRODUCTION
1.1 Context information

In today's modern globalized society, there seems to be great preoccupation with money and
ownership of material possessions. While this seems like a monstrous assumption to make
about the world, the idea of wealth and object attainment has consumed humans leading them
into the vicious circle of expenditure known as debt. Credit Cards is form of debt designed
with the concept of spend now and pay later. (Federal Reserve G.19 March, 2012) Credit card
is a small plastic card with a unique number attached with an account. It has a magnetic strip
embedded in it or chip based mechanism that is used to read the credit card via card readers.
Credit cards offer two transactional advantages over cash and checks. In recent years, the use
of credit cards and other forms of credit has increased tremendously. In recent past credit card
transactions in the world have been steadily raising, and with increased transactions comes
increased debt. It has become a fact of life for most consumers and is a part of the consumer
culture.. First, unlike cash and checks, credit cards make it unnecessary to maintain cash
reserves sufficient at all times to cover current expenditures. Second, credit cards offer several
ancillary benefits unavailable to cash and credit cards. Credit cards provide flexibility for
consumers in matching their income and expenditure streams by alleviating the need to
maintain sufficient funds at all times to cover current expenditures. Rather than necessitating
an ongoing maintenance of cash balances, credit cards necessitate holding only enough cash to
cover a check to pay the credit card bill once a month. When a customer purchases a product
via credit card, the credit card issuer bank pays on behalf of the customer and the customer has
a certain time period after which the credit card bill must be settled. It is usually in the
monthly payment cycle. When a credit card is used, the retailer records the name and account
number of the purchaser and the amount of the sale, and forwards this record to the credit card
billing office. At intervals, usually monthly, the billing office sends a statement to the
cardholder listing all the charged purchases and requesting payment immediately or in
installments. The billing office reimburses the retailer directly. Most of the work involved in

1
credit card operations is now handled by computers. Charges for the use of a credit card are
sometimes paid directly by the cardholder, and sometimes borne by the retail establishments
that accept them. In the latter case, the cost is absorbed into the price of the merchandise.
Issuers usually charge interest to credit customers who do not settle their bills within a month,
but certain credit plans do not charge interest until a bill has been outstanding for several
months payment cycle. Interest rates for overdue balances are usually regulated by state law.
Using a credit card is like getting a loan. Every time you charge something, you're borrowing
money until you pay it back later that month, or over time. In exchange for this loan, the credit
card company adds interest charges to your account, which you must pay along with the
purchase amounts.

Credit card originated in the United States during 1920s when individual companies such as
hotel chains and oil companies began issuing them to customers for purchases made at their
business units. The use increased after Second World War. Diners Club introduced the first
universal credit card that can be used at variety of stores and businesses. In 1958 A.D., the
American Express company established another universal card called, “Don’t leave home
without it”. It is only after such developments, bank credit came into existence. Under the
credit card scheme, an individual can get a credit card from a bank with a specified credit limit
as determined by the bank based on one’s income. The bank in turn will enter into a contract
with different shopping establishments all over the country, covering almost every aspect of
human necessity, right from hotels, and restaurants to departmental stores, petrol retail outlets,
cloth shops, rail and air travel agencies and jewelry shops to sell goods on the basis of the
credit card. It is only after such developments, bank credit came into existence. Credit cards
have been increasingly accepted as the preferred mode of payment. In USA, for example,
shoppers are using credit cards more than ever. More than 75%of the adult population in the
US has a credit card (Hogarth, 2004).

Credit Card services history in Nepal is associated with a travel agency rather than a financial
institution or bank. The service was provided by a travel agency named Alpine Travel services
Private Limited (ATS) which obtained the license from Visa and Master Card International in

2
1985 A.D. as the representative of Chase Manhattan Bank. After Alpine Travel services
Private Limited (ATS), Nepal Grindlays Bank Limited (Now, Standard Chartered Bank
Limited.) also entered credit card acquiring market in 1989 A.D. After two years, in 1991,
Nepal Arab Bank Limited (Now, NABIL Bank Limited) also started the Credit Card acquiring
business. In the year 1993 November, Nepal Arab Bank issued Master Card and became the
first Nepalese commercial bank to issue Credit Card. After that, in the year 1993 November,
Himalayan Bank Limited 3 entered the Credit Card issuing business with its typical local
proprietary card branding “HBL Regular” which is the Nepal’s first ever domestic card.
Himalayan Bank Limited improved its technology infrastructure and in December, 1997
issued another Card branding “HBL Gold” which was more reliable and safe. These cards
become very popular in Nepalese general public, especially in the Kathmandu Valley. But
now HBL Gold is not issuing because of the manipulation problem. Himalayan Bank Ltd.
started to acquire internationally branded Credit Card (Visa) only since 1996. In the year
1997, Nepal Grind lays Bank Limited. Started to issue Visa Card. In April 2004, Nepal
Investment Bank Ltd. issued its Visa credit Card. The establishment of Smart Choice
Technologies (SCT) in 2001 was a turning point in the spread of plastic money in the country.
SCT created an integrated shared services network, SCT Network, for ATMs and POS
terminals managed through a national switch. This network has been made available on a
subscription basis (pay per use) to banks across the country. The company, which has 78 BFIs
under its network, has 985 ATMs and 1,600 Points of sale across the country. More Point of
Sales also increased the convenience and reliability of Credit Cards. This Process brought
about Competition in Small Credit Card market in Nepal and of course for the better as it
reduces the high commission charges that were enjoyed by the pioneers of Credit Card
introducers and improved the quality of Service. Credit Card is still in initial stage in Nepalese
Market compared to other developed and developing countries. The major problem with the
Credit Card business is that most of the people are still unaware about its benefits. Credit Card
market can be an emerging opportunity in Nepal because Banstola (2007) found that Financial
Institutions are slowly moving from Physical branches to click and E-banking. ATM’s are the
most popular electronic delivery channel for banking services in Nepal. Only few customers
are using internet banking facilities. Nepalese financial institutions till date have not faced any

3
kind of electronic fraud or risk. Banks have basic security tools like firewall, lightening/power
surge protection. Nepalese banks are using E-banking for their own convenience and for the
purpose of retaining exiting customers. The cost analysis of most of the banks in Nepal seems
to be either inadequate or not applied due to their narrow space of business transaction or lack
of sufficient tools. The population of Credit Card Users is fluctuating, in year 2010 Population
is 30909, in year 2011 it is 28456, in year 2012 it is 27921, in year 2013 it is 38587, in year
2014 is 57898, and in year 2015 it is 43895,in year 2016 it is 52014,and in year 2017 it is
72827 and in year it is 94716.. It can be seen there is fluctuation of Population of Credit Card
holders from the year 2010 till 2015. It reveals that the population of Credit card holders is
maximum in year 2014 i.e. 57898 Persons and minimum in year 2012 i.e. 27921 Persons.

1.2 Statement of the problem

Credit card is still in initial stage in Nepalese market compared to other developed and
developing countries. The major problem with the credit card business is that most of the
people are still unaware about its benefits. Only few customers are using internet banking
facilities. This study seeks to discover the factors that influence consumer satisfaction with
credit cards. Even though many banks have started the credit card services to advance the
banking system of Nepal but still the popularity towards credit card usage is slowly
progressing in the country. The major task of this study is to analyze what factors are
responsible in shaping the perception and satisfaction of customers towards credit card
service.

 Why debit cards are more preferable than credit cards in Nepal?
 Why people are unaware about credit card usage in Nepal?

The research question for the study is as follow:

 To what extent does the cost of credit cards affect consumer satisfaction?
 To what extent does reliability of Credit Card Company affects customer satisfaction?
 To what extent does responsiveness of employees of credit card issuer bank affects
customer satisfaction?
 To what extent does tangibility of credit card affects customer satisfaction?

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1.3 Purpose of the Study

In context of Nepal, Credit Card is not new financial service but still credit card literacy is
limited to very small population. Credit card seems to be a new term to many Nepalese. The
general purpose of the study is to identify satisfaction level of customer and current situation
of credit Card services in Nepal.

The purpose of the study is as follow:

 To measure the perception and satisfaction with Credit Card of private bank customers.
 To examine the factors influencing utilization of credit cards.
 To find out the yearly growth rate of credit card holders.
 To identify the weakness and problem of the credit card services.

1.4. Significance of the Study

Credit Cards still remain a new financial Service to many Nepalese although it has been
decades this service was introduces to the Nepalese market. This Summer Project study will
help anyone who is interested to know about Credit Cards, its history and perception of users
toward credit Cards, Credit Card holder population, and growth rate of Credit Card holders in
context of Nepal. This study will add knowledge in the field of Credit Card Services in Nepal.
Since, this study uses both Primary and Secondary data a proper reflection of the subject
matter can be obtained. This study will also be very useful to various parties such as further
Researcher, Students, Teachers, financial institutions providing Credit Card services and
general individual to get reliable useful information about Credit Card Services in Nepal.

1.5 Literature Survey

Tangibility, the related issues brought into the research include the quality of credit card
material, the comprehension of user guide, the quality of ATM machine and ATM booth and
the appearance of customer service staff. The quality of credit card material determines the
card durability and the design of the card would attract users and play a role of marketing tool
for the card issuers. The user guide should be easy to understand and cover common issues
customers may encounter. The ATM system and quality is important for customers who often
need to withdraw cash. The two importance issues to consider are the convenience that is the

5
number of ATMs and the ATM booths. Customer service staff who works at banks needs to
provide adequate information and benefits of credit card to new customers.

Reliability, there are two main issues which are phone answering staff’s knowledge about
credit card and the online banking system that assists card users. Staff needs to be trained
adequately so they may quickly locate problems and figure out the solutions for customers.
The online banking system must support customers, especially for the purposes such as
reviewing billing statements, transferring money or making payments.

Responsiveness, the research takes into consideration 3 issues including staff’s willingness to
assist customers, staff’s problem solving skills and their ability to perform professional
services. Phone answering staff may face a wide range of situations of which they may have to
solve problems hardly encountered before. Therefore, they have to show willingness to listen
customers and patient enough to walk them through the difficulties. The problem solving
skills must be good so that problems are not just solved quickly, adequately but customers also
feel satisfied with the solutions given by the staff. Moreover, as banking industry requires a
very high level of professional in order to gain trust from customers, staff needs to show their
professional at very high level to customers.

Many empirical studies have been conducted on the subject of Credit Cards in abroad however
it seems there is lacking of studies and research about Credit Cards in Nepal. The major
emphasis of different research has been on various issues like frauds, security, usage pattern,
new method of e-payment, etc. The previous work done on Credit Card needs perusal. Past
studies in the subject matter has been reviewed to indicate in a general way the type of work
done on this subject in abroad countries. It is expected that the critical examination of the
studies would give focus to research problem and help to indicate the areas which have
remained neglected at the hands of the researchers. From the review of literature, it was found
that hardly there was a study which examined the perception of users on the usage of Credit
card.

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Credit cards, including store cards and bankcards, serve two distinct functions for consumers:
a means of payment and a source of credit (Ausubel 1991; Chakravorti 1997, 2000;
Chakravorti and Emmons 2001; Slocum and Matthews 1970; Stavins 2000). Based on the
main use of credit cards and the benefits sought, credit card users can be segmented into two
groups: convenience users and revolvers (Lee and Hogarth 1999). Convenience users tend to
employ credit cards as an easy mode of payment; typically pay their balance in full upon
receiving the statement. Revolvers, on the other hand, use the card principally as a mode of
financing and chose to pay interest charges on the unpaid balance. According to the consumer
behavior literature, consumer usage behavior and the benefits sought from a product or a
service are one of the best predictors to explain consumer purchase behavior (Peter and Olson
1999).

Credit cards also serve as an open-ended, easily available credit source ( Lee and Kwon 2002).
When consumers use credit cards as a mode of financing, credit cards compete with bank
loans and other forms of financing (Brito and Hartley 1995). Credit cards allow consumers to
borrow within their credit limit without transaction costs, which includes all the time and
effort involved with obtaining a loan from a financial institution. This convenience attracts
many consumers to pay high interest on outstanding credit card balances, rather than taking
the time to apply for a loan with a lower interest rate. As a result, credit cards account for a
substantial and growing share of consumers’ debt (Canner and Luckett 1992).

The popularity of credit cards as a payment medium has been attributed to the convenience of
not carrying cash and checks, the limited liability of lost/ stolen cards, and additional
enhancements, such as dispute resolution services and perks (i.e., frequent-use awards
programs) (Chakravorti 1997, 2000; Chakravorti and Emmons 2001; Whitesell 1992). They
are frequently used for convenience, telephone and Internet transactions.

Many consumers value uncollateralized credit lines for making purchases when they are
illiquid (i.e. before their incomes arrive), even at relatively high interest rates. Because of
limited alternatives to short-term uncollateralized credit, the demand for such credit may be
fairly in-elastic with respect to price (Brito and Hartley1995).

7
Ausubel (1991) suggests that consumers may not even consider the interest rate when making
purchases because they do not intend to borrow for an extended period when they make
purchases. However, they may change their minds when the bill arrives.

Stavins (1996) argues that consumers are somewhat sensitive not only to changes in the
interest rate but also to the value of other credit-card enhancements such as frequent-use
awards, expedited dispute resolution, extended warranties, and automobile rental insurance.
However, she agrees with Ausubel (1991), Calem and Mester (1995) that lowering interest
rates may attract less creditworthy consumers, therefore dissuading some credit-card issuers
from lowering their interest rates.

According to Jeans S. Bowers (1979) longitudinal study, low income users of credit cards tend
to use the cards for the installment feature rather than for service features such as convenience,
safety, or identification. It has been suggested that the installment feature of credit is needed
by the low income consumer to permit purchases such as automobiles, furnishings, and other
consumer durables.

Demographics also seem to play a vital role in making a choice and the use of credit cards as a
convenience user or revolver. Age, income level has been studied previously and suggest
some indication for correlation between demographic and use of credit card. According to the
study conducted by Jean Kinsey (1981) the probability of having credit cards and the number
held was correlated highly with age and occupation. However these two characteristics were
less important than the place of residence, use of checking and savings accounts, and attitude
towards credit.

Barker (1992) investigated the attitude of Turkish consumers towards credit cards, and the
approach of card issuers by surveying two samples of 200 card holders and non-holders. He
found out that the better educated, middle aged members of the upper middle class seem to be
the prime target for Credit Card services, he found that the most important reasons for using a
credit card were “case of payment”, followed by “risk of carrying cash”. His study revealed
that non holders do not carry credit cards because they do not know much about it; informal
sources of information appear to be more influential than mass media advertising in

8
penetrating the market; proposes that the usage and the administration of credit cards are
influenced very much by the infrastructure of the country and hence, he suggested that credit
card companies have to modify their marketing and administrative procedures rather than
following a standardized approach.

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

Worthington (1995) describes about the cashless society, where clumsy and expensive-to
handle coins and notes are replaced by efficient electronic payments initiated by various types
of plastic cards is a tantalizing prospect for the twenty-first century. He found that some of the
interested parties stand to gain more than others if the cashless society becomes a reality. He
outlines the rationale of those who are keen to promote the cashless society and the
implications for marketers charged with winning consumer acceptance for payment by plastic
card. Commencing with a European-wide view of the European plastic card market, focuses
on recent developments within the UK, one of Europe‟s leading countries in the use of plastic
cards as a means of payments. The plastic card payment product is analyzed under the three
headings of pay later, pay now and pay before and a view is offered as to the future prospects
for each type of plastic card in contributing to the development of the cashless society.

9
Joshi (1996) explained that card issuers seek to introduce the emerging payment card
technology like debit and smart cards. Credit cards are being gradually revolutionized by
various factors: introduction of customers– friendly technology, a competitive marketing
environment, the rise of the financially sophisticated consumer who avoids paying interest and
the emergence of new competitors. The concept of debit cards as a new emerging payment
system has gained acceptance in the Asia-Pacific region in past few years. Being a new
concept, mass acceptance is gradual and not instantaneous. His study shows that spending on
credit cards is higher than debit cards but the numbers of transactions are more on debit cards.
There are technological and infrastructure hurdles for debit cards as it is significantly different
from credit cards. For this, system should be on line and the investments in technology are
huge. Study shows that profit margins in debit cards are one-third than those from credit cards.
Author believes that India by virtue of a late starter in the card industry is at an advantage as it
can except to shorten its learning curve by utilizing global experience and expertise in
electronic payment system.

Chakravorti (1997) concluded that based on underlying incentives versus other payment
instruments, consumers should always use their credit cards to make payment and payoff their
balances in full by the due date. However, some consumers are reluctant to make most of their
purchases with credit cards because they fear that they may not be able to make full payment
when their credit card bills are due. Furthermore, there are certain purchases that cannot be
made with credit cards although this set continues to decrease. Unlike other payment
instruments, credit cards allow consumers access to long-term credit, mostly uncollateralized,
at the point of sale.

Park and Burns (2005) pointed out the direct impact of fashion-related factors on compulsive
buying and the indirect impact of fashion-related factors on compulsive buying through credit
card use. It was found credit card usage to be the most influential factor followed by
expenditure on fashion goods. Research shows that fashion orientated consumers are heavy
credit card users. Consumers who tend to have fashion leadership and know the importance of

10
being well dressed might use their credit card more while those who have anti–fashion attitude
are least likely to use their credit cards. The authors observe that the credit card is the most
significant factor in encouraging compulsive buying and suggest that since other antecedents
of such behavior are hard to pin down, regulatory action should focus on the control of credit.

Worthington, Stewart and Lu (2007) examined through exploratory research into the holding
and usage of credit cards by a distinct segment of the Chinese population, who were “early
adopters” of this product. Primary data was collected for taking sample of the urban affluent
population in china to gauge preferences and attitudes towards the use of credit cards. The
sample was drawn from a narrower base than the actual target population of urban-affluent
market but an available and valid respondent set, which offers insights into the “early
adopters” of the credit card product in china. It was found, that the respondent were
comfortable with the holding and use of credit cards particularly recognized their value for
spending on travel and entertainment. The research also identified purchase trigger points,
which indicated that the use of credit cards for purchases above certain values is already
prevalent with the sample of urban affluent Chinese consumers.

Maya & Rofi (2011) in their study showed that there was a positive attitude towards the use of
credit cards among overall respondent, while the perceived usefulness had the highest
contribution towards positive attitude to use of credit cards. Further the study pointed out that
there was a strong intention to continue used credit cards, where the highest intention was the
desire to finance routine expenses with credit cards. Additionally, researchers found that since
respondents have been using credit cards wisely, the use of credit cards would provide
supports and will not cause to financial problems in the future.

Ismail, Amin, Shayeri and Hashim (2014) examined the factors influencing the attitude of
bank customers in the context of the Malaysian banking system. The study employed the
variable like knowledge, media awareness, perceptions, family influence and religious factors
on attitudes towards credit card usage. The study shows that knowledge, media awareness,
11
perceptions and family influence are instrumental in determining consumer attitudes toward
credit card usage. In more detail, perceptions are ranked highest, followed by family influence
and knowledge.

Dewri, Islam and Saha (2016) investigated behavioral usage patterns of credit card users in the
emerging economics and how the external factors are influencing the credit card users to use
credit cards in their day-to-day life. The study found that there is a significant relationship
among earnings and usage of credit limit; different age group has diverse tendency to use
credit card and repayment attitudes; profession and usage behavior of credit card; e-repayment
attitudes to pay bill by different age groups.

1.6 Conceptual Framework

A conceptual framework is an analytical tool with the several variations and the contexts. A
theoretical structure of assumptions, principles and rules hold together the ideas comprising a
broad concept. It is use to make conceptual distinctions and organize ideas. Strong conceptual
framework captures something real and does this in a way that is easy to remember and apply.
The conceptual framework of this study is shown in figure 1.1.

12
Figure 1.1 Conceptual Framework of customer satisfaction Credit card usage

Independent Variable

Security

Convenience
Dependent Variable

Customer Satisfaction
Reliability

Responsiveness

Moderating Variable

Tangibility

Age

Monthly Income

Gender

13
Hypothesis Testing

H1: There is significant relationship between Security and customer Satisfaction.

H2: There is significant relationship between Convenience and customer Satisfaction.

H3: There is significant relationship between Reliability and customer Satisfaction.

H4: There is significant relationship between Responsiveness and customer Satisfaction.

H5: There is significant relationship between Tangibility and customer Satisfaction.

1.7. Research Methods used for Data Collection and Analysis

Research method is a way to systematically solve the research problem. It highlights the
method adopted in the process of research study. It also explains about the population, the
samples, sampling techniques used, data analysis tools etc. used in the research study. Both
primary and secondary data has been used in this research. When the data are collected for the
first time by investigator or an agent of investigator is called primary data. The primary data
are original in nature and main purposes are to decrease the complexity of an enquiry and
provide accurate information. The data which are collected by someone for their own purpose
but can be used by some other persons or organizations due its relevance to the study is known
as secondary data. Thus, the primary data for one person can be secondary data for some
others. So, data which are originally collected but obtained from either published or
unpublished sources are secondary data.

1.7.1. Research Design

A research design is a plan comprising the researcher’s decision about the procedures of
sampling, data collection and analysis of data in respect of a given study, which aims to fulfill
the objective or purpose of the study without a wasteful expenditure of time, energy and
money. Research design ensures against the study failure.

14
This research paper use Descriptive Research Design for a fact-finding operation searching for
adequate information about Credit Cards. This research using Descriptive Research Design
simply portrays an accurate profile of Credit Card Practices in Nepal, however this paper will
not fully analyze and explain why credit card market behave as they do.

1.7.2. Population

Population refers to the entire group of people, events, or things of the interest that the
researcher wishes to investigate. Population may be finite or infinite. A finite population is
one containing a fixed number of elements. An infinite population is one without limits of any
kind and is therefore indeterminate. This research paper defines its population as group of
people who are owners of Credit Cards in Nepal.

1.7.3. Sample and Sampling Method

A sample is a collection of items of elements from a population or universe. Hence, a sample

is only a portion or subset of the universe or population. It comprises some observations
selected from the population. Since it was impossible to study the whole population for this
research paper due to time constraints, budget constraints and difficulty to locate the
population. The researcher has used Nonprobability sampling to undertake the study setting
the sample size of 47 respondents. Nonprobability sampling is described as those samples,
which are not determined by chance, but rather by personal convenience or judgment of the
researcher. Nonprobability sampling is suitable for quick and cheap studies.

Even in Nonprobability sampling there are different methods of sampling and the researcher
for this study has used convenience sampling and Snowball sampling. Convenience sampling
refers to samples selected not by judgment or probability techniques because the element in a
fraction of the population can be reached conveniently. Similarly snowball is a special
nonprobability method used when the desire sample characteristics is rare. This sampling
design is widely used when respondents are located through referral networks.

1.7.4. Data Collection Method

The researcher for this study used both the Primary and Secondary sources for data collection.
The primary data were obtained through field survey and online survey. The field survey were

15
conducted in place which has Point of Sale ( PoS) of Credit Cards like Bank, Departmental
Stores, High Profile Furniture show rooms etc. The online survey was conducted to
respondents known through referral networks using Google form. Respondents were
administered with questionnaires which had both open-ended and close-ended questions. The
researcher obtained Secondary sources data through Annual publications of Nepal Rasta Bank,
various commercial Banks, Financial magazines, local magazines and newspapers

1.7.5. Data Analysis Tools

Since this research study is based on descriptive research design this study also uses
descriptive statistics like frequency, percentage, mean, standard deviation for data analysis.
Descriptive statistics describes the data that have been gathered. The data collected were
edited, coded, classified and tabulated. Microsoft Excel was used for data analysis in this
study. The five point differential scale used in the study is coded as scale 1. Strongly agree, 2.
Agree, 3. Neutral ,4. Disagree and 5.Strongly disagree. Independent sample t-test and
ANOVA was used to measure the effect of moderating variables like age, gender, monthly
income.

1.7.8. Limitations of the Study

Every Study has some limitations despite the researcher hard and determined effort to present
the factual and reliable information as far as possible. This study has following drawbacks:

• The researcher has used convenience sampling for obtaining primary data from the
respondents due to time and budget constraints.

• The researchers findings are under the assumptions that the data provided by
respondents and secondary sources are accurate.

16
 Chapter II

DATA PRESENTATION AND ANALYSIS

This chapter covers the data presentation and analysis of the study. It covers a sample of 47
respondents. Analysis of data has been divided into three parts. First part analyzes and
presents general and demographic information about respondents known as respondent’s
profile. Second part analyzes the respondent’s response obtained with the help of
questionnaire. The collected data are presented in table and proper analysis is done. Third part
elucidates about findings and discussion.

2.1.1Gender wise distribution

The gender wise classification of respondent is presented in Table 2.1

Table 1: Gender

Gender

Frequency Percent Valid Percent Cumulative

Percent

Valid 1 23 48.9 48.9 48.9

2 24 51.1 51.1 100.0

Total 47 100.0 100.0

Table 1 showed that majority of respondents were female (51.1%) as compared to Male
population (48.9%).

2.1.2Age wise distribution

17
The Age wise classification of respondents is presented in Table 2.2

Table 2: Age

Age

Frequency Percent Valid Percent Cumulative Percent

Valid 1 5 10.6 10.6 10.6

2 18 38.3 38.3 48.9

3 17 36.2 36.2 85.1

4 7 14.9 14.9 100.0

Total 47 100.0 100.0

Table 2.2 reveals that age of the respondents is categorized in to 4 categories. The result
shows that majority of respondents i.e. 18(38.3%)respondents belong to age group 25-35,
followed by 35-45 aged respondents i.e. 17 (36.2%)respondents, 45 and above aged
respondents i.e. 7 (14.9%)respondents , and least from below 25 aged respondents
i.e.5(10.6%) respondents .

2.1.3 Monthly Income wise Distribution

The Income wise classification of respondents is presented in Table 2.3:

Table 3: Income

Monthly _Income

18
 Frequency Percent Valid Percent Cumulative
Percent

Valid 1 5 10.6 10.6 10.6

2 16 34.0 34.0 44.7

3 21 44.7 44.7 89.4

4 5 10.6 10.6 100.0

Total 47 100.0 100.0

Table 2.3 reveals that monthly income of the respondents is categorized in to 4 categories. The
result shows that majority of respondents i.e. 21(44.7%)respondents fall under per month
income group 60000-90000, followed by 30000-60000 income group respondents i.e. 16
(34%)respondents, remaining 100000 and above income level and below 30000 income level
have same number of respondents i.e.5 (10.6%).

2.2 Descriptive Statistics Analysis

Descriptive statistics is used to describe the basic features of the data in the study. It provides
simple summaries about the sample and the measures. It is used to present quantitative
descriptions in a manageable form. It helps us to simplify large amounts of data in a sensible
way. Each descriptive statistic reduces many data into a simpler summary.

Mean is the average of the number that is used to measure the central tendency of data. It is
determined by adding all the data points in a population and then dividing the total by the
number of points.

Standard deviation is a measure of the dispersion of a set of data from its mean.

Correlation is used to test relationships between independent variables and dependent

Variables. In other words, it’s a measure of how things are related. The study of how variables
are correlated is called correlation analysis.

2.2.1 Descriptive Statistics on Security

19
This section shows effect of security in customers Satisfaction towards credit card. These
construct of five different scale items are measured in a 5-point Likert scale: 1-Strongly
Disagree to 5- Strongly Agree. Here, a score more than 3 represents the higher intensity of
perception .The opinion of respondents is observed by computing its mean and standard
deviation. Mean value gives the result of average condition of respondents on how they feel
and standard deviation gives the spread from the average mean of the respondents. Following
table represents the results of ratings done by the respondents:

1. Security

Table 4: Descriptive Analysis of Security

code particulars Mean S.D

SEC1 Credit card is secure services. 3.7 0.689

SEC2 Frauds and cheating are minimal on credit card 3.32 0.810
services.

SEC3 Credit cards require extra precautions during use. 3.3 0.689

SEC4 It is much safer to change purchase to credit card than 3.81 0.647
to pay cash.

SEC5 Credit card issuer bank maintains privacy of the user. 4.06 0.673

Table 2.4 shows that the respondents agreed with the fact that Credit card is secure services
as the mean for the statement is 3.7 and the standard deviation is valued at0.689. The
statement Frauds and cheating are minimal on credit card services has the mean value of 3.32
and S.D.0.810 .Similarly, the mean of the statement, it is much safer to change purchase to
credit card than to pay cash is 3.81 and standard deviation is 0.673. The statement Credit card
issuer bank maintains privacy of the user has mean value 4.06 and S.D. is 0.673.

CONVENIENCE

20
Table 5: Descriptive Analysis of Convenience

This section shows convenience feature of credit card and level of satisfaction obtained. These
construct of five different scale items are measured in a 5-point Likert scale: 1-Strongly
Disagree to 5- Strongly Agree. Here, a score more than 3 represents the higher intensity of
perception .The opinion of respondents is observed by computing its mean and standard
deviation. Mean value gives the result of average condition of respondents on how they feel
and standard deviation gives the spread from the average mean of the respondents. Following
table represents the results of ratings done by the respondents:

Code particulars Mean S.D

CONV1 Credit card is easy mode of payment. 4.06 0.734

CONV2 Credit card services are user friendly services. 3.74 0.736

CONV3 Credit card provides convenient hours of operation 4.06 0.818

(24/7).

CONV4 It is convenient to carry credit card than cash. 4.13 0.797

Table 2.5 shows that the respondents agreed with the fact that Credit card is easy mode of
payment as the mean for the statement is 4.06 and the standard deviation is valued at0.734.
The statement Credit card provides convenient hours of operation (24/7) has the mean value of
4.06 and S.D.0.818 .Similarly, the mean of the statement, Credit card services are user friendly
services is 3.74 and standard deviation is 0.736. The statement it is convenient to carry credit
card than cash has mean value 4.13 and S.D. is 0.797

Reliability - Ability to perform the promised service dependably and accurately

Table 6: Descriptive Analysis of Reliability

This section shows importance of reliability in credit card services. These construct of five
different scale items are measured in a 5-point Likert scale: 1-Strongly Disagree to 5- Strongly
Agree. Here, a score more than 3 represents the higher intensity of perception .The opinion of
respondents is observed by computing its mean and standard deviation. Mean value gives the
21
result of average condition of respondents on how they feel and standard deviation gives the
spread from the average mean of the respondents. Following table represents the results of
ratings done by the respondents:

Code particulars Mean S.D

REL1 The credit card issuer bank provide services and respond 3.23 0.729
within time frame.

REL2 The bank reassures when problem arise 3.23 0.758

REL3 Bank maintains accurate billing system. 3.62 0.739

REL4 When you have a problem bank shows a sincere interest 3.3 0.805
in solving it.

REL5 Bank performs the services right the first time. 3.26 0.820

Table 2.6 highlighted ability to perform the promised service dependably and accurately by
issuer bank. The statement Bank maintains accurate billing system has the highest mean of
3.62 with standard deviation of 0.739. Similarly, the second highest mean is of When you
have a problem bank shows a sincere interest in solving it has mean 3.3 and S.D 0.805. Bank
performs the services right the first has mean of 3.26 and standard deviation of 0.820
Following the statement The credit card issuer bank provide services and respond within time
frame and The bank reassures when problem arise have same mean of 3.23 and standard
deviation of 0.729 and 0.758

Responsiveness - Willingness to help customers and provide prompt service

Table 7: Descriptive Analysis of Responsiveness

This section shows responsiveness feature of credit card and level of satisfaction obtained.
These construct of five different scale items are measured in a 5-point Likert scale: 1-Strongly
Disagree to 5- Strongly Agree. Here, a score more than 3 represents the higher intensity of
perception .The opinion of respondents is observed by computing its mean and standard
22
deviation. Mean value gives the result of average condition of respondents on how they feel
and standard deviation gives the spread from the average mean of the respondents. Following
table represents the results of ratings done by the respondents:

Code particulars Mean S.D

RES1 Customer request are handled promptly. 3.21 0.750

RES2 Employees are polite and friendly. 3.45 0.717

RES3 Employees respond to request and help customers if any 3.57 0.683
problem arises.

Table 2.7 highlighted the employees responsiveness to its customers while solving their
problem. Employees respond to request and help customers if any problem arises has the
highest mean of 3.57 with standard deviation of 0.683. Similarly, the second highest mean is
of Employees are polite and friendly and this has mean of 3.45 and standard deviation of
0.683.

Tangibility - Appearance of physical facilities, equipment, personnel, and

communication

Table 8: Descriptive Analysis of Tangibility

This section shows Tangibility feature of credit card and level of satisfaction obtained. These
construct of five different scale items are measured in a 5-point Likert scale: 1-Strongly
Disagree to 5- Strongly Agree. Here, a score more than 3 represents the higher intensity of
perception .The opinion of respondents is observed by computing its mean and standard
deviation. Mean value gives the result of average condition of respondents on how they feel
and standard deviation gives the spread from the average mean of the respondents. Following
table represents the results of ratings done by the respondents:

Code Particulars Mean S.D

23
TAN1 There is no problem in withdrawal of cash. 2.66 0.635

TAN2 There are sufficient ATM booths. 3.26 0.943

. Customer service staff provides adequate information 3.47 0.804

and benefits of credit card to customers.

TAN4 Credit cards are durable. 3.66 0.635

The above table 2.8 represents mean value of each statement. The statements Credit cards are
durable has highest mean value 3.66 and S.D 0.635.Whereas, the statement There is no
problem in withdrawal of cash has mean value of 2.66 and S.D. 0635.

Customer Satisfaction (Dependent variable)

Table 9: Descriptive Analysis of Customer Satisfaction

These construct of five different scale items are measured in a 5-point Likert scale: 1-Strongly
Disagree to 5- Strongly Agree. Here, a score more than 3 represents the higher intensity of
perception .The opinion of respondents is observed by computing its mean and standard
deviation. Mean value gives the result of average condition of respondents on how they feel
and standard deviation gives the spread from the average mean of the respondents. Following
table represents the results of ratings done by the respondents:

Code Particulars Mean S.D

CS1 I’m satisfied by credit card because it is secure service. 3.77 0.560

CS2 I’m satisfied by credit card because it is easy mode of 4.04 0.624

24
 payment.

CS3 Reliability of credit card company affects customer 3.47 0.747

satisfaction.

CS4 Responsiveness of employees of credit card company 3.45 0.619

affects customer satisfaction.

CS4 Tangibility of credit card affects customer satisfaction. 3.28 0.877

Table 2.9 shows that the respondents are satisfied by credit card because it is easy mode of
payment and has the highest mean 4.04 and the standard deviation is valued at 0.624. The
statement I’m satisfied by credit card because it is secure service has second highest mean
value of 3.77 and S.D.0.560 .Similarly, the mean of the statement, Reliability of credit card
company affects customer satisfaction is 3.47 and standard deviation is 0.747. The statement
Responsiveness of employees of Credit Card Company affects customer satisfaction has mean
value 3.45 and S.D. is 0.619.Likewise, the statement Tangibility of credit card affects
customer satisfaction as mean value 3.28 and standard deviation 0.877.

Summary Table

Table 10: Summary Table

Descriptive Statistics
N Mean Std. Deviation
S 47 3.6383 .39921
C 47 4.0000 .66960
R 47 3.3277 .56940
RES 47 3.4113 .52573
T 47 3.2606 .54910
CS 47 3.6000 .39563
Valid N (listwise) 47

Table 2.10 Summary table

25
Table 2.10 shows that there were five independent variable factors of customer satisfaction
towards Credit Card that were tested .The mean score of each factor of customer satisfaction is
calculated from the data collected from the respondents. The mean value of each factor is
shown in above table. The average mean of Security is 3.6383, Convenience is 4, Reliability is
3.3277, Responsiveness is 3.4113 and Tangibility is 3.2606.Te overall result shows that
convenience has highest mean of 4 among all variables.Similarly, the shows the standard
deviation of the variables used in the course of this study. Calculation of the aggregate
variables shows that standard deviation of all the variables are less than 1 which represents a
fair representation of the study. A low standard deviation indicates that the data points tend to
be very close to the mean value where as a higher Standard Deviation indicated that the data
points are spread out over a large range of values.

2.2 Correlational analysis

Table 11: Correlation Analysis

Correlations

CS S C R RES T

CS Pearson 1
Correlation

Sig. (2-tailed)

S Pearson .562** 1
Correlation

Sig. (2-tailed) .000

C Pearson .406** .516** 1

Correlation

Sig. (2-tailed) .005 .000

R Pearson .683** .468** .391** 1

Correlation

Sig. (2-tailed) .000 .001 .007

26
RES Pearson .488** .490** .386** .431** 1
Correlation

Sig. (2-tailed) .001 .000 .007 .003

T Pearson .280 .489** .266 .406** .323* 1

Correlation

Sig. (2-tailed) .056 .000 .071 .005 .027

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Correlation analysis shows the relationship between the independent and dependent variables.
In course of interpretation of the correlation table we have used the model prescribed by
(Levin and Fox, 2006). The value of correlation should range from +1 to -1. In the above table
the mean of each variable is taken into consideration for the calculation of correlation
alongside the mean values of the Independent variable.

In the bivariate correlation report shown in the below Table 2.11, all Pearson correlation
indicators are above 0 that means that all independent variables have strong influence towards
the dependent variable except tangibility. In term of customer satisfaction, Reliability has
highest correlation at 0.683 while convenience has lowest correlation at 0.406.Likewise, the
table shows that there is no significance relationship between tangibility and customer
satisfaction correlation which indicates that the respondents are not concerned about
tangibility aspect while using credit card. Security (0.562) and responsiveness (0.488) have
moderate correlation with customer satisfaction. The positive values of Pearson correlation
indicate that customer satisfaction at any Dimension contributes to the general customer
satisfaction toward credit card.

Based on the correlation analysis result, the research accepts the two hypotheses that (1)
Reliability has the strongest correlation with customer satisfaction and (2) Tangibility has the
no significance relationship with customer satisfaction.

27
2.2.3 Analysis of Demographic Variables

For the analysis of demographic variables and their relevancy towards the Independent
Variables we use Independent Sample T-test and ANOVA. For the demographic variable
having 2 or less categories we use independent sample t-test i.e. for Gender whereas for the
demographic variable having 2 or more categories we use ANOVA i.e. for Age and Income
Level.

2.2.3.1 Relevancy of Gender in Customer Satisfaction towards Credit Card.

Table 12: Gender versus Customer Satisfaction

Levene's Test for Equality of

Variances

F Sig. t df Sig. (2-

tailed)

C Equal .001 .981 -.586 45 .561

S variances
assumed

Equal -.586 44.91 .561

variances 6
not
assumed

From the above table 2.12 we can see that the p-value corresponding to the F-value of the test
statistic of (0.001) is 0.981 which is greater than the value of confidence level α = 0.05. This

28
means that there is no any significant difference between the Gender categories and credit card
satisfaction.

2.2.3.3 Relevancy of Age and Customer Satisfaction towards credit card

For the calculation of relevancy of age and perception towards online trading we use ANOVA
analysis.

Table 13: Relevancy of Age

ANOVA

CS

Sum of Squares df Mean Square F Sig.

Between Groups .277 3 .092 .574 .635

Within Groups 6.923 43 .161

Total 7.200 46

For the calculation of the relevancy of the Demographic factors with more than two groups we
use ANOVA analysis and from the above Table 2.13, we can see that the value of the test
statistic between the groups is F= 0.574 and the corresponding value of significance 0.635
which is greater than confidence level of α = 0.05. This means that there in so any significant
relevancy in between the age factor and credit card satisfaction.

2.2.3.5 Relevancy of Income Level and Customer satisfaction towards credit card

Table 14: Relevancy of Income Level

29
ANOVA

CS

Sum of Squares df Mean Square F Sig.

Between Groups .146 3 .049 .296 .828

Within Groups 7.054 43 .164

Total 7.200 46

Table 2.14 studies the relevancy of Income Level with credit card satisfaction and from the
above table we can see that the value of the test statistic F equals 0.296 the corresponding p
value of which equals 0.828 which is greater than the confidence level of α = 0.05. This
means that there is no any significant difference between income level and credit card
satisfaction.

Hypothesis Testing

H1: There is significant relationship between Security and customer Satisfaction.

The p-value of Security is 0.000 which is less than 0.005. Hence, there is significant
relationship between Security and customer satisfaction. The hypothesis (H1) is accepted.

H2: There is significant relationship between Convenience and customer Satisfaction.

The p-value of Convenience is 0.004 which is less than 0.005. Hence, there is significant
relationship between Convenience and customer satisfaction. The hypothesis (H2) is accepted.

H3: There is significant relationship between Reliability and customer Satisfaction.

The p-value of Reliability is 0.000 which is less than 0.005. Hence, there is significant
relationship between Reliability and customer satisfaction. The hypothesis (H3) is accepted.

30
H4: There is significant relationship between Responsiveness and customer Satisfaction.

The p-value of Responsiveness is 0.001 which is less than 0.005.Hence; there is significant
relationship between Responsiveness and customer satisfaction. The hypothesis (H4) is
accepted.

H5: There is significant relationship between Tangibility and customer Satisfaction.

The p-value of Security is 0.056 which is more than 0.005.Hence; there is no any significant
relationship between Security and customer satisfaction. The hypothesis (H5) is rejected.

2.3 Findings and Discussions

 Among the 47 respondents, the majority of the respondents were female 51.1%
i.e.24 respondents and remaining 48.9% i.e. 23were male respondents. Analysis
shows that this is due to reason that in most of the household in Nepal . Maximum
age group respondents fall under the category of 25-35 years with 38.3 percent i.e.
18respondents and minimum age group respondents fall under the category of
below 25 with 10.6 percent i.e.5 respondents. Monthly income of the respondents
is categorized in to 4 categories. The result shows that majority of respondents i.e.
21(44.7%)respondents fall under per month income group 60000-90000, followed
by 30000-60000 income group respondents i.e. 16 (34%)respondents, remaining
100000 and above income level and below 30000 income level have same number
of respondents i.e.5 (10.6%).
 Out of the total responses, conveniene is ranked 1st having highest mean i.e4
which means while applying for the Credit Card Service, it is the most important
factors affecting customer satisfaction. Likewise Security is ranked 2nd with mean
3.6383.Tangibility is ranked 5th with mean 3.2606.
 Calculation of Mean Value by the use of the constructs in Likert Scale showed that
while all the independent variables had significant relationship with dependent
variables i.e. Mean of Independent variables being greater than 3, it is Convenience

31
 with a mean value of 4.000 which had the most significant relation. This was
followed by Security (3.6383), Responsiveness(3.4113) ,Reliability (3.3277),
Tangibility(3.2606).The calculation of Standard Deviation showed the fair
representation of the study in the data collected.
 The relevancy of Income Level with credit card satisfaction and from the above
table we can see that the value of the test statistic F equals 0.296 the corresponding
p value of which equals 0.828 which is greater than the confidence level of α =
0.05. This means that there is no any significant difference between income level
and credit card satisfaction. There is no any significant difference between the
Gender categories and credit card satisfaction. The value of the test statistic
between the groups is F= 0.574 and the corresponding value of significance 0.635
which is greater than confidence level of α = 0.05. This means that there in so any
significant relevancy in between the age factor and credit card satisfaction.
 In term of customer satisfaction, Reliability has highest correlation at 0.683 while
convenience has lowest correlation at 0.406.Likewise, there is no significance
relationship between tangibility and customer satisfaction correlation which
indicates that the respondents are not concerned about tangibility aspect while
using credit card. Security (0.562) and responsiveness (0.488) have moderate
correlation with customer satisfaction.

2.3.2. Findings from Secondary Data

Based on the analysis of the Secondary data, following are the major findings of the study:

• In normal the minimum age requirement to obtain Credit Card from Nepalese
Issuer is 18 years with exception to Global IME Bank whose minimum age
requirement is 16 years.

• Every issuers search proof of strong financial strength of the prospective

cardholders to ensure future cash flows of the expenditures.

32
• Obtaining Credit Cards are not as easy obtaining Debit Cards due its varying
procedures and documentation requirement.

• Credit Card limits are varying but according to issuers they provide fair credit limit
and are varying according to Card holders need and financial strength. In general
Cash limits for Nepalese Currency Denomination Credit Cards is 90 % of Credit
limit and US Dollar Credit Card Denominations Cash limit is 50 % of Credit limit.

• In general Service Charge free period ranges from 15 days to 45 days.

• Lowest service charge rate in the industry is 24% per annum.

• Normally Banks have categorized three cycles of credit First cycle for normal due,
Second cycle for overdue and Third cycle for overdue exceeding second cycle time
period.

• The fee for Credit Card services normally are categorized as Transaction fee,
Service fee and interest payments.

• Banks are more proactive to security concerns whereas cardholders are usually
reactive to security concerns.

• Provision of discounts on various merchants is made.

• The major causes for low acceptability of Credit Cards in Nepal are as follows:

 Lack of customer’s literacy about Credit Card System.

 Lack of customer’s internet and e-banking literacy.

 Customers concern about their private information.

 Customers concern about security policy of Credit cards as e-

payment system due to poor digital infrastructure of nation.

 Lack of customers trust in internet banking and Internet security Concerns.

33
  Problem encountered in e-banking services in past usages.

 Concern about theft of account information.

2.3.3. Findings about Credit Card Payment Process

The Credit Card Payment Process involves sequence of steps which are as follows:

Table 2.13 Credit Card Payment Process

Step Description

Step 1 Bank issues and activates a credit card to customer on his/her request.

Step 2 Customer presents credit card information to merchant site or to merchant

from whom he/she want to purchase a product/service.

Step 3 Merchant validates customer's identity by asking for approval from card
brand company.

Step 4 Card brand company authenticates the credit card and paid the transaction
by credit. Merchant keeps the sales slip.

Step 5 Merchant submits the sales slip to acquirer banks and gets the service
chargers paid to him/her.

Step 6 Acquirer bank requests the card brand company to clear the credit amount
and gets the payment.

Step 7 Now card brand company asks to clear amount from the issuer bank and
amount gets transferred to card brand company.

In the credit card processing acquirer is a bank that processes and settles a merchant's credit
card transactions with the help of a card issuer. A card issuer isa financial institution, bank,
credit union or company that issues or helps issue cards to cardholders. A cardholder is the
owner of a card who uses the card to make credit card purchases. The first step in processing a
credit card is called authorization. After a merchant swipes the card, the data is submitted to
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merchant’s bank, called an acquirer, to request authorization for the sale. The acquirer then
routes the request to the card-issuing bank, where it is authorized or denied, and the merchant
is allowed to process the sale. The second step in processing a credit card is called batching.
At the end of a day, the merchant reviews all the day’s sales to ensure they were authorized
and signed by the cardholder. It then transmits all the sales at once, called a batch, to the
acquirer to receive payment. The third step in processing a credit card is called clearing. After
the acquirer receives the batch, it sends it through the card network, where each sale is routed
to the appropriate issuing bank. The issuing bank then subtracts its interchange fees, which are
shared with the card network, and transfers the remaining amount through the network back to
the acquirer. The fourth and final step in processing a credit card is called funding. After
receiving payment from the issuer, minus interchange fees, the acquirer subtracts its discount
fee and sends the remainder to the merchant. The merchant is now paid for the transaction,
and the cardholder is billed. A charge paid by merchants to a credit card issuer and a card
network as a fee for accepting credit cards is known as interchange fee. They generally range
from 1 to 3 percent. A processing fee paid by merchants to acquirers to cover the cost of
processing credit cards is known as the discount fee. The Credit Card Payment Process is
diagrammatically presented at the Appendices section of the report.

Chapter III

CONCLUSION AND ACTION IMPLICATIONS

35
3.1 Conclusion

A Credit Card is a payment card, which enables you with the option of making purchases on
credit.it is built with the concept spend now and pay later! It is a convenient financial
management tool that helps you manage Cardholders expenditures even they don’t have cash
in hand. It offers many benefits, however at the same time it also carries many responsibilities
to the holder thereof. It provides Cardholder with a freedom from the burden of carrying cash.
Credit cards have very wide applications, wider than the currency notes and are safer than
them too! Credit Card in Nepal is accepted at all merchant locations displaying the sign of
Visa Cards, Masters Cards. Some of Credit cards are confined to usage within India and Nepal
due to the rules and regulation of Nepal Rastra Bank as defined in Bank and financial Act,
Monetary policy and other concerned legislation. Credit card can be used as often as card
holder wish, provided pre-set credit limit is not exceeded. Once a card is used, the card limit
decreases until the time payment is received from card holder to the bank in Nepalese context.
There is no any significant difference in Credit Card issued in Nepal and international Credit
Card because it gives you the privilege and flexibility of using a Credit Card instead of heavy
cash / traveller's cheques and the billing system. A Credit Card is always issued with a pre-set
limit, which is determined by financial history and the income source of the applicant and also
complying with the rules and regulation set by Nepal Rastra Bank. A cardholder is requested
not to exceed its limit at any point of time or else further credit may be denied at any merchant
location and an excess over limit fee is also charged. In case of cash advance, the limits are
assigned 50% of the total limit including cash advance fee as mentioned by issuers. If it
becomes necessary for Cardholder to enhance the limit on temporary or permanent basis on
events such as travelling on a long vacation, business promotion tour or willing to make a
major purchase, holders can inform the bank in writing at least a week prior to pre-planned
tour or purchase and necessary arrangements are made according to bank policies.

On the payment due date if Card holder does not have sufficient balance resulting in
outstanding due then interest will be charged. The rate of interest is varying and as per bank
agreement with the cardholder. Payment outstanding effects Card holder credit limits as well
as credit history and might create trouble for Card holder while making further transaction.

36
Hence, to avoid such embarrassing circumstances every banks request Card holder to make
the payment on time.

There are five independent factors that show how those factors have a real tie impact on the
customer satisfaction. Namely those independent factors are Security, Convenience,
reliability, responsiveness and tangibility.

Credit Cards services are like the stone rolling down the hill which can’t be stopped. Today or
tomorrow we should adapt it in our lifestyle and culture. The focus should be that Credit Card
services should be the component which can bind the society rather than cause conflict and
chaos in the society. The benefits of the Credit Card services should be gratifying to the
individuals and the society which will help people be more dynamic and adaptive in the
electronic payment system.

3.2 Action Implication

Action implications show some opinions regarding the possible solutions that could make the
area of study better and promising one. Action implications can be used as sources of
information for making plans and decision that will help in scenario development of the study
area. The Action Implications regarding Credit Card Services are as follow:

 Security risk and identity theft concerns has limited people from using electronic
services like Credit Cards .It would be better if issuers can convince Cardholders about
security concerns and mechanism adopted to ensure secure financial transactions
which can increase the possible Cardholders populations. It would also be better if
offline payment systems are also established.
 Security concerns and breaches have been in news as well as are troubling the Card
holders. It would be better if Cardholders become cautious and keep their Card PIN
number always confidential and secure which will minimize the problem of
embezzlements of funds. Cardholders should get regularly updated about concerns
regarding the Credit Cards such as technology, new developments, services and
facilities. Cardholders should Sign on the signature panel at the back side of the card
with an inerasable black ballpoint pen immediately after they receive the card.

37
 Reliable digital infrastructure will increase the overall acceptability of the electronic
services like Credit Cards. It would be better if appropriate and reliable digital
infrastructure is developed through overall collaborations of all stake holders. It would
also be fruitful if Government of Nepal can conduct some appropriate programs and
bring policies to decrease the existing digital divide in nation.
 To encourage customers to change their habits in making payment from using cash to
using credit cards, commercial banks must pay attention on many issues related to
different stages that credit card users involved with, from the opening the cards, using
and getting familiar with credit card to solving problems occurred with card usage.
 The profit generated by credit card use is enormous, the competition among
commercial banks to grab market share is rising quickly. As a result, banks have to
consider the two important issues that are the Reliability and Responsiveness. The staff
or credit card advisors at banks must give customers adequate information and
guidance from how to use the card properly and securely to how to get more benefits
with the cards they acquire.
 The employees of credit card issuer bank must be prepared well about problem and
situation solving skills to achieve the highest satisfaction from customers.

38
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 Annex

Respondent Profile:

 Gender: Male { } Female { }

 Age:

i) Below 25 ii) 25-35 iii) 35-45 iv) 45 and above

Annual Income(Monthly income)

a)Below 30000 b) 30000-60000 c) 60000- 90000 d)100000 and above

Please, make a circle () in a numbered box in each of the below particular statement. Where,
1 =strongly disagree (SD), 2 = Disagree (D), 3 = Neutral, 4 = Agree (A), and 5 = strongly
agree (SA).

1. Security

code particulars SD D N A SA

S1 Credit card is secure services. 1 2 3 4 5

S2 Frauds and cheating are minimal on credit card services. 1 2 3 4 5

S3 Credit cards require extra precautions during use. 1 2 3 4 5

S4 It is much safer to change purchase to credit card than to 1 2 3 4 5

pay cash.

S5 Credit card issuer bank maintains privacy of the user. 1 2 3 4 5

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CONVENIENCE

Code particulars SD D N A SA

C1 Credit card is easy mode of payment. 1 2 3 4 5

C2 Credit card services are user friendly services. 1 2 3 4 5

C3 Credit card provides convenient hours of operation (24/7). 1 2 3 4 5

C4 It is convenient to carry credit card than cash. 1 2 3 4 5

Reliability - Ability to perform the promised service dependably and accurately

Code particulars SD D N A SA

R1 The credit card issuer bank provide services and respond 1 2 3 4 5

within time frame.

R2 The bank reassures when problem arise 1 2 3 4 5

R3 Bank maintains accurate billing system. 1 2 3 4 5

R4 When you have a problem bank shows a sincere interest in 1 2 3 4 5

solving it.

R5 Bank performs the services right the first time. 1 2 3 4 5

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Responsiveness - Willingness to help customers and provide prompt service

Code particulars SD D N A SA

RES1 Customer request are handled promptly. 1 2 3 4 5

RES2 Employees are polite and friendly. 1 2 3 4 5

RES3 Employees respond to request and help customers if any 1 2 3 4 5

problem arises.

Tangibility - Appearance of physical facilities, equipment, personnel, and communication

Code particulars SD D N A SA

T1 There is no problem in withdrawal of cash. 1 2 3 4 5

T2 There are sufficient ATM booths. 1 2 3 4 5

T3 Customer service staff provides adequate information and 1 2 3 4 5

benefits of credit card to customers.

T4 Credit cards are durable. 1 2 3 4 5

Customer Satisfaction (Dependent variable)

SD D N A SA
Code particulars

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 1 2 3 4 5
CS1 I’m satisfied by credit card because it is secure service.
1 2 3 4 5
CS2 I’m satisfied by credit card because it is easy mode of
payment.
1 2 3 4 5
CS3 Reliability of credit card company affects customer
satisfaction.
1 2 3 4 5
CS4 Responsiveness of employees of credit card company affects
customer satisfaction.
1 2 3 4 5
CS4 Tangibility of credit card affects customer satisfaction.

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