A PROJECT REPORT ON

PLASTIC MONEY
EXECUTIVE SUMMARY

Plastic money in today’s world has become an extremely common instrument for
carrying out transactions. The usage of plastic money services has been expanding
since the last decade and it continues to rise with increasing speed.
Many factors have contributed in shifting the traditional people’s mind-set from Paper
money to Plastic money, with demonetisation being the most recent contributor.
Banks have also promoted these services and people have openly accepted the same.
In this project, various types of plastic money services in India have been explained
followed by the need/importance, advantages and disadvantages of plastic money.
The recent growth and development in the line of plastic money has also been spoken
about which includes credit cum debit cards and pay to wave mechanism.

A survey was conducted too with 73 respondents, wherein many points were noticed
and which helped to understand the topic better. In the end of the study, some
recommendations have also been stated in the end.

We can say that plastic money has been a necessity and we can also say that it can be
the biggest contributor towards future Indian cashless transactions.
 TABLE OF CONTENTS

SR TOPIC PAGE
NO. NO
1. CHAPTER 1.1 – INTRODUCTION 1
CHAPTER 1.2 – HISTORY
2. CHAPTER 2 – RESEARCH METHODOLOGY 6

3. CHAPTER 3 – REVIEW OF LITERATURE 8

4. CHAPTER 4.1 – TYPES OF PLASTIC MONEY 11

5. CHAPTER 4.2 – VISA AND MASTERCARD 17

6. CHAPTER 4.3 – NEED AND IMPORTANCE OF 18

PLASTIC MONEY
7. CHAPTER 4.4 – ADVANTAGES AND 20
DISADVANTAGES
8. CHAPTER 4.5 – DIFFERENCE BETWEEN CREDIT 25
AND DEBIT CARD
9. CHAPTER 4.6 – ESSENCE OF PLASTIC MONEY 27
IN INDIA
10. CHAPTER 4.7 – GROWTH OF PLASTIC MONEY 29
IN INDIA
11. CHAPTER 4.8 – REVOLUTION AND 31
DEVELOPMENT OF PLASTIC MONEY TODAY
12. CHAPTER 4.9 – OTHER PLATFORMS FOR 36
GROWTH OF PLASTIC MONEY
13. CHAPTER 4.10 – DEMONETISATION 39

14. CHAPTER 5 - SURVEY ON PLASTIC MONEY 42

(QUESTIONNAIRE AND INTERPRETATION OF
THE RESPONSES)
15. CHAPTER 6 – CONCLUSION 61

16. CHAPTER 7 – RECOMMENDATIONS 64

17. CHAPTER 8 – REFERENCES 66

 CHAPTER 1.1
INTRODUCTION OF PLASTIC MONEY

Plastic Money or Polymer Money, made out of plastic, is a new and easier way of
paying for goods and services. Plastic Money was introduced in the 1950’s and is now
an essential form of ready money which reduces the risk of handling a huge amount
of cash. They can come in many different forms such as cash cards, credit cards, debit
cards, pre-paid cash cards and store cards.

In today’s materialistic world, everyone is running behind money or you can say that
the whole world is running behind money. Money is required for the smallest of work
these days! Carrying large amounts of cash is not advisable either! Thus, Plastic
Money comes in as a Win-Win for these various encounters in the daily life.

Plastic Money today plays a major role in the functioning of the economy. It is the
most promising route towards the dream of taking India towards a cashless economy
in the near future. The use of these cards is simple, fast and convenient. It can be used
by various age groups from different sectors.

Using plastic money also takes the economy towards the cleaner side with reduced
bribery, reduced black money and proper representation of a person’s income and
expenditure giving the country an idea about the standard of living of its population.
The various functions, advantages, disadvantages, challenges and other aspects of
plastic money will be highlighted as we move through this project.

These cards have evolved into a safe and secure manner to purchase goods and
services. The internet has given the users an additional purchasing power. Banks have
options like cash back rewards, saving plans and other incentives to entice people to

1
use their cards. Increasing competition among various providers of plastic money
facilities have indirectly benefitted the end users. They get to avail and exploit the
various offers which are introduced frequently to keep the customers loyal to a
particular bank/provider.

The use of plastic money in India has escalated on a great scale post the
announcement of Demonetisation in November, 2016 by the Hon. Prime Minister
Shri Narendra Modi. The Indian Government announced that all the Rs. 500 and Rs.
1000 notes of the Mahatma Gandhi Series would be called back and new notes of Rs.
500 and Rs. 2000 would be circulated. The prolonged cash crunch faced by the people
during this period pushed them towards using plastic money and majority of the
vendors throughout the country started to accept this format of money.

1.2 HISTORY

With hundreds of millions of plastic cards in circulation today, these Plastic cards
have become a way of life. India alone is home to millions of them. Initially
positioned as a status symbol these plastic cards have caught on in a big way amongst
the educated population of the country.
Extending credit to their customers has always been an extremely common practice.
However, in the early 1940s, when individual retail merchants in America found it
more and more difficult to afford credit to these patrons, financial institutions came
into the picture.

A brief timeline showing the growth of Plastic Money.

1946 -The earliest plastic card was called Charge - It and was invented in 1946. It
revolved around a system of credit developed by John Biggins a credit consultant at
Flatbush National Bank, Brooklyn, New York. This "card" allowed the customers to
charge local retail purchases. The merchant deposited the same at Biggins Bank. The
bank reimbursed the merchant and collected payment from the customer.

1951 -The Franklin National Bank in Long Island New York issued the first official
credit card. In 1951, a Mr. Frank McNamara had just finished dinner in a New York
restaurant when, to his acute embarrassment, he discovered that he had left his wallet
in another suit. While talking the restaurant owner into letting him pay the bill the
next day, an idea for a new credit card was already being concocted in his mind.
Within a few months he formed a company called Diners Club and convinced 27
restaurants and 200 people to join it.

By 1951 there were 42,000 Diners club cards in circulation.

1958 - American Express saw this as direct competition to its traveller’s cheque
division and brought out its own charge card in 1958. Within three months they
managed half a
million cardholders.
1960 - Bank of America introduced its own card called Bank Americard. Beginning
with a small group of cardholders and merchants, the bank began to license regional
financial institutes to act as BankAmericard for their region. BankAmericard grew
and in the next
few years more and more communities across the US became serviced by a regional
member.

1966 -Fourteen US banks in Buffalo, New York formed Interbank - a new association
on the same guidelines.

1967- Four California banks changed their name to the Western States Bankcard
Association. They opened membership to other financial institutions in the west the
product called MasterCharge. Eventually all financial institutions and banks interested
in issuing credit cards became members of either Bank Americard or Master Charge.
All parties benefited from this system and led to rapid growth in cardholder accounts,
merchant accounts and sales volumes.

1977 - BankAmericard became VISA and in 1979 MasterCharge became MasterCard

International.

1980-With only two players in domestic card industry, HSBC and Citibank the
number swelled to over 25 in the year 2010.
1981- Credit cards in India made their debut and are on the verge of an unprecedented
boom.

1981 – 2010 The market has virtually grown to over 4 million cards with over 25-
30% of compounded annual growth in new cardholder’s base.

The recent growth in the use of plastic money after 2010 mainly credit and debit cards
has been phenomenal. There are hundreds of millions of credit cards in circulation
today, these little rectangular pieces of polymerized substance have become a way of
life. India alone is home to millions of them.

Spending pattern through plastic money has changed drastically. Travelling, dining
and jewellery are some the top purchases that Indians make through credit cards. Few
years ago, it was jewellery and apparel purchases that formed the largest chunk of
purchases through plastic money. Fuel accounts for a very small portion of credit card
purchases as these are largely paid through debit cards. This growing trend will soon
rise up to the point where the plastic money will completely replace the need for
carrying cash. Will this change be for good or bad only the future will decide.

Plastic Money business is definitely going big time. In a country where a decade back
people had hardly heard the word plastic money or credit card It has been estimated
that there are likely to be around half million potential card users in the near future.
This forecasting derives credibility from the fact that more and more local and
international financial institutions are exhibiting enthusiasm in this direction. This in
turn reflects prospects in Indian market in accommodating numerous credit card
competitors operating on the circuit, ensuring healthy and competitive card business
deals. However, the card-based usage has picked up only during the last few years.
Payment by cards is now becoming a much-preferred mode for making retail
payments in the country (Report on trend and progress of banking in India 2006-07,
RBI). Thus, plastic cards are such payment tool which gives a customer an
opportunity of non-cash payment of goods and services and are designed to facilitate
small value retail payments by offering a substitute for bank notes and coins and thus
to complement traditional payment instruments.
The recent growth in the use of plastic money mainly credit and debit cards has been
phenomenal. After the Demonetization by the Prime Minister Mr Narendra Modi and
his emphasis on Cashless Transaction, initially positioned as a status symbol, these
plastic cards have caught on in a big way amongst the educated population of the
country.

With the Indian economy expanding rapidly at more than 7.5 per cent per annum and
the middle class budding cashless transactions in India are becoming very popular.
Generally, increasing reliance on cashless transactions is seen as sign of a modern
economy where there is a strong synergy between the ordinary consumers and its
financial institutions.

The plastic money in the form of cards was introduced by banks in India in 1990's.
But it was not very popular among Indian consumer at the time of its introduction.
The change in demographic features of consumers in terms of their income, marital
status, education level etc. and upgradation of technology and its awareness has
brought the relevant changes in consumers' preferences. These changing preferences
have also modified their outlook and decision regarding the acceptance and non-
acceptance of particular product and services in the market.

Thus, the plastic cards are gaining popularity among bankers as well as customers and
getting accepted in the market place. It can be well imagined from the discussion that
no doubt, the plastic cards market is growing at a large pace in India yet it has long
way to go as it lacks behind if compared to the usage trends of other countries. Hence,
it has become important that the payment system in India has to be modernized
enough to be at par with the systems prevalent in other countries, since our domestic
financial markets are increasingly getting integrated with markets abroad. RBI is also
taking important steps in order to enhance its usage and popularity through initiatives
like regulating card market to maintain the security levels and to build up confidence
of bankers and customers. Despite the strong advances in e-payments, an estimated 90
percent of personal consumption expenditure in India is still made with cash, which
indicates the tremendous growth potential of this business.

So, this can be considered as mere beginning which indicates the bright future
prospects of plastic card market in India.
 CHAPTER 2
RESEARCH METHODOLOGY

Primary source: Questionnaire.

Secondary source: The study is based on secondary data and collected from
books, articles,
fact sheets, newspapers, journals, periodicals, annual reports, bank websites and social
media.

Target Population: Population of the research are people from various age
groups and sectors.

Research Design: Descriptive Research

Contact Method: Use of online survey forms/questionnaires along with personal

one to one interaction with the respondents.

Extent: The location considered is Mumbai.

ASSUMPTIONS:

1. The sample respondents of Mumbai represent the entire population of India.

2. The respondents have answered the questions best to their knowledge and
have not given any vague answers.
3. The secondary data collected is truthful and reliable.

OBJECTIVES OF THE STUDY

 To understand the genesis and concept of plastic money.

 To understand the current scenario concerned with debit cards, credit cards
and other plastic money instruments.
  To analyse the trend of increasing preference of customers towards plastic
money.
 To analyse the importance, advantages, disadvantages, growth and
development, impact and influence of plastic money.

LIMITATIONS OF THE STUDY

 Respondents understanding of the questions.

 The information given by the respondents can be biased.
 The extent/reach of the study is Mumbai.
 Sample size for data analysis and interpretation is not large.

SCOPE OF THE RESEARCH

 The main objective of the project is to get to know about Plastic Money in
India and its importance to various subjects and sectors.
 To understand the effect of demonetization on Plastic Money in India.
 To understand the various preferences of people under the term plastic money.
 CHAPTER 3

REVIEW OF LITERATURE

Mandeep Kaur (2011), Perception of cardholders and member establishments

towards plastic money in India is a study that examines the perspective of users, as
well as member establishments, has increased towards the use of plastic money. It
focuses on some vital aspects like challenges experienced by customers and bankers,
value attribution to plastic-money adaptation and some factors attracting them to
adopt and use plastic money. It also analyses the current status and trends of plastic
money in India.

It is noted that Mandeep Kaur, a research specialist understood the importance

and future of plastic money in India since the year 2011. Many factors have
contributed to the further increase in use of these services which is mentioned
and explained later in this project.

Bansi Patel and Urvi Amin (2012) in their research paper “Plastic Money: Roadway
Towards Cashless Society” discussed that now days in any transaction Plastic money
becomes inevitable part of the transaction and with-it life becomes easier and
development would take better place and along with the plastic money it becomes
possible that control the money laundry and effective utilization of financial system
would become possible which would also helpful for tax legislation.

The researchers here made a report on plastic money as a roadway to cashless

economy and also discussed the various pros of plastic money which also have
been explained later in this project.

P Manivannan (2013) in his research paper “Plastic Money a way for Cash Less
Payment System” examined that Plastic Money i.e. usage of Credit card was
measured a luxury, and has become needed. These plastic money and electronic
payments was and used by only higher income group. This facility extended not only
to customers in urban areas or cities, but also to customers residing in rural area.
However, today, with development of banking and trading activity, the fixed income
group or salaried classes are also start using the plastic money and electronic payment
systems and particularly Credit cards.

P Manivannan in his research has rightly highlighted the original perception of

plastic money as a luxury to it becoming a necessity in today’s world, used by
practically all sections of the society. More information on the working and
features of credit cards will be encountered further.

Mahima Rana in her research journal “Transition from Paper to Plastic: Trends and
Issues of Plastic Money in India” (2018) has concluded that: Any alternative to cash
can be popularized only if authorities address people’s inhibitions and overcome the
challenges in the path of transition. The benefits of plastic money cannot be negated
and to develop in the modern world, moving away from paper currency is becoming
important. Further research and discussions on the topic should be done to
methodically bring about the change to this new form of currency.

Mahima Rana, has rightfully thought about the barriers and challenges faced for
increasing the usage of plastic money services. The various disadvantages and
challenges of plastic money have been discussed to get a better understanding of
its current position in India.

Nair Sreeja S. and Dr S John M in their article “Impact of Demonetisation in the use
of Plastic Money with special reference to card and non-card holders” have stated and
observed that, “Demonetization is a general measure to control the problems like
black money, counterfeit notes, though there are specific measures to solve these
problems. It is usually, immediately, or simultaneously followed by remonetisation,
as there is no other way. The government is in process of controlling the situation by
increasing the circulation of new currency notes. So, our efforts should be focused
towards popularizing e- banking and advantage in using plastic money. Government
should take initiative to make available the plastic money to its public especially the
rural population and educate them regarding digitalization and its advantage as most
of the rural population still depend on cash. The decision of government will
definitely give better results in the long run. To make dream ‘digital economy’
happen, there is need for more organized studies across India so as to find out the
preferences for use of plastic money and the challenges. This knowledge market will
help the marketers, policy maker and also the customers.”

Demonetisation is perceived as one of the biggest motivator for the increased use
of plastic money services. A separate chapter and specific questions to get
further clarity and confirmation on the same has been provided in this project.

Deepthi Mary Mathew (2016) in the paper “Demonetization: A Positive step

towards a less cash society “says that the Demonetization of higher denomination
notes should be considered as a constructive step by the government to push the
country towards a cash less society. This can also act as an impetus for various
government initiatives schemes such as financial inclusion and digital India

Various suggestions and recommendations for increasing the use of plastic

money has been discussed in the ending chapters of the project. It brings
forward various personal comments on how can a cash free economy be
promoted through plastic money.
 CHAPTER 4.1
TYPES OF PLATIC MONEY

Plastic money is a term that is predominantly used in reference to hard plastic cards
we use every day in place of actual bank notes. They can come in many different
forms such as Credit Cards, Debit Cards, Cash/ATM Cards, Store Cards and Sodexo
Cards, etc.

4.1.1 CREDIT CARD

 A credit card is a card issued by a financial company which enables the
cardholder to borrow funds. The funds may be used as payment for
goods and services.

 Issuance of credit cards has the condition that the cardholder will pay
back the original, borrowed amount plus any additional agreed-upon
charges.

 The credit company provider may also grant a Line of Credit (LOC) to
the cardholder which allows the holder to borrow money in the form of
a cash advance.

 The issuer pre-sets borrowing limits which have a basis on the

individual's credit rating.

 At the end of the month, the holder needs to pay 5 to 10 percent of the
outstanding value of the purchases and liquidate the balance in easy
instalments over the next few months.

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

 Parties Involved in the Credit Card functioning are as follows:

o Cardholder: The holder of the card used to make a purchase:
the customer

o Card-issuing Bank: The financial institution or other

organization that issued the credit card to the holder.

o Acquiring Bank: The financial institution accepting the

payment for the products on behalf of the merchant.

o Merchant Account: This could refer to the acquiring bank or

the independent sales organization, but in general is the
organization the merchant deals with.

o Credit Card Association: An association of card-issuing banks

such as Discover, Visa, MasterCard, American Express, etc.
that set transaction terms for merchants, card issuing banks and
acquiring banks.

o Transaction Network: The system that implements the

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

o Affinity Partner: Some institutions lend their names to an issuer

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

o Insurance Providers: Insurers underwriting various insurance

protections offered as credit card perks.
4.1.2 DEBIT CARD

 A debit card is a payment card that deducts money directly from a

consumer’s checking account to pay for a purchase. Debit cards
eliminate the need to carry cash or physical checks to make purchases.

 In addition, debit cards, also called check cards, offer the convenience
of credit cards and many of the same consumer protections when
issued by major payment processors like Visa or MasterCard.

 Unlike credit cards, they do not allow the user to go into debt, except
perhaps for small negative balances that might be incurred if the
account holder has signed up for overdraft protection.

 However, debit cards usually have daily purchase limits, meaning it

may not be possible to make an especially large purchase with a debit
card.

 The various types of Debit Card Systems are as follows:

o Online Debit System: Online debit cards require electronic

authorization of every transaction and the debuts are reflected
in the user’s account immediately.
 o Offline Debit System: This type of debit card may be subject to
a daily limit, and/or a maximum limit equal to the
current/checking account balance from which it draws funds.
Transactions conducted with the offline debit cards require 2-3
days to be reflected on the user’s account balances

o Electronic Purse Card System: Smart Card based electronic

purse system (in which value is stored on the card chip, not in
an externally recorded account, so that machines accepting the
card need no network connectivity.)

4.1.3 CASH CARD/ ATM CARD

 An ATM card is a payment card or dedicated payment card issued by

a financial institution which enables a customer to access automated teller
machines (ATMs) for transactions such as deposits, cash withdrawals,
obtaining account information, and other types of banking transactions,
often through interbank networks.

 ATM cards are payment card size and style plastic cards with a magnetic
stripe or a plastic smart card with a chip that contains a unique card
number and some security information such as an expiration date or CVV.
  ATM cards are known by a variety of names such as bank
card, MAC (money access card), client card, key card or cash card,
among others.

 Such cards do not allow the holder to directly make a purchase with it.

 ATM Cards cannot be used at merchants that only accept debit or credit
cards!

 Cash Cards are not as efficient and useful like debit or credit cards as they
do not provide the power to directly purchase goods.

4.1.4 STORE CARD

 Stored-value cards differ from debit cards, where money is on deposit

with the issuer, and credit cards which are subject to credit limits set
by the issuer and are connected to accounts at financial institutions.

 Another difference between stored-value cards and debit and credit

cards is that debit and credit cards are usually issued in the name of
individual account holders, while stored-value cards may be
anonymous, as in the case of gift cards.

 Stored-value cards are prepaid money cards and may be disposed when
the value is used, or the card value may be topped up, as in the case
of telephone calling cards or when used as a fare card.
  These are used majorly by departmental stores mainly as a marketing
tool to retain customers and increase the turnover.

4.1.5 SODEXO CARD

 The Sodexo Meal Card is the most -advanced digital meal benefit solution
that’s accepted at best-in-class eateries and grocery stores across 1,500+
cities nationwide.

 Here are some of the benefits of this innovative solution:

- Tax savings.

- Exclusive deals and discounts give you additional savings.

- Nationwide network of 1,00,000+ unique points of acceptance

- Smart food ordering online

- Secure and quick transactions on the go

 CHAPTER 4.2
VISA AND MASTERCARD

Visa and MasterCard operate global systems that assume responsibility for routing
card payment authorization and settlement requests from merchant acquirers (the
companies that provide card payment processing services and equipment to
merchants) to the card issuers' systems and transport the response messages back the
opposite way.

Additionally, the card networks offer added value services such as tokenization and
EMV cryptogram authentication. These organizations also set the rules for all parties
that issue, accept and/or recess transactions from cards bearing their brand and
promote the global recognition and acceptance of those brands through advertising
and rules enforcement. As part of the latter role, they help facilitate the exchange of
money and fees between the card issuers and merchants and determine the fees that
are paid to and by the issuers for all card transactions.

They provide the backbone to the transaction as well as the marketing arm.
VISA and MasterCard give assurance to the vendor he will get paid and to a smaller
extent to the card holder that he will be protected like in the extended warranty
situation of the lowest price guaranty if advertised is lower.

Visa and MasterCard are two of the most popular credit card brands in the world,
though these companies don't issue credit cards themselves. Banks and other financial
institutions issue the cards, setting interest rates and credit limits and sponsoring
rewards programs. Since Visa and MasterCard are usually accepted wherever credit
cards are taken, the consumer should focus more on the interest rate and features of
the card rather than the brand. The actual differences between the credit card
companies are subtle but may impact a consumer when it comes to perks such as
fraud protection, travel or car rental insurance and purchase protection
 CHAPTER 4.3
NEED AND IMPORTANCE OF PLASTIC MONEY

1. Less expenditure on printing notes.

- Plastic Money has been a leading promoter of a Cashless Economy
and Cashless Transactions. If majority of the transactions and
business happens online, then the country would save a fortune on
the printing, secrecy, research and development on currency notes.
- This indirectly also has an impact on the environment too as a little
bit less of paper is used.

2. More transparent transactions.

- As we all know, all transactions through plastic money are sourced
somewhere or the other to a bank account.
- This means that the Government can track down money trails
easily resulting in a transparent and clean system.
- People would be reluctant to deal in black money as somewhere or
the other they might be identified and tracked down
- This feature of plastic money can gradually lead India towards the
path of a corruption free economy.

3. More Convenient.
- Plastic Money is more convenient than the traditional way of
making payments.
- There is no need to carry big bulks of cash in the wallet.
- There is also no problem of keeping or returning the exact change
as you don’t require lower monetary denominations here to carry
out the transactions.
4. Saves Time.
- Carrying out transactions with the help of plastic money is much
more time efficient as compared to the traditional payment
methods.
- Secondly, one doesn’t have to make repeated visits to the bank and
thus can again save on time.

5. Safe and Secure.

- Plastic money is also much more secure and safer as compared to
cash.
- One doesn’t have to worry about the theft of money as every single
penny is secured with latest digital technology.
- Thus, one doesn’t have to fear the danger of theft.
- If ever a person’s card gets stolen, he can immediately ask the bank
to block the card. In this way, he will not lose any money.

6. It is more durable.
- Plastic Money is much more durable than the paper notes.
- Secondly it is light weighted, compact and is extremely easy to
carry.
- There is no risk of the notes getting torn or worn out.

7. Employment Opportunities.
- Increasing use of plastic money services has led to an increase in
employment opportunities in the banking sector.
- Opportunities ranging from tele-calling to back end management
from various banks have been opened.
- This is indirectly helpful in increasing the standard of living and
the GDP of the country.
 CHAPTER 4.4
ADVANTAGES AND DISADVANTAGES OF PLASTIC MONEY

4.4.1 ADVANTAGES/ MERITS

 More comfortable than carrying cash: It is essential that we need to

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

 Risk handling cash will decrease: We are living in a world where

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

 Provides credit facility: How about having a card that provides you a
credit facility? With the advent of credit cards, you can purchase anything
today and you are given sufficient time to pay for it. Only with plastic money,
you avail this credit facility. The advantage of having this facility is that you
need not go behind people to borrow money in case of emergencies, instead,
you can use the card in your hand. Also, you get ample amount of time to
repay the amount. It is like a best buddy who helps you in case of financial
needs. Purchase today and pay later, isn't that a benefit you are getting? This
factor is one of the main reasons why people are attracted towards credit
cards.

 Tracking transactions becomes easy: Having a track of your daily or

monthly transactions is always good. By using the plastic money, you are
automatically keeping a track of all your transactions. You can verify it later if
required. When we are using bank notes, we might forget later for what we
spend it, unless you have the habit of noting down every cash transaction you
make. This is not the case with plastic cards. The banks normally send the
statement of debit or credit card to its customers on a monthly basis which will
have the list of all your transactions for that particular month. This transaction
history might help us at times when we misplace a bill. We can show the
transaction details to prove that we have made a purchase. Also, for us to have
a check of our expenses or any particular transaction made in the past, these
statements are useful.

 0% Interest rate instalment options: Certain credit cards provide its

customers the facility to convert their purchases from selected outlets to
instalment options of 3, 6 or 12 months at 0% interest rate. The customer is
given the option to select the period of instalment which cannot be changed
 later. If you have selected 6 months instalment plan and paid it off within 5
months, then you will have to pay an extra fee. Therefore, be careful and pay
only according to the instalment period selected. It is an amazing facility
offered by the banks as it helps you to purchase that thing you wish today and
pay in equal instalments within a period of specific time. Therefore, this is
indeed an advantage of plastic money.

 Convenience of making payments: In olden days when there was no

plastic money, we need to go personally to each place to make a payment be it
utility payments or booking tickets. But now you can pay at your own
convenience sitting at home with the use of plastic money. For example, you
need to go to the travel agency to pay cash for your ticket, instead, you can
book your ticket online. Also, when a travel agency is involved, they charge
commission or fee but when you are booking the ticket directly from the
airline's website, you are saving on it. Plastic cards can also be used for online
purchases. We can see many online shops coming up these days. If you find
something interesting on a website and would want to have it, you can always
purchase it anytime using plastic money. Another advantage is that certain
websites do not charge you the service fee if you are making payment through
plastic money as the payment is done upfront. A service fee will be charged in
cash on delivery option. Plastic money can be used 24/7 for online purchases.

 International acceptance: One of the main advantages of plastic money

is that the same card can be used locally as well as internationally. For
example, you can get rid of the hassle of converting the cash into the currency
of the country you are planning to travel. If you have an international debit or
credit card, you can make your purchases with that card itself. So, the problem
of running out of cash will not happen even if you are abroad and that helps
you to have a safe journey without worrying about the cash and budget.
Sometimes we end up not buying something that we actually like due to
insufficient cash but when you have a credit card with you, you can always
 purchase it and pay later. Especially from abroad as it is not practically
possible to visit the country again to buy stuff.

4.4.2 DISADVANTAGES/ DEMERITS

 Not feasible always: Plastic money is not a complete replacement for cash.
In certain places, we need cash itself. While buying fish from the market or
when paying to the newspaper boy, we need cash itself as they do not carry
POS machine to swipe the plastic money. Similarly, we pay money at
religious places for offerings, there also they do not take plastic money.
Unless we have the facility to use plastic money everywhere, we cannot
replace cash completely. Still, there are small retail shops which do not take
plastic money. In villages, hardly we find any shops that accept plastic money.
It makes us necessary to carry some cash always for our safety.

 Not 100% safe: There is a certain amount of risk involved in transactions

which involves plastic money as well. Especially when doing online shopping.
We are exchanging the details relating to our card over the internet which is
not always a safe place. Some websites are just set up to steal our financial
information and loot money thereby. We should not fall in to such scams and
hackers. One should be a smart online shopper in this world.

 Minimum purchase requirements: One of the major disadvantages of

using plastic money is that one needs to make a minimum purchase in order to
swipe their card. For instance, if the minimum purchase is Rs. 50.00; and we
have purchased items for only Rs. 40.00, you can't use your card for this
transaction unless you purchase for Rs. 50.00. In this case, you will have to
purchase something unnecessary to make it Rs. 50.00. If we had sufficient
 cash in hand, we could have avoided spending extra Rs. 10.00. This is the
mainly imposed by merchants.

 Service charge in certain cases: When we are using plastic money

instead of cash, in certain cases the bank charges a service charge for the
purchase of certain items. For instance, in some countries, the service charge
is levied on card transactions when you purchase gold from jewelry. When
paying cash, this additional charge will not be taken.

 Card too can get damaged: Imagine a situation wherein you have made
a purchase and when at the counter you realize that your card is damaged or
when trying to swipe, the transaction is not getting proceed due to some chip
error or damage. Many a times, the magnetic strip has some errors, many a
times the card can break too which makes it useless. In such situations, you
will definitely wish if you had some cash in hand. These cases occur only
when plastic money is used. It might be a rare case but the possibility cannot
be completely ignored.

 Interest, for non-payment: A credit card allows you to purchase today

and pay for at a later period of time. It gives you a credit period, but if we fail
to make the payment within the due date, interest will be charged. When we
are using cash, we are not taking any credit from the bank, hence non-payment
does not occur.

 Impulsive Purchases: Sometimes, these cards make us buy things that we

don’t need or can’t afford. These impulsive purchases are extremely common
and one should be totally careful and cautious against the same. If one is using
cash, he has an idea of the amount spent by him. But in the case of plastic
money, a person may go overboard considering his spending capacity.
 CHAPTER 4.5
DIFFERENCE BETWEEN DEBIT CARD AND CREDIT CARD

Debit Card Credit Card

Only the funds available in the Credit available in the credit card
current/savings account can be used to account can be used to make
make transactions. transactions.

The availability of funds is based on The availability of funds is based on the

the investment made to the account. credit limit set by the lender.

Interest is earned on the deposit Interest is levied on the outstanding

available. balance.
EMI facility is not available on debit EMI facility is available on credit cards.
cards.

No repayment required. Repayment of outstanding amount can be

made either as revolving credit (payment
of minimum due amount on the credit
card account or payment of more than
minimum due on the card and less than
total outstanding amount) or the
borrower can choose to pay the total
outstanding amount by the due date.

Charges include joining fee, processing Charges include joining fee, processing
fee, annual fee, etc. fee, annual fee, late payment fee,
prepayment penalty/ foreclosure charges.
 Monthly bank statement is sent to the Monthly credit statement is sent to the
borrowers. borrowers with details of bills,
transactions, total credit outstanding,
minimum amount due and due date of
payment.

Any savings/current account holder can In order to avail a credit card, the
avail a debit card. applicant must fulfil the lender’s
eligibility criteria. Factors such as
the CIBIL score or credit history,
existing relationship or transaction
history with the bank, debt-to-income
ratio, etc. affect the individual’s credit
card eligibility and approval.

Fraud liability offered by the Bank/ Unlike a debit card, credit cards come
financial institution is low in the case with high fraud liability and insurance
of a debit card. cover for losses incurred from the theft
and misuse of a credit card.
 CHAPTER 4.6
ESSENCE OF PLASTIC MONEY IN INDIA

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

Indian consumption is still dominated by cash, with cards contributing only 5 per cent
of the personal consumption expenditure. In developed countries, 30-50 per cent of
spends happen through cards. So, there is huge growth opportunity.

The rapid growth of smartphones, Internet penetration and e-commerce is

complementing these; card payment volumes have been growing in excess of 25 per
cent y-o-y. “We expect this trend to continue, aided by the continued increase in debit
card activation and usage; debit card transactions have been growing at 31 per cent
each year.

Intense competition and strategic collaboration among existing and new market
participants like the payments and small banks and wallets will help scale up
acceptance and foster more creativity, innovation and consumer choice. According to
him, the future holds exciting times for the payments industry in India, as all
stakeholders and regulatory authorities come together to achieve a “less-cash
dependent” and eventually “cashless” society.

The Indian card market is at par with the best in the world. Here are some indicators.
Profitable usage: Credit cards can be used online with a separate security number to
prevent misuse. This has increased profitability. Credit cards are now increasingly
being used to pay for even school fees and hospitalization expenses.

Safety standards followed by players to prevent misuse match the best in the world.
For example, any transaction above a particular sum is automatically referred to the
issuing bank which calls up the cardholder in a matter of seconds on the mobile phone
to confirm the purchase.

Product features too match the best anywhere in the world. Almost all credit cards
come with standard frills such as free accident insurance, medical insurance at a
heavy discount and much more. The cardholder is offered the option of converting a
big purchase made on credit card into a loan at a lower rate of interest spread over a
long period.
 CHAPTER 4.7
GROWTH OF PLASTIC MONEY IN INDIA

India could see credit and debit cards becoming redundant as by 2020. As more
people adopt the government’s Aadhar Payment Bridge System (APBS) which will
allow authentication of payments with nothing more than a user’s fingerprint.

In the aftermath of demonetisation, the government has begun pushing digital

payments as a way to counter the shortage of cash as well as a way to ensure an
accountability in payments. While a big part of its strategy has been to promote digital
payments through smartphones, initiatives such as APBS, which will completely
remove the need for technology at the user’s end.

“India is in the midst of huge disruption in the world of both financial technology and
social innovation. By 2020, my view is that India will make all debit cards, credit
cards, ATMs and POS machines totally irrelevant,” said Amitabh Kant, CEO of NITI
Aayog, in a panel discussion at the Pravasi Bharatiya Divas in Bengaluru on Saturday.

The country has around 662 million debit cards and less than 25 million credit cards
in usage currently. In contrast, it has over a billion-mobile subscriber base of which
around 300 million use smartphones with internet access.

But kiosks using APBS could be an alternate transaction method as each individual as
a unique Aadhar ID linked to their bank accounts and emerge as an alternate platform.
The use of plastic cards in India has no doubt in rise from last few years but there is
still a great potential left for the bankers to introduce more attractive services in order
to lure the customers on one side and increase their profits on the other. Some aspects
or facts (organized from various studies and articles) which are contributing to the
growth of plastic cards market and also indicate its growth in the near future.

It’s not that only the card numbers have increased, but even the types of cards on offer
have seen a surge. Today the domestic card industry is flooded with different types of
cards ranging from gold, silver, global, co-branded credit cards, smart to secure, the
list is endless. Foreign banks have shouldered the major responsibility of increasing
the card base and adding value-added services to the card products in the past. This is
also evident from the fact that the market share of these foreign banks is estimated to
be well over 70%. But the scenario has changed dramatically in the last of couple of
years with the entry of State Bank of India (SBI), a domestic major in the banking
sector. More and more nationalized banks and private sector banks like ICICI and
HDFC Bank are aggressively launching credit card with value added features. There
is immense growth potential in the domestic card industry.
 CHAPTER 4.8
REVOLUTIONS AND DEVELOPMENT OF PLASTIC MONEY
TODAY

4.8.1 Contactless payment:

Contact less payment systems are credit cards and debit cards, key fobs, smart cards,
or other devices, including smartphones and other mobile devices, that use Radio
Frequency Identification (RFID) or near field communication (NFC, e.g. Samsung
Pay, Apple Pay, Google Pay, Fitbit Pay, or any bank mobile application that support
Contactless) for making secure payments. The embedded chip and antenna enable
consumers to wave their card, fob, or handheld device over a reader at the point of
sale terminal. Contactless payments are made in close physical proximity,
unlike mobile payments which use broad-area cellular or Wi-Fi networks and do not
involve close physical proximity.

Some suppliers claim that transactions can be almost twice as fast as a

conventional cash, credit, or debit card purchase. Because no signature or PIN
verification is typically required, contactless purchases are typically limited to small
value sales.

Lack of authentication provides a window during which fraudulent can be made

while the card owner is unaware of the card's loss.

PROS of PayWave and PayPass:

1. Convenient as you just need to “tap and pay” using your credit card or mobile
phone without keying in a PIN or signing a receipt.
2. Gives you peace of mind as you are protected against fraudulent transactions.
 3. Reduces threat of hackers who may scan cards and steal valuable information
as NFC uses data encryption when sending sensitive information.
4. Cost and time efficient for the average consumer.
5. You do not have to worry with typing errors (such as incorrectly typing in
your PIN) and connection is quicker on the contactless terminal.
6. Retailers no longer have access to your credit card information.
7. You are able to keep track of rewards and use points for your purchases made
in coffee shops or miles redemption. Some banks even offer cash back and
prizes when you use this feature.
8. Convenient and quick checkout payments mean lesser queues and lining up.

CONS of PayWave and PayPass:

1. Only a few yet have adopted to this technology so it might create confusion or
frustration among users. Not all consumers are educated on this technology.
2. Only consumers with smartphones or those with PayWave/PayPass credit
cards can use this technology.
3. You may lose your credit card and your account may be compromised.
4. Risk of spyware or malware attacks and other viruses like any computer
device in the terminal.
5. You can’t change the limit or choose the limit per transaction as chosen by the
bank.
4.8.2 Credit cum Debit Cards:

Credit cum debit card is a single card which has the features of both a credit card as
well as a debit card. Although we have all heard about ATM cum debit cards, the
term credit cum debit cards is not so common. Over the past few years, some banks in
the country have introduced such cards.

These are essentially debit cards, but work on the concept of an overdraft benefit for
the customer. That is, the customer can use the card to withdraw money from ATMs
and also at merchant establishments like any other debit cards. In addition, once the
balance in his account is exhausted, he can use the card up to a pre-determined credit
limit, over and above the account balance. This in effect is like taking an overdraft on
your account.

A credit cum debit card carries all features of a normal debit card. In addition, a credit
limit is determined up to which the customer can withdraw at ATMs or use in
merchant establishments. The credit limit is set based on certain eligibility criteria of
the customer.

Eligibility Criteria: These cards are issued only when the bank is convinced of the
credit standing of the customer. The eligibility criteria and the credit limit
determination are based on different factors for different banks. Usually, it is set at 2-
3 times of the take home salary. Some banks also determine this based on other
factors like a proportion of fixed deposits (if you have one) with the bank or based on
a security like bonds or National Savings Certificates to be kept with the bank. The
limits set and the eligibility criteria vary from bank to bank and also in some cases,
from customer to customer. Most banks however grant this card only to salary
account holders. This is because they would want a backing in the form of a regular
salary credit into the savings account, in case there is default in payment of interest or
the amount spent
Charges for such cards: These cards usually come with no processing fees or initial
charges. However, this may vary from bank to bank and also depending on market
conditions. You obviously do not have to pay on the ‘debit’ part of the card, i.e.: up to
the amount of balance in your account. Over and above this, when you use the credit
limit, you will have to pay interest on the used amount, similar to normal credit cards.

However, the interest rates charged on the credit used is usually lower than what is
charged on traditional credit cards. It ranges from 14%-18% per annum, whereas the
charges on a normal credit card are upwards of 24% per annum. Since it is a debit
card also, the charges on cash withdrawal at ATMs are not applicable, unlike most
traditional credit cards. However, there is a catch here. The interest is applicable from
the day the credit limit is used. That is, unlike traditional credit cards, there is no
interest free period available in credit cum debit cards. So, the charges are levied on
the entire period. The interest charged is recovered from the amount in the savings
bank account.
4.8.3 FOREX Cards

Forex cards are the latest entry into the travel currency market. These cards have seen
a steady increase in their popularity over the past few years. Forex cards are an easy
way of carrying currency from country to country. They are easy to buy and load with
money for your next trip abroad.

Forex cards are useful financial instruments for anyone that is traveling abroad. Forex
cards are a great option for individuals that lack access to a credit or banking services.
You can use the forex card at lots of different retail stores, merchants, hotels and
business establishments.

A forex card is a type of prepaid debit card. They are issued by banks such as HDFC
Bank, Visa, Bank of America, Kotak Mahindra Bank, and ICICI Bank. Since the user
has already prepaid for the card, funds are issued in the local currency of the country.
This saves forex cardholders from having to convert their currency.

Forex cards are safe, convenient and cost-effective. These cards save cardholders
money because banks typically charge fees ranging from 2 to 3% for overseas
transactions on credit and debit cards.

Forex cards are a blessing to all the frequent travellers as they don’t have to get the
currency exchanged over and over again. It saves a lot of time and provides an all in
one facility.

All the banks in business today are encouraging the promotion of travel cards as they
receive the conversion premiums at every cashless transaction.
 CHAPTER 4.9
OTHER PLATFORMS FOR GROWTH OF PLASTIC MONEY

4.9.1 MUMBAI RAILWAY’S SMART CARD

One of the most convenient way to buy the ticket in Mumbai Local Train is
with ATVM Smart Card. These are available on all the Local Train Stations.
There are special counters for these smart cards and travel coupons. These
counters do not sell anything else, so there is not much queue to buy these.
You can Pay Rs. 100 to buy a new Smart Card. There is no need to give any
photograph or any ID proof. Anybody can pay this amount and buy this Smart
Card in no time. Each card has unique number. There is no magnetic strip on
the card so it is safe to carry with any electronic item. You also receive
payment receipt along with Smart Card. This needs to be preserved for records
purpose, in case if any verification is required for ownership of Smart Card.

Out of your hundred rupees, Rs. 50 are kept as security deposit. and you get
value of Rs. 52 on the card. This money can be used for printing ticket from
ATVM machines before starting the journey in Local Train. Depending on
your journey appropriate fare is deducted from your Smart Card. You can also
use the card on ATVM machine to check the balance available inside. This
Smart card works on Central and Western Railway ATVM machines.

ADVANTAGES:

o You will not miss that special convenient train by standing in queue to
get you ticket.

o No need to keep exact fare amount or change coins which are

generally asked on Counter.
 o No queue to purchase smart card or recharge same.

o ATVM’s are located all over the stations, so one does not need to find
the ticket counter in order to purchase the ticket.

o Increases people’s confidence in using Plastic Services.

o Available 24*7, whereas the ticket counters shut after a particular time.

DISADVANTAGES:

o Many a times the ATVM’s are out of order or are malfunctioning

which makes the cards useless for immediate travel.

o Illiterate people are not acquainted with the proper usage of the ATVM
and at the same time they form the highest commuting population by
the local trains.

o There is no security of the cards, if the card is lost, one cannot track it.
The balance of the card also goes waste.
4.9.2 MUMBAI METRO SMART CARD

The best way to travel on the metro is with a Smart Card. This is an electronic
card that can be obtained over the counter from Customer Care of any metro
station or authorized channel. Smart Card can be obtained by paying security
deposit of Rs.50,

Smart Card can be loaded with Store Value Pass or Trip Based Monthly Pass

The Store Value Pass is an electronic purse with some pre-loaded monetary
value as per your choice. Each time you use the metro, the ticket value will be
deducted from the monetary value stored in the Smart Card at the exit gate as
per fare chart. The minimum recharge value is Rs.100 and maximum
monetary value that can be stored is Rs.3000.

Buying a Smart Card will help you save time by avoiding queues at ticket
counters.
 CHAPTER 4.10
“DEMONETISATION”

Demonetisation forms an important factor that has promoted and has been a major
driver for the recent change in trend towards using plastic money services.
Let us first understand what Demonetisation is…

On 8 November 2016, the Government of India announced the demonetisation of

all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series. It also announced the
issuance of new ₹500 and ₹2000 banknotes in exchange for the demonetised
banknotes. The government claimed that the action would curtail the shadow
economy and reduce the use of illicit and counterfeit cash to fund illegal activity and
terrorism.

The announcement of demonetisation was followed by prolonged cash shortages in

the weeks that followed, which created significant disruption throughout the
economy. People seeking to exchange their banknotes had to stand in lengthy queues,
and several deaths were linked to the rush to exchange cash.

According to a 2018 report from the Reserve Bank of India, approximately 99.3% of
the demonetised banknotes, or ₹15.30 lakh crore (15.3 trillion) of the ₹15.41 lakh
crore that had been demonetised, were deposited with the banking system. The
banknotes that were not deposited were only worth ₹10,720 crores (107.2 billion),
leading analysts to state that the effort had failed to remove black money from the
economy. The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the
day after the announcement. The move reduced the country's industrial
production and its GDP growth rate.

Initially, the move received support from several bankers as well as from some
international commentators. The move was also criticised as poorly planned and
unfair, and was met with protests, litigation, and strikes against the government in
several places across India. Debates also took place concerning the move in both
houses of parliament.

Chaos ensued in the cash-dependent economy (some 78% of all Indian customer
transactions are in cash), as long, snaking lines formed outside ATMs and banks,
which had to shut down for a day. The new rupee notes have different specifications,
including size and thickness, requiring re-calibration of ATMs: only 60% of the
country’s 200,000 ATMs were operational. Even those dispensing bills of lower
denominations faced shortages. The government’s restriction on daily withdrawal
amounts added to the misery, though a waiver on transaction fees did help a bit.

Small businesses and households struggled to find cash and reports of daily wage
workers not receiving their dues surfaced. The rupee fell sharply against the dollar.

The government’s goal (and rationale for the abrupt announcement) was to combat
India's thriving underground economy on several fronts: eradicate counterfeit
currency, fight tax evasion (only 1% of the population pays taxes), eliminate black
money gotten from money laundering and terrorist-financing activities, and to
promote a cashless economy. Individuals and entities with huge sums of black money
gotten from parallel cash systems were forced to take their large-denomination notes
to a bank, which was by law required to acquire tax information on them. If the owner
could not provide proof of making any tax payments on the cash, a penalty of 200%
of the owed amount was imposed.

“Many Indians switched to alternative payment avenues – a big deal in a country of

1.2 billion with only 25.9 million credit cards and 697 million ATM cards as of July
2016. The biggest gainers were mobile wallet companies that offer ease of
transactions through a large network of partners.” – Investopedia

There has been a rise in the use of credit and debit cards following the demonetisation
initiative, with 37.4 per cent Indian travellers choosing plastic money over cash for
bookings and other travel-related expenditure, a survey has said. After
demonetization, there is a significant rise in the use of plastic money in India. The
concept of paying by cash has become almost standstill and a majority finds it more
convenient to carry a single card to make any payment rather than carrying notes.
Plastic money includes credit cards, debit cards, prepaid balance cards and smart
cards that can be used for any kind of payment. In retail stores, the sale for various
products declined.
Some examples and surveys conducted by various sources on the increase in use of
plastic money and the impact of plastic money post demonetisation have been stated
as follows:

Thus, we can conclude that Demonetisation has been a major pusher for the
common folk to shift towards usage of plastic money and has been an essential
step in taking the economy of India towards a cashless economy.
 CHAPTER 5 - SURVEY ON PLASTIC MONEY
QUESTIONNAIRE AND INTERPRETATION OF THE
RESPONSES

1. Age Group *

o 15-25
o 26-35
o 36-45
o 46-60
o 60 and Above

FINDINGS:
It is seen that out the 73 respondents, the majority belongs to the age group of 15-25
which is 47 respondents followed by the 36-45 age group which contains 20
respondents. We can see that we have Young and Middle-Aged population as a
majority of the respondents. These are the age groups that make the most frequent
transactions in their day to day life.
 2. Gender *

o Male
o Female
o Other

FINDINGS:

We can see that Out of 74 Reponses, 54.8% are Females (40) forming a majority as
compared to the remaining 45.2% from Men (33).
Females usually have a daily usage of money for purchasing groceries and other daily
requirements, on the other hand, men usually come behind the females keeping in
mind the spending aspect.
 3. Occupation *

o Student
o Businessman
o Professional
o Employee
o Retired
o Home Maker/ House Wife

FINDINGS:

Out of the 73 Respondents, it can be understood that the Majority is formed by

Students (45) followed by the Working Class (Businessmen + Professionals +
Employees) forming the second majority of (16) and lastly followed by Home
Makers/House Wives (10).
We can see that the majority in question 1 and question 3 state the weightage of
students between the age of 15-25, which can be understood as the future of India
 4. Monthly Income/Salary *

o Below 20000
o 20000-40000
o 40000-80000
o 80000 and above

FINDINGS:

As we can see from the chart above, majority of the respondents are from the lowest
salary slab category and the second majority is from the highest salary slab category.
Thus, we have received a properly balanced variety of responses.
Income is an important aspect when it comes to spending money. Banks offer Credit
cards according to the income of the customer. It is an important statistic to decide on
the credit limit. Majority of the respondents have an income below Rs 40000 and
majority of them belong to the student category.

5. Do you have the following Cards? *

Yes No
 Debit Card  
Credit Card  
Cash Card  
Store Card (Eg: Starbucks, Shoppers Stop, Etc.)  
Sodexo Card  

FINDINGS:
Debit Card: 60 People have Debit Card out of 73 respondents.
Credit Card: 20 People have Credit Card, which involves majority of the Working
Class.
Cash Card: Only 7 People have a Cash Card, this can be because these days the debit
and credit cards also function as a cash card.
Store Card: 55 People own various Store Cards. This shows the successful change
from Cash transactions to plastic money as people are gradually preferring to use the
store cards with preloaded balance for their everyday shopping from particular stores,
restaurants and supermarkets.
Sodexo Cards: Quite a few people from the sample are using Sodexo Cards
As compared to Debit, Credit and Store Cards, Cash card and Sodexo Cards are
way less used. This might be due to the lack of awareness and accessibility.
 6. Do you know the basic difference between a Debit and Credit
Card? *

o Yes
o No
o Maybe

FINDINGS:

97.3% people know the basic difference between a Debit and a Credit Card.
This can be due to the increasing awareness of Plastic Money along with the efforts of
various banks to keep the customers updated about the various features and
functioning of various cards.
 7. How many Debit Cards do you have? *

o 0
o 1
o 2
o 3
o More than 3

FINDINGS:
We can notice that around 50% of the respondents own 1 debit card.
19 respondents have 2 debit cards and 5 respondents have 3 cards.
2 People have more than 3 cards and the remaining People do not own any debit
cards.
The prime reason to own more than 1 debit cards would be to avail various offers that
can be availed on some particular debit cards and also due to the number of accounts
one person owns.
 8. How many Credit Cards do you have? *

o 0
o 1
o 2
o 3
o More than 3

FINDINGS:

We can notice that around 53.4% of the respondents do not own a Credit Card.
This can be due to multiple reasons such as high interest rates, discomfort in taking
credit for day to day purpose, paying lump sum amount of money at the month end
and so on!
The main reason of owning various credit cards may be due to the different credit
limits in various accounts.
 9. Which bank’s Plastic Money services are you using? *

o SBI
o HDFC
o Kotak Mahindra Bank
o Citi Bank
o American Express
o Axis Bank
o Other

Which bank’s Plastic Money services are you using?

FINDINGS:

We can observe that majority of the respondents use Plastic Money services of
nationalized or private sector banks and not co-operative and others.
Points like security, availability of ATM’s, ease of operations and so on might have
driven people towards using the plastic money services of big banks as they usually
spend a lot of resources and make the customer experience much more premium and
easy as compared to other scheduled banks.
 10. What would be your preferred choice for making a transaction?

o Cash
o Mobile Wallets
o Cheques
o Net Banking
o Debit Card
o Credit Card

FINDINGS:

Broadly overviewing this chart can give us a good insight on the preferred choice of
people making transactions. We can clearly see that 41.1% people prefer making a
transaction through plastic money (debit + credit) followed by 34.2% people making a
transaction by cash.
Hence, we can see that Plastic Money is a preference of people.
Apart from that other cashless modes (Net Banking + Cheques + Mobile Wallets)
form up 24.7%
Broadly comparing, 65.8% people prefer using cashless payment and the remaining
34.2% prefer using cash.
 11. Since when are you using a Debit/Credit Card?

o Before 2015
o 2016 (Year of Demonetisation)
o After 2016

FINDINGS:

This shows that 46.6% of the Respondents have been using the Plastic Money
services before 2016. Remaining 53.4% of the Respondents forming the majority,
have started using these services post and during the year 2016 which is the year of
Demonetization which has been one of the important factors involved in the shifting
from Cash to Cashless transactions.
 12. What was the reason of your shift from Cash to Plastic Money?

o Change of Trend
o Ease of use
o Bank’s Pressure
o Requirements of Business
o Other

FINDINGS:

We can witness that 31.5% of the respondents shifted due to the change in trend.
79.5% (Majority) of the respondents have shifted because of the ease to conduct
transactions.
Some respondents have also shifted due to Bank’s pressure to withdraw money via
ATM’s or else due to the requirement of business.
Reviewing the previous question, we can comment that majority of the respondents
have started using plastic money services post demonetization and here we can
witness that the majority of the respondents have shifted from cash to plastic money
due to the ease of use! Jointly, we can see that demonetization has made it easier for
people to carry out their transactions.
 13.Do you feel that the use of your Debit/Credit Card has increased
after demonetisation?

o Yes
o No
o Maybe

FINDINGS:
As we can clearly see from the chart of the respondents, 66.7% of the respondents
consider demonetization to be the reason for the increased usage of plastic money
services.
Whereas, the other 26.4% of the respondents have a feeling about the same as
mentioned above.
A very small part of the sample has respondents who feel that demonetization has no
effect on their usage of plastic money.
But, we do go with the majority and thus get another indication of demonetization
being one of the biggest reason for the growth of plastic money services in India.
14.What is the most desired feature of Plastic Money? *

o Trust
o Privacy and Secrecy
o Feasibility and Availability of ATMs
o Financial Incentives and Offers
o Reliability

FINDINGS:

From the above chart, we can see that the most desired feature of plastic
money is feasibility and availability of ATMs. In today’s world, convenience
has become a very important factor. People prefer going to any nearby ATM
and withdraw money rather than standing in ques in the banks to withdraw
money after going through some documentation.
Second desired feature is the need for privacy and secrecy. If people don’t feel
secure and fear that their money is in danger, they may resent from using the
plastic money services.
The remaining three factors have a more or less equal weightage.
15.What was the main purpose of your Debit/Credit Card use
BEFORE Demonetisation?*

o Online Shopping
o Online Booking (Flight, Movies, Hotels, Etc.)
o Cash Withdrawal/Deposits in ATM
o Back-up / Safety
o Other:

FINDINGS:

The above chart shows people’s preference towards the usage of plastic
money for various activities before demonetization.
The majority of respondents have said that they preferred plastic money for
online booking purposes. It can be because it helps them avoid ques.
Online Shopping, Cash Withdrawal and Backup/Safety have got more or less
equal weightages.
16.What is the main purpose of your Debit/Credit Card use AFTER
Demonetisation? *

o Online Shopping
o Online Booking (Flight, Movies, Hotels, Etc.)
o Cash Withdrawal/Deposits in ATM
o Back-up / Safety
o Other:

FINDINGS:
Comparing the chart from question number 15, we can observe the increase in
the preference of using plastic money services for Online Booking from
30.1% to 43.1%.
This can be due to the increased deals offered by retailers, vendors, etc. for
making bookings online.
Online Shopping and Cash Withdrawal usage has been persistent.
However, we can see that there has been a sharp drop from Backup and Safety
option from 20.5% to 8.3% which implies that the people are no more
considering cards to be a backup, rather they are using it for everyday
transactions.
17. What would you prefer? *

o Complete Cashless Transactions

o Balanced
o Only Cash Transactions

FINDINGS:

This chart is a pretty much proving factor for our research project.
People now prefer a balanced economy over traditional hard-core cash
transactions mentality.
This chart implies that our people have accepted the usage of plastic money.
There might be a time when due to the advancements in cashless transactions
system, India can transform into to complete cashless economy which might
later on help to eradicate many wrong practices and use of black unaccounted
money.
18.How comfortable are you while using the following modes of
transactions? (5 being the most comfortable) *
FINDINGS:

People’s comfort preferences for various Methods are stated as follows:

Summarizing the above stated points, we can say that the respondents are
most comfortable in doing transactions by Cash and then by Debit Card.
They are most reluctant to carry out the transaction by Sodexo Card
followed by Credit Card.
We can interpret that after all these developments and advancements, Cash
yet prevails to be the most comfortable method for payments. So, it might
take time for the economy to shift towards a complete cashless economy
just immediately in the upcoming years.
People will need to be educated and explained the growing importance of
a cashless economy.
 CHAPTER 6

CONCLUSION

Looking at the broad scenario, there is no doubt that the plastic money is rising up in
the market. The day will come when all the transaction will be done through plastic
money, yet there are more further technologies which have been implemented in
Japan and US but India is still growing in its first phase. People have started keeping
bunch of cards in their pockets instead of currencies. Everything A-Z can be
purchased via plastic money.

Thus, in these growing phenomena there doesn’t seems any declination instead it
growing at a higher rate. Consumers are preferring these cards mostly for shopping
online E- commerce has given a better way to use the plastic money. It can be
concluded that plastic money has a very bright future in the coming years because of
the increasing trend of ecommerce.

21ST Century banking has become wholly customer-driven & technology driven by
challenges of competition, rising customer expectations & shrinking margins, banks
have been using technology to reduce cost & enhance efficiency, productivity &
customer convenience. Technology intensive delivery channels like net banking,
mobile banking, etc. have created a win-win situation by extending great convenience
& multiple options for customer.

From educating customers about credit cards there is a need to educate them about the
differentiating factors of the cards. Awareness has been also increased through the
constant advertisement by VISA and MasterCard. The strategy should be to
emphasize on its differentiating characteristics. They also need to identify potential
customers and target those using mailers.

As internet is growing at a fast rate the net users can be targeted by having interactive
sites. The prospective company’s card personality could also be used in the home
page to solve customer queries.
On the basis of the analysis, the following conclusions can be given about the Plastic
card usage: -

1. It was found that people find cards as a convenient way of payment. Gone are the
days which required people to carry huge amount of cash to make their payments.
With the P.M Mr Narendra Modi’s emphasis on Cashless transactions in banks,
departmental stores, grocery outlets, Apparel stores etc., now the people in India are
gradually adapting to this new way of transaction.

2. Reduction in Cashless transactions will also lead to the restriction of the influx of
Duplicate money from abroad. Safety measures pertaining to the fund transfer need to
be increased to encourage and assure people so that the use of Plastic money
increases.

3. Safety in the Plastic money is an important factor that induces its usage. Multiple
level of security should be insured like Password, OTP (One time password), use of
SHTTP (secured sites) instead of HTTP etc.

4. Forex Cards should be promoted to travellers by luring them in by providing better

facilities and various discounts.

5. Plastic money can play a very important and in fact a major role in the eradication
of corruption in India. These are the reasons that how are it possible: -

o Every money transfer or transaction is maintained and recorded and also the
transactions of crores and crores of money cannot go unrecorded. Each official
can have only that much of amount that he earns or has saved through his or
her earnings.
o None of the money transactions are illegal. As, all the money transfer and
transaction happens through bank accounts, none of the illegal money can be
transferred.
o All the conversions of the Indian currency into dollars or Swiss dollars are
recorded and also their amount is recorded if a lot of money is converted.
 o The number of fraudulent money practises are reduced as no fake paper notes
can be printed as they are not usable.
o All the transactions will be recorded and also payments made in this manner
are billed out in order to maintain a proof of the transaction made. Hence this
will eradicate the problem of lack of evidence when it comes to transactions
made. Many a times, we do not take a cash memo from the shopkeeper
although it is the only record or proof that says that we have purchased an item
from that shop.

Thus, this study has tried to throw some light on the factors affecting the usage,
prospects and growth-development potential of Plastic card usage in India.
 CHAPTER 7
RECOMMENDATIONS

1. Transaction Charges
Transaction charges on online transactions should be waived off to induce the
people to use Plastic cards more. Many a times people avoid using plastic
money services due to the high transaction charges. Actually, if there are no
transactions, our country will see a massive surge in the usage of plastic
money services.
Companies that accept payments through plastic money online should reduce
or remove the convenience fees to promote the use of such services.

2. Subsidies
Subsidy on electronic transactions can also lead to increased usage of plastic
cards.
People at this stage should be promoted to use plastic money.
Incentives and encouragement from the government can do the job.
Subsidies such as instant cashback on the using of plastic money services
should be granted. Various discount vouchers can be offered as well.

3. Unique Identification
Thumb scanning facility can be incorporated with plastic money usage so that
the safety is insured and people get assured to use plastic cards.
This way, we can insure that only the authorized person has access to the
funds.
It can curb down the ATM frauds drastically and can be great boost for the
growth of plastic money.
4. OTP Verifications
For large transactions in stores too, the plastic money service providers should
send an OTP to the buyer of the goods. This will ensure the double security of
the card as well as the funds. This will also indirectly boost the confidence of
the people in making big transactions through the cards.

5. Training and Awareness

Both, the Government and the card companies should jointly conduct
campaigns to educate the common folk with the usage of these services,
benefits, precautions and so on. Bankers should personally demonstrate the
complete usage and functioning of the cards, ATMs, transactions to the
customers while issuing the card to them.

6. Link the Cards to Mobile Devices

All these cards should be able to be traced through your personal mobile
devices so you can track the card as soon as you have misplaced the same.

7. Offer Cashbacks
Shops, Outlets, Restaurants can offer cashbacks on the usage of various
partnered companies. This will promote people to shift towards making
cashless payments and will help the outlets too to increase their business.
 CHAPTER 8

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