A

Dissertation Project Report

On
USE OF PLASTIC MONEY
Submitted to Utkal University in partial fulfillment for degree of Master of
Finance & Control under Kushagra Institute of Information & Management
Science (KIIMS), Cuttack

“JANGYASENI SAHU”
Univ. Roll No. 13771U124012
Batch -2012-14

Under The Guidance Of

PROF.R.ROSALIN
FACULTY OF MANEGEMENT
KIIMS, CUTTACK

PIRA BAZAR, CUTTACK

1
 CERTIFICATE

This is to be certified that the dissertation project report entitled, “ USE OF

PLASTIC MONEY” Submitted to Utkal University in partial fulfillment of the
requirement for the award of Master of Finance and Control(MFC), is a record
of original research work done by JANGYASENI SAHU during the period of her
study (2012-14) in the department of MFC, KUSHAGRA INSTITUTE OF
INFORMATION AND SCIENCE, affiliated Utkal University under the
supervision & guidance of Prof. R.ROSALIN & that dissertation project has
not formed the basis for award of any degree/ diploma/associate
ship/fellowship/any other similar title .

Date: (Dr.S.K.Baral)
Place: DIRECTOR
KIIMS,CUTTACK

2
 CERTIFICATE
This is to be certified that the dissertation project report entitled,
“USE OF PLASTIC MONEY” Submitted to Utkal University in partial
fulfillment of the requirement for the award of Master of Finance and
Control(MFC), is a record of original research work done by JANGYASENI
SAHU during the period of her study (2012-14) in the department of MFC,
KUSHAGRA INSTITUTE OF INFORMATION AND SCIENCE, affiliated Utkal
University under the supervision & guidance of Prof.R.ROSALIN & that
dissertation project has not formed the basis for award of any degree/
diploma/associate ship/fellowship/any other similar title .

Date: (Prof. R.R.MISHRA)

Place: Course Coordinator MFC , KIIMS

3
 CERTIFICATE

This is to be certified that the dissertation project report entitled, “ USE OF

PLASTIC MONEY” Submitted to Utkal University in partial fulfillment of the
requirement for the award of Master of Finance and Control(MFC), is a record
of original research work done JANGYASENI SAHU during the period of her
study (2012-14) in the department of MFC, KUSHAGRA INSTITUTE OF
INFORMATION AND SCIENCE, affiliated Utkal University under the
supervision & guidance of PROF. R.ROSALIN& that dissertation project has
not formed the basis for award of any degree/ diploma/associate
ship/fellowship/any other similar title .

Date: (Prof. R.Rosalin)

Place: Faculty in Management, KIIMS

4
 DECLARATION

I do hereby declare that the dissertation project report entitled, “USE OF

PLASTIC MONEY” Submitted to Utkal University in partial fulfillment of the
requirement for the award of Master of Finance and Control(MFC), is a record
of original research work done by JANGYASENI SAHU during the period of her
study (2012-14) at the department of MFC, KUSHAGRA INSTITUTE OF
INFORMATION AND SCIENCE, Utkal University under the supervision &
guidance of Prof.R.Rosalin & that dissertation project report has not formed
the basis for award of any degree/ diploma/associate ship/fellowship/any
other similar title .

Date: Signature of Student

Place:

5
 ACKNOWLEDGEMENT

It is with profound gratitude that I express my sincere thanks to Mr. J.B. Padhi,
the Secretary, KIIMS and all other faculty members of our college for their
constant encouragement during the course of my study.
I would like to express my profound gratitude to my guide Prof.R.Rosalin,
KIIMS who utilized their valuable time able to guide my project work in “ USE
OF PLASTIC MONEY”. Their simplicity, self-affecting humility and genuine
affection for student community have been an inspiration.
I sincerely express my deep sense of gratitude to, Prof.R.R.MISHRA, Head
Of The Department, MFC, KIIMS and for guiding me in completing the project. I
am indebted to all our friends for their encouragement and support rendered
for their successful completion of the project. Lastly no words can express my
debt gratitude to my parents and thanks to all my relatives for their
cooperation.

Date: (Signature of Student)

Place:

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 TABLE OF CONTENTS

CHAPTER – 1: Introduction
 Mean
 Definition
 Objective of the study
 Scope of the study
 REASEARCH METHODOLOGY
 Limitations
CHAPTER 2: The History of Credit Cards and Debit Cards In
Plastic Money
 Credit Card Origins
 Bank Card Associations
 Plastic Becomes the Standard
 The Future

CHAPTER 3: TYPES OF PLASTIC MONEY

 Credit card
 Debit card
 Charge card
 Amex card
 Dinner club card
 Global card
 Co-branded card
 Master card & Visa
 Smart card
 Photo card

CHAPTER 4: CREDIT CARD

 CREDIT CARD INTRODUCTION
 DEFINITION
 MEANING
 ADVANTAGES & DISADVANTAGES OF CREDIT CARD
A. BENEFITS TO THE BANK
B. BENEFITS TO CARD HOLDER
C. BENEFITS TO THE MERCHANT ESTABLISHMENT
 DISADVANTAGES OF CREDIT CARD
 MARKETING STRATEGIES
 STEPS FOLOWED IN CREDIT CARD TRANSACTION
1) AUTHORIZATION
2) MERCHANT BALANCING
3) CAPTURE

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 4) CLEARING
5) INTERCHANGE (VS/MC ONLY)
6) Settlement
7) Merchant ACH
 Different Types of Credit Cards
i. Low Interest Credit Cards
ii. Instant Approval Credit Cards
iii. Balance Transfer Cards
iv. Rewards Credit Cards
v. Cash Back Credit Cards
vi. Airline Credit Cards
vii. Prepaid Debit Cards
viii. Secured Credit Cards
ix. Credit Cards for Bad Credit
x. Student Credit Cards
xi. Business Credit Cards
 Types of Credit Cards offered by Indian Banks
A. Silver Cards
B. Gold and Platinum Cards
 Credit Card Data

CHAPTER 5: DEBIT CARD

 DEBIT CARD
 Types of debit card systems
 Online Debit System
 Offline Debit System
 Electronic Purse Card System
 Prepaid Debit Card
 BENEFITS & FEATURES OF DEBIT CARDS
 FREE WITH OUR BANK ACCOUNT
 NO BACKGROUND CHECK
 CASH WITHDRAWALS
 CONVENIENCE
 FAIR EXCHANGE
 STATEMENT OF ACCOUNT
 BANKING CUM SHPPING CARD
 Process Debit Card Transactions
 FEATURES OF DEBIT CARD
 Online debit card transactions
 Off line debit card transactions
 Plastic Fraud

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CHAPTER 6: Advantages & Disadvantage of plastic money

 ADVANTAGES
 DISADVANTAGES

CHAPTER 7: TECHNOLOGY AND INFRASTRUCTURE

 TECHNOLOGY AND INFRASTRUCTURE

CHAPTER 8: CASE STUDY

 What Happens in Credit Card Fraud Cases?

CHAPTER 9: FINDINGS, SUGGESTION & CONCLUSION

 MAJOR FINDINGS
 SUGGESTION
 CONCLUSION
 BIBLIOGRAPHY

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CHAPTER - 1

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Introductions

Plastic money or polymer money, made out of plastic, is a new and easier way of
paying for goods and services. Plastic money was introduced in the 1950s and is now an essential
form of ready money which reduces the risk of handling a huge amount of cash. It includes debit
cards, ATMs, smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for
currency. This book on plastic money is divided into two sections titled Concepts and
Experiences. The former covers articles on the the emergence of plastic money, different types of
plastic cards and their growth in India and other related issues. An experience discusses the
experiences of banks like Standard Chartered, Citibank, which deal with plastic money and their
growth in the market.

Meaning

Plastic money refers to credit cards, you use them whenever you want and pay later (with interest,
of course). It makes it too easy for people to buy things they normally could not afford, which
makes it easier to get into debt.

Definition
A slang phrase for credit cards, especially when such cards used to make purchases.
The "plastic" portion of this term refers to the plastic construction of credit cards, as opposed to
paper and metal of currency. The "money" portion is an erroneous reference to credit cards as a
form of money, which they are not. Although credit cards do facilitate transactions, because they
are a liability rather than an asset, they are not money and not part of the economy's money
supply.

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Objective of the study:

The present study has been undertaken with the following objectives:
. To examine the conceptual aspects of plastic money and the recent
development in plastic money market
. To make an analysis of the risk associated with the plastic money business
. To examine and evaluate the perceptions and experience of the plastic money holder
. To make a comparative analysis of market share holding of different banks in plastics
money business

Scope of the study:

The present study has been conducted in the city of Bhubaneswar. The study has been divided
into two parts. The first part discusses the operation and risk associated and the future prospective
of credit card in India. The second part reveals the experience of the credit holder in the city of
Bhubaneswar collected through a customer survey.

REASEARCH METHODOLOGY:

Sources of data
The sources of data for the study are primary as well as secondary. For the
literature part of the study the sources of information are secondary i.e from leading journals,
brochures of different credit card and debit cards etc. for the customer survey the information has
been collected from 100 cards holders selected randomly as respondents from different banks
operating in the city namely Bank of Baroda(Bob card),
Central Bank(Can Card),Bank of India(India card) and State Bank of India (Cheque card).

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Data presentation

The data collected for the study has been classified and has been presented in
the form of tables, bar diagrams and pie charts to facilitate comparison and analysis.

Analysis and inference

Analysis has been done using different statistical and analytical tools
with the aid of computers. The analysis in the study has been done extensivelyas well as
intensively, on the basis of which inferences and conclusions have drawn.

Limitations

The study is dependent on sampling method of data collection due to limitation of

time and resources. Moreover the study incorporates on limitation that are inherent in available
secondary sources of information. Plastic money is a vast issue, which cannot be confined, in a
small report as this. Hence this study has been made comprehensive under the limitations of
available information and time.

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CHAPTER 2

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The History Of Credit Cards and Debit Cards In Plastic
Money

Credit cards have evolved into a safe and secure manner to purchase goods and
services. The Internet has given credit card users additional purchasing power. Banks have
options like cash-back rewards, savings plans and other incentives to entice people to use their
cards. Debit cards allow people the convenience of cards without the worry of racking up debt.
The convenience, security and rewards offered by credit and debit cards keep shoppers using their
cards as opposed to checks or cash.

Credit Card Origins

The first credit cards were issued by individual stores and merchants. These cards were
issued in limited locations and only accepted by the businesses that issued them. While the cards
were convenient for the customers, they also provided a customer loyalty and customer service
benefit, which was good for both customer and merchant. It was not until 1950 that the Dinner's
Club card was created by a restaurant patron who forgot his wallet and realized there needed to be
an alternative to cash only. This started the first credit card specifically for widespread use, even
though it was primarily used for entertainment and travel expenses.

Plastic Becomes the Standard

The first Diner's Club cards were made out of cardboard or celluloid. In 1959 American Express
changed all that with the first card made of plastic. American Express created a system of making
an impression of the card presented at the register for payment. Then that impression was billed to
the customer and due in full each month. Several American Express cards still operate like this as
of 2010. It was not until the late 1980s that American Express began allowing people to pay their
balance over time with additional card options.

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Bank Card Associations

In 1966, Bank of America created a card that was a general purpose card or "open loop" card.
These "closed loop" agreements limited cards like Diners Club and American Express to certain
merchants, unlike the new "open loop" cards. The new general purpose system required interbank
cooperation and additional regulations. This created additional safety features and began building
the credit card system of today. Two systems emerged as the leaders--Visa and Master Card.
However, today there is little difference between the two and most merchants accept both card
associations.

Debit Cards Emerge

The Visa association of cards took credit cards to a new level in 1989 when they introduced debit
cards. These cards linked consumers to their checking accounts. Money was now drawn from a
checking account at the point of sale with these new cards and replaced check writing. This
helped the merchants check that money was available and made it easier to track the customer if
the funds could not be obtained. Consumers liked the convenience of not having to write checks
at the point of sale, which made debit cards a safe alternative to cash and checks.

The Future

There were almost 29 million debit card users as of 2006, with a projected 34.4 million users by
2016. However, online services like PayPal are emerging as a way for people to pay their debts in
new, secure and convenient ways. Technology also exists to have devices implanted into phones,
keys and other everyday devices so that the ability to pay at the point of sale is even more
convenient.

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CHAPTER 3

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TYPES OF PLASTIC MONEY

Different types:-

Credit card

A credit card is plastic money that is used to pay for products and services at over 20 Million
locations around the world. All you need to do is produce the card and sign a charge slip to pay
for your purchases. The institution which issues the card makes the payment to the outlet on your
behalf; you will pay this 'loan' back to the institution at a later date.

Debit card

Debit cards are substitutes for cash or check payments, much the same way that credit cards are.
However, banks only issue them to you if you hold an account with them. When a debit card is
used to make a payment, the total amount charged is instantly reduced from your bank balance.
Don't borrow on your credit card! Here's why

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A debit card is only accepted at outlets with electronic
swipe-machines that can check and deduct amounts
from your bank balance online.

Charge card

A charge card carries all the features of credit cards. However, after using a charge card you will
have to pay off the entire amount billed, by the due date. If you fail to do so, you are likely to be
considered a defaulter and will usually have to pay up a steep late payment charge.
When you use a credit card you are not declared a defaulter even if you miss your due date. A
2.95 per cent late payment fees (this differs from one bank to another) is levied in your next
billing statement.

Amex card

Amex stands for American Express and is one of the well-known charge cards. This card has its
own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa.
Credit cards: Remember these dos and don'ts.
This card is typically meant for high-income group categories and companies and may not be
acceptable at many outlets. There are a wide variety of special privileges offered to Amex
cardholders.

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Dinner club card

Diners Club is a branded charge card. There are a wide variety of special privileges offered to the
Diners Club cardholder. For instance, as a cardholder you can set your own spending limit.
Besides, the card has its own merchant establishment tie-ups and does not depend on the network
of MasterCard or Visa.
However, since this card is typically meant for high-income group categories, it may not be
acceptable at many outlets. It would be a good idea to check whether a member establishment
does accept the card or not in advance.

Global card

Global cards allow you the flexibility and convenience of using a credit card rather than cash or
travelers cheque while traveling abroad for either business or personal reasons.

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Co-branded card

Co-branded cards are credit cards issued by card companies that have tied up with a popular
brand for the purpose of offering certain exclusive benefits to the consumer.
A debit card with a difference
For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a
special discount on Times Music cassettes, free entry to Times Music events, etc.

Master card & Visa

MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the
card business across the world.
They have built a vast network of merchant establishments so that customers worldwide may use
their respective credit cards to make various purchases.

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Smart card

A smart card contains an electronic chip which is used to store cash. This is most useful when you
have to pay for small purchases, for example bus fares and coffee. No identification, signature or
payment authorization is required for using this card.
The exact amount of purchase is deducted from the smart card during payment and is collected by
smart card reading machines. No change is given. Currently this product is available only in very
developed countries like the United States and is being used only sporadically in India.

Photo card

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

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 CHAPTER 4

CREDIT CARD

INTRODUCTION

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to
buy goods and services based on the holder's promise to pay for these goods and services. The
issuer of the card grants a line of credit to the consumer or the user) from which the user can
borrow money for payment to a merchant or as a cash advance to the user. Usage of the term
"credit card" to imply a credit card account is a metonym.

When a purchase is made the user would indicate consent to pay by signing a receipt with
a record of the card details and indicating the amount to be paid. Issuer agrees to pay the
merchant and the credit card user agrees to pay the card issuer.

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DEFINITION:-

The credit card can be defined as “A small plastic card that allows its holder to
buy goods and services on credit and to pay at fixed intervals through the card issuing agency.

MEANING:-

A credit card is a card or mechanism which enables card holder to purchase goods, travels and
dine in a hotel without making immediate payments. The holders can use the cards to get credit
from banks up to 45 days.

The credit card relieves the consumers from the botheration of carrying cash and ensures safety. It
is a convenience of extended credit without formality. Thus credit card is a passport to, “safety,
convenience, prestige and credit.

ADVANTAGES & DISADVANTAGES OF CREDIT CARD

ADVANTAGES OF CREDIT CARD

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The benefits of credit card can be grouped as follows:

(A) BENEFITS TO THE BANK

a) A credit card is an integral part of banks major services these days. The credit card provides the
following advantages to the bank: the system provides an opportunity to the bank to attract new
potential costumers.

b) To get new customers the bank has to employee special trained staff. This gives the bank an
opportunity to find the latent talent from among existing staff that would have been otherwise
wasted.

c) The more important function of a credit card, however, is simply to yield direct profit for the
bank. There is a scope and a potential for a better profitability out of income / commission earned
from the traders turn over.

d) This also provides additional customer services to the existing clients. It enhances the customer
satisfaction.

e) More use by the car holder and consequently the growth of banking habits in general.

f) Better network of card holders and increased use of cards means higher popularity and image
of the bank

g) Savings of expense on cash holdings, i.e. stationery, printing and man power to handle clearing
transactions while considerably is reduced. It increases

(B) BENEFITS TO CARD HOLDER

The principal benefits to a card holder are:

a) He can purchase goods and services at a large number of outlets without cash or cheque. The
card is useful in emergency, and can save embarrassment.

b) The risk factor of carrying and storing cash is avoided. It is convenient for him to carry credit
card and he has trouble free travel and may purchase his without carrying cash or cheque.

c) Months purchases can be settled with a single remittance, thus, tending to reduce bank and
handling charges.

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d) The card holder has the period of free credit usually between 30-50 days of purchase

e) Cash can usually be obtained with the card, either on card account or by using it as
identification when encashings a cheque at the bank.

f) Availing credit with minimum formality.

g) The credit card saves trouble and paper work to traveling business man.

(C) BENEFITS TO THE MERCHANT ESTABLISHMENT

The principal benefits offer credit card to the retailer is

a) This will carry prestigious weight to the outlets.

b) Increases in sale because of increased purchasing power of the cardholder due to unbilled
credit available to the card holder.

c) The retailers gain from the impulse buying and trading up the tendency to buy the bigger or
better article

d) Credit card ensures timely and certainly of payments.

e) Suppliers/sellers no longer have to send reminders of outstanding debits.

f) Systematic accounting since sales receipts are routed through banking channels.

g) Advertising and promotional support on national scale.

h) Development of prestigious clientele base.

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DISADVANTAGES OF CREDIT CARD

The following are the common disadvantages of the credit card:

a) Some credit card transactions take longer time than cash transactions because of various
formalities.

b) The customer tends to overspend out of immerse happiness.

c) Discounts and rebates can rarely be obtained.

d) The cardholder is responsible for charges due to loss or theft of the card and the bank may not
be party for loss due to fraud or collusion of staff, etc

e) Customers may be denied cash discount for payment through card.

f) It might lead to spending habits and cardholders may end up in big debts

i) Avoid the entire cost and security problem involved in handling cash.

j) Losses to bad debts and reduced an additional liquidity is

k) It also allows him to delegate spending power to add on members

l) Credit card is considered as a status symbol.

MARKETING STRATEGIES

American companies spend billions of dollars each year on marketing. As a matter of fact, in
2001, U.S. advertising expenditures alone topped $230 billion, more than doubling the $105.97
billion spent in 1980.
(Source: “Advertising: Exposure and Statistics” November 2003 newsletter of the Media
Education Foundation)

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Now, these figures may seem staggering to the independent professional on a budget, but don’t
panic; there are lots of effective strategies you can utilize that will help you grow your business
fast.
Here are some of my favorites:

Identify your niche.

One of the easiest ways to attract customers is to figure out which group of prospective customers
you get your very best results for and go after them exclusively. Many professionals are afraid to
do this claiming that they’ll be leaving someone out, but many marketing experts agree that niche
marketing as the easiest and fastest way to get business.

Position yourself as an expert.

Why? Experts make more money and get more media attention and that’s free advertising!
Let’s face it; it’s easier to trust a specialist than a generalist who’s trying to be everything to
everyone. Once you’ve identified your niche, let the world know about how you can help.
Provide free information products, write articles and white papers about the problems your clients
face and how they can solve them.

Conduct workshops, seminars and tele-classes specifically geared towards helping your
prospective customers and before long you’ll be regarded as an expert in your field. And, while
you’re at it don’t forget to, collect names, emails and addresses of prospects to keep filling your
pipeline.

Develop ongoing relationships with complementary professionals and build your referral team.

These are other professionals who sell non-competing services or products to the same
niche customers you are targeting. For instance, my clients often need the services of
bookkeepers, accountants and business attorneys. Likewise, they refer business to me. Here are a
couple of other examples:

• Residential realtor, mortgage broker, real estate attorney, home improvement contractor,
architect and interior designer.
000000000

• Commercial printer, copywriter, graphic designer

.Institute a system to keep track of all of the people who are interested in your product or services,
and find creative ways of keeping in touch with them on a regular basis.

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 To start, go through your notes. Put together a list of all of the people you’ve spoken to in
the last 6-9 months who’ve showed interest in you but haven’t become paying customers. Follow
up with them in a variety of ways: call them to touch base, use email, ask them to subscribe to a
newsletter, send them interesting articles, or invite them to join you at events. It takes numerous
impressions to make the sale; that’s why you see commercials on TV over and over again for the
same products.

By Keeping track of all of the people who’ve showed interest and keeping your business
on their radar screen you’ll turn more of them into paying customers.

Let your satisfied customers help you sell your products or services.

Here are a couple of ways to do this:

00000000000000000000000000
• Ask them for referrals - right away (if you were a car salesman you wouldn’t wait for the new
car to get dirty and dented!)
000000000000• Ask them to write testimonials for you, (also right away) and compile a list of
testimonials to use in your all of your marketing collateral.

Create a marketing calendar and keep to it consistently.

Scheduling marketing activities that take place weekly, bi monthly, monthly and quarterly will
help you to avoid the feast or famine syndrome that most independent professionals fall prey to.
And, by doing so, marketing will become easier since it becomes a regular part of your business
life.

Identify innovative ways to get more business from existing customers.

It’s much easier to get business from customers who are already happy with your services or
products. So develop additional services or products to keep customers coming back for more.

STEPS FOLOWED IN CREDIT CARD TRANSACTION

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1. AUTHORIZATION

For Internet Merchants, the shopping card is connected to or integrated with a Payment Gateway.
For Retail Merchants, the card is swiped through a magnetic reader on the point of sale terminal
the authorization is transmitted to the appropriate card issuer for approval. The issuing bank of
card issuer authenticates the card holder and approves or declines the transaction amount.

It is important to note that no money changes hands during the authorization. Merchants must re-
present the transaction to receive payment.

2. MERCHANT BALANCING

This is also known as batching out. Most pos terminals and all payment gateway per firm an auto
close functions at the and of the day and batch out automatically.
3. CAPTURE

The front end processor matches the authorization data to the settlement data and transmits the
card capture file to a back end processor for V/MC transactions or to the appropriate card issuer
for other card types.

4. CLEARING

During this stage the back end processor performs compliance checks and risk management
procedures and transmits the transaction to V/MC or to the appropriate card issuer for other card
types.

5. INTERCHANGE (VS/MC ONLY)

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During this stage the V/MC Association sort the transactions by issuing bank and transmit them
to the appropriate issuing banks for settlement.

6. Settlement

During this stage the Issuing Bank calculates fees and deductions and routs the net funds to the
appropriate Card Issuer which determines the daily deposits for the merchants.

7. Merchant ACH

During this stage the acquiring bank or card issuer transmits the merchant deposit to the
merchant’s checking account.

Different Types of Credit Cards

Credit cars are of various types, every one has to select credit cards on the basis of the
pros and cons of each type of credit card and at the same time the nature of use. This article gives
an insight into the several types of credit cards available in the market
Today, credit card customers enjoy more options and choices than ever before. To gain new
customers, credit card companies compete by offering new services and cards to customers. No
matter what your needs, chances are good that there is a card out there that would be ideal for
you. If you are looking for the right card, you can begin by considering the many types of cards
available to you:

Low Interest Credit Cards

These types of credit cards offer very low interest. In some cases, these cards just charge a
few percent interests. The reasons for this are numerous. In most cases, the low interest rate is for
a limited time only. After a set number of months, you will begin paying higher interest rates. In
some cases, low interest credit cards are not really credit cards at all - they are debit cards linked
to a low-interest loan such as a line of credit. Check your agreement to find out what type of card
you have. If you need to consolidate debts or if you like the idea of having low interest for a
while, this type of credit card can be perfect for you.

Instant Approval Credit Cards

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These cards are really a product of our fast-paced society. The idea behind this type of credit card
is that once you fill out your application, you will be told whether you are approved or not right
away. The approval process only takes a few minutes. Instant approval credit cards are very
popular online and applicants can apply via the internet or over the phone.

If you are very impatient or need credit right away, these types of cards can be for you. However,
you should be aware that these cards do not guarantee that you will be approved right away -
sometimes, more time is needed to process your application. Another drawback to these cards is
that they rely heavily on your credit score. If you have poor credit or any extenuating financial
circumstances, these types of cards may not be for you.

Balance Transfer Cards

Balance transfer cards are a type of temporary low-interest card that is meant to help you
consolidate your debt. They work this way: if you have several credit cards with a balance, you
can get a balance transfer card. You then transfer all your credit card debt onto the new card and
work to pay it off. Since the new card has a low interest rate, you can quickly repay your bills.

If you are in debt, a balance transfer card can be a great way to get out of debt. It offers the
convenience of one bill and low rates. However, some cards have high fees. Also, if you run up
your other cards after consolidating your debts or if you are unable to pay off your new card in
the limited time before the low interest rate increases, you may find yourself even more in debt
than before.

Rewards Credit Cards

Rewards credit cards offer you points, rewards, or bonuses for every cash purchase made
with your credit card over time. As you accumulate rewards or points, you can redeem your
bonus for entertainment events, purchases, travel, and other fun prizes. Some cards even offer
customers extra automatic-enter sweepstakes and draws. Each time you use your card, you are
entered into a draw to win specific prizes.

These types of cards are really a marketing tool for card companies. Companies know that
customers love rewards and prizes and so offer these
enticements to lure customers. The major advantage of these cards is that they can help you get
more cash value for your money. They can also be fun and rewarding for almost any credit card
customer. However, not all reward credit cards are a deal. Some charge high fees to offset the
costs of the bonuses. Some also have very low points systems, meaning that you need to spend a
lot with your credit card to get any rewards at all. Read the fine print carefully before signing.

33
CASH BACK CREDIT CARD

Cash back credit cards give you money rewards. When you make a purchase with this
type of credit card, you get some points based on the amount of money you have spent with your
credit card. When you accumulate enough points, you get cash back. On most cards, you can get
back about 1% of your total purchases.

These cards are great for those who are budget-conscious as they give you some money back
from your purchases. However, there are several drawbacks to these types of cards. Some cards
have low cash-back percentage rates. Some charge high fees or have limits on how much money
you can get back each year. Most cards only offer you cash back advantages on purchases - not
on your balance. If you decide this card is right for you, do compare several card offers to find the
best cash back credit card option.

Airline Credit Cards

This type of card allows you to accumulate frequent flyer points on all your credit card
purchases. If you travel a lot or love to travel, this card can help you accumulate points for a free
trip or for a discount ticket. In many cases, these cards are great because they allow you to gather
points for every purchase. However, these cards can also charge high fees. In some cases, your
points will expire if you do not use them within a specified time. Worse, some airline credit cards
make use of a point system that is not very user-friendly. You may have to slowly accumulate an
enormous amount of points to qualify for a trip. If you do not love to travel and if you do not use
your Credit card a lot, then, your ability to get rewards you like may be very limited.

Prepaid Debit Cards

These cards are sometimes called junior credit cards. They are not truly credit cards at all, since
you are not getting credit or loans from the credit card company. Instead, these cards work by
having you deposit some money into the card account. You can then use your card to charge any

34
amount up to the amount in the account. When you add more money, you can charge more to
your card.0000000000000000000000000000000000

Secured Credit Cards

Secured credit cards use collateral to ensure that the card company will be paid back. Often, these
cards are used by people with no credit or bad credit. With secured credit cards, you can enjoy
credit card convenience even if you do not qualify for traditional cards. However, you will also
have to cope with the additional fees and low credit limits that these credit cards have.

Credit Cards for Bad Credit

Bad credit credit cards are designed for people with poor credit histories. These cards generally
have very low credit limits and charge extra fees. This is because they are designed for people
who are considered far less likely to repay their debts. If you have a bad credit rating, these types
of credit cards can be a great way to rebuild your credit history. These cards can also allow you to
have credit even if you would be rejected for most other cards due to your credit history.

Student Credit Cards

Student credit cards are cards meant to attract college and university students. These cards
often offer sign-up bonuses for students. They are also easier to apply for, since credit card
companies recognize that students have much shorter credit histories than the average customer.
000000000000

If you are a student, student credit cards can be a great option. They are simple to use and
can help you build a good credit rating before you graduate. However, there are some
disadvantages to student credit cards. These cards may have no reward programs and may have
fewer benefits, including fewer bonuses and services, than other cards.

Business Credit Cards

Business credit cards are created especially for business use. They offer many of the same
advantages as traditional credit cards, but also offer services that can really help a business. With

35
some business credit cards, for example, you can enjoy higher interest rates, extra cards for
business employees, monthly reports on your expenses, and services that let you keep your
personal and business expenses separate on the same card. These advantages mean that using this
card for your business is more convenient.

Types of Credit Cards offered by Indian Banks

Silver Cards
Silver credit cards rank lowest among the metal named cards, and, because of lower
prestige when compared to gold and platinum cards, are commonly known as basic and standard
credit cards. Silver credit cards come with advantages such as lower annual membership fees if
there is any, and a lower threshold salary which banks use to evaluate your application in case
you should apply.

Silver credit cards will provide you with almost the same credit limit as other cards provided you
have a good credit history. You can also avail of 0% interest balance transfer schemes which are
made available for a period of 6-9 months for silver card holders.
There are also some disadvantages to using silver credit cards. One would be the lower
cash advance limits, less rewards and promotional packages, and less travel perks compared to
gold and platinum cards. HDFC Bank, ICICI offer silver credit cards through their HDFC Bank
Silver cards and ICICI Sterling Silver credit card

Gold and Platinum Cards

Gold and platinum credit cards are a status symbol for any credit card holder, bringing prestige
since getting gold and platinum cards usually require that you have good credit rating and a
higher income levels. Gold and platinum cards offer higher limit for cash advance withdrawals
and sometimes can provide higher credit limits as compared to standard or silver cards.

If you have a gold or platinum card, you also get better perks and privileges such as travel
insurance, extended warranties for appliance purchases and special deals on specific products,
and purchase protection insurance.
You can also engage in some loyalty schemes that are offered for gold and platinum credit card
holders which can sometimes involve cash back promos and reward points systems.
Some popular gold and platinum cards available are the American Express Gold card, and the
ICICI Solid Gold Credit Card.

36
 It is not possible to cover them the exact offerings of these cards but I will highly advice you to
check all these websites of the banks to get all the info about the credit cards they are offering.
Also try to talk to your friends who are having credit cards to get more info.

Types of
Credit
Cards
offered
By

Credit Card Data

Credit Card is either Visa or MasterCard which is the Most popular and in some instance
American Express.000000000000000000000000000000

The Top 10 Credit Card Issuers in India are as follows,

ICICI Bank - 5.07 Mn

HDFC Bank - 4.42 Mn
SBI Cards - 2.65 Mn
Citibank - - 2.54 Mn
HSBC Cards - 1.3 Mn
ABN Amro - 0.78 Mn
Axis Bank - 0.57 Mn
Deutsche Bank - 0.495 Mn

37
AmericanExpress 0.45 Mn

Data Courtesy - The Reserve Bank of India

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 CHAPTER 5

DEBIT CARD

A debit card (also known as a bank card or check card) is a plastic card that provides an
alternative payment method to cash when making purchases. Functionally, it can be called an
electronic cheque, as the funds are withdrawn directly from either the bank account or from the
remaining balance on the card. In some cases, the cards are designed exclusively for use on the
Internet, and so there is no physical card.

In many countries the use of debit cards has become so widespread that their volume of
use has overtaken the cheque and, in some instances, cash transactions.

Like credit cards, debit cards are used widely for telephone and Internet purchases and,
unlike credit cards, the funds are transferred immediately from the bearer's bank account instead
of having the bearer pay back the money at a later date.

39
 Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash and as a cheque guarantee card. Merchants may also offer cash back facilities
to customers, where a customer can withdraw cash along with their purchase.

Types of debit card systems

Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are
reflected in the user’s account immediately. The transaction may be additionally secured with the
personal identification number (PIN) authentication system and some online cards require such
authentication for every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards. One difficulty in using online debit cards is the necessity of an electronic
authorization device at the point of sale (POS) and sometimes also a separate PIN pad to enter the
PIN, although this is becoming commonplace for all card transactions in many countries. Overall,
the online debit card is generally viewed as superior to the offline debit card because of its more
secure authentication system and live status, which alleviates problems with processing lag on
transactions that may only issue online debit cards. Some on-line debit systems are using the
normal authentication processes of Internet banking to provide real-time on-line debit
transactions. The most notable of these are Ideal and POL.

Offline Debit System

Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit
cards (e.g. Maestro in the United Kingdom and other countries, but not the United States) and are
used at the point of sale like a credit card (with payer's signature). This type of debit card may be
subject to a daily limit, and/or a maximum limit equal to the current/checking account balance
from which it draws funds. Transactions conducted with offline debit cards require 2–3 days to be
reflected on users’ account balances. In some countries and with some banks and merchant
service organizations, a "credit" or offline debit transaction is without cost to the purchaser
beyond the face value of the transaction, while a small fee may be charged for a "debit" or online
debit transaction (although it is often absorbed by the retailer). Other differences are that online
debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the
merchant supports that functionality); also, from the merchant's standpoint, the merchant pays
lower fees on online debit transaction as compared to "credit" (offline) debit transaction.

40
Electronic Purse Card System

Smart-card-based electronic purse systems (in which value is stored on the card chip, not
in an externally recorded account, so that machines accepting the card need no network
connectivity) are in use throughout Europe since the mid-1990s, most notably in Germany
(Geldkarte), Austria (Quick), the Netherlands (Chipknip), Belgium and Switzerland (CASH). In
Austria and Germany, all current bank cards now include electronic purses.

Prepaid Debit Card

Prepaid debit cards, also called reload able debit cards or reload able prepaid cards, are
often used for recurring payments. The payer loads funds to the cardholder's card account.
Prepaid debit cards use either the offline debit system or the online debit system to access these
funds. Particularly for companies with a large number of payment recipients abroad, prepaid debit
cards allow the delivery of international payments without the delays and fees associated with
international checks and bank transfers. Providers include Caxton FX prepaid cards, [Escape
prepaid cards and Travelex prepaid cards. [ Whereas, web-based services such as stock
photography websites (stockpot), outsourced services (odes), and affiliate networks (Media Whiz)
have all started offering prepaid debit cards for their contributors/freelancers/vendors.

BENEFITS & FEATURES OF DEBIT CARDS

BENEFITS OF THE DEBIT CARD

FREE WITH OUR BANK ACCOUNT

Obtaining a debit card is easy. If we qualify to open a bank account, we usually get a debit card, if
our bank offers the service.

NO BACKGROUND CHECK

When we are applying for a debit card, the ban does not need to look into our credit history. All
we need is the documentation to open a bank, account, and money in our bank when we use our
debit card.

41
CASH WITHDRAWALS

The customer can withdraw a minimum of Rs. 100/- and a maximum Rs.10, 000/- per day

CONVENIENCE

A Debit card fees us from carrying a lot of cash or a cheque book. In case, we are an international
traveler, we don’t need to stock up on Traveler’s Cheques or cash. We can use our debit card to
withdraw Cash from over 500,000 ATMs around the world in over 100 countries. We can
withdraw in the local currency of the country we are in, limited only by the money we have back
home in our account, and Business Travel Quota (BTQ) limit arability.

FAIR EXCHANGE

If we return merchandise or cancel services paid for with a Debit card, the transaction is treated
as if it were made with cash or a check. Customers usually get cash back for offline purchases; for
on-line transactions, the amount is credited to our account.

STATEMENT OF ACCOUNT

A statement of transactions can be obtained from the customer’s branCHAPTER For example, a
mini statement containing the last four transactions and balance can be obtained at a State Bank
Group during the working hours of the customer’s branCHAPTER

BANKING CUM SHPPING CARD

Your Debit card can be used as ATM card at any ATM across the world, as well as for making
purchase at merchant locations. You can also withdraw cash from any of the 12000 ATMs in
India.

WIDELY ACCEPTED, INTERNATIONALLY VALID

FEATURES OF DEBIT CARD

The following are features of Debit cards

42
A) It is a combination of a Cheque and ATM card. Therefore, there are no fees for using the ATM
for cash withdrawal, or as a debit card for purchase.

B) The Debit Card services in meant for withdrawals against the balance already available in the
designated account.

C) It is the card holder’s obligation to maintain sufficient balance in the designated account to
meet withdrawals and service charges.

D) A Debit card is more affordable than credit card. We just our bank account for all our
transactions. No credit period. Our bank account is debited immediately.

E) No credit check is required to get a Debit card.

F) Use of card is terminated without notice, upon the death, bankruptcy or insolvency of the
cardholder or for other valid reasons.
G) Spending is limited to our bank balance.

Process Debit Card Transactions

A successful business will usually accept debit cards as a part of their overall profile of payment
solutions. If you don’t process debit cards, you may not be taking full advantage of all the
potential that your merchant account can deliver. There are essentially two ways you can accept
debit cards, online and offline.

Off line debit card transactions

An offline debit card transaction is still the way most merchants accept debit cards. This is
essentially the same as processing credit cards. You swipe your customer’s debit card through a
credit card terminal and have them sign the receipt.

If you choose to accept debit cards offline, be sure that the debit card has a VISA or MasterCard
logo. Otherwise, the debit card won’t be approved and you won’t be able to process the debit card
offline

Online debit card transactions

43
 The most advantageous way to process debit cards is to do it online. You will still be able
to accept debit cards at the point of sale, but you will need to install a PIN pad on your credit card
terminal.

An online debit card transaction works much like a credit card transaction, except that
after your customer swipes his or her debit card, they will enter a PIN instead of signing the
receipt.

At this point the encrypted debit card information is sent to the customer’s bank for
authorization, and you’ll receive the funds just as you would for a credit card transaction.
Your business has many advantages when you accept debit cards.

For example, you pay a flat fee for each debit card transaction that you process, instead
the flat fee plus percentage rate that you are charged when you accept credit cards. Over time, this
can potentially save you a lot of money.
0000000000000000000000000000000000000000000000000

Another advantage when you process debit cards is that you can’t be charged higher
“downgrade” fees.

In a credit card transaction, you are usually charged the “discount rate.” However, some
transactions are considered to be a higher risk or expense to the bank, and you are charged a
higher rate as a result.

But when you accept debit cards, you always pay the same flat rate, with no danger of the
rate increasing.

You can also cut down on checkout time when you accept debit cards. It takes an average
of 30 seconds to hand over the pen, wait for the customer to sign the receipt, and then take the
pen back.

If you process 20 credit card transactions a day, you’re losing 100 minutes a day just
passing a pen back and forth! That’s almost two hours.

Plastic Fraud

State-of-the-art thieves are concentrating on plastic cards. In the past, this type of fraud was not
very common. Today, it is a big business for criminals. Plastic cards bring new convenience to
your shopping and banking, but they can turn into nightmares in the wrong hands. This pamphlet

44
describes credit and debit cards and some common schemes involving card fraud with tips to help
you avoid them

The following are the types of frauds

Stolen Cards at the Office

Extra Copies of Charge Slips
Discarded Charge Slips
Unsigned Credit Cards
Loss of Multiple Cards
Strange Requests for Your PIN Numbers
Legitimate Cards
Altered Cards
Counterfeit Cards

45
 CHAPTER 6

Advantages & Disadvantage

ADVANTAGES
Plastic money, unlike paper money, will not burn easily and can resist higher temperatures than
paper money.

You have no fear to be theft. And its easy to use.

Plastic money, unlike paper money, will not burn easily and can resist higher temperatures than
paper money.

Paper money also picks up dirt and stains more easily than plastic money.

Plastic money is the debit and credit cards. Plus point of plastic money is
that you won't have to carry your cash around all the time.

46
It also doesn't wear after time as paper does nor does it rip and tear.

Give you incentives, such as reward points, that you can redeem.
Be more convenient to carry than cash.
Provide a convenient payment method for purchases made on the Internet
and over the telephone.
Help you establish a good credit history.

DISADVANTAGES
Cost much more than other forms of credit, such as a line of credit or a

Personal loan, if you don't pay on time.

Damage your credit rating if your payments are late;

Allow you to build up more debt than you can handle;

Have complicated terms and conditions;

It also doesn't wear after time as paper does nor does it rip and tear.

Paper money also picks up dirt and stains more easily than plastic money.

I can't really see any advantages to have paper money, unless it is cheaper to make.

Its disadvantage is that, some extra money will be deducted for the bank services.
It’s around 2.5% of the money you spent.

47
 CHAPTER 7

TECHNOLOGY AND INFRASTRUCTURE

One of the most important features that Plastic Money offers is the technology associated with
this business.

Credit card businesses rely on very reliable and secure technology and demands very Strong
connectivity backbone.

48
Although a third world country, with lot of insecurities and almost no infrastructure, Pakistan has
no exception when it comes to credit card business.

There is approximately 3000 Point of Sale Terminals (POST) present on merchant's sites
connected with bank host system.

Inter-city connectivity is accomplished through X.25 networks.

Perhaps, it is the most important time in the history of Pakistan as the parameters of its
Infrastructures are coming into existence.

There is an immense need of reliable wide area connectivity and this market is so huge and
lucrative that it can accommodate many more industry giant

49
 CHAPTER 8

CASE STUDY

What Happens in Credit Card Fraud Cases?

A variety of crimes constitute credit card fraud. The term can describe a person using a
stolen credit card to purchase goods or services posing as the person named on the card. It can
also describe illegally and fraudulently withdrawing funds from an account that is not yours.

50
Identity theft, which is the act of posing as an individual to make purchases, is often classified
together with credit card fraud. A victim of credit card fraud can sometimes see bank accounts
emptied of all their funds or negative marks going on her credit report for things she had nothing
to do with. Many banks will monitor transactions made with a credit card and alert the person
named on the account of any potentially suspicious activity. This is to protect the bank or Credit
Card Company just as much as it is to protect the customer.

Investigation

Exactly what happens during a credit card fraud case depends a great deal on the actions of
the Credit Card Company or bank involved. If fraudulent transactions are proven to have been
made on a person's account but the amount of the transactions is lower than the cost of an
investigation the company can credit the money back to a person and then close the account to
protect from further harm.0
0000000000000000000000000

If the amounts of fraudulent charges are so great that an investigation is warranted, the
police will be notified. The credit card company can look at a list of the fraudulent charges and
determine where they were made. At that point an officer can question witnesses and review
security camera footage in an attempt to identify suspects. If a suspect is arrested he can be tried
in a court of law.

Felony

Credit card fraud is considered a felony by the courts of the United States. As a result a
person convicted of credit card fraud could face jail time (the exact amount of which depends on
the extent of the crime). A felony conviction stays on a person's record and can prevent the person
from getting hired for a job. Having a felony on a criminal record will also take away a person's
eligibility in terms of running for public office. If a person who is not a natural- born citizen of

51
the United States commits credit card fraud and is convicted of a felony the result could be being
deported to their country of origin.

52
 CHAPTER-9

FINDINGS, SUGGESTION & CONCLUSION

MAJOR FINDINGS:

53
1) India’s credit cards base was around 8.5 million in 2002. The potential is estimated around
128 million
2) Total card spend grew by 75% from 2002 to 2006 reaching 1.5$ million in 2006
Card spending is expected to zoom at an annual rate of 50% over 2006 Citibank is the largest
issuer of credit cards in India commanding over 50% of the market share.
3) -07 driven by 25-30% annual growth rate in both cardholders and per head spending.
4) More than 57% of the cardholder avail a for travel and entertainment.

SUGGESTION:

1) For healthy existence in competitive card market bank should concentrate on customer
satisfaction by way of extra service.
2) The market has a very wide scope and hence banks should innovate and develop specialized
products to suit customer requirement.
3) Public banks should tie up with technologically strong banks, which will go a long way in
providing economies of scale.
4) Banks should become more vigilant towards frauds by adopting fraud controlling system,
educating their employees on techniques of preventing frauds and creating customer
awareness.
5) Merchant establishments should be encouraged to accept credit cards on rountine system.

CONCLUSION
21st Century banking has become wholly customer-driven & technology driven by challenges of
competition, rising customer expectations & shrinking margins, banks have been using

54
technology to reduce cost & enhance efficiency, productivity & customer convenienence.
Technology intensive delivery channels like net banking, mobile banking, etc have created a win-
win situation by extending great convenienence. & multiple options for customer.

From educating customers about credit cards there is a need to educate them about the
differentiating factors of the cards. Because visa and master card are advertising regularly and
thereby increases awareness. The strategy should be to emphasize on its differentiating
characteristics.

They also need to identify potential customers and target those using mailers. As internet is
growing at a fast rate the net users can be targeted by having interactive sites. The prospective
company’s card personality could also be used in the home page to solve customer queries in the
‘Best Possible Manner’.

BIBLIOGRAPHY

BOOKS

INOVATION IN BANKING & INSURANCE

55
FINANCIAL MARKET & SERVICES
INDIAN BANKING INDUSTRIES
INDIAN BANKING

WEBSITE

WWW.GOOGLESERCHAPTER COM
WWW.YAHOO.COM
WWW.RBI.ORG
WWW.WIKIPEDIA .COM
WWW.INFOSEE.COM
WWW.INDIANMBA.COM
WWW.INDIANBANKING.ORG

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