Growth & Use of Plastic Money

CHAPTER I
INTRODUCTION
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 Credit cards in India are gaining ground. A number of banks in India are
encouraging people to use credit card. The concept of credit card was used in 1950 with the
launch of charge cards in USA by Diners Club and American Express. Credit card however
became
more
popular
with
use
of
magnetic
strip
in
1970.
Credit card in India became popular with the introduction of foreign banks in the country.
Credit cards are financial instruments, which can be used more than once to borrow money or
buy products and services on credit. Basically banks, retail stores and other businesses issue
these. It was introduced around and has now become an essential form of ready money. One
of the main reasons for introducing plastic money, especially credit cards is to reduce the risk
of handling a huge amount of cash by individuals/merchants. The growth and popularity of
plastic money in India has been phenomenal in the last few years.
In the present day world, no one wants to be bothered by the presence of huge cash in his or
her wallet and the Indians are no exceptions. The unprecedented growth in the number
of credit card users has stimulated the Indian economy by a significant extent. The arrival of
malls, multiplexes, online shopping stores and shopping complexes have contributed to the
growth of the use of plastic cards.
The Best credit cards in India are usually meant for specific user group such as women,
students and small business owners. These cards are offered to the prospective customers
with appealing deals.
Over the years, Indians have been averse to credit cards. This is primarily because they
believed that spending through credit is a sure shot way of getting into the debt trap. Of
course, movies highlighting the sad state of a borrower did not exactly help matters. And
even the local kirana shops have the famous lines Aaj Nagad, Kal Udhari (cash today, credit
tomorrow).But the situation is not actually that scary. And it is all about right timing. Credit
cards can be a useful tool at the hands of savvy consumers who can effectively use the
benefits offered by cards.It is important to know that credit card is a financial tool that needs
to be used responsibly. While it ensures cash flow, it is not advisable for customers to borrow
for a longer period of time. Use it effectively and take good advantage of the time line and
clear your debts, without any additional costs.
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Major Banks issuing Credit Card in India

State Bank of India credit card (SBI credit card)

Bank of Baroda credit card or BOB credit card

ICICI credit card

HDFC credit card

IDBI credit card

ABN AMRO credit card

Standard Chartered credit card

HSBC credit card

Citibank Credit Card

Global player in Credit card market are Master Card, VISA Card, American Express, Diners
Club International.

The first 6 digits of credit cards number are known as the issuer identification number
(IIN),previously known as bank identification number (BIN).These identify the institution
that issued the to the card holder

The IIN ranges used by the major card schemes are

VISA: Card number start with a 4.
Master Card: Card start with No.51 and 55
Diners Club: Card number beginning 36 or 38
Amex Ex: Card number beginning 34 or37

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Money
Coins and banknotes the two most common physical forms of money. Money is any object
that is generally accepted as payment for goods and services and repayment of debts in a
given country or socio-economic context. The main functions of money are distinguished as:
a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of
deferred payment. Money originated as commodity money, but nearly all contemporary
money systems are based on fiat money. Fiat money is without intrinsic use value as a
physical commodity, and derives its value by being declared by a government to be legal
tender; that is, it must be accepted as a form of payment within the boundaries of the country,
for "all debts, public and private".The money supply of a country consists of currency
(banknotes and coins) and demand deposits or 'bank money' (the balance held in checking
accounts and savings accounts). These demand deposits usually account for a much larger
part of the money supply than currency. Bank money is intangible and exists only in the form
of various bank records. Despite being intangible, bank money still performs the basic
functions of money, being generally accepted as a form of payment. The use of barter-like
methods may date back to at least 100,000 years ago, though there is no evidence of a society
or economy that relied primarily on barter. Instead, non-monetary societies operated largely
along the principles of gift economics. When barter did occur, it was usually between either
complete strangers or potential enemies Many cultures around the world eventually
developed the use of commodity money. The shekel was originally a unit of weight, and
referred to a specific weight of barley, which was used as currency. The first usage of the
term came from Mesopotamia circa 3000 BC. Societies in the Americas, Asia, Africa and
Australia used shell money often, the shells of the money cowry (Cypraea moneta L. or C.
annulus L.). According to Herodotus, the Lydians were the first people to introduce the use of
gold and silver coins. It is thought by modern scholars that these first stamped coins were
minted around 650 -600 BC.The system of commodity money eventually evolved into a
system of representative money. This occurred because gold and silver merchants or banks
would issue receipts to their depositors redeemable for the commodity money deposited.
Eventually, these receipts became generally accepted as a means of payment and were used as
money. Paper money or banknotes were first used in China during the Song Dynasty. These
banknotes, known as "jiaozi" evolved from promissory notes that had been used since the 7th
century. However, they did not displace commodity money, and were used alongside coins.
Banknotes were first issued in Europe by Stockholms Banco in 1661, and were again also
used alongside coins. The gold standard, a monetary system where the medium of exchange
are paper notes that are convertible into pre-set, fixed quantities of gold, replaced the use of
gold coins as currency in the 17th-19th centuries in Europe. These gold standard notes were
made legal tender, and redemption into gold coins was discouraged. By the beginning of the
20th century almost all countries had adopted the gold standard, backing their legal tender
notes with fixed amounts of gold. After World War II, at the Bretton Woods Conference, most
countries adopted fiat currencies that were fixed to the US dollar. The US dollar was in turn
fixed to gold. In 1971 the US government suspended the convertibility of the US dollar to
gold. After this many countries de-pegged their currencies from the US dollar, and most of
the world's currencies became unbacked by anything except the governments' fiat of legal
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tender and the ability to convert the money into goods via payment.
Medium of exchange
When money is used to intermediate the exchange of goods and services, it is performing a
function as a medium of exchange. It thereby avoids the inefficiencies of a barter system,
such as the 'double coincidence of wants' problem.
Unit of account
A unit of account is a standard numerical unit of measurement of the market value of goods,
services, and other transactions. Also known as a "measure" or "standard" of relative worth
and deferred payment, a unit of account is a necessary prerequisite for the formulation of
commercial agreements that involve debt. To function as a 'unit of account', whatever is being
used as money must be:Divisible into smaller units without loss of value; precious metals can
be coined from bars, or melted down into bars again.Fungible: that is, one unit or piece must
be perceived as equivalent to any other, which is why diamonds, works of art or real estate
are not suitable as money.A specific weight, or measure, or size to be verifiably countable.
For instance, coins are often milled with a reeded edge, so that any removal of material from
the coin (lowering its commodity value) will be easy to detect.
Store of value
To act as a store of value, a money must be able to be reliably saved, stored, and retrieved
and be predictably usable as a medium of exchange when it is retrieved. The value of the
money must also remain stable over time. Some have argued that inflation, by reducing the
value of money, diminishes the ability of the money to function as a store of value.
Standard of deferred payment
While standard of deferred payment is distinguished by some texts, particularly older ones,
other texts subsume this under other functions. A "standard of deferred payment" is an
accepted way to settle a debt a unit in which debts are denominated, and the status of
money as legal tender, in those jurisdictions which have this concept, states that it may
function for the discharge of debts. When debts are denominated in money, the real value of
debts may change due to inflation and deflation, and for sovereign and international debts via
debasement and devaluation.
Money supply
In economics, money is a broad term that refers to any financial instrument that can fulfill the
functions of money. These financial instruments together are collectively referred to as the
money supply of an economy. Since the money supply consists of various financial
instruments (usually currency, demand deposits and various other types of deposits), the
amount of money in an economy is measured by adding together these financial instruments
creating a monetary aggregate. Modern monetary theory distinguishes among different types
of monetary aggregates, using a categorization system that focuses on the liquidity of the
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financial instrument used as money

Market liquidity
Market liquidity describes how easily an item can be traded for another item, or into the
common currency within an economy. Money is the most liquid asset because it is
universally recognised and accepted as the common currency. In this way, money gives
consumers the freedom to trade goods and services easily without having to barter.Liquid
financial instruments are easily tradable and have low transaction costs. There should be no
(or minimal) spread between the prices to buy and sell the instrument being used as money.
Measures of money
The money supply is the amount of financial instruments within a specific economy available
for purchasing goods or services. The money supply is usually measured as three escalating
categories M1, M2 and M3. The categories grow in size with M1 being currency (coins and
bills) and checking account deposits. M2 is currency, checking account deposits and savings
account deposits, and M3 is M2 plus time deposits. M1 includes only the most liquid
financial instruments, and M3 relatively illiquid instruments.Another measure of money, M0,
is also used, although unlike the other measures, it does not represent actual purchasing
power by firms and households in the economy. M0 is base money, or the amount of money
actually issued by the central bank of a country. It is measured as currency plus deposits of
banks and other institutions at the central bank. M0 is also the only money that can satisfy the
reserve requirements of commercial banks.
Types of money
Currently, most modern monetary systems are based on fiat money. However, for most of
history, almost all money was commodity money, such as gold and silver coins. As
economies developed, commodity money was eventually replaced by representative money,
such as the gold standard, as traders found the physical transportation of gold and silver
burdensome. Fiat currencies gradually took over in the last hundred years, especially since
the breakup of the Bretton Woods system in the early 1970s.
Commodity money
Many items have been used as commodity money such as naturally scarce precious metals,
conch shells, barley, beads etc., as well as many other things that are thought of as having
value. Commodity money value comes from the commodity out of which it is made. The
commodity itself constitutes the money, and the money is the commodity. Examples of
commodities that have been used as mediums of exchange include gold, silver, copper, rice,
salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy,
etc. These items were sometimes used in a metric of perceived value in conjunction to one
another, in various commodity valuation or Price System economies. Use of commodity
money is similar to barter, but a commodity money provides a simple and automatic unit of
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Growth & Use of Plastic Money

account for the commodity which is being used as money. Although some gold coins such as
the Krugerrand are considered legal tender, there is no record of their face value on either
side of the coin. The rationale for this is that emphasis is laid on their direct link to the
prevailing value of their fine gold content. American Eagles are imprinted with their gold
content and legal tender face value.
Representative money
In 1875 economist William Stanley Jevons described what he called "representative money,"
i.e., money that consists of token coins, or other physical tokens such as certificates, that can
be reliably exchanged for a fixed quantity of a commodity such as gold or silver. The value of
representative money stands in direct and fixed relation to the commodity that backs it, while
not itself being composed of that commodity.
Fiat money
Fiat money or fiat currency is money whose value is not derived from any intrinsic value or
guarantee that it can be converted into a valuable commodity (such as gold). Instead, it has
value only by government order (fiat). Usually, the government declares the fiat currency
(typically notes and coins from a central bank, such as the Federal Reserve System in the
U.S.) to be legal tender, making it unlawful to not accept the fiat currency as a means of
repayment for all debts, public and private. Some bullion coins such as the Australian Gold
Nugget and American Eagle are legal tender, however, they trade based on the market price
of the metal content as a commodity, rather than their legal tender face value (which is
usually only a small fraction of their bullion value). Fiat money, if physically represented in
the form of currency (paper or coins) can be accidentally damaged or destroyed. However,
fiat money has an advantage over representative or commodity money, in that the same laws
that created the money can also define rules for its replacement in case of damage or
destruction. For example, the U.S. government will replace mutilated Federal Reserve notes
(U.S. fiat money) if at least half of the physical note can be reconstructed, or if it can be
otherwise proven to have been destroyed. By contrast, commodity money which has been lost
or destroyed
Commercial bank money
Demand deposit in cheque form. Commercial bank money or demand deposits are claims
against financial institutions that can be used for the purchase of goods and services. A
demand deposit account is an account from which funds can be withdrawn at any time by
check or cash withdrawal without giving the bank or financial institution any prior notice.
Banks have the legal obligation to return funds held in demand deposits immediately upon
demand (or 'at call'). Demand deposit withdrawals can be performed in person, via checks or
bank drafts, using automatic teller machines (ATMs), or through online banking. Commercial
bank money is created through fractional-reserve banking, the banking practice where banks
keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and
lend out the remainder, while maintaining the simultaneous obligation to redeem all these
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deposits upon demand. Commercial bank money differs from commodity and fiat money in
two ways, firstly it is non-physical, as its existence is only reflected in the account ledgers of
banks and other financial institutions, and secondly, there is some element of risk that the
claim will not be fulfilled if the financial institution becomes insolvent. The process of
fractional-reserve banking has a cumulative effect of money creation by commercial banks,
as it expands money supply (cash and demand deposits) beyond what it would otherwise be.

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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.

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.

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Growth & Use of Plastic Money

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.

CHAPTER II
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.

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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
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

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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.

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
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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TYPES OF DEBIT CARDS

DEBIT CARDS
Combining the wide acceptability of a credit card and the thoughtful prudence of an ATM
card, the ICICI Bank Debit Card is the most convenient accessory. No more fear of
overspending. No more searching for the nearest ATM. Only more comfort and convenience
in the debit cards provided by ICICI.
Various Products

The ICICI Bank Private Banking Debit Card

The ICICI Bank Gold Debit Card

The ICICI Bank HPCL Debit Card

The ICICI Bank Ncash Silver Card

The ICICI Bank Ncash Debit Card

DEBIT CARD
HDFC BANK Debit Cards give you complete and instant access to the money in accounts
without the risk or hassle of carrying cash.
TYPES OF DEBIT CARDS
Easy Shop International Debit Card
Easy Shop International Gold Debit Card

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CHAPTER III
PAYMENT OPTIONS

Concept of credit card

Progress in civilization in its turn has brought out radical changes in the manner of trading.
The need for something intrinsically useful and easily applicable in everyday dealing is
clearly felt. Cash in the form of currency notes and coins makes up just one form of the
payment system. Development in banking while also giving inputs to the further development
of cash brought about a second phase in payment namely paper instructions such as cheques
and credit transfers. The requirement for greater flexibility and convenience has led to
electronic payments, and this is where plastic cards have proved their worth. It allows the
card issuers to limit the sum of money the card-holders wish to spend. The spending of cardholders who have defaulted on payments or who are over their credit limit can be restricted
until the balances are cleared.

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Definition of credit card
A credit card is a credit-token within the meaning of section 14(1), Consumer Credit Act
1974 of the UK which defines a credit-token as a card, cheque, voucher, coupon, stamp, form
booklet or other document or thing given to an individual by a person carrying on a consumer
credit business, who undertakes:

That on the production of it (whether or not some other action is also required), he
will supply, cash, goods and services (or any of them) on credit, or

That were, on the production of it to third party (whether or not any other action is
also required), the third party supplies cash, goods and services (whether or not
deducting any discount or commission), in return for payment to him by the
individual.

In very simple words credit card can be termed as an unsecured personal loan offered to
customers by the banks where the card-holder could purchase goods and services from
authorized merchant or merchant establishments (MEs) of the bank up to a fixed limit on
credit. Such credit is normally made available for a period of 30 to 45 days.
A credit card can also be used to secure airline tickets and car rentals. Having a credit card
can make purchases and reservations easier; however, a credit card should be used
responsibly so that the consumer does not over extend his finances.
Credit cards are usually issued by banks or other financial institutions. Some credit cards may
be available online.

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HISTORY OF CREDIT CARDS
Our society was once upon a time functioning without money; it is again likely to become
moneyless. While ancient society was confronted with the problems of adjusting mutually
satisfactory rates and basis of exchange, future society, with the help of computers,
electronics and telecommunications, credit cards, telephone and other modern means of
communications, would settle financial transactions instantly. Money as a medium of
exchange will serve its function. The difference will be that in future coins, currency notes,
cheques, etc., will be dispensed with in favour of records. India has entered the stage of credit
card system and credit cards are gaining increasing relevance to facilitate industrial,
commercial and agricultural transactions.
Credit was first used in Assyria, Babylon and Egypt 3,000 years ago. The bill of exchange
the forerunner of bank notes - was established in the 14th century. Debts settled by one-third
cash and two-thirds bill of exchange paper money followed only in the 17th century. The first
advertisement for credit was placed in 1730 by Christopher Thornton who offered furniture
that could be paid off weekly.
From the 18th century until the early part of the 20th, tallymen sold clothes in return for small
weekly payments; they were called tallymen because they kept a record of tally of what
people had brought on a wooden stick. One side of the stick was marked with notches to
represent the amount of debt and the other side was a record of payments. In the 1920s
shoppers plate buy now, pay later system was introduced in USA. It could only be used
in shops which issued it.
In 1950, Diners Club and American Express launched their charge cards in USA, the first
plastic money. In 1951, Diners Club issued the first credit card to 200 customers who could
use it at 27 restaurants. With the magnetic strip in 1970, the credit card became a part of the
information age.
The origins of the bank credit card have been traced to John C. Biggins, a consumer credit
specialist at the Flatbush National Bank of Brooklyn, New York. In 1946, Biggins launched a
credit plan called Charge-It. The programme featured a form of scrip that was accepted by
local merchants for small purchases. After the sale was completed, the merchant deposited
the scrip in a bank account, and the bank billed the customer for the total scrip issued.

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Plastic Money: the Currency of Modern India
Indian consumers have never had it so good. The soiled notes are definitely out. Carrying
cash is no more `a pain in the neck' as consumers are relying more on the `plastic card' which
gives them money on credit.
Plastic money basically means debit cards and credit cards which is having a magnetic stripe,
logo, signature of the cardholder made of plastic.
Credit Cards have finally arrived in India. The card industry which is growing at the rate of
20% per annum is flooded with cards ranging from gold, silver, global, smart to secure.the
list is endless. From just two players in early 80s, the industry now houses over 10 major
players vying for a major chunk of the card pie.
Currently four major bishops are ruling the card empire---Citibank, Standard Chartered Bank,
HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million card
users, is expected to double by the fiscal 2003. According to a study conducted by State Bank
of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanchart
follows way behind with 0.67 million, while Hongkong Bank has 0.3 million credit card
customers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed
by Bank of Baroda at 0.22 million.

Parties involved:

Cardholder: The owner of the card used to make a purchase; the consumer.

Card-issuing bank: The financial institution or other organization that issued the credit card to
the cardholder. This bank bills the consumer for repayment and bears the risk that the card is
used fraudulently. American Express and Discover were previously the only card-issuing
banks for their respective brands, but as of 2007, this is no longer the case.

Merchant: The individual or business accepting credit card payments for products or services
sold to the cardholder

Acquiring bank: The financial institution accepting payment for the products or
services on behalf of the merchant.

Independent sales organization: Resellers (to merchants) of the services of the

acquiring bank.

Merchant account: This could refer to the acquiring bank or the independent sales
organization, but in general is the organization that the merchant deals with.
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Growth & Use of Plastic Money

Credit Card association: An association of card-issuing banks such as Visa, MasterCard,

Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks,
and acquiring banks.

Transaction network: The system that implements the mechanics of the electronic
transactions. May be operated by an independent company, and one company may operate
multiple networks. Transaction processing networks include: Cardnet, Nabanco, Omaha,
Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet.

DIFFERENT TYPES OF CREDIT CARDS

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.
At the time of using the card he is not declared not as a defaulter even if misses due date. A
2.95 per cent late payment fees (this differs from one bank to another) is levied in the 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.

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 authorisation 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.

Diners Club card

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Growth & Use of Plastic Money

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.

Photo card
In this photograph is imprinted on a card, and 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.

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

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. .

Affinity card
The card issuer ties up with popular organizations/ institutions which are often non-profit
organizations (Citi-WWF card or the stanch art-Cricket cards) to offer an affinity card. When
the card is used, a certain percentage is contributed to the organization /institution by the card
issue

MasterCard and 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 world-wide may use their respective credit cards to make
various purchases.

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Growth & Use of Plastic Money

Visa card: Visa, Inc., commonly called VISA, is an economic joint venture of 21,000
financial institutions that issue and market Visa products including credit and debit cards. The
company was originally named Visa International Service Association. The name change
occurred in the fall of 2007 as a part of Visas restructuring and IPO plan. The company is
based in San Francisco, California, USA.

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Growth & Use of Plastic Money

PROCESS OF CREDIT CARDS

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Growth & Use of Plastic Money

FUNCTIONS OF CREDIT CARDS

Today, credit cards have many functions and are very versatile. They can be

summarized

into the following functions:

Credit
The holder may obtain extended credit up to an agreed limit at a published interest rate.

Charge
The holder can repay the whole amount at the end of the month, without charge provided no
cash advance has been taken.
Cash
On presentation at the appropriate banks, subject to check, cash can be obtained. In most
cases can also be used in ATMs to obtain cash.
Cheque guarantee
A cheque drawn on a bank may be guaranteed up to a published limit provided it is
accompanied by a Cheque Guarantee Card (or in some cases a Visa or MasterCard card)
issued by the bank on which it is drawn.
Cheque encashment
Cheque guaranteed as above may be used to obtain cash from branches of most banks,
although a charge may be levied in certain circumstances.
International
If the card is a member of Visa International or MasterCard International, you can use your
card at many countries where there are a lot banks who are members of them.
Perhaps the most significant fact to emerge from the summary of card functions is that
strictly speaking, they are not debit cards. Although they can be used to obtain cash via ATM,
the debit will be made from the credit card account and not from the holder's bank account.
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Growth & Use of Plastic Money

The credit cards discussed above are bank cards. Different bank cards have different card
functions. The functions of bank cards really depend on the individual bank itself. Some bank
card may have all of the above functions and some may not.
There other credit cards that are issued by retail stores such as Petrol Card, Quasi Card and
Private Label Card which may have some of the above functions mentioned above.

FEATURES OF CREDIT CARDS

All credit cards offer a variety of features. Knowing and understanding these features will
help
to
decide
which
card
is
right
for.
Fees
Most credit cards charge fees for various things, and it is important to know what these fees
are
and
how
to
avoid
them.
The

annual

fee

Some credit card companies charge you an annual fee just for using their card. Because of
stiff competition, you can often negotiate this fee away if you call and speak to a customer
service
representative.
Cash

Advance

Fee

Most credit card companies will charge you a fee for cash advances. These fees can vary but
are usually somewhat hefty. Not only will they charge you a one-time fee, but the interest rate
for this money will be at a considerably higher rate. Plus, unlike a regular purchase, where
interest begins accruing after some grace period passes, cash advances accrue interest charges
from
day
one.
Many card companies are competing for your business and are now offering an introductory
cash advance and balance transfer rates for a specific amount of time. This lower rate can be
applied to any balances you may wish to transfer from another card. Although it sounds good,
some companies will charge you a fee for the transfer. Know what the fee is before you
transfer
any
balances.

Miscellaneous

Fees

Things like late-payment fees, over-the-credit-limit fees, set-up fees, and return-item fees are
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Growth & Use of Plastic Money

all quite common these days and can represent a serious amount of money out of your pocket
if
you
get
whacked
for
any
of
these
fees.
Incentives
Since there are so many credit card companies, competition is stiff. Adding incentives to their
offers is one of the more popular ways to tip the scales in their favor. Incentives like rebates
on purchases, frequent flyer miles on certain airlines, and extended warranties on purchases
are just a few of the bonuses that card companies will now offer.
For those of you who collect and use your frequent flyer miles, they also have added
incentives like travel insurance and car rental insurance for your convenience. Of course, they
are hoping that with all this traveling, you are using their card to foot at least some of the
bill.
Rewards
Many card companies are looking to keep your business and are therefore making it worth
your while to use their card. Just simply by using their card you can accumulate points that
will in turn earn you rewards. What kind of reward depends solely on the amount of points
you accumulate. Since you can't accumulate these points without charging things on your
card, this is a classic case of 'you have to spend money to save money.'
Bottom line is this: Know what you need and what you don't. No sense in paying for any
features that you won't use.

APR
The annual percentage rate (APR) is the interest rate applied a balance carried beyond the
grace period. Credit cards can have different APRs for different types of balances, e.g.
balance transfers or purchases. Balance transfers and cash advances usually have higher
APRs than for purchases.
Your APR may increase when you're late on your payment to a particular creditor, and other
creditors if your card agreement includes a universal default clause.
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Growth & Use of Plastic Money

APRs can be fixed or variable. A fixed APR can change, but the creditor must inform you in
writing before changing the rate. A variable APR changes from time to time.

Grace Period

The grace period is the amount of time you have to pay your balance in full before a finance
charge is applied to your purchase. If you carried a balance from the previous month, you
may not have a grace period for your new purchases. In addition, balance transfers and cash
advances typically do not have a grace period. When balances don't have an applicable grace
period, interest is applied right away.
To find out the length of the grace period refer to the credit card application or your credit
card agreement. Your monthly statements should also include the number of days in the grace
period.

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Growth & Use of Plastic Money

ADVANTAGES OF CREDIT CARDS

Purchase Power and Ease of Purchase

Credit cards can make it easier to buy things. If you don't like to carry large amounts of
cash with you or if a company doesn't accept cash purchases (for example most airlines,
hotels, and car rental agencies), putting purchases on a credit card can make buying things
easier.

Protection of Purchases

Credit cards may also offer you additional protection if something you have bought is
lost, damaged, or stolen. Both your credit card statement (and the credit card company)
can vouch for the fact that you have made a purchase if the original receipt is lost or
stolen. In addition, some credit card companies offer insurance on large purchases.

Building a Credit Line

Having a good credit history is often important, not only when applying for credit cards,
but also when applying for things such as loans, rental applications, or even some jobs.
Having a credit card and using it wisely (making payments on time and in full each
month) will help you build a good credit history.

Emergencies

Credit cards can also be useful in times of emergency. While you should avoid spending
outside your budget (or money you don't have!), sometimes emergencies (such as your
car breaking down or flood or fire) may lead to a large purchase (like the need for a rental
car or a motel room for several nights.)

Credit Card Benefits

In addition to the benefits listed above, some credit cards offer additional benefits, such as
discounts from particular stores or companies, bonuses such as free airline miles or travel
discounts, and special insurances (like travel or life insurance.) While most of these
benefits are meant to encourage you to charge more money on your credit card
(remember, credit card companies start making their money when you can't afford to pay
off your charges!) the benefits are real and can be helpful as long as you remember your
spending limits.

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Growth & Use of Plastic Money

DISADVANTAGES OF CREDIT CARDS
Blowing Your Budget
The biggest disadvantage of credit cards is that they encourage people to spend money that
they don't have. Most credit cards do not require you to pay off your balance each month, so
even if you only have $100, you may be able to spend up to $500 or $1,000 on your credit
card. While this may seem like 'free money' at the time, you will have to pay it off -- and the
longer you wait, the more money you will owe since credit card companies charge you
interest each month on the money you have borrowed.

High Interest Rates and Increased Debt

Credit card companies charge you an enormous amount of interest on each balance that you
don't pay off at the end of each month. This is how they make their money and this is how
most people in the United States get into debt (and even bankruptcy.) Consider this: If you
have a $100 in savings, most banks will give you at the most 2.0 to 2.5% interests on your
money over the course of the year. This means you earn $2.00 - $2.50 a year on your $100
savings. Most credit cards charge you up to 10 times that amount of interest on balances. This
means that if you have $100 balance that you don't pay off, you will be charged 20-25%
interest on that $100. This means that you owe almost $30 interest (plus the original $100) at
the end of the year. A good way to look at this is in comparison to what you would earn in
interest from a bank or owe in interest to a bank loan: Savings accounts may pay you around
2% interest; if you have a loan from a bank you may pay them around 10% interest (5 times
as much as you earn off your savings); if you owe money to a credit card company, you may
pay them around 20% interest (10 times as much as you earn off your savings.)

Credit Card Fraud

Like cash, sometimes credit cards can be stolen. They may be physically stolen (if you lose
your wallet) or someone may steal your credit card number (from a receipt, over the phone,
or from a Web site) and use your card to rack up debts. The good news is that, unlike cash, if
you realize your credit card or number has been stolen and you report it to your credit card
company immediately, you will not be charged for any purchases that someone else has
made. Even if you don't realize your credit card number has been stolen (sometimes you
might not know until you receive your monthly statement), most credit card companies don't
charge you or only charge a small fee, like $25 or $50, even if the thief has charged thousands
of dollars to your card. There are several things you can do to prevent credit card fraud:

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Growth & Use of Plastic Money

If you lose your card or wallet, report it to your credit card company immediately.

Don't loan your credit card to anyone and only give out your credit card information
to trusted companies or Web sites.

Check your statement closely at the end of each month to make sure all charges are
yours.

You can find out more about protecting your personal information by visiting
our Personal Safety course.

Credit cards can make life easier and be a great tool, but if they aren't used wisely they can
become a huge financial burden. If you do decide to use credit cards, remember these simple
rules:

Keep track of all your purchases.

Don't spend outside your budget.

Pay off your balance on all of your credit cards at the end of each month.

Don't loan your credit or give out your credit card information to anyone but reliable
companies

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Growth & Use of Plastic Money

NEED OF CREDIT CARDS
There may be many people who suggest that you get a credit card, but before you do you
should carefully decide whether or not you really need a credit card. The answer is that you
can get by without a credit card. Although a credit card can be a useful tool, when used
properly (paid in full every month), it can be a bigger liability than an asset. Here are five
common misconceptions about needing a credit card.
1. Credit Card to Build Credit
You build credit by paying your bills on time. You can build enough credit to qualify for a
home loan by paying your rent on time for several years. You destroy your credit when you
do not pay your bills on time. The utility companies and other businesses can send you to a
collection agency if you do not pay on time. You do not need a credit card to build your credit
history. You may find it a little easier to do with a credit card, but you should be very careful
as you try to do so.
2. Credit Card to Shop Online or Rent a Car
Since debit cards have been introduced you no longer need a credit card to do these things. In
fact you can do everything with a debit card that you can with a credit card, except spend
money that you do not have. You should not be doing that anyway. Debit cards can be used
anywhere a credit card can. This completely debunks the statement that you need one to rent
a car.
3. Credit Card for Emergencies
If you plan well you should set up an emergency fund for emergencies. Your emergency fund
should have at least $1000.00 in it, but you should try to have three to six months of expenses
saved up. This much money should be able to handle any emergency that comes your way. If
you are stranded on the road and need to be towed you can use your debit card to pay for the
tow, and your emergency fund to cover those expenses.
4. Credit Card to Save Money on Purchases
Many stores will offer discounts for having a store credit card. Stores do not offer cards to
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Growth & Use of Plastic Money

give you discounts; they offer cards because they realize that while most people intend to pay
the card off every month, few actually do. They make more back on interest than they the
discount they offer to you.
5. Credit Card to Earn Rewards
This is a dangerous game to play. If you are responsible and pay off your balance in full each
month, you may consider having a rewards credit card. You should make sure that you have a
credit card with no annual fee. Additionally it is important to remember that the credit card
offers its rewards, because the company realizes that most people are not going to pay off
their credit cards in full each month. This means that they make more money off the
customers, then rewards they give out.
STEPS FOLOWED IN CREDIT CARD TRANSACTION
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.
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Growth & Use of Plastic Money

5. Interchange (VS/MC Only)

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 merchants checking account.

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Growth & Use of Plastic Money

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
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
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Growth & Use of Plastic Money

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.
Cash Back Credit Cards
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 budgetconscious 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 amount up to the amount in the account. When you add more money, you can
charge more to your card.

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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. 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 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
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Growth & Use of Plastic Money

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. 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.

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Growth & Use of Plastic Money

Types of Credit
Cards offered
By
Indian Banks

INTRODUCTION OF DEBIT CARDS

The debit card has emerged from the shadow of its older sibling, the credit card. Over the past
decade, debit card has grown from accounting for 274 million transactions in 1990 to 8.15
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Growth & Use of Plastic Money

billion transactions in 2002, to challenge the credit card as the preferred payment card. As it
stands, the debit card industry is a multi-billion dollar engine that helps drive bank profits and
point-of purchase consumer sales - but is also beginning to redefine traditional payment
options in the business and government sectors, such as food stamps, benefits, and payroll.

MEANING AND FUNCTIONS OF DEBIT CARDS

Two decades ago, the number of debit cards in circulation was approximately 19 million.
This figure is projected to cross 34.4 million by 2016.
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 check, 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 or entirely replaced the check 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.
Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash and as a check guarantee card. Merchants may also offer cash
back facilities to customers, where a customer can withdraw cash along with their purchase.
Debit cards can also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash and as a cheque guarantee card. Merchants can also offer "cash back"/"cash
out" facilities to customers, where a customer can withdraw cash along with their purchase.

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Types of Debit Card systems

Online Debit Card

Offline Debit Card

Electronic Purse Card System

Prepaid debit cards

Debit card

An example of the front of a typical debit card:

1. Issuing bank logo

2. EMV chip
3. Hologram
4. Card number
5. Card brand logo
6. Expiration date
7. Cardholder's name

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Growth & Use of Plastic Money

An example of the reverse side of a typical debit card:

1. Magnetic stripe
2. Signature strip
3. Card Security Code
There are currently three ways that debit card transactions are processed: online debit (also
known as PIN debit), offline debit (also known as signature debit) and the Electronic Purse
Card System. It should be noted that one physical card can include the functions of an online
debit card, an offline debit card and an electronic purse card. Although many debit cards are
of the Visa or MasterCard brand, there are many other types of debit card, each accepted only
within a particular country or region.

Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are
reflected in the users 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

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Growth & Use of Plastic Money

Offline Debit System
Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major
debit cards 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 23 days to be reflected on users account balances.

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.

Prepaid debit cards

Prepaid debit cards, also called reloadable debit cards or reloadable 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

Working of Debit Card

The user has to present the card to merchant who will swipe it through the electronic terminal
and enter the amount of purchase. The customers need to sign the transaction slip. Account
will be automatically debited for the amount of the purchase and the transaction can be
verified by entering the PIN. Debit Card can be used to access the Account from over 5,000
Shops, Department Stores, Petrol Pumps and Restaurants and over 235 ATMs in India .It can
also be used at over 4 million Visa Electron merchant locations and equally strong
MasterCard outlets. If Debit Card ever gets lost or stolen, card companies protect from
fraudulent usage at the loss.

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
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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.
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 dont need to stock up on Travelers 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 customers branch. 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 customers
branch.
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
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FEATURES OF DEBIT CARD

The following are features of Debit cards

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 holders 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.

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Process Debit Card Transactions

A successful business will usually accept debit cards as a part of their overall
profile of payment solutions. If you dont 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
customers 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 wont be approved
and you wont be able to process the debit card offline

Online debit card transactions

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 customers bank for
authorization, and youll 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. Another advantage
when you process debit cards is that you cant 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
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receipt, and then take the pen back. If you process 20 credit card transactions a
day, youre losing 100 minutes a day just passing a pen back and forth! Thats
almost two hours.

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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 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
1. Stolen Cards at the Office
2. Extra Copies of Charge Slips
3. Discarded Charge Slips
4. Unsigned Credit Cards
5. Loss of Multiple Cards
6. Strange Requests for Your PIN Numbers
7. Legitimate Cards
8. Altered Cards
9. Counterfeit Cards

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Advantages and Disadvantages of Debit Cards
The widespread use of debit and check cards have revealed numerous advantages and
disadvantages to the consumer and retailer alike.
Advantages of debit cards

A consumer who is not credit worthy and may find it difficult or impossible to obtain
a credit card can more easily obtain a debit card, allowing him/her to make plastic
transactions. For example, legislation often prevents minors from taking out debt,
which includes the use of a credit card, but not online debit card transactions.

For most transactions, a check card can be used to avoid check writing altogether.
Check cards debit funds from the user's account on the spot, thereby finalizing the
transaction at the time of purchase, and bypassing the requirement to pay a credit card
bill at a later date, or to write an insecure check containing the account holder's
personal information.

Like credit cards, debit cards are accepted by merchants with less identification and
scrutiny than personal checks, thereby making transactions quicker and less intrusive.
Unlike personal checks, merchants generally do not believe that a payment via a debit
card may be later dishonored.

Unlike a credit card, which charges higher fees and interest rates when a cash advance
is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based
transaction at no extra charge, other than a foreign ATM fee.

Disadvantages of debit cards

Use of a debit card is not usually limited to the existing funds in the account to which
it is linked, most banks allow a certain threshold over the available bank balance
which can cause overdraft fees if the users transaction does not reflect available
balance.

Many banks are now charging over-limit fees or non-sufficient funds fees based upon
pre-authorizations, and even attempted but refused transactions by the merchant
(some of which may be unknown until later discovery by account holder).

Many merchants mistakenly believe that amounts owed can be "taken" from a
customer's account after a debit card (or number) has been presented, without
agreement as to date, payee name, amount and currency, thus causing penalty fees for
overdrafts, over-the-limit, amounts not available causing further rejections or
overdrafts, and rejected transactions by some banks.

In some countries debit cards offer lower levels of security protection than credit
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cards. Theft of the users PIN using skimming devices can be accomplished much
easier with a PIN input than with a signature-based credit transaction. However, theft
of users' PIN codes using skimming devices can be equally easily accomplished with
a debit transaction PIN input, as with a credit transaction PIN input, and theft using a
signature-based credit transaction is equally easy as theft using a signature-based
debit transaction.

In many places, laws protect the consumer from fraud much less than with a credit
card. While the holder of a credit card is legally responsible for only a minimal
amount of a fraudulent transaction made with a credit card, which is often waived by
the bank, the consumer may be held liable for hundreds of dollars, or even the entire
value of fraudulent debit transactions. The consumer also has a shorter time (usually
just two days) to report such fraud to the bank in order to be eligible for such a waiver
with a debit card, whereas with a credit card, this time may be up to 60 days. A thief
who obtains or clones a debit card along with its PIN may be able to clean out the
consumer's bank account, and the consumer will have no recourse

Debit Cards Benefits

Debit Cards offer the following benefits:

They help people to be disciplined financially, since one cannot splurge with the
limited amount of funds deposited for the card.

A person with poor credit can obtain a debit card too much trouble.

Debit cards can be used to make online purchases and payments.

They provide freedom from carrying cash checks while traveling, herby offering more
safety.

Debit Cards: Issuers

The banks issuing debit cards include:

Bank of America

Citibank

American Express

Standard Chartered
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HSBC

Debit Cards vs. Credit Cards: Similarities and

Differences
Similarities

The same financial institutions offer both debit cards and credit
cards. Both cards offer special rewards, such as points and cash
back on purchases made through the card.

Debit cards and credit cards can be used to make online payments
with the help of the pin number assigned to them.

They can be used to withdraw money from ATMs depending on the

cash limit available on these cards.

Differences

In the case of a credit card, the issuer offers credit and overdraft
facilities. This facility is not available with a debit card, which will only
debit

payments

from

existing

and

available

funds

within

the

cardholders account.

A credit cardholder therefore has a monthly bill to pay in every month

that the card is used. If they dont pay that bill, high interest charges
are applied. A debit card holder is free from the hassle of paying those
bills and from the risk of building up large debts to credit card
companies.

Debit Card Problems can be worse than Credit Card

Problems
When an improper charge appears on the credit card it cannot automatically out the money
and simply need to work with the credit card issuer to have the charge removed from the bill.
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When an improper charge occurs with a debit card, however, the funds are automatically
taken from the account and customer is burdened with attempting to get the money back.
Meanwhile, he may experience cash flow problems and the legitimate checks could bounce.

Traveling with your Debit Cards

The reverse side of the debit card will display the names or symbols of the various ATM
systems that will accept the card. Debit card can be used at any ATM in the world as long as
the ATM displays one of the same system names or symbols that is on debit card. When
obtaining funds at an ATM in a foreign country the funds dispersed will be in the currency of
the country going to visit.

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BITCOINS
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing
transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is
open-source; its design is public, nobody owns or controls Bitcoin and everyone can take
part. Bitcoin is a network that enables a new payment system and a completely digital
money.In detail, Bitcoin is a peer-to-peer payment system introduced as open source software
in 2009 by developer Satoshi Nakamoto. The digital currency created and used in the system
is also called bitcoin and is alternatively referred to as a virtual currency, electronic money, or
cryptocurrency. The bitcoin system is not controlled by a single entity, like a central bank,
which has led the US Treasuryto call bitcoin a decentralized currency. Economists generally
agree that it does not meet the definition of money Bitcoins are created as a reward for
payment processing work in which users who offer their computing power verify and record
payments into a public ledger. Called mining, individuals engage in this activity in exchange
for transaction fees and newly minted bitcoins. Besides mining, bitcoins can be obtained in
exchange for other currencies, products, and services. Users can buy, send, and receive
bitcoins electronically for a nominal fee using wallet software on a personal computer,
mobile device, or a web application.

HISTORY
Bitcoin was first mentioned in a 2008 paper published under the name Satoshi Nakamoto. In
2009, an exploit in an early bitcoin client was found that allowed large numbers of bitcoins to
be created. The price of bitcoins has fluctuated wildly since its inception, going through
various cycles of appreciation and depreciation, which have been referred to by some as
bubbles and busts. In 2011, the value of one bitcoin rapidly rose from about US$0.30 to
US$32 before returning to US$2. In the latter half of 2012 and during the 2012-2013 Cypriot
Financial Crisis, the bitcoin price began to rise, reaching a peak of US$266 on 10 April 2013,
before crashing to around US$50. In the end of 2013, the cost of one bitcoin rose to the allround peak of US$1135, but fell to the price of US$693 three days later.Some mainstream
websites began accepting bitcoins c. 2013. WordPress started in November 2012 followed by
OKCupid in April 2013, TigerDirect in January 2014, andOverstock.com that same month.
Certain non-profit or advocacy groups such as the Electronic Frontier Foundation allow
bitcoin donations. (Although this organization subsequently stopped accepting bitcoin.)
October 31, 2008 The white paper publishes Nakamoto publishers a design paper through
a metzdowd.com cryptography mailing list that describes the Bitcoin currency and solves the
problem of double spending so as to prevent the currency from being copied.
CREATION OF BITCOIN
Bitcoin is the first implementation of a concept called "crypto-currency", which was first
described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new
form of money that uses cryptography to control its creation and transactions, rather than a
central authority. The first Bitcoin specification and proof of concept was published in 2009
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in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010
without revealing much about himself. The community has since grown exponentially with
many developers working on Bitcoin. Satoshi's anonymity often raised unjustified concerns,
many of which are linked to misunderstanding of the open-source nature of Bitcoin. The
Bitcoin protocol and software are published openly and any developer around the world can
review the code or make their own modified version of the Bitcoin software. Just like current
developers, Satoshi's influence was limited to the changes he made being adopted by others
and therefore he did not control Bitcoin. As such, the identity of Bitcoin's inventor is
probably as relevant today as the identity of the person who invented paper.
WORKING OF BITCOIN
The basics for a new user- As a new user, you can get started with Bitcoin without
understanding the technical details. Once you have installed a Bitcoin wallet on your
computer or mobile phone, it will generate your first Bitcoin address and you can create more
whenever you need one. You can disclose your addresses to your friends so that they can pay
you or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin
addresses should only be used once.

Balances - block chain: The block chain is a shared public ledger on which the entire Bitcoin
network relies. All confirmed transactions are included in the block chain. This way, Bitcoin
wallets can calculate their spendable balance and new transactions can be verified to be
spending bitcoins that are actually owned by the spender. The integrity and the chronological
order of the block chain are enforced with cryptography.
Transactions - private keys: A transaction is a transfer of value between Bitcoin wallets that
gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private
key or seed, which is used to sign transactions, providing a mathematical proof that they have
come from the owner of the wallet. The signature also prevents the transaction from being
altered by anybody once it has been issued. All transactions are broadcast between users and
usually begin to be confirmed by the network in the following 10 minutes, through a process
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called mining.
Processing mining: Mining is a distributed consensus system that is used to confirm waiting
transactions by including them in the block chain. It enforces a chronological order in the
block chain, protects the neutrality of the network, and allows different computers to agree on
the state of the system. To be confirmed, transactions must be packed in a block that fits very
strict cryptographic rules that will be verified by the network. These rules prevent previous
blocks from being modified because doing so would invalidate all following blocks. Mining
also creates the equivalent of a competitive lottery that prevents any individual from easily
adding new blocks consecutively in the block chain. This way, no individuals can control
what is included in the block chain or replace parts of the block chain to roll back their own
spends.
PAYMENT METHOD
Using Bitcoin as an Individual Install the official Bitcoin client on your computer.
To get started using Bitcoin, whether you want to set it up on your phone or online, you'll
need to download the client and visit the main Bitcoin page to set up your account on the
computer. The client is suitable for Mac, Windows, and Linux. Set up your wallet: Like
regular money, you've got to have a place to keep your digital money. Wallets are basically
programs that sort and track your digital currency via your account settings. There are a
variety of options available, depending on your intentions for using Bitcoin. Software wallets
don't run on a third-party service after download. These wallets are operated from your
computer, where you'll have to run a local blockchain to keep your transactions anonymous.
This is the wallet for which the Bitcoin was originally conceived. Software wallets include:
BitcoinQT
Armory
Multibit

Software Wallets For PC For Mobile Web wallets are always available online, making them
probably the most convenient and user- friendly. All you need to do is set up an account and
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log in. They are, however, potentially somewhat less secure than hardware wallets, though
each of these is also compatible with most Mobile phone providers. Web wallet options
include: Blockchain Coinbase
Coinjar
Coinpunk
BitGo

ADVANTAGES AND DISADVANTAGES

Advantages: Payment freedom - It is possible to send and receive any amount of money
instantly anywhere in the world at any time. No bank holidays. No borders. No imposed
limits. Bitcoin allows its users to be in full control of their money. Very low fees - Bitcoin
payments are currently processed with either no fees or extremely small fees. Users may
include fees with transactions to receive priority processing, which results in faster
confirmation of transactions by the network. Additionally, merchant processors exist to assist
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merchants in processing transactions, converting bitcoins to fiat currency and depositing
funds directly into merchants' bank accounts daily. As these services are based on Bitcoin,
they can be offered for much lower fees than with PayPal or credit card networks. Fewer
risks for merchants - Bitcoin transactions are secure, irreversible, and do not contain
customers sensitive or personal information. This protects merchants from losses caused by
fraud or fraudulent chargebacks, and there is no need for PCI compliance. Merchants can
easily expand to new markets where either credit cards are not available or fraud rates are
unacceptably high. The net results are lower fees, larger markets, and fewer administrative
costs. Security and control - Bitcoin users are in full control of their transactions; it is
impossible for merchants to force unwanted or unnoticed charges as can happen with other
payment methods. Bitcoin payments can be made without personal information tied to the
transaction. This offers strong protection against identity theft. Bitcoin users can also protect
their money with backup and encryption. Transparent and neutral - All information
concerning the Bitcoin money supply itself is readily available on the block chain for
anybody to verify and use in real-time. No individual or organization can control or
manipulate the Bitcoin protocol because it is cryptographically secure.
Disadvantages:
Degree of acceptance - Many people are still unaware of Bitcoin. Every day, more
businesses accept bitcoins because they want the advantages of doing so, but the list remains
small and still needs to grow in order to benefit from network effects. Volatility - The total
value of bitcoins in circulation and the number of businesses using Bitcoin are still very
small compared to what they could be. Therefore, relatively small events, trades, or business
activities can significantly affect the price. In theory, this volatility will decrease as Bitcoin
markets and the technology matures. Never before has the world seen a start-up currency, so
it is truly difficult (and exciting) to imagine how it will play out. Ongoing development Bitcoin software is still in beta with many incomplete features in active development. New
tools, features, and services are being developed to make Bitcoin more secure and accessible
to the masses. Some of these are still not ready for everyone. Most Bitcoin businesses are
new and still offer no insurance. In general, Bitcoin is still in the process of maturing.

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INTRODUCTION
A digital wallet is a software component that allows a user to make an electronic payment
with a financial instrument (such as a credit card or a digital coin), and hides the low-level
details of executing the payment protocol that is used to make the payment.
A digital wallet, functions much like a physical wallet. The digital wallet was first conceived
as a method of storing various forms of electronic money (e-cash), but with little popularity
of such e-cash services, the digital wallet has evolved into a service that provides internet
users with a convenient way to store and use online shopping information.
A digital wallet has both a software and information component. The software provides
security and encryption for the personal information and for the actual transaction. Typically,
digital wallets are stored on the client side and are easily self-maintained and fully compatible
with most e-commerce Web sites. A server-side digital wallet, also known as a thin wallet, is
one that an organization creates for and about you and maintains on its servers. Server-side
digital wallets are gaining popularity among major retailers due to the security, efficiency,
and added utility it provides to the end-user, which increases their enjoyment of their overall
purchase.
The information component is basically a database of user-inputted information.
This information consists of your shipping address, billing address, payment methods
(including credit card numbers, expiry dates, and security numbers), and other information.
A digital wallet is a software component that provides a client with instrument management
and protocol management services. A digital wallet is linked into an end-user, bank, or vendor
application and provides the application with instrument management and protocol
management services. The digital wallets that are linked into vendor and bank applications
provide these management services in the same way that end-user digital wallets do.

EVOLUTION
Digital wallets first emerged in the mid-1990s with a great deal of hype, but to a
lukewarm public reception. The earliest wallets required customers to download
the digital wallet vendor's (one who sells) software and store it on their desktops.
This method largely inhibited customers from warming to the technology.
Downloads generally were viewed with some skepticism by analysts, since they
tend to limit overall distribution. Slow connection speeds exacerbated the
problem, since customers tend to grow frustrated and abort downloads if they
take an excessively long time to complete. In addition, any time the vendor
updated its digital wallet software, customers had to download all over again.
Moreover, once the software was downloaded, the digital wallet was stored on
the computer's hard drive, requiring the customer to make all purchases from
that computer. This lack of flexibility became increasingly problematic as more
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Internet shoppers roamed from one place to another and used multiple
computers for surfing and shopping.Another impediment to digital wallet
penetration was customer awareness.In 1999, according to the research firm
Bizrate.com, only 58 percent of online purchasers were even familiar with digital
wallets, while only one-fourth understood their capabilities. In addition, the sheer
glut of digital wallet offerings in the late 1990sissued by merchants, software
vendors, credit card firms, banks, and other outfitsled to customer confusion,
not to mention frustration stemming from the lack of compatibility between all
these wallet packages. With no standardized payment system, customers were
reluctant to fill up their hard drives with mutually exclusive digital wallets, nor
maintain contracts with various firms.In 2000, Forrester Research released the
results of a survey of online merchants. The merchants were asked why digital
wallets had failed to attain prominence. Sixty-two percent of U.S. e-merchants
felt there simply was too little customer demand, while 54 percent reported that
digital wallets weren't a priority. Twenty-seven percent thought the market was
too immature, another 27 percent couldn't see any benefits in adopting the
technology, and 19 percent thought that digital wallets would result in the loss of
customer relationships.The Electronic Commerce Modeling Language (ECML) was
conceived as a mechanism to clearly define a format for online order forms that
could incorporate digital wallet technology from any vendor. To adopt ECML,
merchants need only reorganize their existing online order forms so that the
fields correspond to those set forth in the ECML standard. No licensing or usage
fees apply, and ECML requires no additional software or hardware, according to
Catalog Age. The first digital wallet to comply with ECML was IBM's Consumer
Wallet 2.1, which was that company's second shot at digital wallet technology.
Meanwhile, ECML standardized the format in which the various fields were stored
in digital wallets.By the early 2000s, digital wallets were undergoing a mild
renaissance. The models developed at that time abandoned software downloads
altogether, opting instead for digital wallet systems that worked directly with
ISPs and other telecommunications firms. In other words they involved serverside (or "thin"), rather than client-side ("fat"), technology.

CASE STUDY
What Happens in Credit Card Fraud Cases?
1. The Basics
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. 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
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to protect the bank or Credit Card Company just as much as it is to protect the customer.
2. 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. 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.

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CHAPTER IV
Finding & Canalization
1. To know about respondents who are using the plastic money.
Respondents were asked whether they use plastic money or not. The results are as
follows:

Use of Plastic money by the respondent

Use of Plastic Money

No; 0%

Yes; 100%

Interpretation:
From the above figure it can be interpreted that 100 respondents who are taken for the
study are using plastic money and hence it can be said that majority respondents now a
days are using plastic money.

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2. Card possessed by respondents?
Respondents were asked to explain that which card they possess and the results are as
follows:

Card Possesed by Respondents

Both; 14%

Credit Card; 28% Debit Card; 58%

Interpretation:
From the above data collected we can interpret that the people mostly have debit card, as
credit card is little expensive than debit card so people mostly prefer debit card, but still
people have applied for their credit card also. Some people have both debit card and credit
card.

3. Debit cards of different companies/banks owned by respondents?

Respondents were asked to explain that how many no. of debit card owned by them and the
results are as follows:

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No. of Debit cards of different companies/banks

Three; 6%
Two; 24%

One; 69%

Interpretation:
The above data reveals that mostly people have one debit card; about 25% of the respondents
are using two debit cards from different companies, its clear that people are satisfied with
their debit card.

4. No. of Credit cards of different companies/banks owned by respondents?

Respondents were asked to explain that how many no. of credit card owned by them and the
results are as follows:

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No. of Credit cards of different companies/banks

Three; 6%

Two; 30%
One; 64%

Interpretation:
From the above information it can be interpreted that 64% of the respondent have one credit
card from different companies/banks and 30% have two debit cards.

5. Companies/Bank card owned by the respondents?

Respondents were asked to explain which company/bank card owned by them. The results
are as follows:

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28
%age. of respondetns

22
Card
owned

22
12

10
6

Interpretation:
From the above data its clear that people mostly prefer SBI Bank to get the plastic money,
after that respondent prefers ICICI and HDFC bank. People usually like to have credit card
with which they have account.

6. Time period of using the debit card/credit card/both ?

Respondents were asked to explain the time period for which they are using them.

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Time period of debit/credit card use

More than 5 year; 18%

Between 3- 5 year; 34%

Less than 1 year; 22%

Between 1- 3 year; 26%

Interpretation:
The above data reveals that mostly people are using plastic money from 3 to 5 year and rest
are using it for less than 3 year i.e. plastic money become a trend from the last few years.

7. Purposes for using the card?

Respondents were asked to explain the purpose of using the card. The results are as follows:

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Purpose for using Cards

All of above; 4%
Petrol filling; 14%

Shopping; 37%

Hotel and Restaurant; 20%

Withdrawal of money; 24%

Interpretation:
It is clear that mostly people use the card for the shopping purpose and then for withdrawal of
cash, 20% use it for going for hotel and restaurants. So the plastic money is used by the
respondents everywhere. For all purpose related using is till now less i.e. 4%.

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8. Card which is more beneficial?
Respondents were asked to explain which card is more beneficial according to them.
The results are as follows:

Card which is beneficial

Both; 30%

Debit card ; 36%

Credit card; 34%

Interpretation:
From the above figure it is clear people mostly prefer debit card but credit cards are not far
behind, about 34% of the respondents feel that credit card is more beneficial than debit card
and some feel that both are beneficial.

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9. Benefits provided by Debit card?
Respondents were asked to tell the benefits provided by debit card. The result is as follows:

Benefits provided

50
20

%age of Respondents

20

10

Interpretation:
From the above collected data it is clear that there are many benefits and respondents are
satisfied with these benefits, as they feel secured and easy to carry the money. They can use
wherever they want. So from analysis respondents are enjoying all the benefits of Debit card
with having a security 50% and accessing anytime.

10. Benefits provided by credit cards?

Respondents were asked to tell the benefits provided by Credit card. The result is as follows:

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Benefits provided

1
1

2
2

25

23

3
3

25

4
4

27

%age of Respondents

Interpretation:
From the above study it can be seen that respondents agreed that credit card is easy to carry
and it give prestige to the holder. They can use it where ever they want and fulfil their wishes,
without thinking. As Credit card gives facility to the holder to do anything on credit. From
above 27% thinks its easy to carry in case of cash.

11. Problems faced in processing the card?

Respondents were asked the problems faced in processing the card. The results are as
follows:

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Problem faced
Feeling of insecurity
Unnecessary formalities

Fear of losing card

High fee charged by bank

15%
30%

15%

40%

Interpretation:
From the data it is clear that the cardholders have the problem in processing the card. 40%
have a fear of losing a card, and 30% feel insecure that card might be misused by some other
person.

12. Future prospects of plastic money?

Respondents were asked to explain to future prospects of plastic money. The results are as
follows:

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Future prospect

%age if Respondents

56

32

Rapid growth

Stagnant

Declining

Interpretation:
It is clear from the figure that mostly people believe that the future of plastic money is at
boom. 56% people believe that there will be rapid growth and 32 % are of the view of steady
growth 6% cant predict anything.

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CHAPTER V
Conclusion
In the last two years, spending pattern through plastic money has changed drastically.
Travelling, dining and jewellery are the top three purchases that Indian makes through credit
cards. Two years ago, it was jewellery and apparel purchases that formed the largest chunk of
purchases through plastic money. Fuel accounts for a very small portion of credit card
purchases as these are largely paid through debit cards.
Consumers were not only more open to the possibility of owning a financial card, but were
also more than willing to use their cards to settle dues. The status symbol aspect of owning
and using cards too played its part on bringing about such robust growth over the space of a
single year. Debit cards in particular proved immensely popular.
According to projections for the 2003-2008 period the number of financial cards in
circulation will register a compounded annual growth rate of nearly 51 percent sp the
satisfaction of consumers has also increased. There are many ethical issues and challenges for
plastic money issuing banks/ companies. Security relating to card should be first priority for
each bank/company.
Consumers are preferring these cards mostly for shopping online E- commerce has given a
better way to use the plastic money.
At last it is concluded that plastic money has a very bright future in the coming years because
of the increasing trend of E- commerce.

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BIBLIOGRAPHY
Kothari C.R, Research Methodology : Research and Techniques; Vishwa Prakshan, New
Delhi, 4th edition.
E.gordan and Natrajan, Financial Services, Himalaya Publishing House, Mumbai. 5th edition.
Articles
College Student using the Credit Card
Smart card based Electronics Commerce characteristics and Roles
Credit card and Debit cards : What new ? Where to ?
Competition and Credit and Debit card Interchange Fees
Theory of Credit card Networks: A survey of Literature
An introduction to the economics of payment card networks
Credit card crisis in South Korea
Ethical Issues and Challenges
Websites
www.rba.gov.au
www.federalreserve.gov
www.direct.gov.uk
www.paypal.com
QUESTIONNAIRE
Dear Sir/Maam
I am student of MBA of Swami Vivekanand Institute of Engineering and Technology and
topic of my project report is Comparative Study of Plastic Money and I want your
cooperation to fill this questionnaire related to my project.
Personal information
Name
______________________________________________
Address
______________________________________________
Occupation ______________________________________________

Q.1 Do you use plastic money?

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Growth & Use of Plastic Money

a) Yes
b) No
Q.2 Which card do you have?
a) Debit card
b) Credit card
c) Both
Q.3. How many no. of debit cards of different companies owned by you?
a)
b)
c)
d)

One
Two
Three
None

Q.4 How many no. of credit cards of different companies owned by you?
a)
b)
c)
d)

One
Two
Three
None

Q.5 Which companies / bank card do you have?

a)
b)
c)
d)
e)

HDFC Bank
SBI Bank
BOI Bank
ICICI Bank
Any other if yes specify

Q.6 Since how long you have been using debit card/credit card/ both ?
a) Less than 1 year
b) Between 1-3 year
c) Between 3-5 year
d) More than 5 year
Q.7 Normally for what purpose do you use cards?
a) Shopping
b) Withdrawal of money
c) Petrol filing
d) Hotel and restaurants
e) All of above
Q.8 Which card according to you is more beneficial?
a) Debit card
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b) Credit card
c) Both
Q.9. What are the benefits provided by debit cards?
a)
b)
c)
d)

Security
Free from fraud
No interest charges
Anytime access

Q.10 What are the benefits provided by credit cards?

a)
b)
c)
d)

Easy to carry
Convenient to pay
Overdraft facility
Prestige to holder

Q.11 What are the problems you are facing in processing the card?
a)
b)
c)
d)

Feeling of insecurity
Fear of losing the card
Unnecessary formalities
High fee collected by banks

Q.12 What are the future prospects of plastic money?

a)
b)
c)
d)
e)

Rapid growth
Steady growth
Stagnant
Cant predict
Declining

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