TABLE OF CONTENTS Sr.No.

Contents Page Number 1 Introduction to Credit Cards 2 Characteristics of the Indian Market 3Different Types of Credit Cards and Features 4How Credit Card works 5Bank Credit Cards and Consumer Behavior 6Customer Analysis517Competitive Landscape in India 8Recent events in the industry 9Advantages of credit card transaction 10Marketing of Credit card6 11Types of Credit card usage 12Advertising & Promotio 13Credit Card Advertising Rules and Laws 14Methods and tools used in credit card industry to detect fraud 15Ways to Avoid Credit Card Fraud8116Smart Cards A window to the future 17Growth in the electronic payments sector8818Quantitative market research 19Uses of Smart Cards 20Disadvantages Of A Smart Card 21Conclusion & Recommendations

Introduction to Credit Cards Upload Log In Sign Up Explore Documents Books - FictionBooks - Non-fictionHealth & MedicineBrochures/CatalogsGovernment DocsHow-To Guides/ManualsMagazines/NewspapersRecipes/MenusSchool Work+ all categ ories RecentFeatured People AuthorsStudentsResearchersPublishersGovernment & NonprofitsBusinessesMusiciansAr tists & DesignersTeachers+ all categories Most FollowedPopular Language: English Download 0 Go BackComment Link Embed of 124 Readcast DIT CARD INDUSTRY IN INDIA is a bonafide work carried out by Mr. SELWYN PEREIRA (Roll No LPGD/AP10/0782)a c

andidate for the Post Graduate Diploma examination of the Welingkar Institute of Management under my guidance and direction.SIGNATURE OF GUIDE:NAME: Mr. Mohan K umar DESIGNATION: AVPADDRESS: J P Morgan India Private LimitedParadigm Towers, M indspace,Malad West, Mumbai 400064DATE: 29 th AUGUST 2011PLACE: Mumbai 6 TABLE OF CONTENTSSr.No.ContentsPage Number 1Introduction to Credit Cards82Charac teristics of the Indian Market153Different Types of Credit Cards and Features154 How Credit Card works255Bank Credit Cards and Consumer Behavior486Customer Analy sis517Competitive Landscape in India558Recent events in the industry569Advantage s of credit card transaction6010Marketing of Credit card6511Types of Credit card usage6712Advertising & Promotion7013Credit Card Advertising Rules and Laws7514M ethods and tools used in credit card industry to detect fraud7715Ways to Avoid C redit Card Fraud8116Smart Cards A window to the future8317Growth in the electronic payments sector8818Quantitative market research9519Uses of Smart Cards10820Disa dvantages Of A Smart Card11821Conclusion & Recommendations119 7 Introduction to Credit Cards As far back as the late 1800s, consumers and merchants exchanged goods through t heconcept of credit, usingcredit coins and charge plates as currency. It wasn't until about half a century ago that plastic payments as we know them today becam e a way of life. Early beginnings In the early 1900s, oil companies and department stories issued their own propr ietarycards, according to Stan Sienkiewicz, in a paper for the Philadelphia Fede ral Reserveentitled "Credit Cards and Payment Efficiency." Such cards were accep ted only at thebusiness that issued the card and in limited locations. While mod ern credit cards are 8 mainly used for convenience, these predecessor cards were developed as a means o f creating customer loyalty and improving customer service, Sienkiewicz says.The first bank card, named "Charg-It," was introduced in 1946 by John Biggins, aban ker in Brooklyn, according toMasterCard. When a customer used it for a purchase, the bill was forwarded to Biggins' bank. The bank reimbursed the merchant andobt ained payment from the customer. The catches: Purchases could only be madelocall y, and Charg-It cardholders had to have an account at Biggins' bank. In 1951, th efirst bank credit card appeared in New York's Franklin National Bank for loan c ustomers.It also could be used only by the bank's account holders.The Diners Clu b Card was the next step in credit cards. According to a representativefrom Dine rs Club, the story began in 1949 when a man named Frank McNamara had abusiness d inner in New York's Major's Cabin Grill. When the bill arrived, Frank realizedhe 'd forgotten his wallet. He managed to find his way out of the pickle, but he de cidedthere should be an alternative to cash. McNamara and his partner, Ralph Sch neider,returned to Major's Cabin Grill in February of 1950 and paid the bill wit h a small,cardboard card. Coined the Diners Club Card and used mainly for travel andentertainment purposes, it claims the title of the first credit card in wide spread use. Plastic debuts By 1951, there were 20,000 Diners Club cardholders. A decade later, the card was replaced with plastic. Diners Club Card purchases were made on credit, but it wa stechnically a charge card, meaning the bill had to be paid in full at the end o f eachmonth. 9

According to its archivist,American Expressformed in 1850. It specialized in del iveriesas a competitor to the U.S. Postal Service, money orders (1882) and trave ler's checks,which the company invented in 1891. The company discussed creating a travel chargecard as early as 1946, but it was the launch of the rival Diners Club card that put thingsin motion.In 1958 the company emerged into the credit c ard industry with its own product, apurple charge card for travel and entertainm ent expenses. In 1959, American Expressintroduced the first card made of plastic (previous cards were made of cardboardor celluloid).American Express soon intro duced local currency credit cards in other countries. About1 million cards were being used at about 85,000 establishments within the first fiveyears, both in an d out of the U.S. In the 1990s, the company expanded into an all-purpose card. A merican Express, or Amex as it often is called, is about to celebrate its50th cr edit card anniversary. Closed-loop system The Diners Club and American Express cards "functioned in what is known as a'clo sed-loop' system, made up of the consumer, the merchant and the issuer of thecar d," Sienkiewicz writes. "In this structure, the issuer both authorizes and handl es allaspects of the transaction and settles directly with both the consumer and themerchant."In 1959, the option of maintaining a revolving balance was introdu ced, according toMasterCard. This meant cardholders no longer had to pay off the ir full bills at the end of 10 each cycle. While this carried the risk of accumulating finance charges, it gave customers greater flexibility in managing their money. Bank card associations "The general-purpose credit card was born in 1966, when the Bank of Americaestab lished the BankAmerica Service Corporation that franchised the BankAmericardbran d (later to be known asVisa) to banks nationwide," Sienkiewicz writes.In 1966, a national credit card system was formed when a group of credit-issuing banks joi ned together and created the InterBank Card Association, according to MasterCard .The ICA is now known as MasterCard Worldwide, though it was temporarily known a sMasterCharge. This organization competes directly with a similar Visa program." The new bank card associations were different from their predecessors in that an 'open-loop' system was now created, requiring interbank cooperation and fundstra nsfers," Sienkiewicz says. Visa and MasterCard still maintain "open-loop" system s,whereas American Express, Diners Club andDiscover Cardremain "closed-loop."Vis a and MasterCard's organizations both issue credit cards through member banksand set and maintain the rules for processing. They are both run by board memberswh o are mostly high-level executives from their member banking organizations.As th e bank card industry grew, banks interested in issuing cards became members of e ither the Visa association or MasterCard association. Their members shared cardp rogram costs, making the bank card program available to even small financialinst itutions. Later, changes to the association bylaws allowed banks to belong to bo thassociations and issue both types of cards to their customers. 11