Vous êtes sur la page 1sur 23


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, credit cards, ATMs, smart cards, etc.

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use every day in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards and store cards

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


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 option like cash-back rewards, savings plan 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 benefits, which was good for both customers and merchants. It was not until 1950 that the Dinners Club card was created by a restaurant patron who forgot his wallet and realized that, there was a need for an alternative to cash. 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 Diners 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 balances 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. These new general purpose system required inter-bank cooperation and additional regulations. This created additional safety features and began building the credit

system of today. Two system emerged as the leaders-VISA and MASTER CARD. However, today there is a little difference between the two and most merchants accept both card associations. DEBIT CARDS EMERGE The VISA association of cards took credit cards to a new level in 1989 when they introduced debit cards. These cards linked consumers to their checking accounts. Money was now drawn from a checking account at the point of sale with these new cards and replaced cheque 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 cheques . 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.


1. 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.

2. DEBIT CARD Debit cards are substitutes for cash or cheque 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. 3. 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. 4. 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. 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. 5. 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.

6. GLOBAL CARDS 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. 7. 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. 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. 8. MASTERCARD & VISA MASTERCARD & 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 payments. 9. SMART CARDS 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 USA and is being used only sporadically in India. 10. PHOTO CARD If your photograph is imprinted on a card, then you have what is known as a photo card. Doing this helps to 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.


A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Usage of the term "credit card" to imply a credit card account is a metonym. When a purchase is made the user would indicate consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid. Issuer agrees to pay the merchant and the credit card user agrees to pay the card issuer.

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

MEANING:A credit card is a card or mechanism which enables card holder to purchase goods, travels and dine in a hotel without making immediate payments. The holders can use the cards to get credit from banks up to 45 days. The credit card relieves the consumers from the botheration of carrying cash and ensures safety. It is a convenience of extended credit without formality. Thus credit card is a passport to, safety, convenience, prestige and credit.



The benefits of credit card can be grouped as follows

(A) BENEFITS TO THE BANK a) A credit card is an integral part of banks major services these days. The credit card provides the following advantages to the bank: the system provides an opportunity to the bank to attract new potential customers. b) To get new customers the bank has to employee special trained staff. This gives the bank an opportunity to find the latent talent from among existing staff that would have been otherwise wasted.

c) The more important function of a credit card, however, is simply to yield direct profit for the bank. There is a scope and a potential for a better profitability out of income / commission earned from the traders turn over. d) This also provides additional customer services to the existing clients. It enhances the customer satisfaction. e) More use by the car holder and consequently the growth of banking habits in general. f) Better network of card holders and increased use of cards means higher popularity and image of the bank g) Savings of expense on cash holdings, i.e. stationery, printing and man power to handle clearing transactions while considerably is reduced. It increases (B) BENEFITS TO CARD HOLDER

The principal benefits to a card holder are:

a) He can purchase goods and services at a large number of outlets without cash or cheque. The card is useful in emergency, and can save embarrassment. b) The risk factor of carrying and storing cash is avoided. It is convenient for him to carry credit card and he has trouble free travel and may purchase his without carrying cash or cheque. c) Months purchases can be settled with a single remittance, thus, tending to reduce bank and handling charges.

d) The card holder has the period of free credit usually between 30-50 days of purchase e) Cash can usually be obtained with the card, either on card account or by using it as identification when encasings a cheque at the bank. f) Availing credit with minimum formality. g) The credit card saves trouble and paper work to traveling business man.

(C) BENEFITS TO THE MERCHANT ESTABLISHMENT The principal benefits offer credit card to the retailer is a) This will carry prestigious weight to the outlets. b) Increases in sale because of increased purchasing power of the cardholder due to unbilled credit available to the card holder. c) The retailers gain from the impulse buying and trading up the tendency to buy the bigger or better article d) Credit card ensures timely and certainly of payments. e) Suppliers/sellers no longer have to send reminders of outstanding debits. f) Systematic accounting since sales receipts are routed through banking channels. g) Advertising and promotional support on national scale. h) Development of prestigious clientele base.


The following are the common disadvantages of the credit card a) Some credit card transactions take longer time than cash transactions because of various formalities. b) The customer tends to overspend out of immerse happiness. c) Discounts and rebates can rarely be obtained. d) The cardholder is responsible for charges due to loss or theft of of the card and the bank may not be party for loss due to fraud or collusion of staff, etc e) Customers may be denied cash discount for payment through card. f) It might lead to spending habits and cardholders may end up in big debts i) Avoid the entire cost and security problem involved in handling cash. j) Losses to bad debts and reduced an additional liquidity is k) It also allows him to delegate spending power to add on members. l) Credit card is considered as a status symbol.



For Internet Merchants, the shopping card is connected to or integrated with a Payment Gateway. For Retail Merchants, the card is swiped through a magnetic reader on the point of sale terminal the authorization is transmitted to the appropriate card issuer for approval. The issuing bank of card issuer authenticates the card holder and approves or declines the transaction amount. It is important to note that no money changes hands during the authorization. Merchants must re-present the transaction to receive payment.

2. Merchant balancing This is also known as batching out. Most pos terminals and all payment gateway per firm an auto close functions at the and of the day and batch out automatically. 3. Capture The front end processor matches the authorization data to the settlement data and transmits the card capture file to a back end processor for V/MC transactions or to the appropriate card issuer for other card types.

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

5. Interchange (VS/MC Only) 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.

Types of Credit Cards offered by Indian Banks

Silver Cards
Silver credit cards rank lowest among the metal named cards, and, because of lower prestige when compared to gold and platinum cards, are commonly known as basic and standard credit cards. Silver credit cards come with advantages such as lower annual membership fees if there is any, and a lower threshold salary which banks use to evaluate your application in case you should apply. Silver credit cards will provide you with almost the same credit limit as other cards provided you have a good credit history. You can also avail of 0% interest balance transfer schemes which are made available for a period of 6-9 months for silver card holders. There are also some disadvantages to using silver credit cards. One would be the lower cash advance limits, less rewards and promotional packages, and

less travel perks compared to gold and platinum cards. HDFC Bank, ICICI offer silver credit cards through their HDFC Bank Silver cards and ICICI Sterling Silver credit card

Gold and Platinum Cards

Gold and platinum credit cards are a status symbol for any credit card holder, bringing prestige since getting gold and platinum cards usually require that you have good credit rating and a higher income levels. Gold and platinum cards offer higher limit for cash advance withdrawals and sometimes can provide higher credit limits as compared to standard or silver cards. If you have a gold or platinum card, you also get better perks and privileges such as travel insurance, extended warranties for appliance purchases and special deals on specific products, and purchase protection insurance. You can also engage in some loyalty schemes that are offered for gold and platinum credit card holders which can sometimes involve cash back promos and reward points systems. Some popular gold and platinum cards available are the American Express Gold card, and the ICICI Solid Gold Credit Card. 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.

A debit card (also known as a bank card or check card) is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card. In many countries the use of debit cards has become so widespread that their volume of use has overtaken the cheque and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases and, unlike credit cards, the funds are transferred immediately from the bearer's bank account instead of having the bearer pay back the money at a later date. Debit cards may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a cheque guarantee card. Merchants may also offer cash back facilities to customers, where a customer can withdraw cash along with their purchase.

Types of debit card systems

Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are reflected in the 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, although this is becoming commonplace for all card transactions in many countries. Overall, the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status, which alleviates problems with processing lag on transactions that may only issue online debit cards. Some on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. The most notable of these are Ideal and POL.

Offline Debit System

Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit cards (e.g. Maestro in the United Kingdom and other countries, but not the United States) and are used at the point of sale like a credit card (with payer's signature). This type of debit card may be subject to a daily limit, and/or a maximum limit equal to the current/checking account balance

from which it draws funds. Transactions conducted with offline debit cards require 23 days to be reflected on users account balances. In some countries and with some banks and merchant service organizations, a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction, while a small fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the retailer). Other differences are that online debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the merchant supports that functionality); also, from the merchant's standpoint, the merchant pays lower fees on online debit transaction as compared to "credit" (offline) debit transaction.

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 mid1990s, most notably in Germany (Geldkarte), Austria (Quick), the Netherlands (Chipknip), Belgium and Switzerland (CASH). In Austria and Germany, all current bank cards now include electronic purses.

Prepaid Debit Card

Prepaid debit cards, also called reload able debit cards or reload able prepaid cards, are often used for recurring payments. The payer loads funds to the cardholder's card account. Prepaid debit cards use either the offline debit system or the online debit system to access these funds. Particularly for

companies with a large number of payment recipients abroad, prepaid debit cards allow the delivery of international payments without the delays and fees associated with international checks and bank transfers. Providers include Caxton FX prepaid cards, [Escape prepaid cards and Travelex prepaid cards. [ Whereas, web-based services such as stock photography websites (stockpot), outsourced services (odes), and affiliate networks (Media Whiz) have all started offering prepaid debit cards for their contributors/freelancers/vendors.



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

NO BACKGROUND CHECK When we are applying for a debit card, the ban does not need to look into our credit history. All we need is the documentation to open a bank, account, and money in our bank when we use our debit card.


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


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.

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. 00000 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 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.

21ST Century banking has become wholly customer-driven & technology driven by challenges of competition, rising customer expectations & shrinking margins, banks have been using technology to reduce cost & enhance efficiency, productivity & customer convenienence. Technology intensive delivery channels like net banking, mobile banking, etc have created a win-win situation by extending great convenienence. & multiple options for customer. From educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. Because visa and master card are advertising regularly and thereby increases awareness. The strategy should be to emphasize on its differentiating characteristics. They also need to identify potential customers and target those using mailers. As internet is growing at a fast rate the net users can be targeted by having interactive sites. The prospective companys card personality could also be used in the home page to solve customer queries in the Best Possible Manner.