Ch.

1 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, !"s, smart cards, etc. #redit cards, variants of plastic money, are used as substitutes for currency. !his book on plastic money is divided into two sections titled #oncepts and $%periences. !he former covers articles on the the emergence of plastic money, different types of plastic cards and their growth in India and other related issues. plastic money and their growth in the market. n e%perience discusses the e%periences of banks like &tandard #hartered, #itibank, which deal with

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

Definition slang phrase for credit cards, especially when such cards used to make purchases. !he )plastic) portion of this term refers to the plastic construction of credit cards, as opposed to paper and metal of currency. !he )money) portion is an erroneous reference to credit cards as a form of money, which they are not. lthough 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.

Ch.2 The History Of Credit Cards and Debit Cards In Plastic Money

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

Credit Card Origins

!he first credit cards were issued by individual stores and merchants. !hese cards were issued in limited locations and only accepted by the businesses that issued them. /hile 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 .inner*s #lub card was created by a restaurant patron who forgot his wallet and reali0ed there needed to be an alternative to cash only. !his started the first credit card specifically for widespread use, even though it was primarily used for entertainment and travel e%penses.

Plastic Becomes the Standard

!he first .iner*s #lub cards were made out of cardboard or celluloid. In 1959 plastic. merican $%press changed all that with the first card made of merican $%press created a system of making an impression of the

card presented at the register for payment. !hen that impression was billed to the customer and due in full each month. &everal merican $%press cards still operate like this as of +010. It was not until the late 1920s that merican $%press began allowing people to pay their balance over time with additional card options.

Bank Card Associations

In 1933, ,ank of .iners #lub and

merica created a card that was a general purpose

card or )open loop) card. !hese )closed loop) agreements limited cards like merican $%press to certain merchants, unlike the new )open loop) cards. !he new general purpose system re4uired interbank cooperation and additional regulations. !his created additional safety features and began building the credit card system of today. !wo systems emerged as the leaders--5isa and "aster #ard. 6owever, today there is little difference between the two and most merchants accept both card associations.

Debit Cards Emerge

!he 5isa association of cards took credit cards to a new level in 1929 when they introduced debit cards. !hese cards linked consumers to their
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checking accounts. "oney was now drawn from a checking account at the point of sale with these new cards and replaced check writing. !his helped the merchants check that money was available and made it easier to track the customer if the funds could not be obtained. #onsumers 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

!here were almost +9 million debit card users as of +003, with a pro8ected 17.7 million users by +013. 6owever, online services like PayPal are emerging as a way for people to pay their debts in new, secure and convenient ways. !echnology also e%ists 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.

Ch.3 TYP ! O" P#$!TIC MO% Y

Different ty&es'(

Credit card
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credit card is plastic money that is used to pay for products and services at over +0 "illion locations around the world. ll you need to do is produce the card and sign a charge slip to pay for your purchases. !he institution which issues the card makes the payment to the outlet on your behalf: you will pay this *loan* back to the institution at a later date.

Debit card 9 .ebit cards are substitutes for cash or check payments, much the same way that credit cards are. 6owever, banks only issue them to you if you hold an account with them. /hen a debit card is used to make a payment, the total amount charged is instantly reduced from your bank balance.
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9 .on*t borrow on your credit card; 6ere*s why 9 debit card is only accepted at outlets with electronic swipemachines that can check and deduct amounts from your bank balance online.

Charge card
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charge card carries all the features of credit cards. 6owever, 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.

/hen you use a credit card you are not declared a defaulter even if you miss your due date. +.95 per cent late payment fees 'this differs from one bank to another( is levied in your ne%t billing statement.

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$)e* card merican $%press and is one of the well-known

me% stands for

charge cards. !his card has its own merchant establishment tie-ups and does not depend on the network of "aster#ard or 5isa.
9 9

#redit cards= >emember these dos and don*ts. !his card is typically meant for high-income group categories and companies and may not be acceptable at many outlets. !here are a wide variety of special privileges offered to me% cardholders.

Dinner club card

9 .iners #lub is a branded charge card. !here are a wide variety of

special privileges offered to the .iners #lub cardholder. ?or instance, as a cardholder you can set your own spending limit. ,esides, the card has its own merchant establishment tie-ups and does not depend on the network of "aster#ard or 5isa.
9 6owever, 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.

 +lobal card 9 @lobal cards allow you the fle%ibility and convenience of using a credit card rather than cash or travelers che4ue while traveling abroad for either business or personal reasons.

Co(branded card 9 #o-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain e%clusive benefits to the consumer. 9 debit card with a difference

9 ?or e%ample, the #iti-!imes card gives you all the benefits of a #itibank credit card along with a special discount on !imes "usic cassettes, free entry to !imes "usic events, etc.

Master card , -isa

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"aster#ard and 5isa are global non-profit organi0ations dedicated to promote the growth of the card business across the world.

9 !hey 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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 !)art card 9 smart card contains an electronic chip which is used to store cash. !his is most useful when you have to pay for small purchases, for e%ample bus fares and coffee. Ao identification, signature or payment authori0ation is re4uired for using this card. 9 !he e%act amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. Ao change is given. #urrently this product is available only in very developed countries like the Bnited &tates and is being used only sporadically in India.

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

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Ch.. C/ DIT C$/D I%T/OD0CTIO%

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. !he 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. Bsage of the term )credit card) to imply a credit card account is a metonym. /hen 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.

D "I%ITIO%'(
!he credit card can be defined as C through the card issuing agency. small plastic card that allows its

holder to buy goods and services on credit and to pay at fi%ed intervals

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M $%I%+'(
credit card is a card or mechanism which enables card holder to purchase goods, travels and dine in a hotel without making immediate payments. !he holders can use the cards to get credit from banks up to 75 days. !he credit card relieves the consumers from the botheration of carrying cash and ensures safety. It is a convenience of e%tended credit without formality. !hus credit card is a passport to, Csafety, convenience, prestige and credit.

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$D-$%T$+ ! , DI!$D-$%T$+ ! O" C/ DIT C$/D

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The benefits of credit card can be grou&ed as follo1s'

2$3 4 % "IT! TO TH 4$%5

a3

credit card is an integral part of banks ma8or services these days. !he the system

credit card provides the following advantages to the bank=

provides an opportunity to the bank to attract new potential costumers. b3 !o get new customers the bank has to employee special trained staff. !his gives the bank an opportunity to find the latent talent from among e%isting staff that would have been otherwise wasted. c3 !he more important function of a credit card, however, is simply to yield direct profit for the bank. !here is a scope and a potential for a better profitability out of income D commission earned from the traders turn over.

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d3 !his also provides additional customer services to the e%isting clients. It enhances the customer satisfaction. e3 "ore use by the car holder and conse4uently the growth of banking habits in general. f3 ,etter network of card holders and increased use of cards means higher popularity and image of the bank g3 &avings of e%pense on cash holdings, i.e. stationery, printing and man power to handle clearing transactions while considerably is reduced. It increases 243 4 % "IT! TO C$/D HO#D /

The &rinci&al benefits to a card holder are'

a3 6e can purchase goods and services at a large number of outlets without cash or che4ue. !he card is useful in emergency, and can save embarrassment. b3 !he 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 che4ue.

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c3 "onths purchases can be settled with a single remittance, thus, tending to reduce bank and handling charges. d3 !he card holder has the period of free credit usually between 10-50 days of purchase e3 #ash can usually be obtained with the card, either on card account or by using it as identification when encasings a che4ue at the bank. f3 vailing credit with minimum formality. g3 !he credit card saves trouble and paper work to traveling business man.

2C3 4 % "IT! TO TH M /CH$%T !T$4#I!HM %T The &rinci&al benefits offer credit card to the retailer is a3 !his will carry prestigious weight to the outlets. b3 Increases in sale because of increased purchasing power of the cardholder due to unbilled credit available to the card holder. c3 !he retailers gain from the impulse buying and trading up the tendency to buy the bigger or better article d3 #redit card ensures timely and certainly of payments.
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e3 &uppliersDsellers no longer have to send reminders of outstanding debits. f3 &ystematic accounting since sales receipts are routed through banking channels. g3 dvertising and promotional support on national scale. h3 .evelopment of prestigious clientele base.

DI!$D-$%T$+ ! O" C/ DIT C$/D

The follo1ing are the co))on disad6antages of the credit card'

a( &ome credit card transactions take longer time than cash transactions because of various formalities. b( !he customer tends to overspend out of immerse happiness. c( .iscounts and rebates can rarely be obtained.

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

e3 #ustomers may be denied cash discount for payment through card. f3 It might lead to spending habits and cardholders may end up in big debts

i3 void the entire cost and security problem involved in handling cash.

73 Eosses to bad debts and reduced an additional li4uidity is 83 It also allows him to delegate spending power to add on members

l3 #redit card is considered as a status symbol.

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M$/5 TI%+ !T/$T +I !

merican companies spend billions of dollars each year on marketing. s a matter of fact, in +001, B.&. advertising e%penditures alone *&osure and !tatistics: %o6e)ber 2;;3 topped F+10 billion, more than doubling the F105.9< billion spent in 1920. 2!ource' 9$d6ertising' ne1sletter of the Media ducation "oundation3

Aow, these figures may seem staggering to the independent professional on a budget, but donGt panic: there are lots of effective strategies you can utili0e that will help you grow your business fast. 6ere are some of my favorites=

Identify your niche.

Hne of the easiest ways to attract customers is to figure out which group of prospective customers you get your very best results for and go after them e%clusively. "any professionals are afraid to do this claiming that theyGll be leaving someone out, but many marketing e%perts agree that niche marketing as the easiest and fastest way to get business.

Position yourself as an e*&ert.

/hyI $%perts make more money and get more media attention and thatGs free advertising; EetGs face it: itGs easier to trust a specialist than a

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generalist whoGs trying to be everything to everyone. Hnce youGve identified your niche, let the world know about how you can help. Provide free information products, write articles and white papers about the problems your clients face and how they can solve them.

#onduct workshops, seminars and tele-classes specifically geared towards helping your prospective customers and before long youGll be regarded as an e%pert in your field. pipeline. nd, while youGre at it donGt forget to, collect names, emails and addresses of prospects to keep filling your

De6elo&

ongoing

relationshi&s

1ith

co)&le)entary

&rofessionals and build your referral tea).

!hese are other professionals who sell non-competing services or products to the same niche customers you are targeting. ?or instance, my clients often need the services of bookkeepers, accountants and business attorneys. Eikewise, they refer business to me. 6ere are a couple of other e%amples= 9 >esidential realtor, mortgage broker, real estate attorney, home improvement contractor, architect and interior designer. 000000000 9 #ommercial printer, copywriter, graphic designer.

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Institute a syste) to 8ee& trac8 of all of the &eo&le 1ho are interested in your &roduct or ser6ices< and find creati6e 1ays of 8ee&ing in touch 1ith the) on a regular basis.
!o start, go through your notes. Put together a list of all of the people youGve spoken to in the last 3-9 months whoGve showed interest in you but havenGt become paying customers. ?ollow up with them in a variety of ways= call them to touch base, use email, ask them to subscribe to a newsletter, send them interesting articles, or invite them to 8oin you at events. It takes numerous impressions to make the sale: thatGs why you see commercials on !5 over and over again for the same products. ,y Jeeping track of all of the people whoGve showed interest and keeping your business on their radar screen youGll turn more of them into paying customers.

#et your satisfied custo)ers hel& you sell your &roducts or ser6ices.
6ere are a couple of ways to do this= 00000000000000000000000000

sk them for referrals - right away 'if you were a car salesman you

wouldnGt wait for the new car to get dirty and dented;(000000000000 9 sk them to write testimonials for you, 'also right away( and compile a list of testimonials to use in your all of your marketing collateral.
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Create a )ar8eting calendar and 8ee& to it consistently. &cheduling marketing activities that take place weekly, bi monthly, monthly and 4uarterly will help you to avoid the feast or famine syndrome that most independent professionals fall prey to. business life. Identify inno6ati6e 1ays to get )ore business fro) e*isting custo)ers. ItGs much easier to get business from customers who are already happy with your services or products. &o develop additional services or products to keep customers coming back for more. nd, by doing so, marketing will become easier since it becomes a regular part of your

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!T P! "O#O= D T/$%!$CTIO%

I%

C/ DIT

C$/D

1. $0THO/I>$TIO% ?or Internet "erchants, the shopping card is connected to or integrated with a Payment @ateway. ?or >etail "erchants, the card is swiped through a magnetic reader on the point of sale terminal the authori0ation is transmitted to the appropriate card issuer for approval. !he 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 authori0ation. "erchants must re-present the transaction to receive payment.

2. Merchant balancing

!his is also known as batching out. "ost pos terminals and all payment gateway per firm an auto close functions at the and of the day and batch out automatically.

3. Ca&ture !he front end processor matches the authori0ation data to the settlement data and transmits the card capture file to a back end processor for 5D"# transactions or to the appropriate card issuer for other card types.

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.. Clearing .uring this stage the back end processor performs compliance checks and risk management procedures and transmits the transaction to 5D"# or to the appropriate card issuer for other card types.

?. Interchange 2-!@MC Only3 .uring this stage the 5D"# settlement. A. !ettle)ent .uring this stage the Issuing ,ank calculates fees and deductions and routs the net funds to the appropriate #ard Issuer which determines the daily deposits for the merchants. B. Merchant $CH

ssociation sort the transactions by

issuing bank and transmit them to the appropriate issuing banks for

.uring this stage the ac4uiring bank or card issuer transmits the

merchant deposit to the merchantGs checking account.

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Different Ty&es of Credit Cards

#redit 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. !his article gives an insight into the several types of credit cards available in the market !oday, credit card customers en8oy more options and choices than ever before. !o gain new customers, credit card companies compete by offering new services and cards to customers. Ao 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=

#o1 Interest Credit Cards

!hese types of credit cards offer very low interest. In some cases, these cards 8ust charge a few percent interests. !he reasons for this are numerous. In most cases, the low interest rate is for a limited time only. fter 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. #heck 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.

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Instant $&&ro6al Credit Cards !hese cards are really a product of our fast-paced society. !he 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. !he 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. 6owever, 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. nother drawback to these cards is that they rely heavily on your credit score. If you have poor credit or any e%tenuating financial circumstances, these types of cards may not be for you. 4alance Transfer Cards ,alance transfer cards are a type of temporary low-interest card that is meant to help you consolidate your debt. !hey work this way= if you have several credit cards with a balance, you can get a balance transfer card. Kou then transfer all your credit card debt onto the new card and work to pay it off. &ince the new card has a low interest rate, you can 4uickly 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. 6owever, some

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cards have high fees. lso, 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.

/e1ards Credit Cards

>ewards credit cards offer you points, rewards, or bonuses for every cash purchase made with your credit card over time. s you accumulate rewards or points, you can redeem your bonus for entertainment events, purchases, travel, and other fun pri0es. &ome cards even offer customers e%tra automatic-enter sweepstakes and draws. $ach time you use your card, you are entered into a draw to win specific pri0es. !hese types of cards are really a marketing tool for card companies. #ompanies know that customers love rewards and pri0es and so offer these enticements to lure customers. !he ma8or advantage of these cards is that they can help you get more cash value for your money. !hey can also be fun and rewarding for almost any credit card customer. 6owever, not all reward credit cards are a deal. &ome charge high fees to offset the costs of the bonuses. &ome also have very low points systems, meaning that you need to spend a lot with your credit card to get any rewards at all. >ead the fine print carefully before signing.

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Cash 4ac8 Credit Cards

#ash back credit cards give you money rewards. /hen 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. /hen you accumulate enough points, you get cash back. Hn most cards, you can get back about 1L of your total purchases. !hese cards are great for those who are budget-conscious as they give you some money back from your purchases. 6owever, there are several drawbacks to these types of cards. &ome cards have low cash-back percentage rates. &ome charge high fees or have limits on how much money you can get back each year. "ost 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.

$irline Credit Cards

!his type of card allows you to accumulate fre4uent 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. 6owever, these cards can also charge high fees. In some cases, your points will e%pire if you do not use them within a specified time. /orse, some airline credit cards make use of a point system that is not very user-friendly. Kou may have to slowly accumulate an enormous amount of points to 4ualify for a trip. If you do not love to travel and if you do not use
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your #redit card a lot, then, your ability to get rewards you like may be very limited.

Pre&aid Debit Cards

!hese cards are sometimes called 8unior credit cards. !hey 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. Kou can then use your card to charge any amount up to the amount in the account. /hen you add more money, you can charge more to your card.0000000000000000000000000000000000

!ecured Credit Cards

&ecured credit cards use collateral to ensure that the card company will be paid back. Hften, these cards are used by people with no credit or bad credit. /ith secured credit cards, you can en8oy credit card convenience even if you do not 4ualify for traditional cards. 6owever, you will also have to cope with the additional fees and low credit limits that these credit cards have.

Credit Cards for 4ad Credit

,ad credit credit cards are designed for people with poor credit histories. !hese cards generally have very low credit limits and charge e%tra fees. !his is because they are designed for people who are considered far

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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. !hese cards can also allow you to have credit even if you would be re8ected for most other cards due to your credit history.

!tudent Credit Cards

&tudent credit cards are cards meant to attract college and university students. !hese cards often offer sign-up bonuses for students. !hey are also easier to apply for, since credit card companies recogni0e that students have much shorter credit histories than the average customer.000000000000 If you are a student, student credit cards can be a great option. !hey are simple to use and can help you build a good credit rating before you graduate. 6owever, there are some disadvantages to student credit cards. !hese cards may have no reward programs and may have fewer benefits, including fewer bonuses and services, than other cards.

4usiness Credit Cards

,usiness credit cards are created especially for business use. !hey offer many of the same advantages as traditional credit cards, but also offer services that can really help a business. /ith some business credit cards, for e%ample, you can en8oy higher interest rates, e%tra cards for business employees, monthly reports on your e%penses, and services that let you keep your personal and business e%penses separate on the same card. !hese

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advantages mean that using this card for your business is more convenient.

Ty&es of Credit Cards offered by Indian 4an8s

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!il6er Cards
!il6er 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. &ilver 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. &ilver credit cards will provide you with almost the same credit limit as other cards provided you have a good credit history. Kou can also avail of 0L interest balance transfer schemes which are made available for a period of 3-9 months for silver card holders. !here are also some disadvantages to using silver credit cards. Hne would be the lower cash advance limits, less rewards and promotional packages, and less travel perks compared to gold and platinum cards. 6.?# ,ank, I#I#I offer silver credit cards through their 6.?# ,ank &ilver cards and I#I#I &terling &ilver credit card

+old and Platinu) Cards

@old and platinum credit cards are a status symbol for any credit card holder, bringing prestige since getting gold and platinum cards usually re4uire that you have good credit rating and a higher income levels. @old

1+

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, e%tended warranties for appliance purchases and special deals on specific products, and purchase protection insurance. Kou 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. &ome popular gold and platinum cards available are the @old card, and the I#I#I &olid @old #redit #ard. It is not possible to cover them the e%act 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. who are having credit cards to get more info. lso try to talk to your friends merican $%press

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Types of Credit Cards offered By Indian Banks

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Credit Card Data

#redit #ard is either 5isa or "aster#ard which is the "ost popular and in some instance merican $%press.000000000000000000000000000000

The To& 1; Credit Card Issuers in India are as follo1s< I#I#I 6.?# &,I #itibank 6&,# ,A %is .eutsche merican ,ank ,ank #ards #ards mro ,ank ,ank $%press 5.0< 7.7+ +.35 +.57 1.1 0.<2 0.5< 0.795 0.75 "n "n "n "n "n "n "n "n "n

Data Courtesy - The Reserve Bank of India

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Ch.? D 4IT C$/D

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. ?unctionally, it can be called an electronic che4ue, 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 e%clusively 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 che4ue and, in some instances, cash transactions. Eike 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. .ebit cards may also allow for instant withdrawal of cash, acting as the !" card for withdrawing cash and as a che4ue guarantee card. "erchants may also offer cash back facilities to customers, where a customer can withdraw cash along with their purchase.

Ty&es of debit card syste)s

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Online Debit !yste)

Hnline debit cards re4uire electronic authori0ation of every transaction and the debits are reflected in the userGs account immediately. !he transaction may be additionally secured with the personal identification number 'PIA( authentication system and some online cards re4uire such authentication for every transaction, essentially becoming enhanced automatic teller machine ' !"( cards. Hne difficulty in using online debit cards is the necessity of an electronic authori0ation device at the point of sale 'PH&( and sometimes also a separate PIA pad to enter the PIA, although this is becoming commonplace for all card transactions in many countries. Hverall, 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. &ome on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. !he most notable of these are Ideal and PHE.

Offline Debit !yste)

Hffline debit cards have the logos of ma8or credit cards 'e.g. 5isa or "aster#ard( or ma8or debit cards 'e.g. "aestro in the Bnited Jingdom and other countries, but not the Bnited &tates( and are used at the point of sale like a credit card 'with payer*s signature(. !his type of debit card may be sub8ect to a daily limit, andDor a ma%imum limit e4ual to the

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currentDchecking account balance from which it draws funds. !ransactions conducted with offline debit cards re4uire +M1 days to be reflected on usersG account balances. In some countries and with some banks and merchant service organi0ations, 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(. Hther 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.

lectronic Purse Card !yste)

&mart-card-based electronic purse systems 'in which value is stored on the card chip, not in an e%ternally recorded account, so that machines accepting the card need no network connectivity( are in use throughout $urope since the mid-1990s, most notably in @ermany '@eldkarte(, ustria 'Nuick(, the Aetherlands '#hipknip(, ,elgium and &wit0erland '# &6(. In ustria and @ermany, all current bank cards now include electronic purses.

Pre&aid Debit Card

Prepaid debit cards, also called reload able debit cards or reload able prepaid cards, are often used for recurring payments. !he payer loads funds to the cardholder*s card account. Prepaid debit cards use either the offline

12

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 #a%ton ?O prepaid cards, P$scape prepaid cards and !ravele% prepaid cards. P /hereas, web-based services such as stock photography websites 'stockpot(, outsourced services 'odes(, and affiliate networks '"edia /hi0( have all started offering prepaid debit cards for their contributorsDfreelancersDvendors.

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Hbtaining a debit card is easy. If we 4ualify to open a bank account, we usually get a debit card, if our bank offers the service. 9 %O 4$C5+/O0%D CH C5 /hen we are applying for a debit card, the ban does not need to look into our credit history. ll we need is the documentation to open a bank, account, and money in our bank when we use our debit card. 9 C$!H =ITHD/$=$#! !he customer can withdraw a minimum of >s. 100D- and a ma%imum >s.10, 000D- per day 9 CO%- %I %C .ebit card fees us from carrying a lot of cash or a che4ue book. In case, we are an international traveler, we donGt need to stock up on !ravelerGs #he4ues or cash. /e can use our debit card to withdraw #ash from over

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500,000 !"s around the world in over 100 countries. /e 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 ,usiness !ravel Nuota ',!N( limit arability. 9 "$I/ CCH$%+ If we return merchandise or cancel services paid for with a .ebit card, the transaction is treated as if it were made with cash or a check. #ustomers usually get cash back for offline purchases: for on-line transactions, the amount is credited to our account. 9 !T$T M %T O" $CCO0%T statement of transactions can be obtained from the customerGs branch. ?or e%ample, a mini statement containing the last four transactions and balance can be obtained at a &tate ,ank @roup during the working hours of the customerGs branch. 9 4$%5I%+ C0M !HPPI%+ C$/D Kour .ebit card can be used as !" card at any !" across the world, as

well as for making purchase at merchant locations. Kou can also withdraw cash from any of the 1+000 !"s in India. /I.$EK ##$P!$., IA!$>A !IHA EEK 5 EI.

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 " $T0/ ! O" D 4IT C$/D

The follo1ing are features of Debit cards

$3 It is a combination of a #he4ue and !" card. !herefore, there are no

fees for using the !" for cash withdrawal, or as a debit card for purchase. 43 !he .ebit #ard services in meant for withdrawals against the balance already available in the designated account. C3 It is the card holderGs obligation to maintain sufficient balance in the designated account to meet withdrawals and service charges. D3 .ebit card is more affordable than credit card. /e 8ust our bank

account for all our transactions. Ao credit period. Hur bank account is debited immediately. 3 Ao credit check is re4uired to get a .ebit card. "3 Bse of card is terminated without notice, upon the death, bankruptcy or insolvency of the cardholder or for other valid reasons. +3 &pending is limited to our bank balance.

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Process Debit Card Transactions

successful business will usually accept debit cards as a part of their overall profile of payment solutions. If you donGt process debit cards, you may not be taking full advantage of all the potential that your merchant account can deliver. !here are essentially two ways you can accept debit cards, online and offline. Off line debit card transactions n offline debit card transaction is still the way most merchants accept debit cards. !his is essentially the same as processing credit cards. Kou swipe your customerGs 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 -I!$ or MasterCard logo. Htherwise, the debit card wonGt be approved and you wonGt be able to process the debit card offline

Online debit card transactions

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

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n online debit card transaction works much like a credit card transaction, e%cept that after your customer swipes his or her debit card, they will enter a PIA instead of signing the receipt. t this point the encrypted debit card information is sent to the customerGs bank for authori0ation, and youGll receive the funds 8ust as you would for a credit card transaction. Kour business has many advantages when you accept debit cards. ?or e%ample, 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. Hver time, this can potentially save you a lot of money. 0000000000000000000000000000000000000000000000000

nother advantage when you process debit cards is that you canGt be charged higher CdowngradeQ fees. In a credit card transaction, you are usually charged the Cdiscount rate.Q 6owever, some transactions are considered to be a higher risk or e%pense to the bank, and you are charged a higher rate as a result. ,ut when you accept debit cards, you always pay the same flat rate, with no danger of the rate increasing. Kou can also cut down on checkout time when you accept debit cards. It takes an average of 10 seconds to hand over the pen, wait for the customer to sign the receipt, and then take the pen back.
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If you process +0 credit card transactions a day, youGre losing 100 minutes a day 8ust passing a pen back and forth; !hatGs almost two hours.

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Plastic "raud

&tate-of-the-art thieves are concentrating on plastic cards. In the past, this type of fraud was not very common. !oday, 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. !his pamphlet describes credit and debit cards and some common schemes involving card fraud with tips to help you avoid them The follo1ing are the ty&es of frauds

1. !tolen Cards at the Office 2. *tra Co&ies of Charge !li&s 3. Discarded Charge !li&s .. 0nsigned Credit Cards ?. #oss of Multi&le Cards A. !trange /eDuests for Your PI% %u)bers B. #egiti)ate Cards E. $ltered Cards F. Counterfeit Cards

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Ch.A $d6antages , Disad6antage

$d6antages Plastic money, unlike paper money, will not burn easily and can resist higher temperatures than paper money. Kou have no fear to be theft. nd its easy to use. Plastic money, unlike paper money, will not burn easily and can resist higher temperatures than paper money. Paper money also picks up dirt and stains more easily than plastic money. Plastic money is the debit and credit cards. Plus point of plastic money is that you won*t have to carry your cash around all the time. It also doesn*t wear after time as paper does nor does it rip and tear. @ive you incentives, such as reward points, that you can redeem. ,e more convenient to carry than cash. Provide a convenient payment method for purchases made on the Internet
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and over the telephone. 6elp you establish a good credit history. Disad6antage

#ost much more than other forms of credit, such as a line of credit or a Personal loan, if you don*t pay on time. .amage your credit rating if your payments are late: llow you to build up more debt than you can handle:

6ave complicated terms and conditions: It also doesn*t wear after time as paper does nor does it rip and tear. Paper money also picks up dirt and stains more easily than plastic money.
I can*t really see any advantages to have paper money, unless it is

cheaper to make. Its disadvantage is that, some e%tra money will be deducted for the bank services.
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 ItGs around +.5L of the money you spent.

Ch.B T CH%O#O+Y $%D I%"/$!T/0CT0/

Hne of the most important features that Plastic "oney offers is the technology associated with this business.
#redit card businesses rely on very reliable and secure technology and

demands very &trong connectivity backbone. lthough a third world country, with lot of insecurities and almost no infrastructure, Pakistan has no e%ception when it comes to credit card business.
!here is appro%imately 1000 Point of &ale !erminals 'PH&!( present

on merchant*s sites connected with bank host system. Inter-city connectivity is accomplished through O.+5 networks. Perhaps, it is the most important time in the history of Pakistan as the parameters of its Infrastructures are coming into e%istence.

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

Ch.E C$! !T0DY

=hat Ha&&ens in Credit Card "raud CasesG

The 4asics

variety of crimes constitute credit card fraud. !he 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. 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. "any banks will monitor transactions made with a credit card and alert the person named on the account of any potentially suspicious activity. !his is to protect the bank or #redit #ard #ompany 8ust as much as it is to protect the customer.

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In6estigation $%actly what happens during a credit card fraud case depends a great deal on the actions of the #redit #ard #ompany 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.00000000000000000000000000 If the amounts of fraudulent charges are so great that an investigation is warranted, the police will be notified. !he credit card company can look at a list of the fraudulent charges and determine where they were made. t that point an officer can 4uestion 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.

"elony

#redit card fraud is considered a felony by the courts of the Bnited &tates. s a result a person convicted of credit card fraud could face 8ail time 'the e%act amount of which depends on the e%tent of the crime(. felony conviction stays on a person*s record and can prevent the person from getting hired for a 8ob. 6aving a felony on a criminal record will also take away a person*s eligibility in terms of running for public office. If a person who is not a natural- born citi0en of the Bnited &tates commits credit card

51

fraud and is convicted of a felony the result could be being deported to their country of origin.

Ch.F CO%C#0!IO%

+1&! #entury banking has become wholly customer-driven R technology driven by challenges of competition, rising customer e%pectations R shrinking margins, banks have been using technology to reduce cost R enhance efficiency, productivity R customer convenienence. !echnology intensive delivery channels like net banking, mobile banking, etc have created a win-win situation by e%tending great convenienence. R multiple options for customer. ?rom educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. ,ecause visa and master card are advertising regularly and thereby increases awareness. !he strategy should be to emphasi0e on its differentiating characteristics. !hey also need to identify potential customers and target those using mailers. s internet is growing at a fast rate the net users can be targeted by having interactive sites. !he prospective companyGs card personality could

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also be used in the home page to solve customer 4ueries in the S,est Possible "annerG.

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