CHAPTER-1

INTRODUCTION
Plastic Money

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 handlings a huge amount of cash. It includes Debit cards,
ATMs, smart cards, etc. The plastic note are same as paper but the only difference is that they
are made of plastic and more secured but in traveling and shopping people used to carry huge
cash which was very unsecured and also increasing crime rate. .
Due to globalization, every card is accepted everywhere with the power of VISA which
interconnect the different countriesCredit cards, variants of plastic money, are used as substitutes
for currency. Plastic money refers to credit cards, we use them whenever we want and pay later
(with interest, of course). It makes it too easy for us to buy things we normally could not afford,
which makes it easier to get into debt.
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.
1

History of Plastic Money

In the late 1990s, the plastic cards market in India, comprising credit cards, smart cards, debit
cards, charge cards, stored value cards and others picked up momentum like never before,
growing at an annual rate of 25%. Analysts attributed this growth largely to the rapidly
increasing user base of debit cards. Though initially, there were only two players, (HDFC and
Citibank), the debit card market base grew considerably through 1999 and reached the 3 million
mark in March 2000. The usage figures indicated a very healthy growth of the market in future,
as seven out of 10 cardholders were reportedly using their card regularly.
The annual spending through debit cards in India reached over Rs 5 billion.
The growth of debit cards was all the more impressive considering the fact that credit cards,
introduced in the country in the early 1980s, had managed to reach the 10 million-user base level
only in 2000.
Thus, the debit card user base had reached one-third of the credit card user base in just around
one-tenth of the time. Also, smart cards introduced in the late 1990s, had become very popular,
especially in the financial services, banking, healthcare, transport and telecommunication
businesses. The demand for co-branded cards during 2001 was a further indication of the fact
that the Indian market had finally realized the potential of plastic money.
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.
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.

Types of Plastic Money

Credit card

Photo card

Debit card

Master card & visa

Charge card

Diner club card

Amex card

Global card

Smart card

Co-branded card

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 we need to do is produce the card and sign a charge slip to pay
for our purchases. The institution which issues the card makes the payment to the outlet on our
behalf; we will pay this Loan back to the institution at a later date.
Debit Card
Debit cards are substitutes for cash or check payments, much the same way that credit cards are
however, banks only issue them to you if you hold an account with them. When a debit card is
used to make a payment, the total amount charged is instantly reduced from your bank balance.
A debit card is only accepted at outlets with electronic swipe-machines that can check and
deduct amounts from your bank balance online.
4

Charge Card
It is a means of obtaining a very short term (usually around 1 month) loan for a purchase. It is
similar to credit card, except that the contract with the card issuer requires that the cardholder
must each month pay charges made to it in full. There is no minimum payment other than the full
balance. Since there is no loan, there is no official interest. A partial payment results in a severe
late fee (as much as 5% of the balance) and the possible restriction of future transaction and risk
potential cancellation of the card.
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. Most of the travelers finance their trip with their business credit cards. Because of
the currency problem.
It becomes difficult for the travellers to go to currency exchange bureaus and exchange their currencies at
very low rate.So the American cards was founded in 1850,its growth was very rapid because of

the international travelers for American express cards.

Master Card Worldwide
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.
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.
5

Smart card enhanced systems are in use today throughout several key applications, including
health care , banking, entertainment, and transportation to various degrees. Having a smart card
is like having a PC in wallet. Smart card will allow card companies to deliver more personalized
products and services providing consumers with custom tailored cards to suit their individual
lifestyle.
Dinner Club Card
Diners Club is a branded charge card. There are a wide variety of special privileges offered to the
Diners Club cardholder. This card is good for dinner only. Card must be signed by club members
in front. Since this card is typically meant for high income group people. So its is necessary to
check the places where it is applicable and accepted.
Photo Card
If customers photo is imprinted on a card, then it is known as a photo card. It helps in
identifying the user of the credit card and is therefore considered safer. Photo card can function
as identity card as well.
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.

Introduction to Credit Card

It is plastic cards used to make a purchase on credit. Credit card charge interest and are primarily
used for short term financing. Interest usually begins one month after a purchase is made &
borrowing limits are pre-set according to the individual credit rating.

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.
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.
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.

Credit Process (How card processing works):

When a customer pays for products or services with a credit card, the card information is
recorded, either by manual entry, a card imprinter, point-of-sale (POS) terminal, or virtual
terminal, and then verified so that the merchant can receive payment for the transaction.
This process involves the following parties:
1. Cardholder:
The owner of the card used to make a purchase
2. Merchant:
The business accepting credit card payments for products or services sold to the cardholder
3. Acquirer:
The financial institution or other organization that provides card processing services to the
merchant
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4. Card association:
A network such as VISA or MasterCard (and others) that acts as a gateway between the acquirer
and issuer for authorizing and funding transactions
5. Issuer:
The financial institution or other organization that issued the credit card to the cardholder.

Credit Process

The flow of information and money between these parties always through the card
associations is known as the interchange, and it consists of a few steps:

1.Authorization:The cardholder pays for the purchase and the merchant submits the transaction to the acquirer.
The acquirer verifies with the issuer almost instantly that the card number and transaction
amount are both valid, and then processes the transaction for the cardholder.
2. Batching:After the transaction is authorized it is then recorded in a batch, which the merchant sends to the
acquirer later to receive the payment (usually at the end of the day)
3. Clearing & settlement:
The acquirer sends the transaction in the batch through the card association, which debits the
issuers for payment & credits the acquirer. The issuer pays the acquirer for the transaction.
4. Funding:
Once the acquirer has been paid, the merchant receives the payment. The amount the merchant
receives is equal to the transaction amount minus the discount rate, which is the fee the merchant
pays the acquirer for processing the transaction. The entire process, from authorization to
funding usually takes about 3 days.

Types of Credit Card:

Types

Bank-issued Cards

Gold Cards

Fuel cards

Telephone Cards

Store Cards

Add- on Cards

Affinity Cards

Types of Credit Cards issued by Indian Banks:

1. 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. HDFC
Bank, ICICI offer silver credit cards through their HDFC Bank Silver cards and ICICI Sterling
Silver credit card.
2. Gold and Platinum Cards
Gold

and

platinum

credit

cards

are

status

symbol

for

any

credit

cardholder, 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
10

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

privileges such as travel insurance, extended warranties for appliance purchases and special deals
on specific products, and purchase protection insurance.. Some popular gold and platinum cards
available are the American Express Gold card, and the ICICI Solid Gold Credit Card.

Advantages:
Money credited into suppliers account within 2-4 days.
No cash involved.
Enable customers to buy expensive products immediately.
Enable customers to make a payment over the telephone or over the internet.
Once transaction confirmed, payment to supplier guaranteed.
Used to obtain cash from the cash machine.
Additional protection if goods are faulty.

Disadvantages:
Risk of fraud, through the use of stolen cards. Normally borne by the credit card
company if the owner has card protection insurance.
Cost of installing & paying for an electronic terminal.
Cardholders spend more than they afford.
Cost of processing the transactions.
Interest can be high if card is not paid-off in each month & cash withdrawals are
expensive.
Method of calculating is complicated & the people may find the interest charges higher
than they expected.

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Introduction to Debit Card

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

Types

Online Debit Card

Offline Debit Card

Prepaid Debit Card

1. 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.

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2. Offline Debit System

Offline debit cards have the logos of major credit cards (for example, Visa or MasterCard) or
major debit cards (for example, 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.
3. Prepaid debit cards
Prepaid debit cards, also called reloadable debit cards, appeal to a variety of users. The primary
market for prepaid cards are unbanked people, that is, people who do not use banks or credit
unions for their financial transactions, possibly because of poor credit ratings.

Advantages of Debit Card:

Plastic money, unlike paper money, will not burn easily and can resist higher temperatures
than paper money.
You have no fear to be theft. And its easy to use.
Paper money also picks up dirt and stains more easily than plastic money.
Plastic money is the debit card and credit cards. Plus point of plastic money is that you
wont have to carry your cash around all the time.
It also doesnt wear after time as paper does not rip and tear.
Give you incentives, such as reward points, that you can redeem.
Be more convenient to carry than cash.
Provide a convenient payment method for purchases made on the internet an over the
telephone.
Help you establish a good credit history.

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Disadvantages of Debit card:

There is no grace period to pay a bill.
Debit cards do not have as much protection as credit cards.
Not all debit cards may be helping to build the credit score.
Some banks are now charging over-limits fees or non sufficient funds fees based upon
pre authorization, and even attempted but refused transactions by the merchant.
Since debit cards are typically linked to bank accounts, if a debit card and PIN number is
stolen, the entire bank account could be drained of funds.

Difference between Debit Card and Credit Card

CREDIT CARD

DEBIT CARD

In this the money is immediately deducted

from the persons saving account.

It is a pay later approach. When a

consumer uses a credit card the money
borrowed will be charged interest as per
credit card agreement.

There is no risk of overspending as the

customer can spend what he has.

The holder tends to overspend because he

spends money which he does not have at
that moment.

Debit card does not involve any interest

payment.

Whereas credit card holder has to pay

interest on the overdrawn amount.

The holder of debit card need not carry any

Payments are made by the bank to the

cash. Debit card is good as money in the

extent of purchases and if they exceed his

accounts with his bank.

limits, he pays the interest on the credit

amount.

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Factors affecting utilization of Plastic Money in India:

INTEREST RATE
INCOME OF THE HOLDER
EDUCATION
ATTITUDE

1. Interest Rate:
In case of credit card if the interest rate is more on borrowing money. Then it will affect the
preference level of the customer. Variation in interest rates affects the plastic money.
2. Income of the holder:
If the customers is having very low income than they cant afford these types of facilities. If they
have high incomes than they feel no need to have credit card and so on. So income of the holder
also affects the plastic money.
3. Education:
If the customer has no knowledge about the various types of plastic money then sometimes it
generates negative perception in their minds. If they know about the pros and cons of having
various types of plastic money than they are clearer about the terms of plastic money. So
knowledge and education affects the plastic money.
4. Attitude:
If the customer has fear about the use of plastic money then they will not prefer plastic money
and if they have positive attitude about plastic money then they can use more. So attitudes of
various persons affect the plastic money.

15

Plastic Frauds:
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 shopingand banking, but they can turn into nightmar
es in the wrong hands. This pamphlet describes credit and debit cards and some common scheme
sinvolving 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 of plastic money:

Plastic money, unlike paper money, will not burn easily and can resist higher temperatures
than paper money.
You have no fear to be theft. And its easy to use.

Plastic money, unlike paper money, will not burn easily and can resist higher temperatures
than paper money.
Paper money also picks up dirt and stains more easily than plastic money.
Plastic money is the debit and credit cards. Plus point of plastic money is
that you won't have to carry your cash around all the time.
It also doesn't wear after time as paper does nor does it rip and tear.
Give you incentives, such as reward points, that you can redeem.
Be more convenient to carry than cash.
Provide a convenient payment method for purchases made on the Internet
and over the telephone.
Help you establish a good credit history.

17

Disadvantages of Plastic Money

Cost much more than other forms of credit, such as a line of credit or a
Personal loan, if you don't pay on time.

Damage your credit rating if your payments are late;

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

Have complicated terms and conditions;

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

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

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

Its disadvantage is that, some extra money will be deducted for the bank services.

Its around 2.5% of the money you spent.

18

LIST OF BANKS PROVIDING PLASTIC MONEY FACILITY

Allahabad bank
Canara bank
Dena bank
India overseas bank
State bank of India
State bank of Patiala
State bank of Hyderabad
Axis bank
HDFC bank
ICICI bank
Punjab national bank
Industrial development bank of India

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TITLE OF THE STUDY

A study on consumer awareness, perception & preference towards Plastic Money

OBJECTIVES OF THE STUDY

To study the awareness & perception of the plastic money.

To study the reasons why consumer like to opt for plastic money

To study the usage of the plastic money

To find out the market leader among the various banks/ companies issuing credit and debit
cards.

To know the problems faced by respondents using plastic money.

To study the satisfaction level of consumers towards plastic money.

To know the importance of plastic money in the daily life of consumers w.r.t credit and
debit cards.

NEED OF THE STUDY

It is rightly said the plastic money is need of hour. People are using these cards on a vast scale.
But after considering the review of literature it is seen the whole payment process of processing
these cards is not safe and customer are facing many problems relating to plastic money. Thats
why study is focused on consumer perception regarding the plastic money. There are many
ethical issues and challenges in the market of plastic money which is required to be studied. This
study is concerned with the Seven perks of plastic money. Convenience, Budgeting technology,
Reputation boosting, Corporate might, Cops and robbers, the float, Openness to negotiations.

20

SCOPE OF THE STUDY

The following are the areas covered by plastic money:
ATM cards are slowly being transformed into value-added debit cards. Bankers and analysts see
tremendous scope for growth in debit cards. There is tremendous potential for debit cards. It
will soon be substituting cheques. Utility payments will soon be made through debit cards, either
as the ATMs or at the counters. The debit card can be used to withdraw cash from ATMs of
other banks depending on whether the debit card-maker has a Visa or a Maestro tie-up. Visa and
MasterCard both confirmed yesterday that they had been notified of the breach and had in turn
notified several banks and credit card companies of the potential data compromise. They
declined to say how many companies have been notified. Credit cards as well as convenient,
accessible credit, credit cards offer consumers an easy way to track expenses which is necessary
for both monitoring personal expenditures and the tracking of work-related expenses for taxation
and reimbursement purposes.

Geographical scope-

The geographical scope of the study is not limited. This study can be implemented in any part of
the country; though the samples taken were from Ludhiana in my research.

Functional scope -

This study can be used to understand the behavioural aspect of people who are using the plastic
money i.e. Debit cards or Credit cards. The study throws some light on concept of plastic money.

21

LIMITATIONS OF THE STUDY

1) The Study is Restricted to Ludhiana.
2) The Response of the Migrant can be Biased and Subjective.
3) Many Respondents were not vocal in sharing their actual views.
4) Due to time Constraints the sample size was kept small and view of majority were not taken.
5) Limited time was another constraint.
6) Geographical locations.
7) Approachability.

22

CHAPTER 2
REVIEW OF LITERATURE
Cunningham Julie (Nov 98), Kansas state university in the study College Student
using the Credit Card:

Stated that there is a need to determine whether college students are responsible with their
credit cards. This study was concerned with the problem faced by the credit cardholders.
Consumer perception regarding credit cards and debit cards is very much different as it is
precisely in a defined sector. Role of online commerce or payment over the internet. It future
prospects of credit card and debit card in India. It also includes consumer preference among
debit card and credit card, consumer satisfaction level in case of both cards.
Loebecke S.Elliot (Jan 98) in his article Smart Card Based Electronic Commerce:
Characteristic and Roles:

Stated that the origin of smart cards began when consumer requirements for convenience
and security out spaced the capabilities of magnetic stripe cards. Providing increased data
storage and added security, smart cards were introduced in Europe in the early 1970s as
stored value cards for payphones. These early smart cards were disposable and were an
effective means to reduce losses. Todays advanced contact less and dual-interface smart
cards technologies- together with emerging digital signature laws and the development of
biometric techniques- can bring a range of services to life on a single piece of silicon.
Swift, Kevin (May 1998) in his article Credit Card and Debit Cards: What New?
Where To?

Stated that trends have changed and forces have impact on the card issuer, and forecasting
its future and the resulting impact on the card economy through the year 2002. The report
takes a different viewpoint from many studies of the industry which examined trends from
the issuers viewpoint. This study takes those trends as the end point and looks at the forces
23

that will impact the card issues. It offers insight into the combination of industry, economic,
demographic and technological changes. That will have an effect on credit and debit card
products and how together they will reshape the industry landscape and result in a
credit/debit card industry that will look far different in the year 2002 that it does today.
Hayashi, Fumiko and Weiner Stuart E. (Sept.2005) in their article Competition and
Credit and Debit Card Interchange Fees

Stated that there is a bridge between the theoretical and empirical literatures on interchange
fees. Credit and Debit card industries are examples of two sided markets. The
distinguishing feature of two- sided markets is they contain two sets of end users, each of
whom needs the other in order for the market to operate. In the case of credit and debit cards
the two end user groups are cardholders and merchants.
Payment card systems take one of two principal forms. They may be three- party system:
Cardholders, Merchants and a single financial institution that offers proprietary network
services, For example: American Express. Alternatively they may be four-party systems:
Cardholders, Merchants, Card- Issuing Banks, and Merchant acquiring Banks, using the
services of a multi- party network such as MasterCard, Visa, or a domestic debit card
Network.
Chakravorti, Sujit (June 2003) in his article Theory of Credit Card Networks: A
Survey of the Literature:

Stated that Credit cards provide benefits to consumers and merchants not provided by other
payment instruments as evidenced by their explosive growth in the number and value of
transactions over the last 20 years. Recently credit card networks have come under scrutiny
from regulators and antitrust authorities around the world. Focusing on interrelated bilateral
transactions, several theoretical models have been constructed to study the implications of
several business practices of credit card networks.

24

 Hunt, Robert in this article An Introduction to the Economics of Payment Card

Networks
Stated that how payment cards work and explains how the market for consumer payment
methods differs from most other markets economists study. These differences have
implications for when, why, and how the rules of antitrust law- which regulate how firms
may exercise market power- should be applied to this industry. He focused on general
purpose credit cards such as Visa or Master Card, and debit cards. We do not discuss
department store cards, oil company cards, or bank cards when they are used at ATMs
Debit cards allow customers to pay for goods and services at the point of sale by authorizing
a withdrawal from their checking or savings account. Most ATM cards can be used at the
point of sale as debit cards. Such transactions are called PIN debit transactions because the
cardholder must enter a four digit personal identification number (PIN) to authorize the
transaction. Funds are then immediately withdrawn from the associated bank account. The
transaction itself is routed through as electronic funds transfer (EFT) network, For example
Star , NYCE and pulse 7 transaction , a signature debit transaction does not immediately
remove funds from the cardholders account; It typically takes a day or two for the
transaction to clear. MasterCard must also accept the comparable brand of debit card.
Chartered Financial Analyst in the article Credit Card Crisis in South Korea:

Stated that in the aftermath of the economic crisis of 97-98 South Korea has undertaken
several measures to deal with prudential problem relating to credit cards. This study attempts
to find out why the credit cards have been a disaster in South Korea in 1999, the Korean
policy makers came up with some revolutionary changes in the policy and law that stepped
up the usage of credit cards. Banks and credit card companies started issuing credit cards
without properly assessing the credit capacity of the customer. The South Korean credit
industry and the economy suffered a painful blow in 2003.

25

 Chartered Financial Analyst (Nov.2007) in the article Ethical Issues and Challenges:

Stated that the credit card company has to take into consideration the challenges which are
there in the markets. Credit cardholders have the fear of losing the card and the card is being
misused by other person. The credit card is stolen or lost and being misused. Credit card
companies have to focus on the security and ethical issues related to credit cards.

26

CHAPTER 3
RESEARCH METHODOLOGY
Research Methodology is Logical and Scientific technique to solve a problem. When we talk of
research methodology, we not only talk of research methods adopted to get desired results but we
also consider logic behind these methods. All possible efforts were made to gather information in a
natural way to achieve objectives of research.
Research is an original contribution to existing stocks of knowledge making for its advancement in
research for knowledge through objectives and systematic method of finding a solution to problem,
is research. Research refers to systematic methods consisting of enunciating the problem, forming
a hypothesis, collecting facts or data, analysis of facts and reaching certain conclusion either in the
form of a solution towards concerned problem in certain generalization for some theoretical
formulation.
In my Research the Research Problem is Study of
Consumer Awareness, Perception and Preference

Selection of Objective/Problem
identification

towards Plastic Money

RESEARCH DESIGN
Research design is a framework or blueprint for conducting

Secondary Research and

Literature Review

the marketing research project. It specifies the details of the

procedures necessary for obtaining the information needed

Data Collection & Tabulation

to structure and solve marketing research problems.

When designing research, one is faced with a continual

Analysis of Data

series of trade-offs. Since there are typically numerous

design alternatives that will work, the goal is to find the
design that enhances the value of the information obtained,

Report Preparation

while reducing the cost of obtaining it and make it as

accurate as possible.

Final Draft

27

The conceptual structure, within which this research is conducted, is descriptive in nature as it
brings forward the results concerning the set objectives fact finding enquires. Moreover it
describes the state of affairs as exists at present In my research the Research Design is
DISCRIPTIVE RESERCH design.

RESEARCH OBJECTIVES

To study the awareness of the plastic money.

To study the reasons why consumer like to opt for plastic money

To study the usage of the plastic money

To find out the market leader among the various banks/ companies issuing credit and debit
cards.

To know the problems faced by respondents using plastic money.

To study the satisfaction level of consumers towards plastic money.

SOURCES OF DATA
Primary data:
Primary data are those, which are collected afresh and for the first time, and thus happen to be
original in character. It is the backbone of any study. It is obtained from respondents with the
help of widely used and well-known method of survey, through a well-structured questionnaire.
So the primary data has been taken from different customers. In my research the source of
primary data is well designed Questionnaire.
Secondary data:
Secondary data are those which have already been collected by someone else and which have
already been passed through the statistical process. In this case one is not confronted with the
problems that are usually associated with the collection of Original data. Secondary data either is
published data or unpublished data.

28

Secondary data is collected from publications, journals, and magazines, Records, web sites etc.
In my research the source of secondary data is journals, internet, and books etc.

SAMPLING PLAN
It consists of:Universe of the study: The Universe is the specific group of people, Firms, Conditions, activities
etc. which form the pivotal point of research project. In my research study the universe
Is All the consumers who are using plastic money (debit cards or credit cards) for different
purposes.

Population:
Population refers to part of universe from which the sample for conducting the research is selected.
Universe and population can be same in some researches. It may be finite or infinite. In finite
universe the number of items is certain, but in case of infinite the number of item is infinite i.e., we
cannot have an idea about the total number of items. The population for my study is finite i.e., all
the consumers of Ludhiana who are using plastic money

Sampling unit: Sampling unit refers to smallest possible individual eligible respondent. In my
study the sampling unit is Single person or consumers who are aware of Plastic money or are
using Debit cards & Credit cards.
SAMPLE SIZE
This refers to the total number of respondents selected from the population to constitute a sample.
The size of the sample should neither be excessively large, nor too small. It should be optimum.
An optimum sample is one which fulfils the requirement of efficiency, representativeness,
reliability and flexibility. The sample size for my research is 50.

29

SAMPLING TECHNIQUE
In this research study, non-probability convenience sampling is opted for. Convenience
sampling is done purely on the basis of convenience or accessibility. This sampling method has
been mainly chosen because of time, financial constraints and lack of expertise.

MEASUREMENT
Measurement is accessed via a 5-point-Likert-type scale ranking from strongly agree to
strongly disagree. Analysis is done with the Calculation of Mean Score which is calculated with
the help of following Formula.

Mean Score =

Total Score
---------------------------

Total Number of Respondents (n=50)

30

CHAPTER 4
ANALYSIS AND INTERPRETATION

Q-1:- Are you aware of Plastic money?

Particulars

No. of respondents

Percentage (%)

Yes

50

92%

No

8%

Table - 4.1
100%
90%
80%
70%
60%
50%

Percentage

40%
30%
20%
10%
0%
Yes

No

Graph - 4.1

Interpretation: - As the Graph 4.1 shows, out of sample size of 50. It can be interpreted that
92% respondents are aware of plastic money and hence it can be said that majority
respondents now a days are aware about plastic money.

31

Q2:- Do you use Plastic Money?

Particulars

No. of respondents

Percentage (%)

Yes

39

85%

No

15%

Table - 4.2
90%
80%
70%
60%
50%
Percentage

40%
30%
20%
10%
0%
Yes

No

Graph-4.2

Interpretation: - As the Graph 4.2 shows, out of sample size of 50. It can be interpreted that
85% of respondents who are taken for the study are using plastic money and 15% respondents
are not using it. Hence it can be said that majority respondents now a days are using plastic
money.

32

Q3:- Which card do you have?

Particulars

No. of respondents

Percentage (%)

Debit Card

17

43%

Credit Card

12

31%

Both

10

26%

Table - 4.3
50%
45%
40%
35%
30%
25%

Percentage

20%
15%
10%
5%
0%
Debit card

Credit card

Both

Graph-4.3

Interpretation: - As the Graph 4.3 shows, out of sample size of 39. It can be interpreted that
43% of people are using Debit card, 31% of respondents are having credit card and 26 % of
respondents are having both the cards.

33

Q4:- Reasons for which you have opted for card?

Particulars

No. of respondents

Percentage (%)

Safety solutions

5%

Handling solutions

10%

Convenient

8%

Fast transaction

10

26%

All of above

20

51%

Table - 4.4
60%

50%

40%

30%
Percentage
20%

10%

0%
Safety solutions

Handling
solutions

Convenient Fast transaction All of above

Graph-4.4

Interpretation: - As the Graph 4.4 shows, out of sample size of 39. Most of the respondents
opted for plastic money due to safety solutions, handling solutions, convenient, & fast
transaction.
34

Q5:- Your card belongs to which bank?

Particulars

No. of Respondents

Percentage (%)

Private sector bank

12

31%

Public sector bank

27

69%

Table - 4.5
80%
70%
60%
50%
40%

Percentage

30%
20%
10%
0%
Private banks

Public banks

Graph-4.5

Interpretation: - As the Graph 4.5 shows, out of sample size of 39. Most of the respondents are
having Debit cards i.e. 69% or Credit cards of public sector bank & 31% of persons are having
plastic money of private sector banks.

35

Q6:- Since how long you have been using Debit cards/Credit cards or both?

Particulars

No. of Respondents

Percentage (%)

Less than 1 year

21%

Between 1-3 year

16

41%

Between 3-5 year

18%

More than 5 years

20%

Table - 4.6
45%
40%
35%
30%
25%
Percentage

20%
15%
10%
5%
0%
Less than 1 yr

Between 1-3 yr

Between 3-5 yr

More than 5 yr

Graph-4.6

1. Interpretation: - As the Graph 4.6 shows, out of sample size of 39. 21% people are
using plastic cards for less than 1 year & 41% of persons are using plastic cards for 1-3
years, 18% of people are using plastic cards for 3-5 years & 20% are using plastic cards
for more than 5 years
36

Q7:- Normally for what purpose do you use cards?

Particulars

No. of respondents

Percentage (%)

Cash withdraw

25

64%

Shopping bill

21%

Travelling

10%

Petrol filling

5%

Table - 4.7
70%
60%
50%
40%
Percentage
30%
20%
10%
0%
Cah withdraw

Shopping bill

Traveling

Petrol filling

Graph-4.7

1. Interpretation: - As the Graph 4.7 shows, out of sample size of 39. It can be interpreted
that Most of the respondents i.e. 64%, are using plastic money for withdrawing cash, and
21%for the payment of shopping bills &10% persons are using plastic cards for traveling
and55 for Dinning bill.
37

Q8:- How often do you use plastic money?

Particulars

No. of respondents

Percentage (%)

Daily

0%

Weekly

23%

Monthly

30

77%

Table - 4.8
90%
80%
70%
60%
50%
Percentage

40%
30%
20%
10%
0%
Daily

Weekly

Monthly

Graph-4.8

Interpretation: - As the Graph 4.1 shows, out of sample size of 39. It can be interpreted that
23% of respondents are using plastic cards at weekly basis & rest of are using plastic cards at
monthly basis.

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Q9:-Do you feel that plastic money is much safer than holding money in
pocket?

Particulars

No. of respondents

Percentage (%)

Strongly agree

14

36%

Agree

16

41%

Neutral

23%

Disagree

0%

Strongly disagree

0%

Table - 4.9
45%
40%
35%
30%
25%
20%

Percentage

15%
10%
5%
0%
Strongly agree

Agree

Neutral

Disagree

Strongly
disagree

Graph-4.9

Interpretation: - As the Graph 4.9 shows, out of sample size of 39. It can be interpreted that
36% of respondents responds to strongly agree that means plastic money is much safer than
holding money in pocket, 41% of persons are responds as agree & 23% of persons are answered
as neutral.
39

Q10:- What are the problems you are facing in processing the card?

Particulars

No. of Respondents

Percentage (%)

Feeling of insecurity

5%

Fear of losing the card

25

64%

Unnecessary formalities

18%

High Fee collected By Banks

13%

Table - 4.10
70%
60%
50%
40%
30%

Percentage

20%
10%
0%
Feeling of
security

Fear of losing
card

Unnecessary
formalities

High fee
collected by
banks

Graph-4.10

Interpretation: - As the Graph 4.10 shows, out of sample size of 39. It can be interpreted that
Most of the persons are facing the problem of fear of losing the card i.e. 64% & 5% of people
feels insecurity , 18% of people are facing the problem from unnecessary formalities and 13%are
facing problem from high fees charged by the banks.
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Q11:- Your opinion about your plastic card?

Particulars

No. of respondents

Percentage (%)

Good

14

36%

Average

13%

Satisfied

20

5%

Poor

0%

Table - 4.11
40%
35%
30%
25%
20%

Percentage

15%
10%
5%
0%
Good

Average

Satisfied

Poor

Graph-4.11

Interpretation: - As the Graph 4.11 shows, out of sample size of 39. It can be interpreted that
Most of respondents, respond good about their plastic cards. 13% of respondents said average,
5% of respondents are satisfied from their plastic cards.
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Q12:- Will you see the next generation as No Currency but Plastic Money?

Particulars

No. of respondents

Percentage (%)

Yes

20

51%

No

19

49%

Table - 4.12

52%
51%
51%
50%
Percentage
50%
49%
49%
48%
Yes

No

Graph-4.12

Interpretation: - As the Graph 4.12 shows, out of sample size of 39. It can be interpreted that
51% of people said that in future only plastic cards may be used against the currency & rest are
in side of currency.

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Q13:-Why you dont prefer plastic money?

Particulars

No. of respondents

Percentage (%)

Instable Income

29%

Malpractices by Owners

0%

Lack of Trust

43%

Lack of Knowledge

14%

Malpractices by Bankers

14%

Table - 4.13
50%
45%
40%
35%
30%
25%
Percentage

20%
15%
10%
5%
0%
Instable income Malpracteices
by owners

Lack of trust

Lack of
knowledge

Malpractices by
bankers
14%

Graph-4.13

Interpretation: - As the Graph 4.13 shows, out of sample size of 7. It can be interpreted that
29% of respondents said that they dont use plastic money because of instable income, 43% of
respondents replied that they have lack of trust,14% respondents replies that they have lack of
knowledge,14% respondents replied that they don`t use plastic money because of malpractices
by bankers
43

CHAPTER 5
SUMMARY AND CONCLUSION
RESULTS AND FINDINGS:
1. Out of the sample of 50. 92% of people are aware about plastic money.
2. Out of sample size of 50. 39% of persons are using plastic money i.e. Debit card or Credit
card & 15% of persons dont use plastic money.
3. Out of sample size of 39. 43% of persons are having debit cards, 31% of persons are
having credit card and 26 % of persons are having both the cards.
4. Out of sample size of 39. Most of the persons opted for plastic money due to safety
solutions, handling solutions, convenient, fast transaction.
5. Out of sample size of 39. Most of the persons are having Debit cards or Credit cards of
public sector bank & 31% of persons are having plastic money of private sector banks.
6. Out of sample size of 39. 21% people are using plastic cards for less than 1 year & 41%
of persons are using plastic cards for 1-3 years, 18% of people are using plastic cards for
3-5 years & 20% are using plastic cards for more than 5 years.
7. Out of sample size of 39. Most of the persons are using plastic money for withdrawing
cash, and for the payment of shopping bills & least persons are using plastic cards for
traveling and for dinning bill.
8. Out of sample size of 39. Most of persons that is 23%, are using plastic cards at weekly
basis & rest of are using plastic cards at daily and monthly basis.
9. Out of sample of 39. 36% of persons are strongly agree that plastic money is much safer
than holding money in pocket, 41% of persons are answered as agree & 23% of persons
are answered as neutral.
10. Out of sample size of 39. Most of the persons are facing the problem of fear of losing the
card i.e. 64% & 5% of people feels insecurity , 18% of people are facing the problem
from unnecessary formalities and 13% are facing problem from high fees charged by the
banks.

44

11. Out of sample size of 39. Most of people said good about their plastic cards. 13% of
persons said average, 5% of people are satisfied from their plastic cards.

12. Out of sample size of 39. 51% of people said that in future only plastic cards may be used
against the currency & rest are in side of currency.
13. Out of sample size of 7. 29% of people said that they dont use plastic money because of
instable income, 43% of people said that they have lack of trust.

SUGGESTIONS

Various offers and discounts should be provided on the plastic money so that all the users
feel satisfied with their card choice.
The interest charges on credit cards should be reduced so that people are encouraged to
use it in regular routine.

More facility should be provided to the card holder in order to satisfy them completely.
More outlets should be provided where the cards can be easily accepted.

The unnecessary formalities should be reduced in order to obtain the plastic money.
Advertisements should be given through TVs, magazines and hoardings to have
maximum reach because the respondents perceive these as important promotional tools.

The whole procedure of obtaining the plastic money needs to be authentic. Companies
should provide security to the card holders.

45

 Companies should reduce the amount of the annual fee charged on the cards.

CONCLUSION
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.
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.
Consumers prefer 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

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