1. 1. 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, ATMs, smart cards, etc. Credit cards, variants of
plastic money, are used as substitutes for currency. This book on plastic money is divided
into two sections titled Concepts and Experiences. The former covers articles on the the
emergence of plastic money, different types of plastic cards and their growth in India and
other related issues. An experience discusses the experiences of banks like Standard
Chartered, Citibank, which deal with plastic money and their growth in the market.
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. 1
2. 2. Definition A slang phrase for credit cards, especially when such cards used to make
purchases. The "plastic" portion of this term refers to the plastic construction of credit
cards, as opposed to paper and metal of currency. The "money" portion is an erroneous
reference to credit cards as a form of money, which they are not. Although credit cards do
facilitate transactions, because they are a liability rather than an asset, they are not
money and not part of the economy's money supply. 2
3. 3. Ch.2 The History Of Credit Cards and Debit Cards In Plastic Money Credit cards have
evolved into a safe and secure manner to purchase goods and services. The Internet has
given credit card users additional purchasing power. Banks have options like cash-back
rewards, savings plans and other incentives to entice people to use their cards. Debit
cards allow people the convenience of cards without the worry of racking up debt. The
convenience, security and rewards offered by credit and debit cards keep shoppers using
their cards as opposed to checks or cash. Credit Card Origins The first credit cards
were issued by individual stores and merchants. These cards were issued in limited
locations and only accepted by the businesses that issued them. While the cards were
convenient for the customers, they also provided a customer loyalty and customer service
benefit, which was good for both customer and merchant. It was not until 1950 that the
Dinner's Club card was created by a restaurant patron who forgot his wallet and realized
there needed to be an alternative to cash only. 3
4. 4. This started the first credit card specifically for widespread use, even though it was
primarily used for entertainment and travel expenses. Plastic Becomes the Standard
The first Diner's Club cards were made out of cardboard or celluloid. In 1959 American
Express changed all that with the first card made of plastic. American Express created a
system of making an impression of the card presented at the register for payment. Then
that impression was billed to the customer and due in full each month. Several American
Express cards still operate like this as of 2010. It was not until the late 1980s that
American Express began allowing people to pay their balance over time with additional
card options. Bank Card Associations In 1966, Bank of America created a card that
was a general purpose card or "open loop" card. These "closed loop" agreements limited
cards like Diners Club and American Express to certain merchants, unlike the new "open
loop" cards. The new general purpose system required interbank cooperation and
additional regulations. This created additional safety features and began building the
credit card system of today. Two systems emerged as the leaders--Visa and Master Card.
 However, today there is little difference between the two and most merchants accept both
card associations. 4
5. 5. Debit Cards Emerge The Visa association of cards took credit cards to a new level in
1989 when they introduced debit cards. These cards linked consumers to their checking
accounts. Money was now drawn from a checking account at the point of sale with these
new cards and replaced check writing. This helped the merchants check that money was
available and made it easier to track the customer if the funds could not be obtained.
Consumers liked the convenience of not having to write checks at the point of sale, which
made debit cards a safe alternative to cash and checks. The Future There were almost
29 million debit card users as of 2006, with a projected 34.4 million users by 2016.
However, online services like PayPal are emerging as a way for people to pay their debts
in new, secure and convenient ways. Technology also exists to have devices implanted
into phones, keys and other everyday devices so that the ability to pay at the point of sale
is even more convenient. 5
6. 6. Ch.3 TYPES OF PLASTIC MONEY Different types:- Credit card A credit card is
plastic money that is used to pay for products and services at over 20 Million locations
around the world. All you need to do is produce the card and sign a charge slip to pay for
your purchases. The institution which issues the card makes the payment to the outlet on
your behalf; you will pay this 'loan' back to the institution at a later date. Debit card 6
7. 7. Debit cards are substitutes for cash or check payments, much the same way that
credit cards are. However, banks only issue them to you if you hold an account with them.
When a debit card is used to make a payment, the total amount charged is instantly
reduced from your bank balance. Don't borrow on your credit card! Here's why A debit
card is only accepted at outlets with electronic swipe- machines that can check and
deduct amounts from your bank balance online. Charge card A charge card carries all
the features of credit cards. However, after using a charge card you will have to pay off
the entire amount billed, by the due date. If you fail to do so, you are likely to be
considered a defaulter and will usually have to pay up a steep late payment charge.
When you use a credit card you are not declared a defaulter even if you miss your due
date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied in
your next billing statement. 7
8. 8. 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. Credit cards: Remember these dos and don'ts. This
card is typically meant for high-income group categories and companies and may not be
acceptable at many outlets. There are a wide variety of special privileges offered to Amex
cardholders. Dinner club card Diners Club is a branded charge card. There are a
wide variety of special privileges offered to the Diners Club cardholder. For instance, as a
cardholder you can set your own spending limit. 8
9. 9. Besides, the card has its own merchant establishment tie-ups and does not depend on
the network of MasterCard or Visa. However, since this card is typically meant for high-
income group categories, it may not be acceptable at many outlets. It would be a good
idea to check whether a member establishment does accept the card or not in advance.
Global card Global cards allow you the flexibility and convenience of using a credit
card rather than cash or travelers cheque while traveling abroad for either business or
personal reasons. Co-branded card 9
10. 10. Co-branded cards are credit cards issued by card companies that have tied up with
a popular brand for the purpose of offering certain exclusive benefits to the consumer. A
debit card with a difference For example, the Citi-Times card gives you all the benefits of
a Citibank credit card along with a special discount on Times Music cassettes, free entry
to Times Music events, etc. Master card & Visa MasterCard and Visa are global non-
profit organizations dedicated to promote the growth of the card business across the
world. They have built a vast network of merchant establishments so that customers
worldwide may use their respective credit cards to make various purchases. 10
11. 11. Smart card A smart card contains an electronic chip which is used to store cash.
This is most useful when you have to pay for small purchases, for example bus fares and
coffee. No identification, signature or payment authorization is required for using this
card. The exact amount of purchase is deducted from the smart card during payment
and is collected by smart card reading machines. No change is given. Currently this
product is available only in very developed countries like the United States and is being
used only sporadically in India. Photo card 11
12. 12. If your photograph is imprinted on a card, then you have what is known as a photo
card. Doing this helps identify the user of the credit card and is therefore considered
safer. Besides, in many cases, your photo card can function as your identity card as well.
Ch.4 CREDIT CARD INTRODUCTION A credit card is a small plastic card issued to
users as a system of payment. It allows its holder to buy goods and services based on
the holder's promise to pay for these goods and services. The issuer of the card grants a
line of credit to the consumer or the user) from which the user can borrow money for
payment to a merchant or as a cash advance to the user. Usage of the term "credit card"
to imply a credit card account is a metonym. When a purchase is made the user would
indicate consent to pay by signing a receipt with a record of the card details and
indicating the amount to be paid. Issuer agrees to pay the merchant and the credit card
user agrees to pay the card issuer. 12
13. 13. DEFINITION:- The credit card can be defined as A small plastic card that allows its
holder to buy goods and services on credit and to pay at fixed intervals through the card
issuing agency. MEANING:- A credit card is a card or mechanism which enables card
holder to purchase goods, travels and dine in a hotel without making immediate
payments. The holders can use the cards to get credit from banks up to 45 days. The
credit card relieves the consumers from the botheration of carrying cash and ensures
safety. It is a convenience of extended credit without formality. Thus credit card is a
passport to, safety, convenience, prestige and credit. 13
14. 14. ADVANTAGES & DISADVANTAGES OF CREDIT CARD ADVANTAGES OF
CREDIT CARD The benefits of credit card can be grouped as follows: (A) BENEFITS TO
THE BANK 14
15. 15. a) A credit card is an integral part of banks major services these days. The credit card
provides the following advantages to the bank: the system provides an opportunity to the
bank to attract new potential costumers. b) To get new customers the bank has to
employee special trained staff. This gives the bank an opportunity to find the latent talent
from among existing staff that would have been otherwise wasted. c) The more important
function of a credit card, however, is simply to yield direct profit for the bank. There is a
scope and a potential for a better profitability out of income / commission earned from the
traders turn over. d) This also provides additional customer services to the existing
 clients. It enhances the customer satisfaction. e) More use by the car holder and
consequently the growth of banking habits in general. f) Better network of card holders
and increased use of cards means higher popularity and image of the bank g) Savings of
expense on cash holdings, i.e. stationery, printing and man power to handle clearing
transactions while considerably is reduced. It increases 15
16. 16. (B) BENEFITS TO CARD HOLDER The principal benefits to a card holder are: a) He
can purchase goods and services at a large number of outlets without cash or cheque.
The card is useful in emergency, and can save embarrassment. b) The risk factor of
carrying and storing cash is avoided. It is convenient for him to carry credit card and he
has trouble free travel and may purchase his without carrying cash or cheque. c) Months
purchases can be settled with a single remittance, thus, tending to reduce bank and
handling charges. d) The card holder has the period of free credit usually between 30-50
days of purchase e) Cash can usually be obtained with the card, either on card account
or by using it as identification when encasings a cheque at the bank. f) Availing credit
with minimum formality. g) The credit card saves trouble and paper work to traveling
business man. 16
17. 17. (C) BENEFITS TO THE MERCHANT ESTABLISHMENT The principal benefits offer
credit card to the retailer is a) This will carry prestigious weight to the outlets. b) Increases
in sale because of increased purchasing power of the cardholder due to unbilled credit
available to the card holder. c) The retailers gain from the impulse buying and trading up
the tendency to buy the bigger or better article d) Credit card ensures timely and certainly
of payments. e) Suppliers/sellers no longer have to send reminders of outstanding debits.
f) Systematic accounting since sales receipts are routed through banking channels. g)
Advertising and promotional support on national scale. h) Development of prestigious
clientele base. 17
18. 18. DISADVANTAGES OF CREDIT CARD The following are the common
disadvantages of the credit card: a) Some credit card transactions take longer time than
cash transactions because of various formalities. b) The customer tends to overspend out
of immerse happiness. c) Discounts and rebates can rarely be obtained. d) The
cardholder is responsible for charges due to loss or theft of the card and the bank may
not be party for loss due to fraud or collusion of staff, etc e) Customers may be denied
cash discount for payment through card. f) It might lead to spending habits and
cardholders may end up in big debts i) Avoid the entire cost and security problem
involved in handling cash. j) Losses to bad debts and reduced an additional liquidity is k)
It also allows him to delegate spending power to add on members 18
19. 19. l) Credit card is considered as a status symbol. MARKETING STRATEGIES
American companies spend billions of dollars each year on marketing. As a matter of
fact, in 2001, U.S. advertising expenditures alone topped $230 billion, more than doubling
the $105.97 billion spent in 1980. (Source: Advertising: Exposure and Statistics
November 2003 newsletter of the Media Education Foundation) Now, these figures may
seem staggering to the independent professional on a budget, but dont panic; there are
lots of effective strategies you can utilize that will help you grow your business fast. 19
20. 20. Here are some of my favorites: Identify your niche. One 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 exclusively. Many professionals are afraid to do this claiming
that theyll be leaving someone out, but many marketing experts agree that niche
 marketing as the easiest and fastest way to get business. Position yourself as an expert.
Why? Experts make more money and get more media attention and thats free
advertising! Lets face it; its easier to trust a specialist than a generalist whos trying to be
everything to everyone. Once youve 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. Conduct workshops, seminars
and tele-classes specifically geared towards helping your prospective customers and
before long youll be regarded as an expert in your field. And, while youre at it dont
forget to, collect names, emails and addresses of prospects to keep filling your pipeline.
20
21. 21. Develop ongoing relationships with complementary professionals and build your
referral team. These are other professionals who sell non-competing services or products
to the same niche customers you are targeting. For instance, my clients often need the
services of bookkeepers, accountants and business attorneys. Likewise, they refer
business to me. Here are a couple of other examples: Residential realtor, mortgage
broker, real estate attorney, home improvement contractor, architect and interior designer.
000000000 Commercial printer, copywriter, graphic designer. Institute a system to keep
track of all of the people who are interested in your product or services, and find creative
ways of keeping in touch with them on a regular basis. To start, go through your notes.
Put together a list of all of the people youve spoken to in the last 6-9 months whove
showed interest in you but havent become paying customers. Follow 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 join you at events. It takes numerous
impressions to make the sale; thats why you see commercials on TV over and over again
for the same products. 21
22. 22. By Keeping track of all of the people whove showed interest and keeping your
business on their radar screen youll turn more of them into paying customers. Let your
satisfied customers help you sell your products or services. Here are a couple of ways to
do this: 00000000000000000000000000 Ask them for referrals - right away (if you were
a car salesman you wouldnt wait for the new car to get dirty and dented!)000000000000
Ask them to write testimonials for you, (also right away) and compile a list of
testimonials to use in your all of your marketing collateral. Create a marketing calendar
and keep to it consistently. Scheduling marketing activities that take place weekly, bi
monthly, monthly and quarterly will help you to avoid the feast or famine syndrome that
most independent professionals fall prey to. And, by doing so, marketing will become
easier since it becomes a regular part of your business life. Identify innovative ways to get
more business from existing customers. 22
23. 23. Its much easier to get business from customers who are already happy with your
services or products. So develop additional services or products to keep customers
coming back for more. STEPS FOLOWED IN CREDIT CARD TRANSACTION 1.
AUTHORIZATION For Internet Merchants, the shopping card is connected to or
integrated with a Payment Gateway. For Retail Merchants, the card is swiped through a
magnetic reader on the point of sale terminal the authorization is transmitted to the
appropriate card issuer for approval. The issuing bank of card issuer authenticates the
card holder and approves or declines the transaction amount. 23
24. 24. It is important to note that no money changes hands during the authorization.
Merchants must re-present the transaction to receive payment. 2. Merchant balancing
This is also known as batching out. Most pos terminals and all payment gateway per firm
an auto close functions at the and of the day and batch out automatically. 3. Capture
The front end processor matches the authorization data to the settlement data and
transmits the card capture file to a back end processor for V/MC transactions or to the
appropriate card issuer for other card types. 4. Clearing During this stage the back end
processor performs compliance checks and risk management procedures and transmits
the transaction to V/MC or to the appropriate card issuer for other card types. 5.
Interchange (VS/MC Only) During this stage the V/MC Association sort the transactions
by issuing bank and transmit them to the appropriate issuing banks for settlement. 24
25. 25. 6. Settlement During this stage the Issuing Bank calculates fees and deductions and
routs the net funds to the appropriate Card Issuer which determines the daily deposits for
the merchants. 7. Merchant ACH During this stage the acquiring bank or card issuer
transmits the merchant deposit to the merchants checking account. Different Types of
Credit Cards Credit cars are of various types, every one has to select credit cards on the
basis of the pros and cons of each type of credit card and at the same time the nature of
use. This article gives an insight into the several types of credit cards available in the
market Today, credit card customers enjoy more options and choices than ever before. To
gain new customers, credit card companies compete by offering new services and cards
to customers. No matter what your needs, chances are good that there is a card out there
that would be ideal for you. If you are 25
26. 26. looking for the right card, you can begin by considering the many types of cards
available to you: Low Interest Credit Cards These types of credit cards offer very low
interest. In some cases, these cards just charge a few percent interests. The reasons for
this are numerous. In most cases, the low interest rate is for a limited time only. After a
set number of months, you will begin paying higher interest rates. In some cases, low
interest credit cards are not really credit cards at all - they are debit cards linked to a low-
interest loan such as a line of credit. Check your agreement to find out what type of card
you have. If you need to consolidate debts or if you like the idea of having low interest for
a while, this type of credit card can be perfect for you. Instant Approval Credit Cards
These cards are really a product of our fast-paced society. The idea behind this type of
credit card is that once you fill out your application, you will be told whether you are
approved or not right away. The approval process only takes a few minutes. Instant
approval credit cards are very popular online and applicants can apply via the internet or
over the phone. If you are very impatient or need credit right away, these types of cards
can be for you. However, you should be aware that these cards do not guarantee that you
will be approved right away - sometimes, more time is needed to process your
application. Another drawback to these cards is that 26
27. 27. they rely heavily on your credit score. If you have poor credit or any extenuating
financial circumstances, these types of cards may not be for you. Balance Transfer Cards
Balance transfer cards are a type of temporary low-interest card that is meant to help you
consolidate your debt. They work this way: if you have several credit cards with a
balance, you can get a balance transfer card. You then transfer all your credit card debt
onto the new card and work to pay it off. Since the new card has a low interest rate, you
can quickly repay your bills. If you are in debt, a balance transfer card can be a great way
 to get out of debt. It offers the convenience of one bill and low rates. However, some
cards have high fees. Also, if you run up your other cards after consolidating your debts
or if you are unable to pay off your new card in the limited time before the low interest rate
increases, you may find yourself even more in debt than before. Rewards Credit Cards
Rewards credit cards offer you points, rewards, or bonuses for every cash purchase
made with your credit card over time. As you accumulate rewards or points, you can
redeem your bonus for entertainment events, purchases, travel, and other fun prizes.
Some cards even offer customers extra automatic-enter sweepstakes and draws. Each
time you use 27
28. 28. your card, you are entered into a draw to win specific prizes. These types of cards are
really a marketing tool for card companies. Companies know that customers love rewards
and prizes and so offer these enticements to lure customers. The major advantage of
these cards is that they can help you get more cash value for your money. They can also
be fun and rewarding for almost any credit card customer. However, not all reward credit
cards are a deal. Some charge high fees to offset the costs of the bonuses. Some also
have very low points systems, meaning that you need to spend a lot with your credit card
to get any rewards at all. Read the fine print carefully before signing. Cash Back Credit
Cards Cash back credit cards give you money rewards. When you make a purchase with
this type of credit card, you get some points based on the amount of money you have
spent with your credit card. When you accumulate enough points, you get cash back. On
most cards, you can get back about 1% of your total purchases. These cards are great
for those who are budget-conscious as they give you some money back from your
purchases. However, there are several drawbacks to these types of cards. Some cards
have low cash-back percentage rates. Some charge high fees or have limits on how
much money you can get back each year. Most cards only offer you cash back
advantages 28
29. 29. on purchases - not on your balance. If you decide this card is right for you, do
compare several card offers to find the best cash back credit card option. Airline Credit
Cards This type of card allows you to accumulate frequent flyer points on all your credit
card purchases. If you travel a lot or love to travel, this card can help you accumulate
points for a free trip or for a discount ticket. In many cases, these cards are great
because they allow you to gather points for every purchase. However, these cards can
also charge high fees. In some cases, your points will expire if you do not use them within
a specified time. Worse, some airline credit cards make use of a point system that is not
very user-friendly. You may have to slowly accumulate an enormous amount of points to
qualify for a trip. If you do not love to travel and if you do not use your Credit card a lot,
then, your ability to get rewards you like may be very limited. Prepaid Debit Cards These
cards are sometimes called junior credit cards. They are not truly credit cards at all, since
you are not getting credit or loans from the credit card company. Instead, these cards
work by having you deposit some money into the card account. You can then use your
card to charge any amount up to the amount in the account. When you add more money,
you can charge more to your card.0000000000000000000000000000000000 29
30. 30. Secured Credit Cards Secured credit cards use collateral to ensure that the card
company will be paid back. Often, these cards are used by people with no credit or bad
credit. With secured credit cards, you can enjoy credit card convenience even if you do
not qualify for traditional cards. However, you will also have to cope with the additional
 fees and low credit limits that these credit cards have. Credit Cards for Bad Credit Bad
credit credit cards are designed for people with poor credit histories. These cards
generally have very low credit limits and charge extra fees. This is because they are
designed for people who are considered far less likely to repay their debts. If you have a
bad credit rating, these types of credit cards can be a great way to rebuild your credit
history. These cards can also allow you to have credit even if you would be rejected for
most other cards due to your credit history. Student Credit Cards Student credit cards are
cards meant to attract college and university students. These cards often offer sign-up
bonuses for students. They are also easier to apply for, since credit card companies
recognize that students have much shorter credit histories than the average
customer.000000000000 30
31. 31. If you are a student, student credit cards can be a great option. They are simple to
use and can help you build a good credit rating before you graduate. However, there are
some disadvantages to student credit cards. These cards may have no reward programs
and may have fewer benefits, including fewer bonuses and services, than other cards.
Business Credit Cards Business credit cards are created especially for business use.
They offer many of the same advantages as traditional credit cards, but also offer
services that can really help a business. With some business credit cards, for example,
you can enjoy higher interest rates, extra cards for business employees, monthly reports
on your expenses, and services that let you keep your personal and business expenses
separate on the same card. These advantages mean that using this card for your
business is more convenient. 31
32. 32. Types of Credit Cards offered by Indian Banks Silver Cards Silver credit cards rank
lowest among the metal named cards, and, because of lower prestige when compared to
gold and platinum cards, are commonly known as basic and standard credit cards. Silver
credit cards come with advantages such as lower annual membership fees if there is any,
and a lower threshold salary which banks use to evaluate your application in case you
should apply. Silver credit cards will provide you with almost the same credit limit as other
cards provided you have a good credit history. You can also avail 32
33. 33. of 0% interest balance transfer schemes which are made available for a period of 6-9
months for silver card holders. There are also some disadvantages to using silver credit
cards. One would be the lower cash advance limits, less rewards and promotional
packages, and less travel perks compared to gold and platinum cards. HDFC Bank, ICICI
offer silver credit cards through their HDFC Bank Silver cards and ICICI Sterling Silver
credit card Gold and Platinum Cards Gold and platinum credit cards are a status symbol
for any credit card holder, bringing prestige since getting gold and platinum cards usually
require that you have good credit rating and a higher income levels. Gold and platinum
cards offer higher limit for cash advance withdrawals and sometimes can provide higher
credit limits as compared to standard or silver cards. If you have a gold or platinum card,
you also get better perks and privileges such as travel insurance, extended warranties for
appliance purchases and special deals on specific products, and purchase protection
insurance. You can also engage in some loyalty schemes that are offered for gold and
platinum credit card holders which can sometimes involve cash back promos and reward
points systems. 33
34. 34. Some popular gold and platinum cards available are the American Express Gold
card, and the ICICI Solid Gold Credit Card. It is not possible to cover them the exact
 offerings of these cards but I will highly advice you to check all these websites of the
banks to get all the info about the credit cards they are offering. Also try to talk to your
friends who are having credit cards to get more info. 34
35. 35. Types of Credit Cards offered By Indian Banks 35
36. 36. Credit Card Data Credit Card is either Visa or MasterCard which is the Most
popular and in some instance American Express.000000000000000000000000000000
The Top 10 Credit Card Issuers in India are as follows, ICICI Bank - 5.07 Mn HDFC Bank
- 4.42 Mn SBI Cards - 2.65 Mn Citibank - - 2.54 Mn HSBC Cards - 1.3 Mn ABN Amro -
0.78 Mn Axis Bank - 0.57 Mn Deutsche Bank - 0.495 Mn American Express - 0.45 Mn
Data Courtesy - The Reserve Bank of India 36
37. 37. Ch.5 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. 37
38. 38. Types of debit card systems Online Debit System Online debit cards require
electronic authorization of every transaction and the debits are reflected in the users
account immediately. The transaction may be additionally secured with the personal
identification number (PIN) authentication system and some online cards require such
authentication for every transaction, essentially becoming enhanced automatic teller
machine (ATM) cards. One difficulty in using online debit cards is the necessity of an
electronic authorization device at the point of sale (POS) and sometimes also a separate
PIN pad to enter the PIN, although this is becoming commonplace for all card
transactions in many countries. Overall, the online debit card is generally viewed as
superior to the offline debit card because of its more secure authentication system and
live status, which alleviates problems with processing lag on transactions that may only
issue online debit cards. Some on-line debit systems are using the normal authentication
processes of Internet banking to provide real-time on-line debit transactions. The most
notable of these are Ideal and POL. Offline Debit System Offline debit cards have the
logos of major credit cards (e.g. Visa or MasterCard) or major debit cards (e.g. Maestro in
the United Kingdom and other countries, but not the United States) and are used at the
point of sale like a credit card (with payer's signature). This type of debit card may be 38
39. 39. subject to a daily limit, and/or a maximum limit equal to the current/checking account
balance from which it draws funds. Transactions conducted with offline debit cards
require 23 days to be reflected on users account balances. In some countries and with
some banks and merchant service organizations, a "credit" or offline debit transaction is
without cost to the purchaser beyond the face value of the transaction, while a small fee
 may be charged for a "debit" or online debit transaction (although it is often absorbed by
the retailer). Other differences are that online debit purchasers may opt to withdraw cash
in addition to the amount of the debit purchase (if the merchant supports that
functionality); also, from the merchant's standpoint, the merchant pays lower fees on
online debit transaction as compared to "credit" (offline) debit transaction. Electronic
Purse Card System Smart-card-based electronic purse systems (in which value is stored
on the card chip, not in an externally recorded account, so that machines accepting the
card need no network connectivity) are in use throughout Europe since the mid-1990s,
most notably in Germany (Geldkarte), Austria (Quick), the Netherlands (Chipknip),
Belgium and Switzerland (CASH). In Austria and Germany, all current bank cards now
include electronic purses. Prepaid Debit Card Prepaid debit cards, also called reload able
debit cards or reload able prepaid cards, are often used for recurring payments. The
payer loads funds 39
40. 40. to the cardholder's card account. Prepaid debit cards use either the offline debit
system or the online debit system to access these funds. Particularly for companies with
a large number of payment recipients abroad, prepaid debit cards allow the delivery of
international payments without the delays and fees associated with international checks
and bank transfers. Providers include Caxton FX prepaid cards, [Escape prepaid cards
and Travelex prepaid cards. [ Whereas, web-based services such as stock photography
websites (stockpot), outsourced services (odes), and affiliate networks (Media Whiz)
have all started offering prepaid debit cards for their contributors/freelancers/vendors. 40
41. 41. BENEFITS & FEATURES OF DEBIT CARDS BENEFITS OF THE DEBIT CARD
FREE WITH OUR BANK ACCOUNT Obtaining a debit card is easy. If we qualify to
open a bank account, we usually get a debit card, if our bank offers the service. NO
BACKGROUND CHECK When we are applying for a debit card, the ban does not need to
look into our credit history. All we need is the documentation to open a bank, account,
and money in our bank when we use our debit card. CASH WITHDRAWALS The
customer can withdraw a minimum of Rs. 100/- and a maximum Rs.10, 000/- per day
CONVENIENCE 41
42. 42. A Debit card fees us from carrying a lot of cash or a cheque book. In case, we are an
international traveler, we dont need to stock up on Travelers Cheques or cash. We can
use our debit card to withdraw Cash from over 500,000 ATMs around the world in over
100 countries. We can withdraw in the local currency of the country we are in, limited only
by the money we have back home in our account, and Business Travel Quota (BTQ) limit
arability. FAIR EXCHANGE If we return merchandise or cancel services paid for with a
Debit card, the transaction is treated as if it were made with cash or a check. Customers
usually get cash back for offline purchases; for on-line transactions, the amount is
credited to our account. STATEMENT OF ACCOUNT A statement of transactions can
be obtained from the customers branch. For example, a mini statement containing the
last four transactions and balance can be obtained at a State Bank Group during the
working hours of the customers branch. BANKING CUM SHPPING CARD Your Debit
card can be used as ATM card at any ATM across the world, as well as for making
purchase at merchant locations. You can also withdraw cash from any of the 12000 ATMs
in India. 42
43. 43. WIDELY ACCEPTED, INTERNATIONALLY VALID FEATURES OF DEBIT CARD
The following are features of Debit cards A) It is a combination of a Cheque and ATM
 card. Therefore, there are no fees for using the ATM for cash withdrawal, or as a debit
card for purchase. B) The Debit Card services in meant for withdrawals against the
balance already available in the designated account. C) It is the card holders obligation
to maintain sufficient balance in the designated account to meet withdrawals and service
charges. D) A Debit card is more affordable than credit card. We just our bank account
for all our transactions. No credit period. Our bank account is debited immediately. E) No
credit check is required to get a Debit card. F) Use of card is terminated without notice,
upon the death, bankruptcy or insolvency of the cardholder or for other valid reasons. 43
44. 44. G) Spending is limited to our bank balance. Process Debit Card Transactions A
successful business will usually accept debit cards as a part of their overall profile of
payment solutions. If you dont process debit cards, you may not be taking full advantage
of all the potential that your merchant account can deliver. There are essentially two ways
you can accept debit cards, online and offline. Off line debit card transactions An offline
debit card transaction is still the way most merchants accept debit cards. This is
essentially the same as processing credit cards. You swipe your customers debit card
through a credit card terminal and have them sign the receipt. If you choose to accept
debit cards offline, be sure that the debit card has a VISA or MasterCard logo. Otherwise,
the debit card wont be approved and you wont be able to process the debit card offline
Online debit card transactions 44
45. 45. The most advantageous way to process debit cards is to do it online. You will still be
able to accept debit cards at the point of sale, but you will need to install a PIN pad on
your credit card terminal. An online debit card transaction works much like a credit card
transaction, except that after your customer swipes his or her debit card, they will enter a
PIN instead of signing the receipt. At this point the encrypted debit card information is
sent to the customers bank for authorization, and youll receive the funds just as you
would for a credit card transaction. Your business has many advantages when you
accept debit cards. For example, you pay a flat fee for each debit card transaction that
you process, instead the flat fee plus percentage rate that you are charged when you
accept credit cards. Over time, this can potentially save you a lot of money.
0000000000000000000000000000000000000000000000000 Another advantage when
you process debit cards is that you cant be charged higher downgrade fees. In a credit
card transaction, you are usually charged the discount rate. However, some
transactions are considered to be a higher risk or expense to the bank, and you are
charged a higher rate as a result. But when you accept debit cards, you always pay the
same flat rate, with no danger of the rate increasing. 45
46. 46. You can also cut down on checkout time when you accept debit cards. It takes an
average of 30 seconds to hand over the pen, wait for the customer to sign the receipt,
and then take the pen back. If you process 20 credit card transactions a day, youre losing
100 minutes a day just passing a pen back and forth! Thats almost two hours. 46
47. 47. Plastic Fraud State-of-the-art thieves are concentrating on plastic cards. In the
past, this type of fraud was not very common. Today, it is a big business for criminals.
Plastic cards bring new convenience to your shopping and banking, but they can turn into
nightmares in the wrong hands. This pamphlet describes credit and debit cards and some
common schemes involving card fraud with tips to help you avoid them The following are
the types of frauds 1. Stolen Cards at the Office 2. Extra Copies of Charge Slips 3.
Discarded Charge Slips 4. Unsigned Credit Cards 5. Loss of Multiple Cards 6. Strange
 Requests for Your PIN Numbers 7. Legitimate Cards 8. Altered Cards 9. Counterfeit
Cards 47
48. 48. Ch.6 Advantages & Disadvantage Advantages 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. 48
49. 49. Provide a convenient payment method for purchases made on the Internet and
over the telephone. Help you establish a good credit history. Disadvantage 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. 49
50. 50. Its disadvantage is that, some extra money will be deducted for the bank services.
Its around 2.5% of the money you spent. Ch.7 TECHNOLOGY AND
INFRASTRUCTURE One of the most important features that Plastic Money offers is
the technology associated with this business. Credit card businesses rely on very
reliable and secure technology and demands very Strong connectivity backbone.
Although a third world country, with lot of insecurities and almost no infrastructure,
Pakistan has no exception when it comes to credit card business. There is
approximately 3000 Point of Sale Terminals (POST) present on merchant's sites
connected with bank host system. Inter-city connectivity is accomplished through X.25
networks. Perhaps, it is the most important time in the history of Pakistan as the
parameters of its Infrastructures are coming into existence. 50
51. 51. There 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.8 CASE
STUDY What Happens in Credit Card Fraud Cases? 1. The Basics A variety of crimes
constitute credit card fraud. The term can describe a person using a stolen credit card to
purchase goods or services posing as the person named on the card. It can also
describe illegally and fraudulently withdrawing funds from an account that is not yours.
Identity theft, which is the act of posing as an individual to make purchases, is often
classified together with credit card fraud. A victim of credit card fraud can sometimes see
bank accounts emptied of all their funds or negative marks going on her credit report for
things she had nothing to do with. Many banks will monitor transactions made with a
credit card and alert the person named on the account of any potentially suspicious
activity. This is to protect the bank or Credit Card Company just as much as it is to protect
the customer. 51
52. 52. 2. Investigation Exactly what happens during a credit card fraud case depends a
great deal on the actions of the Credit Card Company or bank involved. If fraudulent
transactions are proven to have been made on a person's account but the amount of the
 transactions is lower than the cost of an investigation the company can credit the money
back to a person and then close the account to protect from further
harm.00000000000000000000000000 If the amounts of fraudulent charges are so great
that an investigation is warranted, the police will be notified. The credit card company can
look at a list of the fraudulent charges and determine where they were made. At that point
an officer can question witnesses and review security camera footage in an attempt to
identify suspects. If a suspect is arrested he can be tried in a court of law. Ch.9
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, 52
53. 53. etc have created a win-win situation by extending great convenienence. & multiple
options for customer. From educating customers about credit cards there is a need to
educate them about the differentiating factors of the cards. Because visa and master card
are advertising regularly and thereby increases awareness. The strategy should be to
emphasize on its differentiating characteristics. They also need to identify potential
customers and target those using mailers. As internet is growing at a fast rate the net
users can be targeted by having interactive sites. The prospective companys card
personality could also be used in the home page to solve customer queries in the Best
Possible Manner. Ch.10 BIBLIOGRAPHY BOOKS INOVATION IN BANKING &
INSURANCE FINANCIAL MARKET & SERVICES INDIAN BANKING INDUSTRIES
INDIAN BANKING 53
54. 54. TIMES OF INDIA NEWS PAPER (1st OCT 2010) WEBSITE
WWW.GOOGLESERCH.COM WWW.YAHOO.COM WWW.RBI.ORG
WWW.WIKIPEDIA .COM WWW.INFOSEE.COM WWW.INDIANMBA.COM
WWW.INDINBANKING.ORG 54

TAX BENEFIT -on use of Debit Card and Credit Card Government of
India proposed income tax benefits for people making payments through Credit
or Debit cards and doing with transaction charges on purchase of petrol, gas and
rail tickets with plastic money. In a draft paper for moving towards cashless
economy and reduce tax avoidance the Government also proposed to make it
mandatory to settle high value transactions of more than Rs. one lakh through
electronic mode. In order to incentivise shopkeepers, it has proposed tax rebate
to them provided they accept a significant value of sales through debit or credit
cards. Innovations are galore in the plastic money world, both in terms of
technology and services, to embrace simplicity, security and mobility