INTRODUCTION

 Nothing has come to represent cash the way plastic

cards have. The idea of using a card to make
purchases was first drawn by EDWARD BELLEMY in
1887.The US was the first country to launch it in the
early 1990s .It was Diners Club International ,the first
independent credit card company in the world and
the American Express which have changed the way
cards were used. They developed it into tangible
business phenomenon. In India, the concept of plastic
money caught on in the late1980s only after private
sector banking came into practice.
•
 Debit card
Debit cards are upgraded atm
cards branded with Visa,
Mastercard,or other familiar
credit cards company logo.
They look exactly like credit
cards except directly tap your
checking account every time
when you make a purchase or
withdrawl.

They are easier, more

convenient ,less burdensome
and offer greater access to
your money than do checks
,ATMs, or credit cards. They
are descendents of ATM cards
that came in early 1980.
Debit cards can be used almost everywhere –retail
stores, gasoline stores, restaurants etc in the either of
the following ways:
 Today banks are pushing hard to replace the ATM card
with a debit card without asking customers if they want
one. There are more customers with debit card readers
than PIN based readers. Banks also make more money
through off line debit cards in percentage fees or
discount from the merchants.
CREDIT CARDS
 A credit card is part of a system of payments named after the small plastic card
issued to users of the system. It is a card entitling its holder to buy goods and
services based on the holders 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.
 Credit accounts are a pre-approved line of unsecured credit offered to the holder.
STEPS FOLLOWED IN CREDIT CARD
TRANSACTION:
 Authorization
 For Internet Merchants, the shopping cart 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 (POS) Terminal. The authorization is transmitted to the appropriate Card Issuer
(Amex, Discover, Diners, JCB) for approval. The Issuing Bank or Card Issuer authenticates
the Cardholder and approves or declines the transaction amount.
 It is important to note that no money changes hands during the Authorization. Merchants
must re-present the transaction to receive payment.

 Merchant Balancing
 This is also known as Batching Out. Most POS Terminals and all Payment Gateways
perform an auto close function at the end of the day and batch out automatically.
 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.

 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.
 Interchange (VS/MC Only)
 During this stage the V/MC Associations sort the transactions by Issuing Bank and
transmit them to the appropriate Issuing Banks for settlement.

 Settlement
 During this stage the Issuing Bank calculates fees and deductions (i.e., chargebacks) and
routs the net funds to the appropriate Card Issuer which determines the daily deposit for
the merchant.

 Merchant ACH
 During this stage the Acquiring Bank or Card Issuer transmits the merchant deposit to the
merchant’s checking account.
Advantages of credit cards:

 Compact
 Safe to carry
 Convenient
 Easy loan
 Attractive Schemes
 Universality
Limitations of credit cards:

 Security
 Identifiable

 Expensive

 Verification phase
 Credit Card Laundering
Credit card laundering is also referred to as “factoring”.

Tie up for providing CC facility

Company A Company B
(no merchant account) (has merchant account)

Order Tieup for commission Payment is

goods made to
and Company B
makes who sends it to
payment Payment Co. A for a
is made commission
to the CC
customer Company Credit card company
through
Company
B
Smart Card
Meaning
 Smart Card is a plastic card the size of a credit
card with an integrated circuit built into it. This
integrated circuit may consist only of EEPROM
in the case of a memory card, or it may also
contain ROM, RAM and even a CPU.
 Smart cards contain an operating system just like
personal computers.
 Smart cards can store and process information and
are fully interactive.
 Advanced smart cards also contain a file
structure with secret keys and encryption
algorithms. Due to the encrypted file system, data
can be stored in separated files with full security.
uses
 The uses of smart cards are as versatile as any mini-computer. At a
hospital emergency room, for example, the card could identify the
person's health-insurance carrier and transfer all necessary
information from the microchip to an admittance sheet. Tests,
treatment, billing and prescriptions could be processed more quickly
using the card. Major clinical findings could be added to the medical
information section within the microchip.
Technological Difference Betweem Smart Card and
Dr and Cr Card
 The technological difference between the Credit Card and
Smart card is, that the latter contains a computer chip that
actually processes information and has the potential to
store identification information including driving license,
citizenship, and emergency contact information, whereas
magnetic chip on the Credit or Debit Card is simply
electronic encoding of the name, number and expiration
date already embossed on the card.
Benefits of Smart Card
 Smart cards can be used for identification,
authentication, and data storage.
 Smart cards provide a means of effecting business
transactions in a flexible, secure, standard way with
minimal human intervention.
 Smart card can provide strong authentication for
single sign-on or enterprise single sign-on to
computers, laptops, data with encryption,
enterprise resource planning platforms such as SAP,
etc.
Problem of Smart
Card
 Another problem of smart cards
may be the failure rate. The
plastic card in which the chip is
embedded is fairly flexible, and
the larger the chip, the higher the
probability of breaking. Smart
cards are often carried in wallets
or pockets — a fairly harsh
environment for a chip. However,
for large banking systems, the
failure-management cost can be
more than offset by the fraud
reduction.
Potential of Smart Card
 Today, there are fewer than one billion smart cards in use.
Smart card activities are growing at 30 percent a year,
predominately outside the U.S. Over the next five years, the
industry will experience steady growth, particularly in cards
and devices to conduct electronic commerce and to enable
secure access to computer networks. Within the same time
frame, smart cards are expected to be used in 95 percent of the
digital wireless phone services offered worldwide. Asia, Latin
America and North America are areas believed to be of greatest
potential in the next three years. Globally, the uses that have
emerged so far are for payphones, wireless telephony, Internet
access, banking, healthcare and pay TV. (Smart Card Forum,
12/98)
 ELEECTRONIC FUNDS
TRANSFER(EFT)

Electronic funds transfer is a generic term

describing any transfer of funds between
parties or financial institutions via
electronic data systems.
 ELECTRONIC CHEQUES

The ‘cheque’ is a messsage that contains all of

the information that is found on the ordinary
cheque,but is signed digitally:or endorsed.

The best known method of electronic funds

transfer.
STEPS IN A COMPLETE
ELECTRONIC
CHEQUE TRANSACTION
Phase I : Purchasing Goods
Phase II: Depositing Cheques At The
Merchant’s Bank
 WHAT IS ACH?
• ACH = Automated Clearing House

• Electronic Network for financial transactions

• Governed by NACHA
 COMMON APPLICATIONS
• Direct Deposit

• Direct Debit Payment

• Business to Business (B2B) Payments

• E- Commerce Payments

• Tax Payment
 How do Clients Benefit?

• Less Expensive

• Reduces Cheque Fraud

• Efficient method of moving funds

• Improves Cash Flow

• Speeds up collection of Returned Items

 HOW ARE ACH PAYMENTS USED?

• Point-of-Purchase Entries (POP)

• Prearranged Payments and Deposits (PDP)

• Internet-Initiated Entries (WEB)

• Telephone-Initiated Entries (TEL)

 BuyByText Next
generation sales & marketing
technology

12/07/21 36
 A SIMPLE 4-STEP PROCESS

STEP 1 STEP 2
TEXT TO 82540 RECEIVE INBOUND TEXT

Thank you for ordering

Jukebox Hits. Register
your details and complete
your purchase by visiting
the below URL from your
mobile by clicking on the
link or selecting ‘Go To’ in
your Message Menu.
https://secure.purchase
 “PLEASE CONTINUE YOUR
ORDER BY
ACTIVATING YOUR E-WALLET.

THIS SECURE PAGE REQUIRES

YOUR ONCE-OFF
REGISTRATION AND
STEP 3
WILL TAKE 1-2 MINUTES.
SECURE
FOR YOUR FUTURE SECURITY
REGISTRATION AND CONVENIENCE, YOUR
PAGE SENT TO LIVE
MOBILE E-WALLET WILL ENABLE YOU
PHONE TO OPEN AN TO
ACCOUNT & INSTANTLY PURCHASE OTHER
COMPLETE GOODS
THE ORDER. AND SERVICES VIA TEXT OR
EMAIL,
SIMPLY BY KEYING IN YOUR
4-DIGIT PIN NO.”
 STEP 4
ORDER COMPLETION TEXT

Thankyou for ordering Jukebox

Hits. Your order and payment
has been processed and goods
will be dispatched today.
Your Jukebox e-wallet enables
you to make future purchases
securely by simply keying your
4-digit pin into our marketing
texts, emails or website. You
can also close, amend or opt-
out at www.jbbiz.co.uk.

That is just the start of the E-Wallet potential…

REACTIVE TRADITIONAL MARKETING
VERSUS
PROACTIVE E-WALLET