SUBMITTED BY: PANCHAL DIPEN- 83 PATEL ASHISH - 87 PATEL CHINTAN- 93 PATEL HITESH -108 SUBMITTED TO: PROF.MR.

KUNDAN PATEL VMPCMS

REPORT ON PLASTIC MONEY

I. EMERGENCE OF WIDE VARIETY OF FINANCIAL SERVICES

Like other countries of the world, financial services have emerged very fast in India as well. The financial services sector is growing very rapidly because of globalization i.e., liberalized financial markets, computerization, i.e. development in information-technology, companies preferring flexible financial mix, growth in the capital and money markets, increasing competition, etc.

These services are offered by the financial institutions which also include Asset Management as well as liability Management Companies. Lease financing, mutual funds, merchant banking, etc., are a few examples of Asset Management Companies and discounting of bills, acceptance houses are a few examples of liability management companies. In other words, these services are provided by stock exchanges, financial institutions, insurance companies and banks.

The various cards issued by Banks and Financial Institutions can be enumerated as follows :

Credit Card Visa Card ATM Card Gold Card Business Card International Card Master Card Debit Card Prepaid Card Smart Card Silver Card etc.

On the basis of the usage and the facilities provided, these cards can be broadly grouped into four main categories :

Credit Cards Debit Cards Smart Cards Prepaid Cards

Students & Credit Cards

Now a days world is globalized in the college , give the facility to students for the paying their fees by the student credit cards. In the metrocity of India students use credit cards to purchase books and computer softwares .

Students & Credit Cards

One research conduct in megacity for using student credit cards. Some recent statistics 15% of undergraduate students (1824) have credit cards 22% of final year students have two credit cards or more (in 2004 it increased by 27%& 32% in 2005)

Student Credit Card Balances

Average credit card debt per student Median credit card debt per student

2002 1879 1222

2003 2748 1236

2004 2327 1770

2005 2169 946

Percentage with balances 10000-50000

Percentage with balances over 50000

14%

13%

21%

16%

10%

9%

6%

7%

Statement on Credit Card Balances:

By 2005-06 year, 31% of students have a balance of 10000-50000 1 in 8 students owe, 50000 or more In one day person can withdraw 15000 on student credit card.

Credit Card Dos

Use a debit card vs. a credit card Use a card with no annual fee and low interest rates Know all of your cards hidden fees Always pay more than the minimum each month Pay on time, all the time

Credit Card Payment Behavior

Pay off all credit card balances on all cards each month Make the minimum monthly payments on all cards every month Pay off some cards in full each month but make only the minimum monthly payment on others Make more than the minimum payment but always carry a balance Make less then the minimum payment on some or all cards each month

21% 12% 8% 44%

11%

PROBLEMS AND RISKS INVOLVED WITH THE USE OF PLASTIC CARDS

The usages of plastic cards have made financial transactions much more easier and convenient but their use is not free from difficulties. There are some problems and risks attached with their use like :-

1. Usage problems as they are technology dependent. 2. Security problem i.e. the user faces danger of fraud. 3. Validity period problem and renewal of expired cards. 4. Wastage of money (If the card was not properly utilized). 5. Thoughtless Buying i.e., encourages impulsive purchasing. 6. Costly (high interest rates and service charges). 7. Financial problems (customer may overdraw the account). 8. Acceptance problems (not acceptable by all merchants). 9. Non-disclosure of detailed billing procedure

II DESCRIPTIVE SURVEY OF CROSS SECTIONS OF CUSTOMERS In order to know the aforementioned dimensions, claims, etc. of the plastic cards used for financial services in real life situation, a quick descriptive survey of 50 respondents of Mehsana city using the cards was conducted by administering structured questionnaire. The respondents belonged to cross sections of the society in terms of sex, age, education, income status and employment.

FAMILIARITY AND USAGES OF PLASTIC CARDS

The familiarity of the respondents for various types of plastic cards and their usage pattern were found as given in table No. I.

Table I FAMILIARITY AND USAGE OF THE PLASTIC CARDS BY THE RESPONDENTS.

Type of Cards % of respondents familiar with the cards (2)
94 90 100

% of respondents using the cards (3)

64 46 90

Difference between Column 2 and 3. (4)

30 44 10

(1)
Credit Card Visa Card ATM Card

Gold Card
Business Card International Card Master Card

34
30 40 68

10
6 22 18

24
24 18 50

Debit Card
Prepaid Card Smart Card

84
52 30

68
20 18

16
32 12

From Table I, it was found that the respondents were very much familiar with ATM Card, credit card, visa card, debit card, master card and prepaid card while less number of persons were familiar with other types of cards mentioned in the table. As against their familiarity, the uses of the cards were limited to ATM Card, Debit Card and Credit Card only, while other cards were used by them less in number. When compared the usages with the familiarity, ATM Card, Debit Card, International Card, Gold and Business Cards were found more prominent. Relatively speaking, the respondents usages of the cards in relation to their familiarity were found less in the cases of master card, visa card, prepaid card and credit card.

TYPE OF FACILITIES AND SERVICES ATTACHED TO THE CARD The respondents used these cards for availing of the financial services with specific facilities and services attached to them, as shown in Table II.

Table II RANKING OF FACILITIES AND SERVICES OF THE CARDS BY THE RESPONDENTS

Facilities and Services No. of respondents giving Ranks I Travel Privileges 24 hour Services Credit Increase Line 11 22 2 6 8 II 9 10 1 11 14 III 7 4 4 7 11 IV 9 5 2 8 9 V 5 5 4 1 Total of Rank Values Avera ge Value Adjuste d Average Value 0.24 (2) 0.08 (1) 1.75 0.46 (4) 0.31 (3)

111 74 49 101 110

2.70 1.80 3.50 2.80 2.55

Ease in Payment Emergency Cash Withdrawal Discount facilities Service Over Phone Shopping Convenience

3 2 6

3 5 1

5 4 6

1 2 5

5 1 17

53 37 131

3.11 2.64 3.74

1.03 1.32 0.62 (5)

(Figures in brackets denote overall ranks given to various facilities)

On the basis of the rank order method, the respondents revealed their preferences for the different facilities and services attached to the use of the plastic cards for financial services as follows :

24 Hour Service. Travel privileges Emergency Cash Withdrawal. Ease in Payment Shopping Convenience.

PROBLEMS BEING FACED IN THE USAGE OF THE CARDS

But

the respondents experienced different types of problems while using these cards and their responses were shown in Table III

Table III RANKING OF PROBLEMS FACED BY THE RESPONDENTS WHILE USING VARIOUS TYPES OF CARDS
Problems I No. of respondents giving Ranks II III IV V Total of Rank Values Average Value Adjusted Average Value

Memorizing the PIN Danger for Fraud Disposal and renewal of expired cards Usage problems Costly

10 14 2 16

11 11 5 8 8

7 6 11 8 2

4 5 10 8 4

2 5 9 5 5

79 99 130 97 79

2.32 2.41 3.51 3.34 2.25

0.23 (3) 0.17 (2) 1.75 (5)

Infinite
0.14 (1)

Acceptance problems
Problem in locating ATM centers at New Places

7
-

15
-

5
3

3
2

5
2

64
17

1.82
2.42

0.26 (4)

Infinite

(Figures in brackets represent overall ranks to the various problems)

As per Table III, the respondents revealed the seriousness for the problems being faced by them in using various plastic cards in descending order as follows :

Costly Danger for fraud Memorizing the PIN Acceptance problems. Disposal and renewal of expired Cards.

DISCONTINUATION OF THE USE OF THE CARDS

Since the respondents experienced various types of problems and difficulties in using these cards, some of the respondents discontinued the use of these cards for availing of financial services through them. In this survey, 34% of the respondents stopped the use of the cards and the reasons of their stoppage were revealed as per details given in Table

Table IV RANKING OF VARIOUS REASONS FOR STOPPING THE USE OF VARIOUS CARDS.
Reasons No. of respondents giving ranks I II III Total of Rank Values Averag e Value Adjuste d Average value

Waste of Money

13

2.16

2.16

Costly
Financial Problems Thoughtless Buying Difficulty in Maintaining Cards Some bad experience like losses Risky

3
1 3 7 2

2
1 1 1 2

3
1 1 1 1

16
6 8 12 9

2.00
2.00 1.60 1.33 1.80

0.66 (3)
2.00 0.53 (2) 0.19 (1) 0.90

13

2.16

2.16

(Figures in brackets represent overall ranks).

As per Table IV, the respondents who stopped the use of the cards revealed the seriousness of the reasons in descending order as under :

Difficulty in maintaining the Cards Thoughtless Buying. Costly.

III SUGGESTIONS FOR THE SAFE AND SECURE USE OF THE CARDS

In the light of the responses revealed by the respondents in this quick descriptive survey, the following suggestions may be given for making the use of these cards more effective, facilitating and convenient :-

1.

2.

3.

4.

5.

The use of cards even with zero balance facility should be allowed. The introduction of one universal card in place of multiple cards should be made. This card may contain tailor-made chips to the requirements applied by the customers. The statement facility should be made available through internet too. The detailed transaction statement should be made available to the customers. The withdrawal by the cards not only with the password but with the signature of the customers should be started. This will go a long way in preventing the usage of the cards by the unscrupulous people.