CHAPTER-1

INTRODUCTION

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Introduction to 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. Credit cards, variants of plastic money, are used as

substitutes for currency.

MEANING

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.

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.

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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, saving 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 cheques 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 business 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 till 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. To his created additional safety features and began building the credit card system of today.

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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.

Debit Cards Emerge

The Visa association of cards took credit cards to a new level in 1989when 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.

TYPES OF PLASTIC MONEY

Different types of Plastic money are:-

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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.

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Debit card

Debit cards are substitutes for cash or cheque payments, much the same way that credit cards

are. However, banks only issue them to us if we hold an account with them. When a debit

card is used to make a payment, the total amount charged is instantly reduced from our 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.

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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.

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.

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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.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 groupcategories, it may not be

acceptable at many outlets. It would be agood 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 travellers cheque while travelling abroad for either business or personal reasons. 

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Co-branded card

Co-branded cards are credit cards issued by card companies that

havetied 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.

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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

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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.

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.

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 45days.

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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.

Advantages of Credit Card

The benefits of credit card can be grouped as follows:

(A) BENEFITS TO BANK

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 customers.

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.

The most 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.

This also provides additional customer services to the existing clients. It enhances the

customer satisfaction.

More use by the car holder and consequently the growth of banking habits in general.

Better network of card holders and increased use of cards means higher  popularity and

image of the bank 

Savings of expense on cash holdings, i.e. stationery, printing and

man power to handle clearing transactions while considerably is reduced. 

(B) BENEFITS TO CARD HOLDER 

 The principal benefits to a card holder are:

He can purchase goods and services at a large number of outlets

withoutcash or cheque. The card is useful in emergency, and can saveembarrassment.

The risk factor of carrying and storing cash is avoided. It is convenientfor him to carry

credit card and he has trouble free travel and may purchasehis without carrying cash

or cheque.

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Months purchases can be settled with a single remittance, thus, tending to reduce bank

and handling charges.

The card holder has the period of free credit usually between 30-50 days of purchase.

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.

Availing credit with minimum formality.

The credit card saves trouble and paper work to travelling businessman.

(C) Benefits to the Merchant Establishment

The principal benefits offer credit card to the retailer is:-

This will carry prestigious weight to the outlets.

Increases in sale because of increased purchasing power of the card holder due to

unbilled credit available to the card holder.

The retailers gain from the impulse buying and trading up the tendency to buy the bigger

or better article.

Credit card ensures timely and certainly of payments.

Suppliers/ sellers no longer have to send reminders of outstanding debits.

Systematic accounting since sales receipts are routed through banking channels.

Advertising and promotional support on national scale.

Development of prestigious clientele base.

Disadvantages of credit card

The following are the common disadvantages of the credit card:

Some credit card transactions take longer time than cash transactions because of

various formalities. 

The customer tends to overspend out of immerse happiness.

Discounts and rebates can rarely be obtained.

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The cardholder is responsible for charges due to loss or theft of the cardand the bank

may not be party for loss due to fraud or collusion of staff, etc

Customers may be denied cash discount for payment through card.

It might lead to spending habits and cardholders may end up in big debts

Avoid the entire cost and security problem involved in handling cash.

Losses to bad debts and reduced an additional liquidity is

It also allows him to delegate spending power to add on members

Credit card is considered as a status symbol.

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: 

Cardholder: 

The owner of the card used to make a purchase 

Merchant: 

The business accepting credit card payments for products or services sold to the cardholder 

Acquirer: 

The financial institution or other organization that provides card processing services to the merchant 

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 

Issuer:

The financial institution or other organization that issued the credit card to the cardholder.

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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 stored in a batch, which the merchant sends to the

acquirer later to receive payment (usually at the end of the day). 

3. Clearing and settlement:-

The acquirer sends the transactions in the batch through the card association, which debits the

issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the

transactions. 

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4. Funding:-

Once the acquirer has been paid, the merchant receives 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.  However,

Merchant Card Processing from some banks and financial institutions can offer next-day

deposits to their customers with a business checking account. 

In the event of a chargeback (when there's an error in processing the transaction or the

cardholder disputes the transaction), the issuer returns the transaction to the acquirer for

resolution.  The acquirer then forwards the chargeback to the merchant, who must either

accept the chargeback or contest it. 

Different Types of Credit Cards - Know Which One to Go For

Credit cars are of various types, everyone 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

What are instant approval credit cards?

What is the principle behind reward credit cards

How do cash back credit cards work?

How prepaid credit cards can be made use of?

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

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for you. If you are looking for the right card, you can begin by considering the many types of

cards available to you:

1. Low Interest Credit Cards

These types of credit cards offer very low interest. In some cases, these cards just charge a

few percent interest. 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.

2. 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 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.

3. 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

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card in the limited time before the low interest rate increases, you may find yourself even

more in debt than before.

4. 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 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. 

5. 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 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.

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6. 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.

7. 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.

8. 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.

9. 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.

If you are a student, student credit cards can be a great option. They are simple to use and can

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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.

10. 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.

If you own a business, you may wish to consider this type of card. The only real disadvantage

of business cards is that there are so many of them. Some cards offer fewer features and some

charge businesses additional fees for bonuses and services. You can avoid these problems by

seeking out the best possible business credit cards for your needs.

Now that you understand the different types of credit cards, you can make the right credit

card decision for yourself. Knowing which cards are right for you can help empower you to

make the right financial choices.

Types of Credit card offered by Indian banks

I. 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. There are also some disadvantages to using silver credit cards.

Onewould be the lower cash advance limits, less rewards and promotional packages, and less

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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

II. Gold and Platinum Cards

Gold and platinum credit cards are a 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 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. 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.

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DEBIT CARD

A debit card (also known as a bank card or check card) is a plastic card that provides the

cardholder electronic access to his or her bank account(s) at a financial institution. Some

cards have a stored value with which a payment is made, while most relay a message to the

cardholder's bank to withdraw funds from a designated account in favour of the payee's

designated bank account. The card can be used as an alternative payment method

to cash when making purchases. In some cases, the primary account number is assigned

exclusively for use on the Internet and there is no physical card.

In many countries the use of debit cards has become so widespread that their volume has

overtaken or entirely replaced checks and, in some instances, cash transactions. The

development of debit cards, unlike credit cards, has generally been country specific resulting

in a number of different systems around the world, which were often incompatible. Since the

mid 2000s, a number of initiatives have allowed debit cards issued in one country to be used

in other countries and allowed their use for internet and phone purchases.

However, unlike credit cards, the funds paid using a debit card are transferred from the

bearer's bank account, instead of having the bearer pay back the money at a later date.

Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for

withdrawing cash. Merchants may also offer cash back facilities to customers, where a

customer can withdraw cash along with their purchase.

Types of Debit Card Systems

I. Online Debit System

Online debit cards require electronic authorization of every transaction and the debits are

reflected in the user’s 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

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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 POLl.

II. 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 2–3 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 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.

III. 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 Wertkarte), the Netherlands (Chipknip), Belgium (Proton),

Switzerland (CASH) and France (Mon€o, which is usually carried by a debit card). In Austria

and Germany, all current bank cards now include electronic purses.

IV. 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,[citation needed] an umbrella term

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used to describe diverse groups of individuals- typically with poor credit ratings- who do not

use banks or credit unions for their financial transactions.

The advantages of prepaid debit cards include being safer than carry cash, worldwide

functionality due to Visa and MasterCard merchant acceptance, not having to worry about

paying a credit card bill or going into debt, the ability for anyone over the age of 18 to apply

and be accepted without regard to credit quality and the ability to direct deposit paychecks

and government benefits onto the card for free.

Some of the first companies to enter this market were MiCash, RushCard and Netspend who

gained high market share as a result of being first to market. However, in the past few years

there have been several new providers such as TransCash, 247card and iKobo that carry a

number of other benefits, such as money remittance service, card-to-card transfers and the

ability to apply without a social security number.

BENEFITS OF THE DEBIT CARD

1. FREE WITH OUR BANK ACCOUNT

Obtaining a debit card is easy. If we qualify to open a bank account, weusually get a debit

card, if our bank offers the service.•

2. 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.

3. CASH WITHDRAWALS 

The customer can withdraw a minimum of Rs. 100/- and a maximum Rs.10, 000/- per day .

4. CONVENIENCE 

A Debit card fees us from carrying a lot of cash or a cheque book. In case, we are an

international traveller, we don’t need to stock up on Traveller’s Cheques or cash. We can use

our debit card to withdraw Cash from over

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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 are ability.

5. 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.•

6. STATEMENT OF ACCOUNT

 A statement of transactions can be obtained from the customer’s 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 customer’s branch.

7. 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.

WIDELY ACCEPTED, INTERNATIONALLY VALID

Features of Debit card

The following are features of Debit Cards

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.

The debit card service is meant for withdrawals against the balance already available in

the designated account.

It is the card holder’s obligation to maintain sufficient balance in the designated account

to meet withdrawals and service charges.

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.

No credit cheque is required to get a debit card.

26

Use of card is terminated without notice, upon the death, bankruptcy or insolvency of the

cardholder or for other valid reasons.

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 don’t 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 customer’s 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 won’t be approved and you won’t be able to process the debit

card offline

Online debit card transactions

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 cardtransaction, 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 customer’s bank for

authorization, and you’ll 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

27

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. Another advantage when you process debit cards is that you can’t 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. 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, you’re losing 100minutes a day just passing a

pen back and forth! That’s almost two hours.

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 shopingand banking, but they can turn into nightmares in the wrong hands. This pamphlet describes credit and debit cards and some common schemesinvolving 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

28

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

won’t have to carry your cash around all the time.

It also doesn’t 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.

Disadvantages of Debit card

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 payment are late.

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

Have complicated terms and conditions.

It’s around 2.5% of the money you spent.

Some extra money will be deducted for the bank services.

It is cheaper to make.

29

CASE STUDY

What Happens in Credit Card Fraud Cases?

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.

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.

If the amounts of fraudulent charges are so great that an investigation is warranted, the police

will be noticed. The credit card company can look at a listof the fraudulent charges and

determine where they were made. At that point an officer can question witness 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.

30

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.From educating customers about credit cards there is a need toeducate

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 company’s card personality could also be used in the

home page to solve customer queries in the ‘Best Possible Manner’.

Plastic money growth in India fastest in Asia

The plastic money culture seems to be spreading fast if the total transaction volumes through

cards (both debit and credit) in the country for 2002 is anything to go by. Transaction

volumes include both cash withdrawals and purchases made through such cards.

Total transaction volumes have rocketed 103 per cent to $4.201 billion (over Rs 19,400

crore), making India the fastest growing market in Asia Pacific. The comparative figures for

2001 when the Indian market rose by 69 per cent was at $2.277 billion.

The debit card scene in India is also shifting more towards Visa International. Visa’s debit

card — Visa Electron — has cornered 68.5 per cent of the total transaction volumes in debit

cards in 2002.

According to the latest Nilson Report, India has gone up in the rankings by one notch and is

now the eleventh largest market in Asia Pacific.

However, the total purchases through cards rose by only 31 per cent to $1.802 billion. India

has a long way to go compared with other Asian countries both in terms of total transactions

and purchases.

South Korea, the market leader in Asia Pacific, has shown a 39 per cent rise in transaction

volumes to $296.139 billion and a 48 per cent rise in purchases in total purchases to $104.589

billion.

31

It is followed closely by China, which has, however, seen a fall in total volumes of 8 per cent

to $208.283 billion.

However, the figures do not include the volumes of Cirrus and Maestro - the debit card issued

by MasterCard.

The total number of debit cards issued in the country for the period was at 82.99 lakh. Of this

Visa Electron issuances were 49.13 lakh, while Maestro issuances were 33.86 lakh.

The total volumes through the debit cards for the country stood at $3.550 billion of which

Maestro volumes were at $1.115 billion with the remaining volumes with Visa. However, the

purchases through debit cards in the country were much lower at $103.6 million.

 

This could be because, debit cards in the country are still primarily used as ATM card for

withdrawal purposes rather than for purchases.

This is more so among the customers of the public sector banks than for the customers of the

foreign banks or the private sector banks. Also banks are now issuing debit cards in lieu of

ATM cards thus propping up the figures.

The total volumes of Visa and Visa Electron in the country for fiscal 2002 has shown a

growth of 138 per cent to $3.724 billion, while the purchase volumes have increased by 36

per cent to $1.137 billion.

The total volumes for MasterCard has shown a rise of 20 per cent to $787.7 million while

purchases had increased by 22 per cent to $ 665.6 million.

The major issuers of Visa Electron cards are ICICI Bank and HDFC Bank while for Maestro

the major issuers are State Bank of India and Citibank.

32

CHAPTER-2

REVIEW OF LITERATURE

33

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

1970’s as stored value cards for payphones. These early smart cards were disposable and

were an effective means to reduce losses. Today’s 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 issuer’s viewpoint. This study takes those trends as the end

point and looks at the forces 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. The convergence of the internet and various consumer

and other electronic technologies in combination with a desire on the part of companies

in a number of industries to forge new alliances and offer enhanced services has

34

established a role for electronic cash.

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. In four-party system, the interchange fee is an instrument that networks can

Use to achieve a desired

Balance of cardholder.

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.

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

35

department store cards, oil company cards, or bank cards when they are used at ATM’s

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 cardholder’s 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. It was a major

credit card fiasco throughout the country with thousands of citizens committing suicide

to avoid the burden of debt and fear of bankruptcy.

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.

36

CHAPTER-3

OBJECTIVES OF STUDY

37

Primary objectives:

To know the perception of people towards plastic money.

Secondary objectives:

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

debit cards.

2. To study the benefits of debit card and credit cards.

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

debit cards.

4. To know the problems faced by respondents using plastic money.

5. To study the satisfaction level of consumers towards plastic money.

38

Need and Scope of the Study

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. That’s why study is focused on consumer perception regarding the plastic money.

Need of the study is to get to know about the comparative analysis of 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.

39

Scope of 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.

40

CHAPTER-4

RESEARCH METHODOLOGY

41

Research methodology deals with the method of study i.e. how the study can be

carried out and what techniques can be used. It is the careful investigation and enquiry in a

systematic manner in order to find solution to find to find problems in research. It consists of

defining and redefining the problems formulating the hypothesis or suggestions solutions

collecting data and evaluating the data and at last carefully testing the conclusion to

determine whether they fit the formulated hypothesis or not.

Research Design: Research design states the conceptual structure within which research is to

be conducted. A research design is the arrangement of conditions for collections and analysis

of data in a manner that aims to combine relevant the research purpose with economy in

procedure. The different research designs available are:

Exploratory research: It generally emphasis on discovery of ideas and insights. It’s more

qualitative rather than quantitative.

Descriptive research: It is concerned with determining the frequency with which something

occurs or extent relationship between two variables. This study will be having an exploratory

research which is based on discovery of ideas and insights.

Sampling Plan:-

Universe: The universe consists of all people who are using plastic money for different

purposes.

Sample size: This refers to the number of respondents to be selected from the universe to

constitute a sample. Large samples give more reliable results than the small samples. So the

sample size of 100 respondents was taken into consideration in case of research work which

includes both debit and credit card holders.

Sampling unit: Sampling unit implies that who are the respondents. In this sample all those

who are using debit cards and credit cards.

Sampling technique: The technique used for my study is convenient sampling that consists

of questionnaire, which are given to respondents who are the regular users of plastic money.

42

Methods of Data Collection:

Primary Data:

Primary data is that data which is collected for the first time and thus happens to be original is

character. In the study, primary data will be collected from direct source of information like

customers with the help of questionnaire survey and personal interview.

Questionnaire: The second tool used for study is questionnaire. Various questions regarding

the purposes of plastic money and the various procedures for obtaining credit cards, the

necessity of credit cards, increasing relevance of plastic money among consumers, market

leader among various companies issuing credit and debit cards.

Secondary Data:

Secondary data are those which have already been collected by some one. For this study there

will be following secondary data.

Websites

Magazines

Articles and Newspapers

Books

Tools of analysis:

Pie charts and percentage

Figures

43

CHAPTER-5

LIMITATIONS

44

The limitations of a study are:

1. The results are based on primary data.

2. The accuracy of the result is also limited to the reliability of methods of investigation,

measurement and analysis of data.

3. The present study is based on the data from Patiala city only and thus might not be

true for all others areas.

4. There was lack of time.

5. The data collected may or may not be accurate because of the biasness from

respondent side.

6. Findings are not justified because each market player have their unique characteristics

of debit cards and credit cards, so it’s very difficult to decide which bank has upper

edge in plastic money.

45

CHAPTER-6

DATA ANALYSIS AND

INTERPRETATION

1. To know about respondents who are using the plastic money.

46

Respondents were asked whether they use plastic money or not. The results are as

follows:

Use of Plastic money by the respondent

Yes100%

No0%

Use of Plastic Money

Interpretation:

From the above figure it can be interpreted that 100 respondents who are taken for the

study are using plastic money and hence it can be said that majority respondents now a

days are using plastic money.

47

2. Card possessed by respondents?

Respondents were asked to explain that which card they possess and the results are as

follows:

Debit Card58%

Credit Card28%

Both14%

Card Possesed by Respondents

Interpretation:

From the above data collected we can interpret that the people mostly have debit card, as

credit card is little expensive than debit card so people mostly prefer debit card, but still

people have applied for their credit card also. Some people have both debit card and credit

card.

48

3. Debit cards of different companies/banks owned by respondents?

Respondents were asked to explain that how many no. of debit card owned by them

and the results are as follows:

One69%

Two24%

Three6%

No. of Debit cards of different companies/banks

Interpretation:

The above data reveals that mostly people have one debit card; about 25% of the respondents

are using two debit cards from different companies, it’s clear that people are satisfied with

their debit card.

49

4. No. of Credit cards of different companies/banks owned by respondents?

Respondents were asked to explain that how many no. of credit card owned by them

and the results are as follows:

One64%

Two30%

Three6%

No. of Credit cards of different companies/banks

Interpretation:

From the above information it can be interpreted that 64% of the respondent have one credit

card from different companies/banks and 30% have two debit cards.

50

5. Companies/Bank card owned by the respondents?

Respondents were asked to explain which company/bank card owned by them. The

results are as follows:

HDFC Bank SBI PNB OBC ICICI BOI

22%

28%

12%

6%

22%

10%

Card owned

%ag

e. o

f res

pond

etns

Interpretation:

From the above data it’s clear that people mostly prefer SBI Bank to get the plastic

money, after that respondent prefers ICICI and HDFC bank. People usually like to

have credit card with which they have account.

51

6. Time period of using the debit card/credit card/both ?

Respondents were asked to explain the time period for which they are using them.

Less than 1 year22%

Between 1- 3 year26%Between 3- 5 year

34%

More than 5 year18%

Time period of debit/credit card use

Interpretation:

The above data reveals that mostly people are using plastic money from 3 to 5 year

and rest are using it for less than 3 year i.e. plastic money become a trend from the

last few years.

52

7. Purposes for using the card?

Respondents were asked to explain the purpose of using the card. The results are as

follows:

Shopping37%

Withdrawal of money24%

Hotel and Restaurant20%

Petrol filling14%

All of above4%

Purpose for using Cards

Interpretation:

It is clear that mostly people use the card for the shopping purpose and then for withdrawal of

cash, 20% use it for going for hotel and restaurants. So the plastic money is used by the

respondents everywhere. For all purpose related using is till now less i.e. 4%.

53

8. Card which is more beneficial?

Respondents were asked to explain which card is more beneficial according to them.

The results are as follows:

Debit card 36%

Credit card34%

Both30%

Card which is beneficial

Interpretation:

From the above figure it is clear people mostly prefer debit card but credit cards are not far

behind, about 34% of the respondents feel that credit card is more beneficial than debit card

and some feel that both are beneficial.

54

9. Benefits provided by Debit card?

Respondents were asked to tell the benefits provided by debit card. The result is as

follows:

Security Free from fraud Anytime access No interest charges

50%

20% 20%

10%

Benefits provided

%ag

e of

Res

pond

ents

Interpretation:

From the above collected data it is clear that there are many benefits and respondents are

satisfied with these benefits, as they feel secured and easy to carry the money. They can use

wherever they want. So from analysis respondents are enjoying all the benefits of Debit card

with having a security 50% and accessing anytime.

55

10. Benefits provided by credit cards?

Respondents were asked to tell the benefits provided by Credit card. The result is as

follows:

Convenient to pay

Overdra

ft facil

ity

Presti

ge to holder

Easy to

carry

25%

23%

25%

27%Benefits provided

%ag

e of

Res

pond

ents

Interpretation:

From the above study it can be seen that respondents agreed that credit card is easy to carry

and it give prestige to the holder. They can use it where ever they want and fulfil their wishes,

without thinking. As Credit card gives facility to the holder to do anything on credit. From

above 27% thinks it’s easy to carry in case of cash.

56

11. Problems faced in processing the card?

Respondents were asked the problems faced in processing the card. The results are as

follows:

30%

40%

15%

15%

Problem facedFeeling of insecurity Fear of losing cardUnnecessary formalities High fee charged by bank

Interpretation:

From the data it is clear that the cardholders have the problem in processing the card. 40%

have a fear of losing a card, and 30% feel insecure that card might be misused by some other

person.

57

12. Future prospects of plastic money?

Respondents were asked to explain to future prospects of plastic money. The results

are as follows:

Rapid growth Steady growth

Stagnant Can't predict Declining

56%

32%

4% 6%2%

Future prospect

%ag

e if

Resp

onde

nts

Interpretation:

It is clear from the figure that mostly people believe that the future of plastic money is at

boom. 56% people believe that there will be rapid growth and 32 % are of the view of steady

growth 6% can’t predict anything.

58

CHAPTER-7

FINDINGS

59

Findings

Following are the findings that are drawn from the study:

1. Respondents taken for this study are those who are using the plastic money in their

daily life.

2. 62% of the respondents believe that plastic money is the currency of modern India.

3. 69% of respondents own one debit card and 25% owns two debit cards.

4. People have less craze for credit card. Only 28% of the respondents have credit card.

5. Respondents mostly prefer the plastic money of SBI Bank, HDFC Bank and ICICI

Bank.

6. 34% using the cards for the last 3 years and the trend of plastic money have emerged

from the last few years.

7. Mostly people use the cards for shopping and withdrawal of money- plastic money is

mostly preferred at the time of shopping.

8. Debit card is more beneficial according to 36% respondents.

9. Debit card provide security to the cardholders.

10. 20% respondents are dissatisfied that debit card is free from fraud.

11. Mostly people agreed that debit card provide the facility of anytime access. Anytime

you can withdraw your money.

12. Credit card is convenient way to pay agreed by most of the respondents.

13. Credit card provide prestige to holders having the tie up with the famous card

companies it provide the sense of pride.

14. 30% cardholder agreed that the plastic money holders have to tackle with the problem

of insecurity.

15. Cardholders have to fulfil the unnecessary formalities while obtaining the card.

16. Plastic money has a rapid growth in the coming years.

17. The growth credit card in India is still very slow. Companies are going really hard to

increase the sale of credit cards.

60

CHAPTER-8

CONCLUSION

61

CONCLUSION

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.

According to projections for the 2003-2008 period the number of financial cards in

circulation will register a compounded annual growth rate of nearly 51 percent sp the

satisfaction of consumers has also increased. There are many ethical issues and challenges for

plastic money issuing banks/ companies. Security relating to card should be first priority for

each bank/company.

Consumers are preferring 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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CHAPTER-9

RECOMMENDATIONS

63

RECOMMENDATIONS

1. Various offers and discounts should be provided on the plastic money so that all the

users feel satisfied with their card choice.

2. The interest charges on credit cards should be reduced so that people are encouraged to

use it in regular routine.

3. More facility should be provided to the card holder in order to satisfy them completely.

4. There should be more sales executives to reinforce new customers.

5. More outlets should be provided where the cards can be easily accepted.

6. The unnecessary formalities should be reduced in order to obtain the plastic money.

7. Advertisements should be given through TV’s, magazines and hoardings to have

maximum reach because the respondents perceive these as important promotional tools.

8. The whole procedure of obtaining the plastic money needs to be authentic. Companies

should provide security to the card holders.

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

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BIBLIOGRAPHY

65

BIBLIOGRAPHY

Kothari C.R, “Research Methodology : Research and Techniques”; Vishwa Prakshan, New

Delhi, 4th edition.

E.gordan and Natrajan, Financial Services, Himalaya Publishing House, Mumbai. 5th edition.

Articles

College Student using the Credit Card

Smart card based Electronics Commerce characteristics and Roles

Credit card and Debit cards : What new ? Where to ?

Competition and Credit and Debit card Interchange Fees

Theory of Credit card Networks: A survey of Literature

An introduction to the economics of payment card networks

Credit card crisis in South Korea

Ethical Issues and Challenges

Websites

www.rba.gov.au

www.federalreserve.gov

www.direct.gov.uk

www.paypal.com

www.google.com

66

ANNEXURE

67

QUESTIONNAIRE

Dear Sir/Maam

I am student of MBA of Swami Vivekanand Institute of Engineering and Technology

and topic of my project report is “Comparative Study of Plastic Money” and I want

your cooperation to fill this questionnaire related to my project.

Personal information

Name ______________________________________________

Address ______________________________________________

Occupation ______________________________________________

Q.1 Do you use plastic money?

a) Yes

b) No

Q.2 Which card do you have?

a) Debit card

b) Credit card

c) Both

Q.3. How many no. of debit cards of different companies owned by you?

a) One

b) Two

c) Three

d) None

Q.4 How many no. of credit cards of different companies owned by you?

68

a) One

b) Two

c) Three

d) None

Q.5 Which companies / bank card do you have?

a) HDFC Bank

b) SBI Bank

c) BOI Bank

d) ICICI Bank

e) Any other if yes specify

Q.6 Since how long you have been using debit card/credit card/ both ?

a) Less than 1 year

b) Between 1-3 year

c) Between 3-5 year

d) More than 5 year

Q.7 Normally for what purpose do you use cards?

a) Shopping

b) Withdrawal of money

c) Petrol filing

d) Hotel and restaurants

e) All of above

Q.8 Which card according to you is more beneficial?

a) Debit card

b) Credit card

c) Both

Q.9. What are the benefits provided by debit cards?

a) Security

b) Free from fraud

c) No interest charges

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d) Anytime access

Q.10 What are the benefits provided by credit cards?

a) Easy to carry

b) Convenient to pay

c) Overdraft facility

d) Prestige to holder

Q.11 What are the problems you are facing in processing the card?

a) Feeling of insecurity

b) Fear of losing the card

c) Unnecessary formalities

d) High fee collected by banks

Q.12 What are the future prospects of plastic money?

a) Rapid growth

b) Steady growth

c) Stagnant

d) Can’t predict

e) Declining

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