Advances In Management Case Study:

Vol. 3 (8) Aug. (2010)

Credit Card-A Study with Reference to Awareness and Satisfaction of Cardholders

Subramanian S.
PRIST School of Business, PRIST University (off campus), Chennai (T.N), INDIA ssmanianl @yahoo.co.in

Abstract With the advancement of technology, banking access has become easy, quick, accurate, safe and also time saving. Technology provides opportunity to the customers as well as the banker for their convenience. In the modern global e-business environment, the banks in India provide a wide range of card services offered to their customers. The card issuing banks need to provide necessary information regarding their products and services to maximize their customers' satisfaction. Products awareness is an important tool for satisfaction. Customers' satisfaction is necessary for successful marketing and growth of any business. This research study makes an attempt to understand and test whether the cardholders are aware of the product or not, if aware, they are satisfied or not, if satisfied then what is the level of satisfaction. This study also makes an attempt to analyze and test if there is an association between awareness and satisfaction of cardholders in banks based on the primary sources of information collected from the samples of 426 respondents under convenience sampling method were used and analyzed by SPSS. Keywords: E-business, customer satisfaction, awareness, credit card, cardholders.

free of cost. The credit card relieves the consumers from botheration of the 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." A credit card is a plastic card having a magnetic strip, issued by a bank or business authorizing the holder to buy goods or services on credit. Any card, plate or coupon book that may be used repeatedly to borrow money or buy goods and services on credit is called credit card. The credit card business got momentum in the sixties and a number of banks entered the field in a big way. Credit card culture is an old hat in western countries. In India, it is relatively a new concept that is fast catching on. The present trend indicates that the coming years will witness a burgeoning growth of credit card which will lead to a cashless society. Credit has become an important vehicle of trade promotion. Credit card provides convenience and safety to the buying process. One of the important reasons for the popularity of credit cards is the sea change witnessed in consumer behaviour. Credit card enables an individual to purchase products or services without paying immediately. The buyer only needs to present the card at the cash counter and sign the bill. Credit card can, therefore, be considered as a good substitute for cash or cheques.

Statement of the problem

The banks that are issuing card generally do not sell cards directly to the potential cardholders. It is through the intermediaries like other banks and private agencies that issue card for the customers on behalf of the banks for which the intermediaries, selling the cards, are given incentives by the banks. These associates in order to boost their card sales provide only some basic information about the card to the potential cardholders. It is not only the intermediaries but also the issuing banks who fail in this respect. Even though issuing banks and intermediaries claim providing a lot of services to card users, it is not known whether the users of cards are fully aware of these services or they are satisfied with the services. Due to lack of research on the perceptional and attitudinal level and lack of credit card popularity in Thanjavur, it was felt necessary to conduct a study to know the perceptions and satisfaction level of users on various services offered on card.

Introduction
Oxford Dictionary defines "credit card authorizing purchase of goods on credit". Credit cards are innovative instruments in the area of financial services offered by commercial banks. The concept of credit cards was first developed by Diners' club founder Frank McNamara, an American businessman who found himself without cash at a weekend resort and founded Diner's card in 1950. American Express issued their first credit card in 1958. Bank of America issued the Bank Americard (now Visa), bank credit card later in 1958. Right from that time, the commercial banks and non-banking companies in the USA adopted the concept of credit cards to develop their business. Barclays Bank was the first bank to introduce credit card in 1966 in Britain. A Credit card is a card or mechanism which enables cardholders to purchase goods, travel and dine in a hotel without having to make immediate payments. The holders can use the cards to get credit from banks up to 20- 50 days (40)

Hypotheses
On the basis of the respondents' responses, the

Advances In Management
following important formulated and tested. 1. 2. 3. statistical null hypotheses were

Vol. 3 (8) Aug. (2010) received. The usable response rate accounted for 86 per cent, which was really satisfactory. Thus, only 426 questionnaires were taken into consideration for the study. Primary and secondary sources of information were used for the study. According to the chosen methodological research approach, the quantitative data was analyzed by using statistical methods of Chi-square and Friedman ranks test by SPSS.

There is no association between level of awareness and satisfaction among banks. There is no association between type of cardholders and level of satisfaction in banks. There is no significant difference between mean ranks towards satisfaction of Cardholders in banks.

Categories of card services

The important forty card .services were identified and categorized under the following seven broad headings for analysis in the present study: I. Merchant establishments' services: The merchant establishment based card services can provide the following (i) Wider acceptance of card (ii) Quick processing and (iii) Discount facility on card. II. Insurance services: The following are the insurance based card services (i) Insurance on cardholders, (ii) Life insurance to add-on cardholders and (iii) Insurance on purchase made with card. III. Convenience services: The following are the services based on the convenience of the cardholders: (i) Auto Debit facility, (ii)Payment Option :Cash/ Cheque /Internet/ATM, (iii) E -mail statement, (iv) Mobile Alert for payment due, (v) Cheque collection box, (vi) ATM cash withdrawal facility, (vii) Request for change of address, (viii) Travel assistance (reservation facility), (ix) On line purchase facility and (x) Tele banking facility. IV. Value added services: The value added card services can be classified into the following: (i) Maximum spending limit on card, (ii) Balance transfer facility, (iii) Cash advance, (iv) Loan on phone, (v) Dial-adraft facility, (vi) EMI on Call, (vii) Cash in-personal loan on card, (viii) Express Reward point Programmes. V. Benefit added services: The following are the important benefit services: (i) Add-on-card facility, (ii) Monthly pre-set limit, (iii) Temporary Credit limit enhancement, (iv) Permanent credit limit enhancement, (v) Limited lost card liability, (vi) Revolving credit facility, (vii) Interest free credit period, (viii) Cash back offer for retail purchase made on card, and (ix) Toll free 24 hours phone enquiry facility. VI. Global assistance services: The following are the global assistance services provided by the issuer of card: (i) Global acceptance of card, (ii) Global ATM access and (iii) Global travel assistance. VII. General services: The following are the general assistance services provided by the card issuers: (i) Photo card options with signature digitally imprinted, (ii) Separate card for house wife, (iii) No fee for registration, renewal, annual and (iv) Automatic renewal of card.

Methodology
Forty card services were identified and listed in the questionnaire handed over to customers and were classifled into seven dimensions. Based on the classification, cardholders' awareness and satisfaction were evaluated by using the Yes/No pattern, giving one point for YES response and Zero for NO response. The satisfactions of the cardholders toward the services were assessed based on the five point scale given in the questionnaire and the points allotted to them. The cardholders were asked to state their satisfactions for the card services mentioned and make use of any one of these five points to express their level of satisfaction. The descriptive and inferential analysis for each and every service mentioned in the questionnaire was arrived at for both awareness and satisfaction level. Based on the pilot study, ninety (90) per cent of the cardholders were identified belonging to State Bank of India and ICICI Bank. Othei than these two banks, no other bank was popular in issuing credit card in Thanjavur of Tamilnadu. Only ten (10) per cent of the total samples were collected in the pilot study. Samples were selected for the main study into three categories, first belonging to SBI cardholders, second to ICICI cardholders and the third category under 'Other Bank". The sampling unit distributed sparsely, many of the respondents refused and some of the respondents did not cooperate in filling up the questionnaires. So, 600 samples were selected (5% of total 12000 as per banks' record up to March, 2007) for the study under convenience sampling method which involves purposive or deliberate selection of particular unit. The questionnaire was distributed to six hundred (600) respondents; the area covered 15 km in and around Thanjavur town. Due care was taken to see that the sample included in the cardholders belonged to various sections of the society with varied educational qualification, income, profession, marital status, sex and age. The questionnaires were distributed to single card holders as well as multiple card holders in private sector, public sector banks and both were included in the sample. After the follow-up of the 600 distributed questionnaires, 494 responded of which 426 usable were

(41)

Advances In Management

Vol. 3 (8) Aug. (2010) satisfied than single cardholders, which means that varieties of banks card and their services are preferred by them for more satisfaction. Next test was concluded that if there is a significant difference between mean ranks towards satisfaction of cardholders in banks. It reveals that the highest satisfactions were ranked as follows: ICICI and 'Other Bank' cardholders in merchant establishments' services and SBI cardholders for convenience services. The least significant for cardholders' satisfaction among the various issuing banks are insurance and global services. It shows that the cardholders' satisfaction was the most on merchant establishments and convenience services and least on glo bal and insurance services.

Results and Discussion

The socio-economic variables such as gender, age, educational qualification, occupation, area, monthly income, marital status were analyzed. The analysis reveals that out of total 426 respondents, 80.05 per cent were males and 19.95 percent females. It reveals that the majority of the respondents were males. The reason for the low proportion of female cardholders is the lack of awareness among them. Majority of the respondents (36.38%) using card come under the age group 31-40 years. The post-graduate are the largest (40.14%) among 426 cardholders. The second largest users of card graduates (26.29%) were followed by 13.62 per cent doctorates, 12.44 per cent professionals and 7.51 per cent of others. The occupation of cardholders reveals that the majority ofthe respondents were salaried class. The area-wise classification of respondents shows that 83.33 per cent of them belong to urban areas and 16.67 per cent to rural. The monthly income of the respondents reveals that the majority of the cardholders' monthly income is less than Rs. 15,000. The marital status shows that the majority of the respondents are married; unmarried respondents were not attracted by the card issuers. So, the issuers should encourage to using all categories of the respondents to increase their sales and satisfaction of the cardholders. The level of awareness of cardholders in various card issuing banks reveals 23.71 per cent of low awareness, 49.77 per cent of average awareness and 26.52 per cent of high awareness of card among the banks. It reveals that the respondents' awareness of products is an average in banks. So, the card division of the banks should take immediate .steps to increase their cardholders' awareness for better satisfaction. The cardholders' overall level of satisfaction represents 6.57 per cent of highly dissatisfied, 28.87 per cent of dissatisfied, 07.98 per cent neither satisfied nor dissatisfied, 48.60 per cent of satisfied and 07.98 per cent of highly satisfied. It reveals that cardholders' overall satisfaction in issuing banks is only average. So, the card division of various banks should adopt right marketing strategy and assess their customers' needs and expectation for promoting their cardholders satisfaction and growth of sales. An application of various tests was made to find out if there is an association between level of awareness and satisfaction of cardholders among the banks. It reveals that the level of awareness and satisfaction is average. It means that as the awareness increases, simultaneously the satisfaction also has to be increased in banks. So, the card issuers should take necessary steps to improve their cardholders' product awareness for higher satisfaction. Another test was conducted to find out if there is an association between the type of cardholders and satisfaction in banks which reveals that multiple cardholders were more

Conclusion
Satisfaction seems to be an average through the analyses and test when compared to the awareness and satisfaction degree of cardholders. As outcome of the result depends upon the awareness level of cardholders, they look more satisfied on the awareness level of the card being issued by the banks. The issuers should take necessary steps to improve their cardholders' awareness for perennial satisfaction. Further, the study reveals that multiple cardholders' were more satisfied than single cardholders. Varieties of banks card and their services were preferred by them. Services like wider acceptability, discount on purchase and quick processing, popularity and convenience services of bill payments options have to be increased for further satisfaction. It is clear that attracting new customer is a difficult, costly and time consuming process. So, the card divisions of various banks should adopt suitable marketing strategy to create more product awareness among the existing cardholders for better satisfaction otherwise they may lose their business growth through the card in future. Table 1 Classification based on the gender of the respondents Gender
Male Female Total Frequency Percentage 80.05 19.95 lOO.(X)

341 85 426

Table 2
Age group classification of the respondents Age group <=30 31-40 41-50 >50 Total Frequency 87 155 104 80 426 Percentage 24.42 36.38 20.42 18.78 100.00

(42)

Advances In Management
Table 3 Educational qualifications of the respondents Qualification Doctorates Post-graduates Under-graduates Professionals Others Total Frequency 58 171 112 53 32 426 Table 4 Occupation of the respondents Occupation Businessmen Govt. employees Private employees Professionals Frequency 79 156 111
46

Vol. 3 (8) Aug. (2010) Table 6 Monthly incomes of the respondents Monthly income <=Rs. 15,000 Rs.l5,OOI-2O,(X)O Rs.2O.()Ol-25,(K)O >Rs.25,000 Total Frequency 131 113 98 84 426 Percentage 30.75 26.53 23.00 19.72
lOO.OO

Percentage 13.62 40.14 26.29 12.44 07.51 100.00

Table 7 Marital statuses of the respondents Marital status Percentage 18.54 36.62 26.06 10.80 Unmarried Married Total Frequency 103 323 426 Percentage
24.18 75.82 I()().(X)

Table 8 Level of awareness of the respondents Level of awareness Low Average High Total Frequency
101

Percentage 23.71 49.77 26.52 100.00

Others
Total

34
426

07.98
lOO.(K)

212 113 426

Table 5 Area- wise classifications of the respondents Area

Urban Rural Total

Frequency 355 71 426

Percentage 83.33 16.67 100.00

Table 9 Level of satisfactions of cardholders in hanks Satisfaction Highly Dissatisfied Dissatisfied Neither satisfied nor dissatisfied Satisfied Highly satisfied Total Frequency Percentage 28 123 34 207 34 426 6.57 28.87 07.98 48.60 07.98
lOO.OO

HYPOTHESIS-I Null Hypothesis: There is no association between level of awareness and satisfaction of SBI cardholders

Table 10
Level of awareness Low
Average High loial

Chi-square test for association between level of awareness and satisfaction of SBI cardholders Level of satisfaction of cardholders Total value Low Average High
32(42.1) 54 (30.7)

P value

4(5.3) 101 (57.4) 63 (70.0) 168

40 (52.6) 21 (11.9) 27 (30.0)

76 176 90 342 108.69 0.000**

86

88

Note: Figures in parentheses are indicates percentage to row total. (43)

Advances In Management

Vol. 3 (8) Aug. (2010)

HYPOTHESIS-II Null Hypothesis: There is no association between level of awareness and satisfaction of ICICI bank cardholders Table 11 Chi-square test for association between level of awareness and satisfaction of ICICI bank cardholders -) Level of satisfaction of cardholders Level of X' P value Total awareness value High Low Average Low Average High Total 17(45.9) 29(39.2) 2(3.2) 48 6(16.2) 37 (50.0) 37 (59.7) 80 14(37.9) 8(10.8) 23(37.1) 45 37 74 62 173 42.696 0.000**

Note: Figures in parentheses are indicates percentage to row total. HYPOTHESIS-III Null Hypothesis: There is no association between level of awareness and satisfaction of 'Other bank' cardholders. Table 12 Chi-square test for association between level of awareness and satisfaction of 'other bank' cardholders Level of satisfaction of Level of 'Other Bank 'cardholders P value Total awareness value High Low Average

x'

Low Average High Total

12(66.7) 3 (25.0) 15

6(33.3) 9 (75.0) 6(31.6) 21

18 12 19 49 37.947 0.000**

13(68.4)
13

Note: Figures in parentheses are indicates percentage to row total HYPOTHESIS-IV Null Hypothesis: There is no association between types of cardholder and level of satisfaction in banks Table 13 Chi-square test for types of cardholder and level of satisfaction in banks Types of cardholder HD Single card Multiple card Total 22(7.5) 6(4.4) 28 Level of satisfaction in banks D 86(29.8) 37 (27.0) 123 NN 28 (9.7) 6 (4.4) 34 S HS 289 137 426 Total

x'
value 13.557

P value

125(43.3) 28 (9.7) 82 (59.8) 207 6 (4.4) 34

0.008**

Note: Figures in parentheses are indicates percentage to row total. HD-highly dissatisfied; D-dissatisfied; NN-neither satisfied nor dissatisfied; S-satisfied; HS-highly dissatisfied. HYPOTHESIS-V Null Hypothesis: There is no significant difference between mean ranks towards satisfaction of ICICI Bank cardholders

(44)

Advances In Management

^^^'^i

mi^tmm

^sm^

Vol. 3 (8) Aug. (2010)

Table 14 Friedman test for significant difference between mean ranks towards satisfaction of ICICI bank cardholders Dimensions of cardholders' satisfaction Merchant establishments services Convenience .services Value added services Benefit services General services Insurance .services Global services Mean Rank 4.71 4.35 4.31 4.10 3.84 3.38 3.31 59.707 0.000** X^ value P value

HYPOTHESIS-VI Null Hypothesis: There is no significant difference between mean ranks towards satisfaction of SBI cardholders Table 15 Friedman test for significant difference between mean ranks towards satisfaction of SBI cardholders Dimension of cardholders satisfaction Convenience services Benefit services Merchant establishments services Value added services General services Insurance services Global .services Mean Rank 4.87 4.85 4.30 3.73 3.71 3.35 3.20 203.724 0.000**
X^ value

P value

HYPOTHESIS-VII Null Hypothesis: There is no significant difference between mean ranks towards satisfaction in 'Other bank' cardholders Table 16 Friedman test for significance differences between mean ranks towards satisfaction in 'other bank' cardholders Dimensions of cardholders sati.sfaction Merchant establishments services Convenience services Value added .services General services Benefit services Cilobal services Insurance services Mean rank 4.92 4.66 4.62 4.59 4.13 3.02 2.05
New Delhi, Himalaya Publishing House (2006) 3. Gurusamy S., Merchant Banking and Financial Services, Chennai, Vijay Nicole Imprints Private Limited (2007) 4. Haq M.Z. and Tania I.J., "Measurement of consumer satisfaction of credit card users in Bangladesh." Stamford Journal of Business X' value

P value

71.365

o.ooo**

References
1. Elliott Julia. Knight Anne and Cowley Chris, Oxford Ditlionary and Thesaurus. New York, Oxford University Press Inc. (2001) 2. Gordon E. and Natarajan K.. Einancial Markets and Services.

(45)

Advances In Management ^wfe-^>^w8>^siMp:

Studies. I (I). 1-6(2005) 5. Kolhari C.R.. Research Methodology Methods and Techniques, 2'"' edn. New Delhi. New Age International (P) Limited (2009) 6. Panneerselvam R., Research Methodology, New Delhi, Prentice-Hall of India Private Limited (2006) 7. Dash Priya Ranjan, "Your credit card under watch". Financial Chronicle. Chennai. April 17 (2008) 8. Toor N.S., "Computers and banking", Handbook of Banking Information. 27'" edn.. New Delhi, Skylark Publications (2008) 9. Uppal R.K. and Chawla Rosy, "Customer service in banks meeting customer expectations". The Indian Banker. I l l (11), 3439 (2008) 10. Woelfel C.J., Encyclopedia of Banking and Finance, New Delhi, S. Chand and Company Limited (1994)
* "

Vol. 3 (8) Aug. (2010)

11. "Credit card usage in India still low." Survey-Business Line. New Delhi (Dec. 27,), p.l <http://www.blonet.com/2004/12/28/ stories/ 2004/2280257030.htm.> (2004) 12. RBI Report (2008-09) 13. RBI, "Money and Banking", May (2009) 14. http://en.wikipedia.org/wiki/credit_card 15. http://www.advfn.com/moneywords_term_l 199_credit_card.html 16. http://www.bankersonline.com/technology/gurus_tech081803d. html 17. www.icici.com 18. www.rbi.org.in. (Received 10* April 2010, accepted 20'" June 2010)

"Advances In Management' is blind peer reviewed international monthly journal being published regularly since April 2008. Our journal is approved for inclusion in Cabell's Directory and Research Papers in Economics (RePEc).

rd

Year of Publication

I^RkRCH JOURNAL OF

"Research Journal of BioTechnology" r^ '-_:,'*

is being published regularly from August 2006
Website: www.biotekjoumal.net

"Research Journal of Chemistry and Environment"

is being published regularly from December 1997
Website: www.chemenviron.net

(46)

Copyright of Advances in Management is the property of Advances in Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.