CHAPTER1 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 fi!ed 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 ma$ing immediate payments. The holders can use the cards to get credit from ban$s up to %& days. The credit card relieves the consumers from the botheration of carrying cash and ensures safety. It is a convenience of e!tended credit without formality. Thus credit card is a passport to# safety# convenience# prestige and credit.

'

FIRST CREDIT CARD INTRODUCE

HISTORY OF CREDIT CARDS

In 1914 there was credit system that was used by Western Union to give to their more prominent customers in the interest of good customer service. )rominent *prestigious) customers were given a metal card that was used to defer payments *interest free) on services used by them. This credit system was called

Meta M!ne"
In 19#4 +eneral )etroleum ,orporation *an oil company) saw the success and being aware of the value of goodwill this could offer to their customers# also issued their own metal money for gasoline and automotive services. This was first offered to their employees followed by selected customers then the general public after its great success. -uring the ".'/s and ".(/s this form of credit card system spread to other companies such as 0ailroad# hotel chains# airline# oil companies and department stores In the late (/1s American Telephone and Telegraph *AT2T) introduced their credit card3 called the 4ell 5ystem ,redit ,ard. The use of such credit cards3 greatly increased after World War II due to the rapid growth of businesses# increase in travel and the great demands for goods and services and thus# it popularity grows significantly. In 19$%# the first universal credit card was introduced by -iners ,lub# Inc *invented by -iners' ,lub founder 6ran$ 7c8amara). This was a new

$ind of credit card which set the foundation on which today1s card credit is established# unli$e the other cards where they could only used for specific goods and services# the -iner ,lub had a more general use. It was first used by members for restaurant services but 9uic$ly e!panded beyond that service to cover general travel And entertainment e!penses thus covering a variety of establishments. ,ardholders were charged an annual fee and billed on a monthly or yearly basis. -uring the ".&/s# because of its convenience and efficiency# its popularity increased and many merchants were very eager to accept the card because customers spend a lot more than if it was cash since they can charge it to their cards In 19$1 the first ban$ to implement this credit system was the 6ran$lin 8ational 4an$ in 8ew :or$ ,ustomers would submit an application for a loan and were screened for credit. Approved customers were then given a card *,harge;It card) to ma$e retail purchases. This credit card system was similar to today1s system where consumers could ma$e a purchase using the card at participating merchants. This merchant would copy the customers Information from the unto a sales slip then obtain authori<ation from the ban$ thus# completing the purchase. The ban$ would then# in turn# reimburse this participating retailer and collect the debt from the consumer at a later date with a flat fee to cover the costs of providing this credit loan. This system was very successful and after a couple of years# other ban$s impressed with this credit system =umped on board and offered their customers similar services.

&

In 19$&# the American >!press ,ompany *a traveler1s chec$ business) entered the credit card business with their version of the universal credit card -on1t leave home without it3. Their credit card was used for travel and entertainment purposes and accepted at participating airline merchants# restaurants and hotels. Their credit system policy at the time *which changed in ".?@) re9uired cardholders to pay off their balances each month. In 19$9 the 4an$ of America in ,alifornia introduced the 4an$ of America card. They were the first to introduce the revolving credit card. This means customers were now given the option to ma$e regular monthly payments on the balance owed rather than having to pay off the entire balance at one time. In other words# customers could carry a balance from month to month. 7any other ban$s then followed offering this revolving credit option. In 19'$# 4an$ of America foresaw more income potential and control and began issuing license agreements to other ban$s of all si<es in the U5. These licensing agreements allowed other ban$s to issue 4an$America 4lue# White# and +old 4an$America card and also to interchange transactions through these issuing ban$s

In 19'' a group of "% U5 ban$s came together to form a new ban$card processing association that provides the ability to e!change information on credit card transactions.

In 19'( a group of four ,alifornia ban$s formed a new Association entity called 7aster ,harge *0enamed 7aster,ard in ".@.) which is now $nown as Ma)terCard Internati!na . This was done to compete with the 4an$America card *later became *i)a in ".@@). This new ban$card processing association would e!pand their services and increase their income potential# thus# these small ban$s formed a mutual relationships with large national or international ban$s. In 19'9 ban$s interested in issuing cards of their own# became members of either the 7aster ,harge program *7aster,ard Association) or 4an$America card program *Bisa Association). This also means that most independent ban$ charge cards would now change over to either credit card programs. This was mutually beneficial to all ban$s and small financial institutions since# they shared card program costs. 4oth organi<ations issued credit cards through their member ban$s for their customers. Also# they both lay down standards for credit card processing. In ".@@ 4an$ Americard spreading its credit card business globally had difficulty achieving this due to the association of "America" in 4an$Americard. Thus# its name was changed to Bisa. This changing of name was followed shortly *' years after) by 7aster ,harge to 7aster ,ard.

In 19(9 7aster ,harge changed its name to 7aster ,ard. Also# the electronic processing of credit cards improved through electronic dial;up terminals and magnetic stripes on the bac$ of credit cards. This allowed consumers credit cards swiped by merchants to accessed issuing ban$ card holder information. This method decreased fraud# increased speed of processing authori<ations and decreases the usage of paper. In t+e ear " 19&%) the first Automatic Teller 7achines *AT7s) came into e!istence. This gave credit card holders access to cash in different currencies from different countries around the world as well as locally. AT7s give consumers the opportunity to have access to cash from their ban$ account or from their credit card. Also# this gives an e!tra benefit to card holders since they could ma$e deposits '% hours a day from most countries around the world.

#%%$ and ,e"!ndC Today# 7aster,ard# American >!press# BI5A# and -iscovery# are the most popular and also have the most respected symbols when it comes to credit cards. The credit cardDpayment system will continue to evolve as a new technology payment system developed through the advancement in science and technology. 0ead articles below under the headingC Additional Info. En credit ,ard; future credit cards3 that are in the ma$ing for the near future. Enly a few are listed but there are other bigger futuristic developments out there in the ma$ing
?

AD*ANTAGES OF CREDIT CARD T+e ,ene-it) !- credit card can ,e .r!/0ed a) -! !1)

A2 3ENEFITS TO THE 3AN4

32 3ENEFITS TO THE CUSTOMERS 5CARD HO6DER2

C2 3ENEFITS TO THE RETAI6ER

5A2 3ENEFITS TO THE 3AN4

a2 A credit card is an integral part of ban$s ma=or services these days. The credit card provides the following advantages to the ban$C the system provides an opportunity to the ban$ to attract new potential costumers. ,2 To get new customers the ban$ has to employee special trained staff. This gives the ban$ an opportunity to find the latent talent from among e!isting staff that would have been otherwise wasted. c2 The more important function of a credit card# however# is simply to yield direct profit for the ban$. There is a scope and a potential for a better profitability out of income D commission earned from the traders turn over. d2 This also provides additional customer services to the e!isting clients. It enhances the customer satisfaction. e2 7ore use by the car holder and conse9uently the growth of ban$ing habits in general. -2 4etter networ$ of card holders and increased use of cards means higher popularity and image of the ban$

"/

.2 5avings of e!pense on cash holdings# i.e. stationery# printing and man power to handle clearing transactions while considerably is reduced. It increases +2 customer; base of the ban$ i2 It brings into ban$s fold high net worth customers by introducing various types of credit card li$e +old ,ard# >!ecutive ,ard. 72 It brings in new customers from various merchants outlet which accepts credit cards against sale of their goodsDservices. 82 It creates a brand name and popular image for the ban$. 2 Farge scale use of credits card and shops etc accepting them help to increase deposit base of the ban$ 92 It increases interest income of the ban$ when card users avail of loan facilities to settle the bills. n2 This may increase the chances of relationship ban$ing and there by retaining the customers.

""

532 3ENEFITS TO CARD HO6DER The principal benefits to a card holder areC
a2 Ge can purchase goods and services at a large number of outlets without cash or che9ue.The card is useful in emergency# and can save embarrassment. ,2 The ris$ factor of carrying and storing cash is avoided. It is convenient for him to carry credit card and he has trouble free travel and may purchase his without carrying cash or che9ue. c2 7onths purchases can be settled with a single remittance# thus# tending to reduce ban$ and handling charges. d2 The card holder has the period of free credit usually between (/;&/ days of purchase e2 ,ash can usually be obtained with the card# either on card account or by using it as identification when encasings a che9ue at the ban$. -2 Availing credit with minimum formality.

"'

.2 The credit card saves trouble and paper wor$ to traveling business man. +2 The card holder has the option of ta$ing e!tended credit up to a pre arranged limit without reference to anyone# in additional to an initial credit and interest free period. 6uture# revolving credit becomes automatically available as the outstanding balance is reduced. i It provides a proof of spending through ban$ing channels to strengthen his position incase of disputes with sellers. 72 It also gives him e!posures to ban$ing operation since systematic accounting for spending and payments are routed through ban$ing channels. 82 It also allows him to delegate spending power to add on members 2 ,redit card is considered as a status symbol.

"(

3ENEFITS TO THE MERCHANT ESTA36ISHMENT T+e 0rinci0a ,ene-it) !--er credit card t! t+e retai er i) a2 This will carry prestigious weight to the outlets. ,2 Increases in sale because of increased purchasing power of the cardholder due to unbilled credit available to the card holder. c2 The retailers gain from the impulse buying and trading up the tendency to buy the bigger or better article d2 ,redit card ensures timely and certainly of payments. e2 5uppliersDsellers no longer have to send reminders of outstanding debits. -2 5ystematic accounting since sales receipts are routed through ban$ing channels. .2 Advertising and promotional support on national scale. +2 -evelopment of prestigious clientele base.

"%

DISAD*ANTAGES OF CREDIT CARD:The following are the common disadvantages of the credit cardC

a) 5ome credit card transactions ta$e longer time than cash transactions because of various formalities. b) The customer tends to overspend out of immerse happiness. c) -iscounts and rebates can rarely be obtained.

d) The cardholder is responsible for charges due to loss or theft of the card and the ban$ may not be party for loss due to fraud or collusion of staff# etc

e2 ,ustomers may be denied cash discount for payment through card. -2 It might lead to spending habits and cardholders may end up in big debts

i2 Avoid the entire cost and security problem involved in handling cash.

72 Fosses to bad debts and reduced an additional li9uidity is

"&

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

2 ,redit card is considered as a status symbol.

3ENEFITS TO THE MERCHANT ESTA36ISHMENT T+e 0rinci0a ,ene-it) !--er credit card t! t+e retai er i)
a2 This will carry prestigious weight to the outlets. ,2 Increases in sale because of increased purchasing power of the cardholder due to unbilled credit available to the card holder. c2 The retailers gain from the impulse buying and trading up the tendency to buy the bigger or better article d2 ,redit card ensures timely and certainly of payments. e2 5uppliersDsellers no longer have to send reminders of outstanding debits. -2 5ystematic accounting since sales receipts are routed through ban$ing channels. .2 Advertising and promotional support on national scale. +2 -evelopment of prestigious clientele base.

"A

i2 Avoid the entire cost and security problem involved in handling cash. 72 Fosses to bad debts and reduced an additional li9uidity is achieved.

"@

MAR4ETING STRATEGIES
American companies spend billions of dollars each year on mar$eting. As a matter of fact# in '//"# U.5. advertising e!penditures alone topped H'(/ billion# more than doubling the H"/&..@ billion spent in ".?/. 5S!/rce: :Ad;erti)in.: E<0!)/re and Stati)tic)= N!;e9,er #%%> ne1) etter !- t+e Media Ed/cati!n F!/ndati!n2

8ow# these figures may seem staggering to the independent professional on a budget# but don1t panicI there are lots of effective strategies you can utili<e that will help you grow your business fast. Gere are some of my favoritesC

Identi-" "!/r nic+e?

Ene of the easiest ways to attract customers is to figure out which group of prospective customers you get your very best results for and go after them e!clusively. 7any professionals are afraid to do this claiming that they1ll be leaving someone out# but many mar$eting e!perts agree that niche mar$eting as the easiest and fastest way to get business.

"?

P!)iti!n "!/r)e - a) an e<0ert?

WhyJ >!perts ma$e more money and get more media attention and that1s free advertisingK Fet1s face itI it1s easier to trust a specialist than a generalist who1s trying to be everything to everyone. Ence you1ve identified your niche# let the world $now about how you can help. )rovide free information products# write articles and white papers about the problems your clients face and how they can solve them.

,onduct wor$shops# seminars and tele;classes specifically geared towards helping your prospective customers and before long you1ll be regarded as an e!pert in your field. And# while you1re at it don1t forget to# collect names# emails and addresses of prospects to $eep filling your pipeline.

De;e !0

!n.!in.

re ati!n)+i0)

1it+

c!90 e9entar"

0r!-e))i!na ) and ,/i d "!/r re-erra tea9?

These are other professionals who sell non;competing services or products to the same niche customers you are targeting. 6or instance# my clients often need the services of boo$$eepers# accountants and business

".

attorneys. Fi$ewise# they refer business to me. Gere are a couple of other e!amplesC L 0esidential realtor# mortgage bro$er# real estate attorney# home improvement L contractor# printer# architect and interior graphic designer. designer.

,ommercial

copywriter#

In)tit/te a )")te9 t! 8ee0 trac8 !- a !- t+e 0e!0 e 1+! are intere)ted in "!/r 0r!d/ct !r )er;ice)@ and -ind creati;e 1a") !- 8ee0in. in t!/c+ 1it+ t+e9 !n a re./ ar ,a)i)?
To start# go through your notes. )ut together a list of all of the people you1ve spo$en to in the last A;. months who1ve showed interest in you but haven1t become paying customers. 6ollow up with them in a variety of waysC call them to touch base# use email# as$ them to subscribe to a newsletter# send them interesting articles# or invite them to =oin you at events. It ta$es numerous impressions to ma$e the saleI that1s why you see commercials on TB over and over again for the same products. 4y Meeping trac$ of all of the people who1ve showed interest and $eeping your business on their radar screen you1ll turn more of them into paying customers.

'/

6et "!/r )ati)-ied c/)t!9er) +e 0 "!/ )e )er;ice)?

Gere are a couple of ways

"!/r 0r!d/ct) !r

to

do

thisC

L As$ them for referrals ; right away *if you were a car salesman you wouldn1t wait for the new car to get dirty and dentedK)

L As$ them to write testimonials for you# *also right away) and compile a list of testimonials to use in your all of your mar$eting collateral. Create a 9ar8etin. ca endar and 8ee0 t! it c!n)i)tent "? 5cheduling mar$eting activities that ta$e place wee$ly# bi monthly# monthly and 9uarterly will help you to avoid the feast or famine syndrome that most independent professionals fall prey to. And# by doing so# mar$eting will become easier since it becomes a regular part of your business life. Identi-" inn!;ati;e 1a") t! .et 9!re ,/)ine)) -r!9 e<i)tin. c/)t!9er)?

'"

It1s much easier to get business from customers who are already happy with your services or products. 5o develop additional services or products to $eep customers coming bac$ for more.

THE

MECHANICS

OF

CREDIT CARD TRANSACTION

,ard transactions are processed through a chain of connected parties. The five primary parties involved in processing a Bisa or 7aster,ard credit card transaction areC

". TG> ,A0- GEF->0

'. TG> ,A0- I55U>0

(. TG> 7>0,GA8T %. TG> A,NUI0> &. TG> ,A0- A55E,IATIE8

The card issuer is the ban$ that issues the credit card to the cardholder. The merchant ac9uirer# often a ban$# processes transactions on behalf of the merchant. ",ard Association" is another term used to describe Bisa and 7aster,ard. The use of a card involves an e!change of value between a consumer and a business. The card represents an offer for payment in e!change for the

''

merchant1s goods or services. The sales draft itself is the cardholder1s promise to pay. When an ac9uirer accepts a draft from merchants# the ban$ is buying the value represented by the draft and paying the merchant the face value of that sales draft. ,ollecting payment through the interchange systems is a two;part process

1? C earin.:
-uring the clearing process the ac9uirer provides the appropriate issuer with information on the sale. 8o money is e!change during clearing. ,learing involves the e!change of data only. The ac9uirer provides data re9uired to identify the cardholder1s account and provide the dollar amount of the sales. When the issuing ban$ gets this data# the ban$ posts the amount of the sale as a draw against the cardholder1s available credit and prepares to send payment to the ac9uirer.

#? Sett e9entC
The second step is the actual e!change of funds. The issuer sends a record of money that is being transferred from its account to that of the ac9uirer. 6rom this account the ac9uirer pays the merchant. 6unds are settled between issuers and ac9uirers through accounts with large ban$s that are members of the 6ederal 0eserve 5ystem and have been selected for that purpose. )ayments to merchants are made usually through the 6ederal

'(

0eserve1s Automated ,learing Gouse *the A,G3) which is an electronic funds transfer system.

>? Tran)acti!n Pr!ce))in.

Transaction processing involves front;end processing and bac$;end processingC 6ront;end processing involves authori<ation and data capture services and message connections via various communication networ$s to pint of sale devices. 4ac$;end processing provides financial accounting for ac9uirers and issuers and prepares and submits clearing and settlement data into the Bisa and 7aster,ard interchange networ$s.

'%

1? Fr!nt End Pr!ce))in.

Authori<ation is the ac$nowledgement by the issuer that a particular account may be charged for the amount of the sale. The preferred method to obtain an authori<ation and the one that will receive the lower interchange rate is to swipe a card1s magnetic strip through the point of sale terminal1s card reader. If the card cannot be electronically read by the terminal for any reason# the information may be $eyed into the terminal in order to get an electronic response. The re9uest is then routed through the processor1s BA) or 7I) to the issuer1s authori<ation center. The response is returned to the merchant1s terminal. The terminal records the response code which becomes part of the transaction and is included in the clearing data sent through interchange to the issuer Authori<ation may also be obtain through other methods such as voice authori<ation. The merchant can call an ?// number to verbally provide cardholder information and receive an operator1s response. Ether methods such as electronically generated audio responses *A0U) that permit the merchant to use the telephone li$e a $ey pad to enter sale information

'&

can also be used. If for any reason the issuer or its authori<ation center cannot be reached# the card Associations will act as stand;in processors to provide authori<ations.

E ectr!nic Dra-t Ca0t/re

-raft capture is the process of transferring sales draft data into electronic format so that it may be sent through the interchange networ$s for clearing and settlement. -ata identifying the cardholder account and e!piration date is put into the point of sales terminal# either by swiping the card thorough a card reader or manually $eying the information into the terminal1s $eypad. The amount of the sales is then entered and an authori<ation re9uested. Ence an authori<ation code has been received# the terminal is prompted to store data on the completed sale in its memory. .

'A

#? 3ac8-End Pr!ce))in.
4ac$;end processing involves the various accounting functions that enable transactions to be recorded to the proper merchant or cardholder account. -uring bac$;end processing reports are created for distribution to the ac9uirers that includeC

12 Sett e9ent data #2 Sec/rit"A-ra/d data >2 Retrie;a Ac+ar.e,ac8 data 42 F/nd) di),/r)e9ent) data

Transactions for internet and other card not present environments wor$ similarly but can have additional processing steps. 4oth Bisa and 7aster,ard have Internet authentication programs *not to be confused with authori<ation) named Berified by Bisa *4y) and 7aster,ard 5ecure ,ode *7,5,) that do alter the transaction process somewhat. If the cardholder is registered with one of these programs# they must provide a pre;registered password at the time of purchase. This password is then passed along as
'@

part of the information flow of the transaction *these programs and other techni9ues for controlling fraud are discussed in more detail later in this section). Bisa and 7aster,ard offer both signature debit and credit cards to consumers. The primary difference between signature debit transactions and credit transactions are that debit cards are lin$ed to a ban$ account. 0ather than offering the cardholder (/ days of float and the option to finance ongoing balances# debit cards simply debit the cardholder1s ban$ account for authori<ed purchases. 5ignature debit transactions *which are sometimes also referred to as offline debit# a misleading reference and not to be confused with an offline >6T debit transaction) are different from )I8 debit transactions in that the transaction does not involve use of a )I8 number at the time of purchase. )I8 transactions also are processed on entirely different networ$s referred to as >6T networ$s and are discussed in 5ection IB.

'?

CREDIT CARD OPERATIONS OF 3AN4

R3I G/ide ine)
)ursuant to the announcement made in the Annual )olicy 5tatement '//%;/&# the 0eserve 4an$ of India had constituted a Wor$ing +roup on 0egulatory 7echanism for ,ards. The +roup has suggested various regulatory measures aimed at encouraging growth of credit cards in a safe# secure and efficient manner as well as to ensure that the rules# regulations# standards and practices of the card issuing ban$s are in alignment with the best customer practices. The following guidelines on credit card operations of ban$s have been framed based on the recommendations of the +roup as also the feedbac$ received from the members of the public# card issuing ban$s and others. All the credit card issuing ban$s D 846,s should implement these guidelines immediately. >ach ban$ D 846, must have a well documented policy and a 6air )ractices ,ode for credit card operations. In 7arch '//&# the I4A released a 6air )ractices ,ode for credit card operations which could be adopted by
'.

ban$s D 846,s. The ban$ D 846,'s 6air )ractice ,ode should# at a minimum# incorporate the relevant guidelines contained in this circular.

G/ide ine) 1? I))/e

-!r !-

I90 e9entati!n card)

a2 4an$s D 846,s should independently assess the credit ris$ while issuing cards to persons# especially to students and others with no independent financial means. Add;on cards i.e. those that are subsidiary to the principal card# may be issued with the clear understanding that the liability will be that of the principal cardholder.

,2 As holding several credit cards enhances the total credit available to any consumer# ban$s D 846,s should assess the credit limit for a credit card customer having regard to the limits en=oyed by the cardholder from other ban$s on the basis of self declarationD credit information.

c2 The card issuing ban$s D 846,s would be solely responsible for fulfillment of all M:, re9uirements# even where -5As D -7As or other agents solicit business on their behalf.

d2 While issuing cards# the terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language *preferably in

(/

>nglish# Gindi and the local language) comprehensible to a card user. The 7ost Important Terms and ,onditions *7IT,s) termed as standard set of conditions# as given in the Appendi!# should be highlighted and advertisedD sent separately to the prospective customerD customers at all the stages i.e. during mar$eting# at the time of application# at the acceptance stage *welcome $it) and in important subse9uent communications

#?

Intere)t

rate)

and

!t+er

c+ar.e)

a2 ,ard issuers should ensure that there is no delay in dispatching bills and the customer has sufficient number of days *at least one fortnight) for ma$ing payment before the interest starts getting charged.

,2 ,ard issuers should 9uote annuali<ed percentage rates *A)0) on card products *separately for retail purchase and for cash advance# if different). The method of calculation of A)0 should be given with a couple of e!amples for better comprehension. The A)0 charged and the annual fee should be shown with e9ual prominence. The late payment charges# including the method of calculation of such charges and the number of days# should be prominently indicated. The manner in which the outstanding unpaid amount will be included for calculation of interest should also be specifically shown with )rominence in all monthly statements. >ven where the minimum amount indicated to $eep the card valid has been paid# it should be indicated in bold letters that the interest will be charged on the amount due after the due date of payment. These aspects may be shown in the Welcome Mit in addition to

("

being

shown

in

the

monthly

statement.

c2 The ban$ D 846, should not levy any charge that was not e!plicitly indicated to the credit card holder at the time of issue of the card and getting his D her consent. Gowever# this would not be applicable to charges li$e service ta!es# etc. which may subse9uently be levied by the +overnment or any other statutory authority.

d2 The terms and conditions for payment of credit card dues# including the minimum payment due# should be stipulated so as to ensure that there is no negative amorti<ation.

e2 ,hanges in charges *other than interest) may be made only with prospective effect giving notice of at least one month. If a credit card holder desires to surrender his credit card on account of any change in credit card charges to his disadvantage# he may be permitted to do so without the ban$ levying any e!tra charge for such closure

('

>?

Br!n.-/

,i in.

a2 The card issuing ban$ D 846, should ensure that wrong bills are not raised and issued to customers. In case# a customer protests any bill# the ban$ D 846, should provide e!planation and# if necessary# documentary evidence to the customer within a ma!imum period of si!ty days with a spirit to amicably redress the grievances.

,2 To obviate fre9uent complaints of delayed billing# the credit card issuing ban$ D 846, may consider providing bills and statements of accounts online# with suitable security built therefore.

4?

U)e

!-

DSA)

DMA)

and

!t+er

a.ent)

a2 when ban$s D 846,s outsource the various credit card operations# they have to be e!tremely careful that the appointment of such service providers does not compromise with the 9uality of the customer service and the ban$ D 846,1s ability to manage credit# li9uidity and operational ris$s. In the

((

choice of the service provider# the ban$ D 846,s have to be guided by the need to ensure confidentiality of the customer1s records# respect customer privacy# and adhere to fair practices in debt collection. ,2 The ,ode of ,onduct for -irect 5ales Agents *-5As) formulated by the Indian 4an$s1 Association *I4A) could be used by ban$s D 846,s in formulating their own codes for the purpose. The ban$ D 846, should ensure that the -5As engaged by them for mar$eting their credit card products scrupulously adhere to the ban$ D 846,1s own ,ode of ,onduct for credit card operations which should be displayed on the ban$ D 846,1s website and be available easily to any credit card holder.

c2 The ban$ D 846, should have a system of random chec$s and mystery shopping to ensure that their agents have been properly briefed and trained in order to handle with care and caution their responsibilities# particularly in the aspects included in these guidelines li$e soliciting customers# hours for calling# privacy of customer information# conveying the correct terms and conditions of the product on offer# etc.

(%

Pr!tecti!n

!-

C/)t!9er

Ri.+t)

,ustomer1s rights in relation to credit card operations primarily relate to personal privacy# clarity relating to rights and obligations# preservation of customer records# maintaining confidentiality of customer information and fair practices in debt collection. The card issuing ban$ D 846, would be responsible as the principal for all acts of omission or commission of their agents *-5As D -7As and recovery agents).

I?

Ri.+t

t!

0ri;ac"

a2 unsolicited cards should not be issued. In case# an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same# the card issuing ban$ D 846, shall not only reverse the charges forthwith# but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.

,2 Unsolicited loans or other credit facilities should not be offered to the

(&

credit card customers. In case# an unsolicited credit facility is e!tended without the consent of the recipient and the latter ob=ects to the same# the credit sanctioning ban$ D 846, shall not only withdraw the credit limit# but also be liable to pay such penalty as may be considered appropriate c2 The card issuing ban$ D 846, should not unilaterally upgrade credit cards and enhance credit limits. )rior consent of the borrower should invariably be ta$en whenever there is any changeDs in terms and conditions. d2 The card issuing ban$ D 846, should maintain a -o 8ot ,all 0egistry *-8,0) containing the phone numbers *both cell phones and land phones) of customers as well as non;customers *non;constituents) who have informed the ban$ D 846, that they do not wish to receive unsolicited calls D 575 for mar$eting of its credit card products. The -8,0 should be set up within two *') months from the date of this circular and wide publicity should be given to the arrangement e2 The intimation for including an individual1s telephone number in the -o 8ot ,all 0egistry *-8,0) should be facilitated through a website maintained by the ban$ D 846, or on the basis of a letter received from such a person addressed to the ban$ D 846,. -2 The card issuing ban$ D 846, should introduce a system whereby the -5AsD -7As as well as its ,all ,enters have to first submit to the ban$ D 846, a list of numbers they intend to call for mar$eting purposes. The ban$ D 846, should then refer to the -o 8ot ,all 0egistry *-8,0) and only those numbers which do not figure in the 0egistry should be cleared for calling.
(A

.2 The numbers cleared by the card issuing ban$ D 846, for calling should only be accessed. The ban$ D 846, would be held responsible if a -o 8ot ,all 8umber *-8,8) is called on by its -5As D -7As or ,all ,entreDs. +2 The card issuing ban$ D 846, should ensure that the -o 8ot ,all 0egistry *-8,0) numbers are not passed on to any unauthori<ed personDs or misused in any manner.

I.)4an$s D 846,sD their agents should not resort to invasion of privacy vi<.# persistently bothering the card holders at odd hours# violation of "do not call"

(@

5ii2

C/)t!9er

c!n-identia it"

a2 The card issuing ban$ D 846, should not reveal any information relating to customers obtained at the time of opening the account or issuing the credit card to any other person or organi<ation without obtaining their specific consent# as regards the purposeDs for which the information will be used and the organi<ations with whom the information will be shared. 4an$s D 846,s should satisfy themselves# based on specific legal advice that the information being sought from them is not of such nature as will violate the provisions of the laws relating to secrecy in the transactions. 4an$s D 846,s would be solely responsible for the correctness or otherwise of the data provided for the purpose. 32 In case of providing information relating to credit history D repayment record of the card holder to a credit information company *specifically authori<ed by 04I)# the ban$ D 846, may e!plicitly bring to the notice of the customer that such information is being provided in terms of the ,redit Information ,ompanies *0egulation) Act# '//&. c2 4efore reporting default status of a credit card holder to the ,redit Information 4ureau of India Ftd. *,I4IF) or any other credit information ,ompany authori<ed by 04I# ban$s D 846,s may ensure that they adhere to a procedure# duly approved by their 4oard# including issuing of sufficient
(?

notice to such card holder about the intention to report himD her as defaulter to the ,redit Information ,ompany. The procedure should also cover the notice period for such reporting as also the period within which such report will be withdrawn in the event the customer settles his dues after having been reported as defaulter. 4an$s D 846,s should be particularly careful in the case of cards where there are pending disputes. The -isclosureD release of information# particularly about the default# should be made only after the dispute is settled as far as possible. In all cases# a well laid down procedure should be transparently followed. These procedures should also be transparently made $nown as part of 7IT,s d2 The disclosure to the -5As D recovery agents should also be limited to the e!tent that will enable them to discharge their duties. )ersonal information provided by the card holder but not re9uired for recovery purposes should not be released by the card issuing ban$ D 846,. The card issuing ban$ D 846, should ensure that the -5As D -7As do not transfer or misuse any customer information during mar$eting of credit card products.

(.

5iii2

Fair

Practice)

in

de,t

c! ecti!n

a2 In the matter of recovery of dues# ban$s D 846,s may ensure that they# as also their agents# adhere to the e!tant instructions on 6air )ractice ,ode for lenders *circular -4E-. Feg. 8o. 4,. "/% D/../@.//@ D '//'O/( dated 7ay &# '//() as also I4A1s ,ode for ,ollection of dues and repossession of security. In case ban$s D 846,s have their own code for collection of dues it should# at the minimum# incorporate all the terms of I4A's ,ode. ,2 In particular# in regard to appointment of third party agencies for debt collection# it is essential that such agents refrain from action that could damage the integrity and reputation of the ban$ D 846, and that they observe strict customer confidentiality. All letters issued by recovery agents must contain the name and address of a responsible senior officer of the card issuing ban$ whom the customer can contact at his location. c2 4an$s D 846,s D their agents should not resort to intimidation or harassment of any $ind# either verbal or physical# against any person in their debt collection efforts# including acts intended to humiliate publicly or intrude the privacy of the credit card holders1 family members# referees and friends# ma$ing threatening and anonymous calls or ma$ing false and misleading representations.

%/

'?

Redre))e)

!-

Grie;ance)

a2 generally# a time limit of si!ty *A/) days may be given to the customers for preferring their complaints D grievances.

,2 The card issuing ban$ D 846, should constitute +rievance 0edresses machinery within the ban$ D 846, and give wide publicity about it through electronic and print media. The name and contact number of designated grievance redresses officer of the ban$ D 846, should be mentioned on the credit card bills. The designated officer should ensure that genuine grievances of credit card subscribers are redressed promptly without involving delay.

c2 The grievance redresses procedure of the ban$ D 846, and the time frame fi!ed for responding to the complaints should be placed on the ban$ D 846,'s website. The name# designation# address and contact number of important e!ecutives as well as the +rievance 0edresses Efficer of the ban$ D 846, may be displayed on the website. There should be a system of ac$nowledging customers' complaints for follow up# such as complaint number D doc$et number# even if the complaints are received on phone.

%"

d2 If a complainant does not get satisfactory response from the ban$ D 846, within a ma!imum period of thirty *(/) days from the date of his lodging the complaint# he will have the option to approach the Effice of the concerned 4an$ing Embudsman for redresses of his grievanceDs. The ban$ D 846, shall be liable to compensate the complainant for the loss of his time# e!penses# financial loss as well as for the harassment and mental anguish suffered by him for the fault of the 4an$ and where the grievance has not been redressed in time.

(? Interna c!ntr! and 9!nit!rin. )")te9)

With a view to ensuring that the 9uality of customer service is ensured on an on;going basis in ban$s D 846,s# the 5tanding ,ommittee on ,ustomer 5ervice in each ban$ D 846, may review on a monthly basis the credit card operations including reports of defaulters to the ,I4IF# credit card related complaints and ta$e measures to improve the services and ensure the orderly growth in the credit card operations. 4an$s D 846,s should put up detailed 9uarterly analysis of credit card related complaints to their Top 7anagement. ,ard issuing ban$s should have in place a suitable monitoring mechanism to randomly chec$ the genuineness of merchant transactions.

&?

Ri.+t

t!

i90!)e

0ena t"

%'

The 0eserve 4an$ of India reserves the right to impose any penalty on a ban$ D 846, under the provisions of the 4an$ing 0egulation Act# ".%. for violation of any of these guidelines.

Di--erent T"0e) !- Credit Card)

%(

Di--erent T"0e) !- Credit Card)

,redit cars are of various types# every one has to select credit cards on the basis of the pros and cons of each type of credit card and at the same time the nature of use. This article gives an insight into the several types of credit cards available in the mar$et Today# credit card customers en=oy more options and choices than ever before. To gain new customers# credit card companies compete by offering new services and cards to customers. 8o matter what your needs# chances are good that there is a card out there that would be ideal for you. If you are loo$ing for the right card# you can begin by considering the many types of cards available to youC

6!1 Intere)t Credit Card)

%%

These types of credit cards offer very low interest. In some cases# these cards =ust charge a few percent interests. The reasons for this are numerous. In most cases# the low interest rate is for a limited time only. After a set number of months# you will begin paying higher interest rates. In some cases# low interest credit cards are not really credit cards at all ; they are debit cards lin$ed to a low;interest loan such as a line of credit. ,hec$ your agreement to find out what type of card you have. If you need to consolidate debts or if you li$e the idea of having low interest for a while# this type of credit card can be perfect for you. In)tant A00r!;a Credit Card) These cards are really a product of our fast;paced society. The idea behind this type of credit card is that once you fill out your application# you will be told whether you are approved or not right away. The approval process only ta$es 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. Gowever# 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 drawbac$ to these cards is that they rely heavily on your credit score. If you have poor credit or any e!tenuating financial circumstances# these types of cards may not be for you. 3a ance Tran)-er Card)
%&

4alance transfer cards are a type of temporary low;interest card that is meant to help you consolidate your debt. They wor$ this wayC if you have several credit cards with a balance# you can get a balance transfer card. :ou then transfer all your credit card debt onto the new card and wor$ to pay it off. 5ince the new card has a low interest rate# you can 9uic$ly 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. Gowever# some cards have high fees. Also# if you run up your other cards after consolidating your debts or if you are unable to pay off your new card in the limited time before the low interest rate increases# you may find yourself even more in debt than before.

Re1ard) Credit Card)

0ewards 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 pri<es. 5ome cards even offer customers e!tra automatic;enter sweepsta$es and draws. >ach time you use your card# you are entered into a draw to win specific pri<es. These types of cards are really a mar$eting tool for card companies. ,ompanies $now that customers love rewards and pri<es and so offer these enticements to lure customers. The ma=or advantage of these cards is that

%A

they can help you get more cash value for your money. They can also be fun and rewarding for almost any credit card customer. Gowever# not all reward credit cards are a deal. 5ome charge high fees to offset the costs of the bonuses. 5ome also have very low points systems# meaning that you need to spend a lot with your credit card to get any rewards at all. 0ead the fine print carefully before signing.

Ca)+

3ac8

Credit

Card)

,ash bac$ credit cards give you money rewards. When you ma$e a purchase with this type of credit card# you get some points based on the amount of money you have spent with your credit card. When you accumulate enough points# you get cash bac$. En most cards# you can get bac$ about "P of your total purchases. These cards are great for those who are budget;conscious as they give you some money bac$ from your purchases. Gowever# there are several drawbac$s to these types of cards. 5ome cards have low cash;bac$

%@

percentage rates. 5ome charge high fees or have limits on how much money you can get bac$ each year. 7ost cards only offer you cash bac$ 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 bac$ credit card option.

Air ine Credit Card)

This type of card allows you to accumulate fre9uent 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 tic$et. In many cases# these cards are great because they allow you to gather points for every purchase. Gowever# these cards can also charge high fees. In some cases# your points will e!pire if you do not use them within a specified time. Worse# some airline credit cards ma$e use of a point system that is not very user;friendly. :ou may have to slowly accumulate an enormous amount of points to 9ualify for a trip. If you do not love to travel and if you do not use your ,redit card a lot# then# your ability to get rewards you li$e may be very limited.

Pre0aid De,it Card)

These cards are sometimes called =unior credit cards. They are not truly credit cards at all# since you are not getting credit or loans from the credit card company. Instead# these cards wor$ by having you deposit some money into the card account. :ou can then use your card to charge any amount up to the amount in the account. When you add more money# you

%?

can

charge

more

to

your

card.

Sec/red Credit Card)

5ecured credit cards use collateral to ensure that the card company will be paid bac$. Eften# these cards are used by people with no credit or bad credit. With secured credit cards# you can en=oy credit card convenience even if you do not 9ualify for traditional cards. Gowever# you will also have to cope with the additional fees and low credit limits that these credit cards have.

Credit Card) -!r 3ad Credit

4ad credit credit cards are designed for people with poor credit histories. These cards generally have very low credit limits and charge e!tra fees. This is because they are designed for people who are considered far less li$ely 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 re=ected for most other cards due to your credit history.

St/dent Credit Card)

5tudent 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 recogni<e 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 help you build a good credit rating before you graduate. Gowever# 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.

3/)ine)) Credit Card)

4usiness 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 e!ample# you can en=oy higher interest rates# e!tra cards for business employees# monthly reports on your e!penses# and services that let you $eep your personal and business e!penses separate on the same card. These advantages mean that using this card for your business is more convenient.

&/

&"

Types of Credit Cards offered By Indian Banks

&'

T"0e) !- Credit Card) !--ered ," Indian 3an8) Si ;er Card)

Si ;er credit cards ran$ lowest among the metal named cards# and# because of lower prestige when compared to gold and platinum cards# are commonly $nown as basic and standard credit cards. 5ilver credit cards come with advantages such as lower annual membership fees if there is any# and a lower threshold salary which ban$s use to evaluate your application in case you should apply. 5ilver credit cards will provide you with almost the same credit limit as other cards provided you have a good credit history. :ou can also avail of /P interest balance transfer schemes which are made available for a period of A;. months for silver card holders. There are also some disadvantages to using silver credit cards. Ene would be the lower cash advance limits# less rewards and promotional pac$ages# and less travel per$s compared to gold and platinum cards. G-6, 4an$# I,I,I offer silver credit cards through their G-6, 4an$ 5ilver cards and I,I,I 5terling 5ilver credit card

&(

G! d and P atin/9 Card)

+old and platinum credit cards are a status symbol for any credit card holder# bringing prestige since getting gold and platinum cards usually re9uire that you have good credit rating and a higher income levels. +old 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 per$s and privileges such as travel insurance# e!tended warranties for appliance purchases and special deals on specific products# and purchase protection insurance. :ou can also engage in some loyalty schemes that are offered for gold and platinum credit card holders which can sometimes involve cash bac$ promos and reward points systems. 5ome popular gold and platinum cards available are the American >!press +old card# and the I,I,I 5olid +old ,redit ,ard. It is not possible to cover them the e!act offerings of these cards but I will highly advice you to chec$ all these websites of the ban$s to get all the info about the credit cards they are offering. Also try to tal$ to your friends who are having credit cards to get more info.

&%

CHAPTER # DE3IT CARD

A debit card *also $nown as a ban$ card or chec$ card) is a plastic card that provides an alternative payment method to cash when ma$ing purchases. 6unctionally# it can be called an electronic che9ue# as the funds are withdrawn directly from either the ban$ account or from the remaining balance on the card. In some cases# the cards are designed e!clusively for use on the Internet# and so there is no physical card. In many countries the use of debit cards has become so widespread that their volume of use has overta$en the che9ue and# in some instances# cash transactions. Fi$e credit cards# debit cards are used widely for telephone and Internet purchases and# unli$e credit cards# the funds are transferred immediately from the bearer's ban$ account instead of having the bearer pay bac$ the money at a later date. -ebit cards may also allow for instant withdrawal of cash# acting as the AT7 card for withdrawing cash and as a che9ue guarantee card. 7erchants may also offer cash bac$ facilities to customers# where a customer can withdraw cash along with their purchase.

&&

T"0e) !- de,it card )")te9)

On ine De,it S")te9
Enline debit cards re9uire electronic authori<ation of every transaction and the debits are reflected in the user1s account immediately. The transaction may be additionally secured with the personal identification number *)I8) authentication system and some online cards re9uire such authentication for every transaction# essentially becoming enhanced automatic teller machine *AT7) cards. Ene difficulty in using online debit cards is the necessity of an electronic authori<ation device at the point of sale *)E5) and sometimes also a separate )I8 pad to enter the )I8# although this is becoming commonplace for all card transactions in many countries. Everall# the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status# which alleviates problems with processing lag on transactions that may only issue online debit cards. 5ome on;line debit systems are using the normal authentication processes of Internet ban$ing to provide real;time on;line debit transactions. The most notable of these are Ideal and )EF

O-- ine De,it S")te9

&A

Effline debit cards have the logos of ma=or credit cards *e.g. Bisa or 7aster,ard) or ma=or debit cards *e.g. 7aestro in the United Mingdom and other countries# but not the United 5tates) and are used at the point of sale li$e a credit card *with payer's signature). This type of debit card may be sub=ect to a daily limit# andDor a ma!imum limit e9ual to the currentDchec$ing account balance from which it draws funds. Transactions conducted with offline debit cards re9uire 'O( days to be reflected on users1 account balances. In some countries and with some ban$s and merchant service organi<ations# a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction# while a small fee may be charged for a "debit" or online debit transaction *although it is often absorbed by the retailer). Ether 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)I also# from the merchant's standpoint# the merchant pays lower fees on online debit transaction as compared to "credit" *offline) debit transaction

E ectr!nic P/r)e Card S")te9

5mart;card;based electronic purse systems *in which value is stored on the card chip# not in an e!ternally recorded account# so that machines accepting the card need no networ$ connectivity) are in use throughout >urope since the mid;"../s# most notably in +ermany *+eld$arte)# Austria *Nuic$)# the 8etherlands *,hip$nip)# 4elgium and 5wit<erland *,A5G). In Austria and +ermany# all current ban$ cards now include electronic purses.

&@

Pre0aid De,it Card

)repaid debit cards# also called reload able debit cards or reload able prepaid cards# are often used for recurring payments. The payer loads funds to the cardholder's card account. )repaid debit cards use either the offline debit system or the online debit system to access these funds. )articularly for companies with a large number of payment recipients abroad# prepaid debit cards allow the delivery of international payments without the delays and fees associated with international chec$s and ban$ transfers. )roviders include ,a!ton 6Q prepaid cards# R >scape prepaid cards and Travele! prepaid cards. R Whereas# web;based services such as stoc$ photography websites *stoc$pot)# outsourced services *odes)# and affiliate networ$s *7edia Whi<) have all started offering prepaid debit cards for their contributorsDfreelancersDvendors.

&?

3ENEFITS OF DE3IT CARDS T+e -! !1in. are t+e ,ene-it) !- t+e de,it card )er;ice)
FREE BITH OUR 3AN4 ACCOUNT Ebtaining a debit card is easy. If we 9ualify to open a ban$ account# we usually get a debit card# if our ban$ offers the service. NO 3AC4GROUND CHEC4 When we are applying for a debit card# the ban does not need to loo$ into our credit history. All we need is the documentation to open a ban$# account# and money in our ban$ when we use our debit card. CASH BITHDRABA6S The customer can withdraw a minimum of 0s. "//D; and a ma!imum 0s."/# ///D; per day CON*ENIENCE A -ebit card fees us from carrying a lot of cash or a che9ue boo$. In case# we are an international traveler# we don1t need to stoc$ up on Traveler1s ,he9ues or cash. We can use our debit card to withdraw ,ash from over

&.

&//#/// AT7s around the world in over "// countries. We can withdraw in the local currency of the country we are in# limited only by the money we have bac$ home in our account# and 4usiness Travel Nuota *4TN) limit arability. FAIR ECCHANGE If we return merchandise or cancel services paid for with a -ebit card# the transaction is treated as if it were made with cash or a chec$. ,ustomers usually get cash bac$ for offline purchasesI for on;line transactions# the amount is credited to our account. STATEMENT OF ACCOUNT A statement of transactions can be obtained from the customer1s branch. 6or e!ample# a mini statement containing the last four transactions and balance can be obtained at a 5tate 4an$ +roup during the wor$ing hours of the customer1s branch. 3AN4ING CUM SHPPING CARD :our -ebit card can be used as AT7 card at any AT7 across the world# as well as for ma$ing purchase at merchant locations. :ou can also withdraw cash from any of the "'/// AT7s in India. WI->F: A,,>)T>-# I8T>08ATIE8AFF: BAFI-

A/

FEATURES OF DE3IT CARD

T+e -! !1in. are -eat/re) !- De,it card)

A2 It is a combination of a ,he9ue and AT7 card. Therefore# there are no fees for using the AT7 for cash withdrawal# or as a debit card for purchase. 32 The -ebit ,ard services in meant for withdrawals against the balance already available in the designated account. C2 It is the card holder1s obligation to maintain sufficient balance in the designated account to meet withdrawals and service charges. D2 A -ebit card is more affordable than credit card. We =ust our ban$ account for all our transactions. 8o credit period. Eur ban$ account is debited immediately. E2 8o credit chec$ is re9uired to get a -ebit card. F2 Use of card is terminated without notice# upon the death# ban$ruptcy or insolvency of the cardholder or for other valid reasons. G2 5pending is limited to our ban$ balance.

A"

DRAB3AC4S OF DE3IT CARDS NO GRACE PERIOD A) Unli$e a credit card# debit card transactions are on a pay now3 basis FI7IT>- )0ET>,TIE8

4) Using a debit card may mean we have less protection than we would have with a credit card for undelivered or defective goods.

A'

A(

Pr!ce)) De,it Card Tran)acti!n)

A successful business will usually accept debit cards as a part of their overall profile of payment solutions. If you don1t process debit cards# you may not be ta$ing 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. O-- ine de,it card tran)acti!n) An offline debit card transaction is still the way most merchants accept debit cards. This is essentially the same as processing credit cards. :ou swipe your customer1s 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 *ISA or Ma)terCard logo. Etherwise# the debit card won1t be approved and you won1t be able to process the debit card offline

A%

On ine de,it card tran)acti!n)

The most advantageous way to process debit cards is to do it online. :ou will still be able to accept debit cards at the point of sale# but you will need to install a )I8 pad on your credit card terminal. An online debit card transaction wor$s much li$e a credit card transaction# e!cept that after your customer swipes his or her debit card# they will enter a )I8 instead of signing the receipt. At this point the encrypted debit card information is sent to the customer1s ban$ for authori<ation# and you1ll receive the funds =ust as you would for a credit card transaction. :our business has many advantages when you accept debit cards. 6or e!ample# you pay a flat fee for each debit card transaction that you process# instead the flat fee plus percentage rate that you are charged when you accept credit cards. Ever time# this can potentially save you a lot of money. Another advantage when you process debit cards is that you can1t be charged higher downgrade3 fees. In a credit card transaction# you are usually charged the discount rate.3 Gowever# some transactions are considered to be a higher ris$ or e!pense to the ban$# and you are charged a higher rate as a result.

A&

4ut when you accept debit cards# you always pay the same flat rate# with no danger of the rate increasing. :ou can also cut down on chec$out time when you accept debit cards. It ta$es an average of (/ seconds to hand over the pen# wait for the customer to sign the receipt# and then ta$e the pen bac$. If you process '/ credit card transactions a day# you1re losing "// minutes a day =ust passing a pen bac$ and forthK That1s almost two hours

AA

P a)tic Fra/d
5tate;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. )lastic cards bring new convenience to your shopping and ban$ing# but they can turn into nightmares in the wrong hands. This pamphlet describes credit and debit cards and some common schemes involving card fraud with tips to help you avoid them T+e -! !1in. are t+e t"0e) !- -ra/d)

1? St! en Card) at t+e O--ice #? E<tra C!0ie) !- C+ar.e S i0) >? Di)carded C+ar.e S i0)
4? Un)i.ned Credit Card) $? 6!)) !- M/ ti0 e Card) '? Stran.e ReD/e)t) -!r Y!/r PIN N/9,er) (? 6e.iti9ate Card) &? A tered Card) 9? C!/nter-eit Card)

Ne1 Tec+n! !."

A@

8ew technology is ma$ing it more difficult for criminals to use# alter# or counterfeit credit and debit cards. 5ome of the innovations are already in use. T+e)e )ec/rit" -eat/re) +a;e ,een added t! 9a7!r credit card): H! !.ra0+ O A three;dimensional# laser produced optical device that changes its color and image as the card is tilted. Fine- ine 0rintin. O A repeated pattern of the card company name positioned as bac$ground for the company logo. U tra-;i! et in8 O 5pecial in$ that is visible only under ultra;violet light# which will display the credit card company's logo.

A?

Credit
7ost popular and in

Card
some instance American

Data:
>!press.

,redit ,ard is either Bisa or 7aster,ard which is the

T+e T!0 1% Credit Card I))/er) in India are a) -! !1)@ I,I,I G-6, 54I ,itiban$ G54, A48 A!is -eutsche American 4an$ 4an$ ,ards ; ,ards Amro 4an$ 4an$ >!press ; ; ; ; ; ; ; ; &./@ %.%' '.A& '.&% ".( /.@? /.&@ /.%.& /.%& 7n 7n 7n 7n 7n 7n 7n 7n 7n

Data Courtesy - The Reserve Bank of India

A.

CHAPTER $ EUESTIONNARIES
1? Meanin. !- credit card ,redit is a privilege and a convenience. ,redit lets you charge a meal on a credit card# pay for an appliance on an installment plan# ta$e out a loan to buy a house# or pay for schooling. ,redit allows you to ma$e a purchase without ready cash. A credit card enables you to buy things now and pay for them later. :ou get credit by promising to pay in the future for something you receive in the present. ,redit usually costs something# and what is borrowed must be paid bac$. #? T+e rea)!n -!r t+e needine)) !- credit ,onvenient# hassle;free shopping. When you use a credit card to ma$e a purchase# you don't have to carry a lot of cash# pay by chec$# or present additional identification. A credit card also simplifies and speeds up catalog ordering and currently is virtually the only way to ma$e Internet purchases. >mergency help. ,redit cards are the ultimate financial security blan$et. They can get you through nearly any emergency situation.

@/

>asier budgeting. With a credit card# you can ma$e purchases and pay them off on a schedule that fits your budget. ,redit cards also allow you to ta$e advantage of sales and special offers. >? Rea)!n t! e)ta, i)+ a .!!d credit +i)t!r" >stablishing a good credit history is an important part of your personal and financial future. It can help open doors for you or $eep them loc$ed. A variety of people and businesses ma$e decisions affecting your future that are based on your credit history. 4an$s and other lenders consider your credit report when reviewing applications for mortgages# revolving lines of credit# or other loans. Fandlords sometimes use credit reports to decide among rental applicants. And a potential employer may even assess an applicant's credit report before e!tending a =ob offer.

4? Meanin. !- de,it card -ebit ,ard is an electronic purse# which allows the holder to withdraw cash from AT7s and also enables him to purchase goods or services from the member establishments. -ebit ,ards are mostly issued in collaboration either with BI5A or 7aster,ard.

@"

CONC6USION
'"5T ,entury ban$ing has become wholly customer;driven 2 technology driven by challenges of competition# rising customer e!pectations 2 shrin$ing margins# ban$s have been using technology to reduce cost 2 enhance efficiency# productivity 2 customer convenienence. Technology intensive delivery channels li$e net ban$ing# mobile ban$ing# etc have created a win;win situation by e!tending great convenienence. 2 multiple options for customer. 6rom educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. 4ecause visa and master card are advertising regularly and thereby increases awareness. The strategy should be to emphasi<e 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 company1s card personality could also be used in the home page to solve customer 9ueries in the S4est )ossible 7anner1.

@'

3I36IOGRAPHY
3OO4S I8EBATIE8 I8 4A8MI8+ 2 I85U0A8,> 6I8A8,IAF 7A0M>T 2 5>0BI,>5 I8-IA8 4A8MI8+ I8-U5T0I>5 I8-IA8 4A8MI8+ TI7>5 E6 I8-IA 8>W5 )A)>0 *(/TG AU+ '//@)

BE3SITE WWW.+EE+F>.,E7 WWW.:AGEE.,E7 WWW.04I.E0+

@(