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Literature Review:
An article on the Hindu, dated 23rd April 2014 shed light on various issues such as the
utility of different forms of plastic money among other things. The article was based on a
report published by the RBI who had sourced the information from MasterCard and
VISA. According to the RBI report, credit cards have a higher share in the discretionary
category whereas debit cards dominate in routine expenses like utility payments. About
30 per cent of credit card spends are being done online. At least 10-15 per cent of
customers use their cards only online, mainly from smaller cities. The RBI report said
electronic payments dominate their expenses: rail/airfare (71 per cent), durable goods
(61 per cent), rent (49 per cent), tele/mobile (47 per cent), medical institutions (46 per
cent), clothing/footwear (44 per cent), beverages and refreshments (35 per cent). Debit
cards entered India in 1998 and they currently account for almost 95 per cent of the total
number of cards in circulation. Credit cards have shown relatively slower growth even
though they entered the market one decade before debit cards.
The paper published by Hayashi and Klee about the adoption of plastic money suggests
various benefits and problems faced by consumers. Using cash is convenient because it
is accepted almost everywhere (with the notable exception of online retailers), but
carrying large amounts of cash entails both a substantial opportunity cost and a physical
risk of being the target of crime. Credit cards, while costly from the perspective of
payees (as noted above), offer consumers many advantages. A limited liability in the
case of theft or loss, dispute resolution assistance, consolidation of bill payment,
itemized bills, and the ability to borrow are just some of the standard features of most
bank issued debit cards. These cards are accepted at the same locations where credit
cards are accepted. The major advantages of the debit card are that it normally doubles
as an ATM card, thus allowing the consumer to carry one less card, and it also allows
the user to receive cash back after purchases are made when used in combination with
a personal identification number. Like credit cards, debit cards also offer consolidated
billing/record keeping and ease of telephone and Internet based transactions.
Drawbacks to the debit card include lack of acceptance, high processing fee and
increased formalities.
Sources:
http://www.thehindu.com/business/Economy/only-1015-cards-used-for-online-transactions-rbireport/article5940415.ece
https://www.rbi.org.in/scripts/Publications.aspx
http://econpapers.repec.org/article/bpjrneart/v_3a2_3ay_3a2003_3ai_3a2_3an_3a8.htm
Hypothesis:
H0 : People are not aware of the concept of Plastic money.
H1 : People are aware of Plastic money and possess at least one such card.
H0 : Credit card is the most popular form of plastic money.
H1 : Debit card is the most popular form of plastic money.
H0 : People prefer to use cash more often for all their daily purchases.
H1 : People prefer plastic money over paper money for their daily transactions.
Based on the response to this questionnaire, a set of select respondents will be called
for a personal interview.
Schematic Diagram
Awarnes
s among
consume
rs
Expenditur
e
Securi
ty
Usage
of
Plastic
Money
Portabli
ty
Technolo
gy
Accessabl
ity
Questionnaire:
Q.1 Are you aware about plastic money?
A) Yes
B) No
Q. 3 Arrange these in the order of frequency of your usage (1 being most frequent and 4 being
least frequent)
A) Cash
___
B) Credit Card
___
C) Debit Card
___
D) Net Banking
___
Q.4 Would you prefer to use plastic money over other forms of payment for these transactions.
(Tick the preferred options)
A) Paying Bills (electricity, telephone etc.)
B) Online Shopping
C) Banking
D) Buying groceries
I) Mobile/TV Recharge
Q.5 Benefits of using plastic money? (Rate each Parameter on the scale of 1-5,1 being most
beneficial and 5 being least beneficial)
A) Convenience
___
B) Security
___
C) Promotional offers
___
D) Accessibility
___
E) Portability
___
Q.6 Problems perceived on possession of plastic money? (Rate each Parameter on the scale of
1-5, 1 being most problematic and 5 being least problematic).
A) Fear of losing card
___
___
C) Unnecessary formalities
___
___
Q.7 What amount(s) would you prefer to pay using plastic money over other forms?
A) Less than 100
B) Increasing Duplicity
C) Wear And Tear of paper money
D) None
A) No effect
B) Increased
C) Decreased
Q.10 What is your opinion about the growth of Plastic Money in the future.
A) Rapid Growth
B) Steady Growth
C) Stagnant
D) Decline
E) Cant Predict
Submitted By
Aashish Agrawal
2015B3A8411G
Sarthak Mehrotra
2015B3A3361G
Aravind DS
2015B3A8531G
Palash Chaturvedi
2015B3A7395G
Dipesh Bansal
2015B3A4476G
Shubhransh Jagota
2015B3A7348G
Aravind Venugopal
2015B3A7474G