CRITICAL RIVIEW OF CREDIT CARD TRANSACTION SYSTEM

Md. Razib-Al-Hasan Khan

INDEPENDENT UNIVERSITY, BANGLADESH

December 2004
CRITICAL RIVIEW OF CREDIT CARD TRANSACTION SYSTEM

by

Md. Razib-Al-Hasan Khan

ID: 0020334

An Internship Report Presented in Partial Fulfillment

of the Requirements for the Degree
Bachelor of Science
in
Computer Science

INDEPENDENT UNIVERSITY, BANGLADESH

December 2004
 Internship

CRITICAL RIVIEW OF CREDIT CARD TRANSACTION SYSTEM

by

Md. Razib-Al-Hasan Khan

ID: 0020334

has been approved

December 2004

_______________________
Mr. S. J. Ahmed
Lecturer
School of Communication
Independent University, Bangladesh
 Abstract:

During the last decades the world changed greatly because of rapid exchange of

information. Through telecommunication and network the world became a smaller place

as people can send or receive information from one end to the other within a second.

The main purpose of exchanging information is trading and commerce. In a nut shell the

globalization of world business evolved.

The business through Internet is generally known as e-business or e-commerce.

According to Forrester Research (as cited in Kessler, 2003), electronic commerce

generated sales worth US $12.2 billion in 2003. This statistics indicates the vast

popularity of e- business venture in recent days.

As the security of electronic transaction was ensured the usage of electronic card

increased remarkably. Electronic fund transfer guaranteed easy and reliable transfer of

money world wide.

One of the world's leading electronic payment brands is Visa. There are more than one

billion Visa cards in circulation, which are accepted in 150 countries throughout the

world.

Bangladesh is one of the countries where electronic payment system is available. Master

Card and Visa are the two leading brands existing in our country. For instance financial

institution such as Premier Bank issues Visa credit card. Now a days the number of credit

card holders are increasing as different kinds of financial institutions and shopping malls

in the major cities are providing the facility of paying money through credit cards. The

safety and ease of carrying credit card is the main reason behind using it.

iv
 ACKNOWLEDGMENTS

This is my humble attempt to present gratitude in preparing this report. I have truly

drawn upon my own experience as a student of computer science. This project would not

have been possible without the dedicate ions and contributions of a number of

individuals.

First and foremost, I would like to express my gratitude to Mr. S. J. Ahmed for agreeing

to supervise me during the internship project. His eagerness helped me in every step of

the way and encouraged me to propel myself higher.

Then I want to show my gratefulness to the staffs of Premier Bank Limited. Specially to

Mr. Zahid and Mr. Shamsul Huda for their continuous and cordial support during my

internship.Special thanks to Dr. Indrani Haque for sparing her valuable time to read my

report and providing valuable feedback to update it.

Lastly, I thank to Independent University, Bangladesh for providing me with such

opportunities to work and gain experience of the professional field and writing formal

report like this.

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 TABLE OF CONTENT

Chapters Page

INTRODUCTION………………………………………………………………. …1
Origin of the report…………………………………………………………………2
Objective of the report………………………………………………………………3
Limitations…………………………………………………………………………..3

COMPANY PROFILE……………………………………………………………...4
The company overview……………………………………………………………..4
Working platform of premier bank………………………………………………….5
Mission of the bank…………………………………………………………………6
Goals……………………………………………………………………..………….6
Objective ………………………………………………………………………........7

METHODOLOGY ………………………………………………………………….8
Interview …………………………………………………………………………….8
Questionnaires ……………………………………………………………………....9
Observation ………………………………………………………………………....9
System design ……………………………………………………………………….9

CRITICAL ANALYSIS ……………………………………………………………11

Electronic commerce ……………………………………………………………….11

SYSTEM STUDY …………………………………………………………………16

Credit card policy of premier bank…………………………………………………16
Credit card application form collection procedure………………………………….23
Marketing approach ………………………………………………………………..26
Advertisement………………………………………………………………………26

SYSTEM ANALYSIS……………………………………………………………...27
Transaction processing system through POS………………………………………32
Example of transaction processing system…………………………………………33
Clearance part of the TPS…………………………………………………………..33

CONCLUSION…………………………………………………………………….35

REFERENCES……………………………………………………………………..37

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 LIST OF FIGURES
Figures Page
1. List of DFD symbols….……………………………………………….. 10
2. Application collection procedure……………………………………… 23
3. Rich picture of card production and delivery…………………………... 24
4. Organogram of credit card division …………………………………… 25
5. DFD of transaction processing system (Base I: context level)..………...27
6. DFD of transaction processing system (Base I: system level)…………..28
7. DFD of transaction processing system (Base II: context level) ………...29
8. DFD of transaction processing system (Base II: system level) ………... 30

vii
1. INTRODUCTION
Overview of Internship:

Independent University, Bangladesh offers a 12 credit course as Internship for the

graduating students in her course curriculum. The curriculum requires every student

to do an internship in a reputed firm for hands on experience about the professional

works. It is a practical exposure of theoretically gained knowledge and can be

considered as a preliminary trial to be acquainted with any organization and to make

oneself confident enough to enter into service life and start building career. As the

outside world is very much competitive for anyone after graduation, IUB provides

such an opportunity to build up the capability with most appropriate opportunities.

This gives the student great opportunity in the service world and also to get exposure

to various diversifications of the service world. Intern students are supervised under a

particular faculty member throughout their Internship stage. Here the student gets the

chance to apply his theoretical knowledge and practical skill that he has gained in the

entire under graduation student life. They are responsible to report weekly or

fortnightly to his/her respective Supervisor to get his/her assistance. And the project

gets advancement by following the Supervisor’s instruction. The internship period is

for at least 3 months. After that the student submits a report on his project work,

which reflects his knowledge gained in the entire B. Sc. course. That is the main

purpose of this report to give an outline of the outcome of internship during the entire

period of the course in the company.

Purpose of Internship

In our study period mainly we gain theoretical knowledge but now a day, in the job

market is no substitute for principle work experience. Getting meaningful work

 2
experience in one’s major field of study or career interest should be a number one

priority a vital par of college education. Today students with career related work job

experience is getting the best interviews and job offers. The major targets to offer

Internship in IUB are as following:

‰ This is the beginning of a student’s professional career.

‰ The student’s competency and efficiency in the working environment can be

assessed from this course

‰ Teaches the student to take up the responsibility and pressure of work

‰ Teaches the student to learn from work

‰ To help students enhance their creativity and efficiency in dealing with projects

related to their field of study.

‰ To evaluate the person’s ability to communicate and under pressure, if required.

‰ Helping students to express dependability, initiative, resource fullness and

professionalism in the tasks they are assigned.

‰ To increase the confidence level of IUB students, which would help them work

after graduation.

1.1 Origin of the report:

This report has been prepared as a requirement of the internship program. The report

was based upon the organization Premier Bank Limited. My organization supervisor

was Mr. Md. Abdul Wali, Senior Vice President and Head of Credit Card Division

and my institution supervisor is Mr. S.J Ahmed, Assistant Professor, School of

Communication, Independent University. The topic, which was decided for doing the

report, was duly approved by my institute supervisor. The report will give the idea
 3

about credit card processing system and transaction processing system in premier

Bank.

1.2 Objective of the Report:

This literature is written on the Credit Card Division in Premier Bank Limited in

Bangladesh. Apart from the overall organization part of Premier Bank Limited (PBL),

the project part is divided into two phases. On the first phase, it is focused about the

credit card policy of the premier bank. In that phase it is described about the organ

gram of Credit card division. From the collection of application, data capture, card

delivery etc described in this part. On the next phase, it is focused about the

Transaction processing system on credit card system. That means how the transaction

is done through POS machine or ATM that is tried to be described in this part.

1.3 Limitations:

• The main limitation is information, which was the confidential to the

company, as not exposed for the security of their own network.

• It’s difficult to functioning properly as a student to work a large company’s

database.

• It is rather impractical to learn about their total information technology, this

short time. So that’s why there is some lacking regarding some topics of the

project.

• Sometime the officials of the organization not assist me properly because they

might be too busy at that moment.

2.0 COMPANY PROFILE

2.1 The Company Overview:

The Bank was incorporated in Bangladesh as Banking Company under Companies

Act, 1994 as a public Limited Company. The Bank stared its operation as on 26th

October 1999.They are also working actively to set tip new Braches in different prime

locations prime locations to ensure their presence closer to their customers.

Head office:

The Premier Bank Limited

Iqbal Center (4"' floor)

42, Kamal Ataturk Avenue

Banani Dhaka-1213.

Bangladesh.

Premier Bank in Bangladesh

The network of Premier Bank in Bangladesh includes:

ƒ 10 branches in Dhaka city

ƒ 1 branch in Savar DEPZ Gate

ƒ 1 branch in Narayangonj

ƒ 2 branches in Chittagong

ƒ 1 branch in Khulna

ƒ 1 branch in Sylhet

ƒ 1 branch in Barishal

ƒ 1 branch in Brahmanbaria
 5
2.2 Working Platform of Premier Bank

The organization uses different types of hardware components including Brand

Compaq PCs, IBM Servers and HP Printers. They use standard monitors as the

screen.

The software used by the Premier Bank can be categorized into three broad

categories:

ƒ System software: The PCs are equipped with the Microsoft’s Windows 2000

professional operating system. All PCs are connected with a central server

from where they get access to different application software.

ƒ Database software: They have their own database software named “Prime”.

ƒ Reporting tools: The reporting tool used by the Premier Bank is Seagate

Crystal Report.

All computers are attached with the network. A central server controls all security

information and authentication information of the users of the PCs, as well as, the

databases is kept in different servers. They use Lotus Notes for their internal mailing

system.

The Premier Bank has 20 branches all over the Bangladesh. These Branches are

mainly situated in divisional city. The Board consists of 13 (thirteen) Directors. The

members of the Board of Directors of the Bank hold very respectable positions in the

society. They are from highly successful group of business and Industries in

Bangladesh. Out of 13 members one is from Taiwan. Each member of the Board of

Directors plays a significant role in the socio-economic domain of the country.

 6
2.3 Mission of the bank:

• To be the most caring and customer friendly provider of financial services,

creating opportunities for more people in more places.

• To ensure stability and sound growth whilst enhancing the value of

shareholders investments.

• To aggressively adopt technology at all levels of operations to improve

efficiency and reduce cost per transaction.

• To ensure a high level of transparency and ethical standards in all business

transacted by the bank.

• To provide congenial atmosphere which will attract competent work force

who will be proud and eager to work for the Bank.

• To be socially responsible and strive to uplift the quality of life by making

effective contribution to national development.

2.4 Goals:

• To grab the maximum relative market share in the industry to compete with

the Standard Chartered Bank.

• To achieve highest growth rate in the industry in terms of Asset, Liability and

Profit.

• To mobilize the highest volume of Low Cost Deposit.

• To build-up most efficient, skilled, competent and motivated human being.

 7
2.5 Objective

The objective of this project was to analysis the transaction processing through credit

card. Some specific formalized steps were followed for this analysis.

Depending on my internship period, I have divided my project schedule to track the

efficiency and control of my project. I have used Gantt chart for my project

scheduling. The Gantt chart is shown below.

August September October November

1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th

week week week week week week week week week week week week

Observation

System analysis

Figure 2.1: Gantt chart for Project Schedule

3.0 METHODOLOGY:

Methodology is a systematic description of the sequence of activities required to solve

a problem. In other words Methodology is a collection of procedures, techniques,

tools and documentation aids, which help the system developers in their efforts to

implement a new information system.

System design:

Process Model

• Data Flow Diagram (DFD)

3.1. Interview:

Interviews are formal meetings where the Analyst can obtain information about the

operations of the present systems and the requirements for the new system. This is the

most common and best method for getting qualitative and subjective information.

Different purposes of the interviews are:

• To gather information about their Present using information technology.

• Find out problems of using information technology.

• To gather facts about the procedures and decisions taking place in the

organization.

• To check the analyst understands of system operations with users of all levels.

• To validate aspects of a proposed system design.

• To build confidence in the design of a new information system.

Following are the personnel who were interviewed for the requirement analysis:
 9

3.2 Questionnaire:

The use of questionnaire allows analysts to collect information about various aspects

of a system from a large number of persons. Close-ended questions and open-ended

questions were used to find the answers about their requirements. Most of the time

Close-ended questions were used. Because Closed -ended questions are unambiguous

and allows the respondent to give a definite answer. I followed the close ended

question.

I categorized 4 type of questionnaire for 4 types persons such as Manager, IT

manager, General Employee and Customers.

A sample questionnaire is given in the appendix that has been used in Premier Bank

to find out answers for evaluation.

3.3 Observation:

Study and proper observation of the system is necessary. After gathering all the

valuable information for system to be developed, system developer should go through

over the existing system by observation method. the observation method for

preparing critical analysis report.

As the documents represent formal information flow in the organization of the using

Information Technology, thus it helps in understanding the existing system.11

3.4 System Design:

Process Model:

Data Flow Diagram:

A graphical tool used to describe and analyze the movement of data through a system-

manual or automated. The diagram reveals the data flows into and out of the process,

rules to process data, stores of data and external entities.

 10

DFD is prepared during the system analysis stage to portray flows and processes of

existing systems or systems in the development stages of the whole system.

Context level Diagram:

One main process which is encompassed within a single circle and more then one

entity are here. Entities are outside the scoop of the process being documented.

Neither of the entities is a source of data. Also no data stores appear in the context

diagram, since they are incorporated within the process itself.

Symbols which are used here-

Rectangle with shade implies entity here. Beginning entity is the

solidified rectangle, initiative of the whole process.

Rectangle with rounded corner is defining the process here.

This is the arrow, information flow to destination.

Parallel line, for Data store

Figure 1: DFD symbols

4.0 CRITICAL ANALYSIS

4.1 Electronic commerce

Definition:

Electronic commerce or e-commerce consists of the buying, selling, marketing, and

servicing of products or services over computer networks. The information

technology industry might see it as an electronic business application aimed

commercial transactions. An alternative definition of E-commerce might view it as

the conduct of business commercial communications and management through

electronic methods, such as electronic data interchange and automated data-collection

systems. Electronic commerce may also involve the electronic transfer of information

between businesses (EDI).

According to Forrester Research (as cited in Kessler, 2003), electronic commerce

generated sales worth US $12.2 billion in 2003.

History:

Historical development the meaning of the term electronic commerce has changed

over time. Originally, "electronic commerce" meant the facilitation of commercial

transactions electronically, usually using technology like Electronic Data Interchange

(EDI) to send commercial documents like purchase orders or invoices electronically.

Today it includes activities more precisely termed "Web commerce" -- the purchase

of goods and services over the World Wide Web via secure servers (note HTTPS, a

special server protocol which encrypts confidential ordering data for customer

protection) with e-shopping carts and with electronic pay services, like credit card pay

authorizations.
 12

Electronic Payment Systems:

Electronic payment systems are becoming central to on-line business process

innovation as companies look for ways to serve customers faster and at lower cost.

Emerging innovations in the payment for goods and services in electronic

commerce promise to offer a wide range of new business opportunities.

Electronic payment systems and e-commerce are intricately linked given that on-

line consumers must pay for products and services. Clearly, payment is an Integral

part of the mercantile process and prompt payment (or account settlement) is

crucial. If the claims and debits of the various participants—individuals, companies,

banks and nonbanks are not balanced because of payment delay or, even worse

default, then the entire business chain is disrupted. Hence an Important aspect of e-

commerce is prompt and secure payment, clearing, and settlement of credit or debit

claims.

Types of Electronic Payment Systems

Electronic payment systems are proliferating in banking, retail, health care, on-line

markets, and even government—in fact, anywhere money needs to change hands.

Organizations are motivated by the need to deliver products and services more cost

effectively and to provide a higher quality of service to customers. This section will

briefly describe the pertinent developments in various 'industries to provide an

overall picture of electronic payment systems of the past and present. Research into

electronic payment systems for consumers can be traced back to the 1940s, and .the

first applications—credit cards—appeared soon after. In the early 1970s, the

emerging electronic payment technology was labeled electronic funds transfer

 13
(EFT). EFT is defined as “any transfer of funds initiated through an electronic

terminal, telephonic instrument, or computer or magnetic tape so as to order,

instruct, or authorize a financial institution to debit or credit an account.” EFT

utilizes computer and telecommunication components both to supply and to transfer

money or financial assets. Transfer is information-based and intangible. Thus EFT

stands in .marked contrast to conventional money and payment modes that rely on

physical delivery of cash or checks (or other "paper orders to pay) by truck, train, or

airplane. Work on EFT can be segmented into three broad categories:

1. Banking and financial payments:

• Large-scale or wholesale payments (e.g., bank-to-bank transfer)

• Small-scale or retail payments (e.g., automated teller machines and cash

dispensers)

• Home banking (e.g., bill payment) .

2. Retailing payments

• Credit cards (e.g., VISA or MasterCard)

• Private label credit/debit cards (e.g., J.C. Penney Card)

• Charge cards (e.g., American Express)

3. On-line electronic commerce payments

• Token-based payment systems Electronic cash (e.g., DigiCash) Electronic checks

(e.g. NetCheque)

. Smart cards or debit cards (e.g., Mondex Electronic Currency Card) • Credit card-

based payment systems

Encrypted credit cards (e.g.. World Wide Web form-based encryption)

Third-party authorization numbers (e.g.. First Virtual) I

 14
Digital Token-Based Electronic Payment Systems

Entirely new forms of financial instruments are also being developed. One such

new financial instrument is "electronic tokens" In the form of electronic cash/money

or checks. Electronic tokens are designed as electronic analogs of various forms of

payment backed by a bank or financial institution. Simply stated, electronic tokens

are equivalent to cash that is backed by a bank. (Electronic tokens are of three

types:

1. Cash or real-time. Transactions are settled with the exchange of electronic

currency. An example of on-line currency exchange is electronic cash (E-cash).

2. Debit or prepaid. Users pay in advance for the privilege of getting information.

Examples of prepaid payment mechanisms are stored in smart cards and electronic

purses that store electronic money.

3. Credit or postpaid. The server authenticates the customers and verifies with the

bank that funds are adequate before purchase. Examples of postpaid mechanisms

are credit/debit cards and electronic checks.)

Credit Card-Based Electronic Payment Systems

To avoid the complexity associated with digital cash and electronic checks

consumers and vendors are also looking at credit card payments on the Internet as

one possible time-tested alternative. There is nothing new in the basic process. If

consumers want to purchase a product or service, they simply send their credit card

details to the service provider involved and the credit card organization will handle

this payment like any other.

Credit card payment on on-line networks can be divided into three basic categories:
 15

1. Payments using plain credit card details.

The easiest method of payment is the exchange of unencrypted credit cards over a

public network such as telephone lines or the Internet The low level of security

inherent in the design of the Internet makes this method problematic (any snooper

can read a credit card number, and programs can be created to scan the Internet

traffic for credit card numbers and send the numbers to its master). Authentication

is also a significant problem, and the vendor is usually responsible to ensure that the

person using the credit card is its owner. Without encryption there is no way to do

this.

2. Payments using encrypted credit card details.

It would make sense to encrypt your credit card details before sending them out, but

even then there are certain factors to consider. One would be the cost of a credit

card 0transaction itself. Such cost would prohibit low-value payments (micro

payments) by adding costs to the transactions.

3. Payments using third-party verification:

One solution to security and verification problems is the introduction of a third

party: a company that collects and approves payments from one client to another.

After a certain period of time, one credit card transaction for the total accumulated

amount is completed.
5.0 SYSTEM STUDY:

In this section the total market approach of premier bank card division and the card

production and delivery process are described.

The Premier Bank is a 3rd generation private Bank that has been approved as a

Principal & Plus Member of VISA International.

5.1 Credit Card Policy of Premier Bank Limited:

1. Types of Visa Credit Card offered by Premier Bank:

‰ Visa Classic Local(Valid Only in Bangladesh)

‰ Visa Classic International(Valid worldwide except in Bangladesh)

‰ Visa Gold Local(Valid Only in Bangladesh)

‰ Visa Gold International(Valid worldwide except in Bangladesh

2. Credit Limit:

The Credit limit should be flexible, proportionate to cardholder’s income reflects

financial soundness and employment status etc. The following card limits may be

applied to different Card types:

Card Type Credit Limit

Visa Classic-Local Tk. 10,000-Tk. 49,000

Visa Gold-Local Tk. 50,000- Tk. 50,00,000

Visa Classic- International USD 1,000-USD3,000

Visa Gold-International USD3,000-USD25,000

Following points should be given due consideration:

 17

1. Amount and stability of the prospective cardholder’s income

2. Ownership of Home, Car, Telephone and other movable and

immovable property.

3. Current financial status

4. Sound Previous credit history, especially whenever recommended by

own branches or any other schedule commercial banks of Bangladesh

5. Age, Marital Status, dependence and nature of job

6. Credit worthiness

7. TIN

3. Credit Card Expiration Date:

The Card will be issued for a Minimum period of 2 years (But Card may be

suspended or cancelled at any time if the Management find that the Card is no longer

remunerative), thereafter the card will need to be renewed.

4. Criteria for approving Credit Card:

4. a. Eligibility for approval of Card:

‰ Directors of all Commercial Banks

‰ For Banker’s, any officer drawing monthly salary of minimum Tk. 10,000/-

and above.

‰ Any borrowers who have credit limit of Tk. 5.00 Lac with any bank with

regular payments.

‰ Customers maintaining average balance of Tk. 1.00 Lac in our bank

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‰ Chairman & Directors of all Government Corporations, Local Bodies, reputed

NGOs, Multinational Companies, and reputed Local organizations etc.

‰ Assistant Director and above in Bangladesh Bank

‰ Deputy Secretary and above in the Govt. Secretariats

‰ All Doctors/ Physicians who have private/public practice

‰ All Vice Chancellors, Professors and Associate Professors of Universities

(Govt.& Private).

‰ All Lawyers who have Bar-at-Law degree and in regular practice

‰ Corporate customers of other banks enjoying credit facility of Tk. 1 crore and

above, who are not overdue/ classified.

‰ Employees of all reputed NGOs, Multinational Companies, Local

organizations having monthly salary of Tk. 15,000/- and above.

4. b. Following will not be eligible for Credit Cards:

‰ Students and pupils who do not have regular job.

‰ Borrowers who have classified loans.

‰ Minors, Lunatics, Bankrupts, defaulters and insolvent.

5. Billing and Payment schedule:

All transactions against the card will be billed once in a month and payment must be

made within 15 days from the statement date either in full or minimum amount shown

in the statement.

6. Various International Card Holders Group:

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International Retention Quota Card under corporate guarantee of exporting houses:

International Credit Card against yearly Personal Travel Quota:

International Credit Card against RFCD account balance:

7. Local Credit Card:

7.a. Local Card to individual:

Gold Card on individual capacity may be issued to high government officials like

Secretary, Additional Secretary, Joint Secretary, Deputy Secretary, Chairmen,

Directors, Managing Directors of Banks, Financial Institutions, Insurance Companies,

Corporations, high officials of Defense and Multinational Companies etc and other

individuals on a case to case basis.

Required Documents- Service Holders

a. Filled Application form

b. Passport size Photograph(Color) -two

c. Passport (1-7 pages) Photocopy if any

d. TIN

e. Banks Statement-latest six months

f. Salary Certificate

Required Documents- Business Personnel

a. Filled Application form

b. Passport size Photograph(Color) -two

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c. Passport (1-7 pages) Photocopy if any

d. TIN

e. Banks Statement-latest six months

f. Income Certificate

g. Valid Trade License/ Memorandum/ Deed of Partnership

h. Proof of T&T Phone

i. Proof of Residence/ Car (If any)

7.b. Local Supplementary Card:

Supplementary cards may be issued against guarantee of basic cardholder and will be

billed to the basic cardholder accounts.

7.c. International Supplementary Card:

No Supplementary Card can be issued against International Cards.

Special features of premier Bank Visa Credit Card

1. Premier Bank ensures high level of security by placing cardholder’s photograph on

the card.

2. 5-45 days credit from the date of transaction. When customer receive their monthly

statement, they can either choose to pay in full or just the minimum due amount

shown in the statement. No interest is charged if they pay in full within payment due

date.

3. 24 hours a day, 365 days a year worldwide services.

4. No joining/ administrative fees.

 21

5. The highest Premier Bank Bonus Point holder can enjoy free air ticket Dhaka

Bangkok-Dhaka (Economy Class)

6. Cash Advance Facility- See detailed in Fees & Charges

Other terms and conditions

1. If a Cardholder pays the minimum payment amount as shown on the statement

of card account within the payment due date, cardholder does not need to pay

late payment charge. If payment received late twice (two months) then the

card will be suspended.

2. Excess Over limit Charge:

For Local Cards: Tk. 500(Gold) and Tk. 300 (Classic)

For International Cards: USD 20(Gold) and USD 15 (Classic).

3. Any excess over limit must be repaid immediately otherwise further penalty

may be applied.

4. Foreign exchange markup 1% (for International Cards only).

5. Interest: 2.5% (monthly) both Local and International Cards. Interest will be

calculated on a daily basis from the date of posting of the transaction.

6. If the cardholder pays the full-billed amount within the payment due date as

shown on the monthly statement of card account, no interest will be charged,

thus the member has the option to enjoy a maximum of 45 days interest free

credit facility.

7. Cash advance interest: 2.5% (month) both Local and International Cards.

Interest will be calculated on a daily basis from the date of posting.

8. Cash advance fees: 3% or Tk. 150 whichever is higher. Fee will be debited on

card account on the posting date. In case of Cash Advance, Cardholder must
 22

pay Cash Advance fee once and cash advance interest until the amount is paid

in full.

9. Interest, excess limit charge and cash advance interest (if any) will be debited

to card account on the statement date. Late payment charge (if any) will be

debited to card account on payment due date.

10. Minimum payment amount is calculated according to the following method:

a. For Local Cards: When the current outstanding is less than or equal to

credit limit, the minimum amount is 5% of the current balance shown

in the statement or Tk.500/- whichever is higher.

b. For International Cards: if the current outstanding balance is less than

or equal to the credit limit, the minimum amount is 5% of the current

balance shown in the statement or USD 50/- whichever is higher.

c. If current outstanding balance is less than USD 50/-, then the

cardholder must pay in full amount.

d. If the current outstanding balance is more than the credit limits for both

the local and international cards: the minimum amount is 5% of credit

limit, plus exceeded amount.

e. Any overdue account: for both local and international cards it is the

minimum amount of the previous statement plus 5% of the billing

amount.

The above charges are subject to change by the bank time to time at its own

discretion.
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5.2 Credit Card Application Form Collection Procedure:

Card Application Form Collection

Branch Target Employees / Officers Target

Assessment

Received Application Form By Credit Card Division

Final Judgment

Not
Approved Approved

Card Delivery to the

Rejected Applicant

Figure 2: Application collection procedure

Card production and delivery Procedure:

People can apply for a credit card either through branch or directly to the card

division. After receiving the application the reception section checks the require

documents and make the data entry into the register book and make a file of the

application. Then the application file passes to the credit section for credit assessment.

They analyze the application and make credit limit for the applicant. Then the file is

sent for the data capture into the computer. After capturing the applicant’s

information the file is sent to the production room for card production. Then the card

is sent to the delivery section and the file is stored in the file management section.
 24

Submit application
Card is delivered
to the cardholder

Applicant
Reception and delivery

Application is being sent to credit section for assesment

Board of Executive committee Credit assessment section

Card is sent to
the delivery section

Information of Applicant is sent to

data capture section for processing

Operation
Processed information is
sent for card production

Card production

Rich picture of the process of Card

production and delivery
 Organogram
Card Di vision, The Premier Bank Li mited

Head of Card

Business System & Operation

Marketing Card Application Credit Assessment Card Issuance Card Operation

Md Mizanur Rahman, JO Md Ahmed Abdullah, SO Md Abdul Baten, EO
Ms Rokeya Ashab, TJO Md Mizanur Rahman (Hired) Md Mahfuzul Islam, O

Customer Services Accounts

Md N A Chow dhury, EO Md Ifthekhar Hossain, FEO Credit Info Verification Data Capture Officer Data Verification Officer
Ms.XXXXX, MTO Md. Pavel Akther, MTO Required-One Offic er Md Tauhidul Bari (Hired) Md Maruf Haider (Hired)
Required-One Offic er Required-One Offic er

Recovery Card Prod/ Em bossing Application Approval

File Management
Ms Sharmin Khan, TJO Md. Aminul Ahesan, SO Em boss/Pin Creation
Md Jamal Hossain (Hired)
Required- One Offic er Mostafizur Rahman, FEO
Ms Anjuman Parvin, MTO

Card Maintenance
Fraud detection/Monitoring
Mostafizur Rahman, FEO
Ms Anjuman Parvin, MTO
Required-three Offic er (Roster)
25
 26
Target Plan for all the employees of Premier Bank Limited

Each of the Officers and Executives of our Bank should provide at least 20 (Twenty)

approved credit cards in the year 2004. The employees are requested to take necessary

precautionary measures while selecting the personals who may default to pay credit

card bills.

If we can issue credit cards according to the above target hopefully we can issue more

than 8000 cards in the first year.

5.3 Marketing Approach

Being a new player in the Credit Card business they have to compete with the existing

competitors who have already expose their products in the market and they are

already marketing their products with marketing agents instead of employees of the

Bank. Initially they may start their credit card marketing with their existing employee

of the Bank. Afterwards they have to go with marketing agents like other Banks, such

as: Standard Chartered Bank, Prime Bank, Dhaka Bank, etc for marketing their

products. Marketing agents are needed to expose their product rapidly in the market

so that they can catch up the maximum market share of credit card business.

5.4 Advertisement:

1) Banner, Poster, Bill board, etc.

2) Media coverage provided through Btv, Satellite channels i.e. Ntv, Atn,

Channel I etc. as well as Daily News Papers.

3) Going for a rally from Motijheel to Ashulia by decorating some pick up or Bus

to create awareness among the people about VISA Credit Card.

4) Participation in various national events like sports, trade fairs, etc. to draw the

public attention about VISA credit card.

 27

6.0 SYSTEM ANALYSIS

Customer
Punch card

1
Invoice from SCB server(acquirer) Unauthorized data from SCB
Transaction
Invoice from PBL (Issuer) server processing Invalid user info of PBL
system Valid user info of PBL

PBL data
PBL user info to SCB Visa

Figure: Transaction processing system

( CONTEXT LEVEL)

VISA: Payment Brand

SCB: Standard Chartered Bank ( Acquirer )

PBL: PREMIER BANK LTD( Issuer)

 28

Card holder Punch card

1.0
Invoice(acquirer)
POS
Invoice (issuer) machine
processing

Invoice Invoice
Card
from from
info
acquirer issuer

2.0
Check info D1 Authorized clients info of acquirer
Acquire server
processing

clients not authorized by

Card info D2
acquirer

Invoice
from
issuer

3.0 Card info

Visa server
Check info D3 List of authorized financial institution
processing

Invoice from
Card info
issuer

4.0

Issuer server
Check info D4 Database for card holder of issuer
processing

Figure: System level DFD of TPS

 29

Show invoice Merchant

Customer info

Customer
1
Give payment
Payment Clearance payment
system for
Give info
merchant
Payment info

Credit account
Visa

Figure: TPS (Clearance)

CONTEXT LEVEL
 30

Pay the Payment

Merchant

Show Invoice

Give information
Store info
Visa D1 Merchant info
1.0

SCB’s
Credit accounts Server
D1 Payment info
Processing Store payment
info

Debit accounts
Update
cardholder info D1 Cardholder information
1.0

PBL
Server Account information
Processing D1
Payment Store account
information info

Figure 5: System level DFD of Clearance System(Base II)

 31

In this phase we will describe about the transaction processing system (Verification

and clearance). Before that some definition are necessary to be given which are as

follows:

Cardholder: In the electronic environment, consumers and corporate purchasers

interact with merchants from personal computers over the Internet. A cardholder is an

authorized holder of a payment card (e.g. Master card, Visa) that has been issued by

an issuer.

Merchant: A merchant is a person or organization that has goods or services to sell to

the cardholder. Typically, these goods and services are offered via a website or by

electronic mail. A merchant that accept payment cards must have a relationship with

an acquirer.

Issuer: this is a financial institution, such as a bank, that provides the cardholder with

the payment card. Typically, accounts are applied for and opened by mail or in

person.

Ultimately, it is the issuer that is responsible for the payment of the cardholder. For

example Premier Bank in Bangladesh work as an issuer.

Acquirer: this is a financial institution that establishes an account with the merchant

and processes payment card authorizations and payments. Merchants will usually

accept more than one credit card brand but do not want to deal with multiple

individual issuers. The acquirer provides authorization to the merchant that a given

card accounts is active and that the proposed purchased does not exceed the credit
 32

limit. The acquirer also provides electronic transfer of payments to the merchant’s

account. Subsequently the acquirer is reimbursed by the issuer over some sort of

payment network for electronic funds transfer. For example Standard Chartered Bank

works as an acquirer as well as issuer.

6.1 Transaction processing system through POS (Point of Sale) machine (Base 1

system):

When client punches card into the POS machine, the card information goes to the

acquirer’s server. The server checks that the card holder is authorized by them

(acquirer)

or not. If so, then the server checks the status of the card. That means the card status is

normal or not and then checks that the requested transaction can satisfied his credit

availability or not. If satisfied all the conditions then it generates an invoice with

authentication unique number and sends it back to the POS machine and thus

merchant verifies the customer.

If the card holder is not the clients of the acquirer then the card information is passed

to their payment brand’s (Visa, MasterCard etc). Then the payment brand’s server

checks that under which financial institutions the card is issued and then sends it to

the issuer’s server. The issuer’s server then checks the status of the card. That means

the card status is normal or not and then checks that the requested transaction can

satisfied his credit availability or not. If satisfied all the conditions then it generates an
 33

invoice with authentication unique number and sends it back to the POS machine and

thus merchant verifies the customer.

6.2 Example of Transaction processing system

(Verification: Base I):

When a PBL customer punches card to the POS machine, the card information first

goes to the Standard Chartered Bank’s server as acquirer. Then SCB server found that

the card holder is not authorized by them. As they are under the payment brand of

Visa, they send it to the Visa server which is located in Singapore for the south Asian

region. Then Visa checks under which member (financial institution) the card holder

exist. They found PBL as the issuer. Then they send it to the PBL’s server. The PBL’s

server then checks the status of the card. That means the card status is normal or not

and then checks that the requested transaction can satisfied his credit availability or

not. If satisfied all the conditions then it generates an invoice with authentication

unique number and sends it back to the POS machine. The cardholder then signs on it

and thus merchant fulfill the client’s request or order.

The whole process described above is the 1st part of the transaction processing system

which is called Base 1 system.

6.3 Clearance part of the Transaction processing System (Base ll):

In the 2nd part of the system the payment are settled between merchant and the

acquirer as well as the issuer. The description is as follows:

 34

After getting the invoice signed by the cardholder the merchant goes to the acquirer

(ex. Standard chartered bank) and shows the invoice. Then the acquirer pays the

payment to the merchant. The acquirer then sends the information to the visa. Visa

then debit the amount from issuer. The issuer collects the information from visa

through Internet.
7. CONCLUSION:

In the competitive world of business, E commerce becomes essential for the nature of

global business. Now a day people can get there daily needs by sitting there own

home. for example in USA 16 percent cars are sold through Internet. Here credit card

comes in to the picture. People can reserve air ticket, hotel booking, can pay the

various utility bill by using credit cards. This makes life quite comfortable. The main

complaint heard about Credit card is that while they are convenient, they are

expensive to use. However, if we look at it from a banking perspective, business is

business. Regardless of what we think of Credit Cards, there is no doubt that they

have changed the world and the way in which we do things. For example, think how

many times we have been out somewhere only to discover we have no cash and we

are out of checks, ah, but in the corner, there is a Credit Card. In the blink of an eye,

we swipe the card and now have cash on hand. In addition to pulling money out, the

Credit Card also makes it convenient to deposit money, transfer money, and check

balances. Best of all, to use a Credit Card, we do not have to go to the bank. We will

find Credit Cards at other banks, grocery stores, shopping malls, along the roadside,

Buckingham Palace, airports, in casinos, and even on the South Rim of the Grand

Canyon. For this reason, Credit Cards are extremely helpful!

In our country the number of credit card holder increasing at an outstanding rate.

Most of them are found as young generation. It was a nice experience for me to work

on credit card division in Premier Bank Ltd. And this internship project gives

experience of working with other peoples, opportunity of learning human skills,

communicate with people and learn me how to service in a company like The Premier

Bank. I also like to mention that without basics of our university computer courses, it
 37

would be difficult on my part to complete and understand this project. The internship

experience cannot eliminate the fact that the textbooks, different database

management system projects helped me a great extent regarding the basic concepts. In

fact, they helped me to acquire the relevant knowledge. I merely want to state that

along with studying from the books, it is extremely important to understand the real

life situational problems from discussions with concern professionals and

observations of other projects developed by more experienced Software Developers.

Lastly I would like to mention that within the short period of time and with other

constraints I managed to gather as much information as possible for the analysis of the

system. However, to make more efficient project much more attention and time is

required to pay.
 38

REFERENCES

1. O’Brien, James A. 2000 Introduction to Information Systems: Essentials for

the Internetworked E-Business Enterprise, McGraw-Hill.

2. Kendall, Kenneth E., Kendall, Julie E. 2003 Systems Analysis and Design,

Prentice-Hall India.

3. Pressman, R.S. 2001 Software Engineering: A Practionar’s Approach,

McGraw-Hill.

4. Whitten, Jeffrey L., Bentley, Lonnie D., Dittman, Kevin C. 2001 Systems

Analysis and Design Methods, McGraw-Hill.

5. Secure electronic transaction, page 550, “Cryptography and network security”

2nd edition 2003 by William Stallings.

6. Systems Analysis And Systems Design, page 92, “Systems analysis and design”

2nd edition 1998 by Elias M Awad.

7. ATM, page 525, “Data communication and networking” 2000 edition, by

Behrouz A Forouzan.

Web pages:

www.premierbankltd.com

www.visa.com