CREDIT CARDS

ORIGIN AND HISTORY

Small plastic card issued to users as a system of payment The issuer of the card creates a revolving account and grants a line of credit to the consumer from which the user can borrow money for payment to a merchant or as a cash advance to the user. In 1920s, the United States people used CC to sell fuel to automobile owners The concept of customers paying different merchants using the same card was implemented in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club In September 1958, Bank of America launched the BankAmericard in Fresno, California. BankAmericard became the first successful modern credit card

ORIGIN AND HISTORY

Aim to expand sales and building strong customer base Non bank cards Bank cards Visa and Master card Cards in Europe Electronic cards Special purpose cards

FEATURES OF MODERN CREDIT CARDS

Owner identification Credit limit Wide usage Technology-dependent

CREDIT CARD FRONT SIDE

Issuing bank logo EMV chip on "smart cards" Hologram Credit card number Card brand logo Expiration Date Card Holder Name contactless chip

CREDIT CARD BACK SIDE

Magnetic Stripe Signature Strip Card Security Code

FACILITIES AND SERVICES

Risk coverage Emergency cash withdrawal 24 Hour service Photo card option Travel privileges Credit-line increase Service over phone Purchase protection Fuel facility Medical advance facility Supplementary cards Hotels discount facility News letters Joint credit card and ATM facility

CLASSIFICATION

Based on mode of credit recovery

Revolving credit card Charge card Standard card Business card Gold card Domestic card International card Proprietary cards Master card VISA card Domestic Tie-up card Individual cards Corporate cards

Based on status of credit card

Based on geographical validity

Based on Franchise / Tie-up

Based on the issuer category

INNOVATIVE CARDS
ATM cards Debit cards Prepaid cards Private label cards Affinity Group cards Smart cards Chip card Co-branded cards

CREDIT CARD CYCLE

Card Issuing Bank

Merchant s Bank

Credit Card

Card User

Merchant Establish ment

CREDIT CARD CYCLE

Credit purchase Credit card processing Bill raising Payment Bill to cardholder Card payment

CREDIT CARD STRUCTURE

Issuer bank Acquirer bank Options for service delivery Stand-alone Co-branding Regional associations Outside service providers Validity and Renewal

CREDIT CARD FRAUDS

Fraudulent applications that result in cards being issued to imposters who have adopted the identity of a real person or conceived a bogus identity Lost, stolen and never received cards are among the major causes for fraud Counterfeit and altered cards Collusive merchants True cardholder fraud where the true cardholder perpetrates fraud Employee fraud

PREVENTION OF FRAUDS

Maintaining details of fraudulent application files, preferably in an automated environment Establishment of Credit Information Bureaus (CIB) which provide the credit history of individual borrowers through credit reports Designing systems to monitor cardholder activity and identify unusual spending behaviour Educating cardholders on card frauds and creating awareness about measures to prevent frauds Merchant education in recognizing and interpreting counterfeit cards Strict and comprehensive controls at the manufacturing level to ensure that each credit card meets established standards and strictly conforms to all security requirements Merchant monitoring procedures to monitor both authorizations and deposits

BENEFITS

To Cardholders

Shopping convenience Credit facility Safety Meticulous record Acceptability

To Merchants
Enhanced sales Easy validation No risk

To Issuer Banks
Source of income Market expansion Cross-selling

DRAWBACKS
Waste of money Thoughtless buying Financial problem Mental agony Costly

INDIAN SCENARIO
Diners Club 1964 Andhra Bank VISA Classic in 1981 Central Bank Master Card in 1981 Indian Banks - Canara Bank, BOI, Bank of Baroda Foreign Banks Citi Bank, Standard Chartered Bank, ANZ Grinlays Bank, Bank of America, American Express bank Citi bank issued Diners Club card

INDIAN SCENARIO
Andhra Bank VISA ICC Canara Bank Cancard, Cancard Visa, Cancard Master, VISA International Gold Cards Bank of Baroda BOBCARD Master, BOBCARD Global SBI Regular cards, International Cards, ATM, ATM-cum-debit card 12 major Indian and Foreign banks issues IOB, Dena Bank, Corporation Bank & Vysya Bank affiliated with Canara bank, Citi bank, BOI

MAJOR CREDIT CARD PROVIDERS IN INDIA

ABN Amro HDFC American Express ICICI Bank Axis Bank SBI Bank of Baroda Canara Bank Citibank

Visa HSBC MasterCard Deutsche Bank Amex Barclays Bank Diners Club Standard Chartered Kotak Mahindra