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ë Credit is a method of selling goods or services
without the buyer having cash in hand.

ë A credit card is and automatic way of offering credit

to a customer.

ë Now a days, every credit card carries an identifying

number that speeds shopping transactions.

ë The sales person would have to record your identity,

billing address, and terms of repayment.
ëA credit card is a card or mechanism which
enables cardholders to purchase goods,
travel and dine in a hotel without making
immediate payment.

ë The cardholders get credit from banks upto

45 days.

ë It is a small plastic card which has a same

shape and size, and as specified by the
ISO/IEC7810 standard as ID-1.
ë The concept of using a card for purchases
was described in 1887 by ´ð
 
in his Utopian novel ´
  
 .

ë According to Encyclopedia Britannica ´the

use of credit cards originated in the united
states during the 1920·s.

ë Around 1938, companies started to accept

each other·s cards. Today credit cards allow
to make purchases with countless third
parties.
ë The front of credit card consist of the
following:
G Issuing bank logo
G Euro pay master card visa(EMV) chip
G Hologram
G Credit card number
G Card brand logo
G Expiry date
G Cardholder·s name
ë The reverse of the credit card consist of the
following:

G Magnetic strip

G Signature strip

G Card security code

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ë Authorization:
G The cardholder pays for the purchase.
G The merchant submits the transaction to the
acquiring bank.
G An authorization will generate an approval
code, which the merchant stores with the
transaction.
G The acquirer verifies the credit card number,
the transaction type & the amount with the
issuer & reserves that amount of the
cardholder·s credit limit for the merchant.
ë Batching:
G Authorized transactions are stored in
batches, which are sent to the acquirer.
G Batches are typically submitted once per day
at the end of the business day.
ë Clearing and settlement:
G The acquirer sends the batch transactions
through the credit card association, which
debit the issuers for payments and credits
acquirer.
ë _unding:
G Once the acquirer has been paid, the
acquirer pays the merchant.
G The merchant receives the amount totaling
the funds in the batch minus the ´discount
rateµ.
ë Chargeback:
G A chargeback is an event in which money in a
merchant account is held due to dispute
relating to the transaction. Chargeback are
typically initiated by the cardholder.
ë Creditcard issuers usually waive interest
charges if the balance is paid in full each
month, nut typically will charge full interest
on the entire outstanding balance from the
date of each purchase if the total balance is
not paid.

ë Interestcan vary considerably from card to

card, and the interest rate on a particular
card may jump dramatically if the card user
is late with a payment on that card or even if
the issuing bank decides to raise its revenue.
ë VISA
ë MASTER CARD
ë AMERICAN EXPRESS
ë VISA MINI
ë DISCOVER
ë DINERS
ë The Visa international service association is
an USA based association which is joint
venture of more than 20,000 final institutes.

ë Visacard is one of the biggest credit card

providing services and it is accepted world
wide.

ë In this system the payments are made by the

customer on monthly basis on his purchase
and if he·s not able to pay the amount within
a specified period of time then some interest
will be charged on his purchases.
ë Mastercard is one of the major credit cards
which are used regularly by the people
around the world and especially in United
States of America.

ë Master card are not in one dimension but the

company has introduced many types of cards
after its arrival in the market.

ë Some of them are Platinum master card,

Gold master card, BMO master card, and
Prepaid master card.
ë American express is also known as AMEX is a
world wide financial services company. The
company is best known due to its famous
cards. These cards includes:

G American express credit cards.

G American express reward credit cards.
G American express platinum credit cards.
ë ABN Amro
ë American express
ë Citi bank
ë HSBC
ë Standard chartered
ë HD_C
ë ICICI
ë BOB
ë BOI
ë SBI
ë Canara bank
Credit card issuers have several types of costs.
å °

 
Banks generally borrow the money which they
lend to their customers. as they receive very low
interest loans from other firms, they may borrow
as much as their customers require, while
lending their capital to other borrowers at higher
rates.

å ï



it is the cost of running the credit card portfolio,
including everything like paying the executives
who run the company printing the plastics,
mailing the statements, running the computers
that keep track of cardholder·s
å ! 
 
hen a consumer becomes severely
delinquent on a debt (often at the point of
six months without payment), the creditor
may declare the debt to be a charge off. The
item will include relevant dates, and the
amount of the bad debt.
Credit card issuers have several types of
revenues.
°
 
 
In addition to fees paid by the card holder,
merchants must also pay interchange fees to
the card issuing bank and card association.

°

 

 
 
Interest charges vary widely from card issuer
to card issuer.
 _ 



The major fees are for
G Rate payments or overdue payments.
G Charges that result in exceeding the credit
limit on credit limit on the card, called over
limit fees.
G Membership fees (annually or monthly).
G Exchange rate loading fees.
ë They allow you to make large purchases on
credit without carrying around a lot of cash.
ë They allow convenient remote purchasing
ordering/shopping online or by phone.
ë They allow accurate record keeping by
consolidating purchases into a single
statement.
ë Carrying a credit card is more safe &
convenient than carrying cash or a cheque
book.
ë Simple to operate & convenient to carry
ë Ress risky than carry liquid cash
ë It provide over draft facility
ë Monthly report are helpful for family budgets
ë It enhance purchasing power
ë Acceptance of credit card increase
reputation of shop
ë It is a source of revenue to bank & helps to
attract new class of customers
ë Îoumay become an impulsive buyer and
tend to overspend because of the ease of
using credit cards as these encourage the
purchasing you cannot really afford.

ë Credit
card system will increase
indebtedness among the card holders.

ë Creditcards are a relatively expensive way

of obtaining credit, if you don·t use them
carefully, especially because of the high
interest rates and other costs.
ë Only reputed merchants in city accept credit
card
ë Getting credit card is a time consuming
process
ë Credit card is not accepted in all the banks
ë There is a risk of fraud
ë Credit card is a costlier process