Plastic Money in Indiamn Shopping
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•To know the perception of people towards plastic money.
•To know the importance of plastic money in the daily life of consumers’ W.R.T credit and debit cards.
•To study the benefits of debit card and credit cards.
•To find out the market leader among the various banks/companies issuing credit and debit cards
•To know the problems faced by respondents using plastic money.
•To study the satisfaction level of consumers towards plastic money.
NEED AND SCOPE OF THE STUDY
Need of the study:-
It is rightly said the plastic money is need of hour. People are using these cards on a vast scale. But after considering the review of literature it is seen the whole payment process of processing these cards is not safe and customer are facing many problems relating to plastic money. That’s why study is focused on consumer perception regarding the plastic money. Need of the study is to get to know about the comparative analysis of plastic money. There are many ethical issues and challenges in the market of plastic money which is required to be studied. This study is concerned with the Seven perks of plastic money Convenience, Budgeting technology, Reputation boosting, Corporate might, Cops and robbers, the float, openness to negotiations.
Scope of study:- the following are the areas covered by plastic money;
ATM cards are slowly being transformed into value-added debit cards. Bankers and analysts see tremendous scope for growth in debit cards. “There is tremendous potential for debit cards. It will soon be substituting cheques. Utility payments will soon be made through debit cards, either at the ATMs or at the counters. The debit card can be used to withdraw cash from ATMs of other banks depending on whether the debit card-maker has a Visa or a Maestro tie-up. Visa and MasterCard both confirmed yesterday that they had been notified of the breach and had in turn notified several banks and credit card companies of the potential data compromise. They declined to say how many companies have been notified. Credit cards As well as convenient, accessible credit; credit cards offer consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes.
Plastic money or polymer money, made out of plastic, is a new and easier way of paying for goods and services. Plastic money was introduced in the 1950s and is now an essential form of ready money which reduces the risk of handling a huge amount of cash. It includes debit cards, ATMs, smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for currency
Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. Credit card however became more popular with use of magnetic strip in 1970.Credit card in India became popular with the introduction of foreign banks in the country .Credit cards are financial instruments, which can be used more than once to borrow money or buy products and services on credit. Basically banks, retail stores and other businesses issue these. It was introduced around and has now become an essential form of ready money. One of the main reasons for introducing plastic money, especially credit cards is to reduce the risk of handling a huge amount of cash by individuals/merchants. The growth and popularity of plastic money in India has been phenomenal in the last few years .In the present day world, no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions.
The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. The arrival of malls, multiplexes, online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. The Best credit cards in India are usually meant for specific user group such as women, students and small business owners. These cards are offered to the prospective customers with appealing deals. Over the years, Indians have been averse to credit cards. This is primarily because they believed that spending through credit is a sure shot way of getting into the debt trap. Of course, movies highlighting the sad state of a borrower did not exactly help matters. And even the local kirana shops have the famous lines; Aaj Nagad, Kal Udhari(cash today, credit tomorrow).But the situation is not actually that scary. And it is all about right timing. Credit cards can be a useful tool at the hands of savvy consumers who can effectively use the benefits offered by cards .It is important to know that credit card is a financial tool that needs to be used responsibly. While it ensures cash flow, it is not advisable for customers to borrow for a longer period of time. Use it effectively and take good advantage of the time line and clear your debts, without any additional costs.
Major Banks issuing Credit Card in India:-
•State Bank of India credit card (SBI credit card)
•Bank of Baroda credit card or BOB credit card
•ICICI credit card
•HDF C cr edit card
•IDBI credit card
•ABN AMRO credit card
•Standard Chartered credit card
•HSBC credit card
•Citibank Credit Card Global player in Credit card market are Master Card, VISA Card, American Express, Diners Club International.
The first 6 digits of credit cards number are known as the issuer identification number (IIN),previously known as bank identification number (BIN).These identify the institution that issued the to the card holder The IIN ranges used by the major card schemes are VISA
: Card number start with a 4.
: Card start with No.51 and 55
: Card number beginning 36 or 38
: Card number beginning 34 or37
Progress in civilization in its turn has brought out radical changes in the manner of trading. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Cash in the form of currency notes and coins makes up just one form of the payment system. Development in banking while also giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers. The requirement for greater flexibility and convenience has led to electronic payments, and this is where plastic cards have proved their worth. It allows the card issuers to limit the sum of money the card-holders wish to spend. The spending of card-holders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared.
Definition of credit card
A credit card is a credit-token within the meaning of section 14(1), Consumer Credit Act 1974 of the UK which defines a credit-token as a card, cheque, voucher, coupon, stamp, form booklet or other document or thing given to an individual by a person carrying on a consumer credit business, who undertakes:- •
That on the production of it (whether or not some other action is alsorequired), he will supply, cash, goods and services (or any of them) on credit, or • That were, on the production of it to third party (whether or not any other action is also required), the third party supplies cash, goods and services (whether or not deducting any discount or commission), in return for paymentto him by the individual.In very simple words credit card can be termed as anunsecured personal loanoffered tocustomers by the banks where the card-holder could purchase goods and services fromauthorized merchant or merchant establishments (MEs) of the bank up to a fixed limit oncredit. Such credit is normally made available for a period of 30 to 45 days.A credit card can also be used to secure airline tickets and car rentals. Having a credit cardcan make purchases and reservations easier; however, a credit card should be used responsibly so that the consumer does not over extend his finances. Credit cards are usually issued by banksor other financial institutions.Some credit cards may be available online.
HISTORY OF CREDIT CARDS
Our society was once upon a time functioning without money; it is again likely to becomemoneyless. While ancient society was confronted with the problems of adjusting mutuallysatisfactory rates and basis of exchange, future society, with the help of computers,electronics and telecommunications, credit cards, telephone and other modern means of communications, would settle financial transactions instantly. Money as a medium of exchange will serve its function. The difference will be that in future coins, currency notes,cheques, etc., will be dispensed with in favour of records. India has entered the stage of creditcard system and credit cards are gaining increasing relevance to facilitate industrial,commercial and agricultural transactions.Credit was first used in Assyria, Babylon and Egypt 3,000 years ago. The bill of exchange – the forerunner of bank notes – was established in the 14th century. Debts settled by one-thirdcash and two-thirds bill of exchange paper money followed only in the 17th century.
The firstadvertisement for credit was placed in 1730 by Christopher Thornton who offered furniturethat could be paid off weekly.From the 18th century until the early part of the 20th, tallymen sold clothes in return for smallweekly payments; they were called “tallymen” because they kept a record of tally of what people had brought on a wooden stick. One side of the stick was marked with notches torepresent the amount of debt and the other side was a record of payments. In the 1920sshopper’s plate – “buy now, pay later” system – was introduced in USA. It could only beused in shops which issued it.In 1950, Diners Club and American Expresslaunched their charge cards in USA, the first ‘plastic money’. In 1951, Diners Club issued the first credit card to 200 customers who coulduse it at 27 restaurants. With the magnetic strip in 1970, the credit card became a part of theinformation age.The origins of the bank credit cardhave been traced to John C. Biggins, a consumer creditspecialist at the Flatbush National Bank of Brooklyn, New York. In 1946, Biggins launched acredit plan called Charge-It. The programme featured a form of scrip that was accepted bylocal merchants for small purchases. After the sale was completed, the merchant depositedthe scrip in a bank account, and the bank billed the customer for the total scrip issued.
Plastic Money: the Currency of Modern India
Indian consumers have never had it so good. The soiled notes are definitely out. Carryingcash is no more `a pain in the neck’ as consumers are relying more on the `plastic card’ whichgives them money on credit.Plastic money basically means debit cards and credit cards which is having a magnetic stripe,logo, signature of the cardholder made of plastic.Credit Cards have finally arrived in India. The card industry which is growing at the rate of 20% per annum is flooded with cards ranging from gold, silver, global, smart to secure….thelist is endless. From just two players in early 80s, the industry now houses over 10 major players vying for a major chunk of the card pie.Currently four major bishops are ruling the card empire—Citibank, Standard Chartered Bank,HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million cardusers, is expected to double by the fiscal 2003. According to a study conducted by State Bank of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanchartfollows way behind with 0.67 million, while Hongkong Bank has 0.3 million credit cardcustomers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed by Bank of Baroda at 0.22 million. Parties involved
Cardholder: The owner of the card used to make a purchase; the consumer.
Card-issuing bank: The financial institution or other organization that issued the creditcard to the cardholder. This bank bills the consumer for repayment and bears the risk that thecard is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case.
Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder
Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.
Independent sales organization: Resellers (to merchants) of the services of theacquiring bank.
Merchant account: This could refer to the acquiring bank or the independent salesorganization, but in general is the organization that the merchant deals with.
Credit Card association: An association of card-issuing banks such as Visa,MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.
Transaction network: The system that implements the mechanics of the electronictransactions. May be operated by an independent company, and one company may operatemultiple networks. Transaction processing networks include: Cardnet, Nabanco, Omaha,Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet. DIFFERENT TYPES OF CREDIT CARDS
A charge card carries all the features of credit cards. However, after using a charge card youwill have to pay off the entire amount billed, by the due date. If you fail to do so, you arelikely to be considered a defaulter and will usually have to pay up a steep late paymentcharge
Winter Project Report
At the time of using the card he is not declared not as a defaulter even if misses due date. A2.95 per cent late payment fees (this differs from one bank to another) is levied in the next billing statement.
Amex stands for American Express and is one of the well-known charge cards. This card hasits own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa.
A smart card contains an electronic chip which is used to store cash. This is most useful whenyou have to pay for small purchases, for example bus fares and coffee. No identification,signature or payment authorisation is required for using this card.The exact amount of purchase is deducted from the smart card during payment and iscollected by smart card reading machines. No change is given. Currently this product isavailable only in very developed countries like the United States and is being used onlysporadically in India.
Diners Club card
Diners Club is a branded charge card. There are a wide variety of special privileges offered tothe Diners Club cardholder. For instance, as a cardholder you can set your own spendinglimit. Besides, the card has its own merchant establishment tie-ups and does not depend onthe network of MasterCard or Visa.However, since this card is typically meant for high-income group categories, it may not beacceptable at many outlets. It would be a good idea to check whether a member establishmentdoes accept the card or not in advance.
In this photograph is imprinted on a card, and then you have what is known as a photo card.Doing this helps identify the user of the credit card and is therefore considered safer. Besides,in many cases, your photo card can function as your identity card as well.
Global cards allow you the flexibility and convenience of using a credit card rather than cashor travellers checks while travelling abroad for either business or personal reasons.
Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer. .
The card issuer ties up with popular organizations/ institutions which are often non-profitorganizations (Citi-WWF card or the stanch art-Cricket cards) to offer an affinity card. Whenthe card is used, a certain percentage is contributed to the organization /institution by the cardissue
MasterCard and Visa
MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. They have built a vast network of merchantestablishments so that customer’s world-wide may use their respective credit cards to makevarious purchases.
Visa card: Visa, Inc., commonly called VISA, is an economic joint venture of 21,000 financial institutions that issue and market Visa products including credit anddebit cards. The company was originally named Visa International ServiceAssociation. The name change occurred in the fall of 2007 as a part of Visa’srestructuring and IPO plan. The company is based in San Francisco, California, USA.
PROCESS OF CREDIT CARDS
FUNCTIONS OF CREDIT CARDS
Today, credit cards have many functions and are very versatile. They can besummarized into the following functions: Credit
The holder may obtain extended credit up to an agreed limit at a published interest rate. Charge
The holder can repay the whole amount at the end of the month, without charge provided nocash advance has been taken. Cash
On presentation at the appropriate banks, subject to check, cash can be obtained. In mostcases can also be used in ATMs to obtain cash. Cheque guarantee
A cheque drawn on a bank may be guaranteed up to a published limit provided it isaccompanied by a Cheque Guarantee Card (or in some cases a Visa or MasterCard card)issued by the bank on which it is drawn. Cheque encashment
Cheque guaranteed as above may be used to obtain cash from branches of most banks,although a charge may be levied in certain circumstances. International
If the card is a member of Visa International or MasterCard International, you can use your card at many countries where there are a lot banks who are members of them.Perhaps the most significant fact to emerge from the summary of card functions is thatstrictly speaking, they are not debit cards. Although they can be used to obtain cash via ATM,the debit will be made from the credit card account and not from the holder’s bank account.The credit cards discussed above are bank cards. Different bank cards have different cardfunctions. The functions of bank cards really depend on the individual bank itself. Some bank card may have all of the above functions and some may not.There other credit cards that are issued by retail stores such as Petrol Card, Quasi Card andPrivate Label Card which may have some of the above functions mentioned above.