Banking has evolved a long way from the days of the medieval money lenders counting
coins on the bench to the present scenario, where it is hard to trace the trail of money
from the beginning to the end.
The trail starts right from the small saver leaving a few rupees in his local bank to the
billions of rupee loans raised by a syndicate banks and financial institutions, capable of
financing projects in any country in the world. Still, these banking majors are heavily
dependent upon their retail home base of savers and borrowers. Most of the bankers
began focusing on this retail market segment as global competition intensified in late
seventies and early eighties.
The debit card has emerged from the shadow of its older sibling, the credit card. Over the
past decade, debit card has grown from accounting for 274 million transactions in 1990 to
8.15 billion transactions in 2002, to challenge the credit card as the preferred payment
card. As it stands, the debit card industry is a multi-billion dollar engine that helps drive
bank profits and point-of purchase consumer sales - but is also beginning to redefine
traditional payment options in the business and government sectors, such as food stamps,
benefits, and payroll. The debit card has arrived and is here to stay.
And yet, though it remains poised for growth, the debit card has also reached a
crossroads. A recent settlement has cost VISA and MasterCard approximately $3 billion,
and has dramatically reduced the fees they can charge for signature-based debit
purchases. The effects of the settlement reach into every layer of the industry - from
rewards incentives, to marketing programs, to future fee arrangements, and future
growth. Consumer preferences for PIN- or signature-based debit will certainly influence
how things unfold, and whether either debit card option will suffer or bloom in the short,
mid, or long term.
Credit cards, one of the banking products that cater products to the needs of retail
segment has seen its number grow in geometric progression in recent years. This growth
has been strongly supported by the development in the field of technology, without which
this could not have been possible.
The history of phenomenal growth in the credit cards segment traces way back to in
1950, the time when ―Dinar Club‖ was established .The card provided select members
with credit at 22 restaurants in New York and collected a commission for paying the bills
promptly. The credit card industry got a further boost with the arrival of American
express began selling their card as a prestige to hotels,restaurants,shops or airlines in
America and slowly expanded the network across the world.
The success of these two players attracted many other banks to join the credit card
business. The entire breed of new players saw a fresh opportunity of granting unsecured
loans at high interest rates to those credit cardholders who did not pay their bills on time.
These banks were not so concerned with collecting commissions from shops but were
thriving on high interest income from those who did not pay their bills on time.
It’s not that only the card numbers have increased, but even the types of cards on offer
have seen a surge. Today the domestic card industry is flooded with different types of
cards ranging from gold, silver, global, co-branded credit cards, smart to secure ….the list
is endless. Foreign banks have shouldered the major responsibility of increasing the card
base and adding value-added services to the card products in the past. This is also evident
from the fact that the market share of these foreign banks is estimated to be well over
70%. But the scenario has changed dramatically in the last of couple of years with the
entry of State Bank of India (SBI), a domestic major in the banking sector. More and
more nationalised banks and private sector banks like ICICI and HDFC Bank are
aggressively launching credit card with value added features.
Although at present the card market is mainly limited to India’s relatively bigger cities
and tourist locations only, there is also a potential in smaller cities. Domestic banks,
owing to their vast network and reach to smaller cities, can easily tap this potential. They
would be better off, penetrating into smaller cities and bringing credit card to the masses
rather than cannibalising other foreign banks’ existing cardholder base.
The efforts of these banks to increase the card base is going to be wholeheartedly
supported by the residents of these smaller cities with their higher disposable income,
changing lifestyle, increasing travel and the growth in the entertainment sector.
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,
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.
Plastic Money: the Currency of Modern India
Indian consumers have never had it so good. The soiled notes are definitely out. Carrying
cash is no more `a pain in the neck' as consumers are relying more on the `plastic card'
which gives 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….the list 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 card users, 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. Stanchart follows way behind with 0.67 million, while Hongkong
Bank has 0.3 million credit card customers. Among the nationalized banks, SBI tops the
list with 0.28 million cards, followed by Bank of Baroda at 0.22 million.
The credit card market in India, which started out in 1981, is on the verge of an
unprecedented boom. Between 1987 and 2000, the market has virtually grown to over 3.8
million cards with almost 25-30 % growth in new cardholders.
SBI, one of the late entrants in the card market, has managed to grab over 8 per cent of
the market share from the bigwigs like Citibank and Standard Chartered Bank. The
bank's credit card business has grown by 8 per cent over the last two years. According to
bank officials, SBI's card issue so far is to the tune of 0.28 million which is expected to In
a bid to tap the lower middle class segment, SBI is currently sharpening its marketing
The bank is putting its best foot forward to compete with global card majors like Citibank
and Standard Chartered Bank. The global bigwigs have already established themselves as
the `bankable brands' in the metros. However, in a bid to move to greener pastures, they
are trying to tap the co-branded card market which has vast potential for growth.
Citibank, which is leading the card empire recently launched a co-branded credit card in
partnership with Indian Oil Corporation. The card will offer its members reward points
on every international spend which can be redeemed for free fuel in India.
ATM- debit cards are the flavour of the season
The credit card business may have fallen short of expectations, but the debit card seems
to lend issuers and payment systems a cause for hope.
Plastic money is getting popular, according to a survey conducted by MasterCard
international in the Asia pacific region comprising of Korea, Malaysia, Indonesia,
Philippines and Thailand. Eighty percent of those who participated in the survey were
either the owners of a card or desired to own an ATM card. 50% owned one and 30%
wish to own a card.
According to Jeff Portelli, Maestro (MasterCard’s debit card offering) has grown from
zero to 70 m cards in the Asia pacific region since its launch six years ago. Today,
Maestro is issued in 16 Asia Pacific markets and is accepted at over 35,000 ATMs and
more than 220,000 points of sale. In India, the card is available through Citibank, Times
Bank and HDFC Bank.
The concept of debit cards has been a slow starter in India. Debit cards are currently
offered by only a handful of banks, which has made availability low. Besides, the annual
fee attached to these cards adds to the perception that consumers are asked to pay for
their own money. However as the market get cracking, these fears are expected to be
alleviated in future.
A debit card is a plastic card which provides an alternative payment method to cash when
making purchases. Physically the card is an ISO 7810 card like a credit card; however, its
functionality is more similar to writing a cheque as the funds are withdrawn directly from
either the cardholder's bank account (often referred to as a check card), or from the
remaining balance on a gift card.
Depending on the store or merchant, the customer may swipe or insert their card into the
terminal, or they may hand it to the merchant who will do so. The transaction is
authorized and processed and the customer verifies the transaction either by entering a
PIN or, occasionally, by signing a sales receipt
As it is popularly known, it is an ATM card on the move. The Debit Card gives the
freedom to access the Savings or Current Account at merchant locations and ATMs.
Whenever to make payments, the amount will be instantly debited to the account. There
are around more than 5.3 lakh Visa/PLUS ATMs and equally strong Mastercard/ Cirrus
ATMs in over 140 countries worldwide. All the purchases and cash withdrawals will be
in the currency of the country are in, while account will be debited in rupees. So you
needn't carry traveller's cheques or foreign exchange the next time you travel
Debit Card can be used at any merchant location displaying the Visa or Mastercard logo
or at any ATMs displaying the Visa/PLUS or Mastercard/Cirrus logo. Besides that, one
can always use it at any of the bank ATMs as a normal ATM card.
Working of Debit Card
The user has to present the card to merchant who will swipe it through the electronic
terminal and enter the amount of purchase. The customer need to sign the transaction slip.
Account will be automatically debited for the amount of the purchase and the transaction
can be verified by entering the PIN. Debit Card can be used to access the Account from
over 5,000 Shops, Department Stores, Petrol Pumps and Restaurants and over 235 ATMs
in India .It can also be used at over 4 million Visa Electron merchant locations and
equally strong Mastercard outlets. If Debit Card ever gets lost or stolen, card companies
protect from fraudulent usage at the loss.
It is necessary to have a savings or current account with the debit card issuer; by filling
an application form. The card company then couriers the card across around a week’s
time. The Debit card does have a daily limit which could be somewhere around Rs.
15,000 at ATMs, and Rs. 10,000 at merchant locations. This again is subject to the
balance available in the account.
Advantages of Debit Card
Debit Card is often easier to get than a credit card.
Check approval or to show identification at store is not required.
No need to carry cash, a checkbook or traveler's checks.
Debit cards are more readily accepted than checks, especially at the time of traveling.
No interest charges are to be paid by debit cardholders.
Debit card processing fee for the merchant are generally lower than credit card fees.
Disadvantages of a debit card
Enough money is required in bank account to have debit card.
Once the amount is paid for purchase, if something goes wrong with the purchase.. Bank
won't put money back into your account for items that are never delivered, don't work or
Bank fees—such as monthly service charges, per-transaction costs or penalties—for
dropping below the required minimum balance are charged by debit card holders.
More chances of lose or misuse of debit card than a credit card.
Two types of debit cards: There are currently two ways that debit card transactions are
processed: online debit (also known as PIN debit) and offline debit (also known as
signature debit). In some countries including the United States and Australia, they are
often referred to at point of sale as "debit" and "credit" respectively, even though in either
case the user's bank account is debited and no credit is involved.
In India there are basically three types of cards namely Visa, Master Card and Amex.
Participating banks like ANZ Grindlays, BoB then issue these cards to the subscribers.
Both Visa and Master Card have been popular in India and Amex a relatively new player
in India as it issues its cards only through American Express
These cards are typically used at automatic teller machines (ATMs) to withdraw cash,
make deposits, or transfer funds between accounts. ATM card is used by inserting the
card into an automatic teller machine and enter a personal identification number, or PIN,
for security. The system checks the account for adequate funds before permitting any
These cards can be used to purchase products at any merchant that accepts VISA or
MasterCard credit cards. On the surface, they look exactly like ATM cards. However,
check cards cannot be used at automatic teller machines. When using a check card no
PIN is used. Instead, you will be asked to sign a transaction slip as would be done with a
Debit Card Problems can be worse than Credit Card Problems
When an improper charge appears on the credit card it can not automatically out the
money and simply need to work with the credit card issuer to have the charge removed
from the bill. When an improper charge occurs with a debit card, however, the funds are
automatically taken from the account and customer is burdened with attempting to get the
money back. Meanwhile, he may experience cash flow problems and the legitimate
checks could bounce.
Traveling with your Debit Cards
The reverse side of the debit card will display the names or symbols of the various ATM
systems that will accept the card. Debit card can be used at any ATM in the world as long
as the ATM displays one of the same system names or symbols that is on debit card.
When obtaining funds at an ATM in a foreign country the funds dispersed will be in the
currency of the country going to visit..
A credit card is a system of payment named after the small plastic card issued to users of
the system. A credit card is different from a debit card in that it does not remove money
from the user's account after every transaction. In the case of credit cards, the issuer lends
money to the consumer (or the user) to be paid to the merchant. It is also different from a
charge card (though this name is sometimes used by the public to describe credit cards),
which requires the balance to be paid in full each month. In contrast, a credit card allows
the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit
cards are the same shape and size, as specified by the ISO 7810 standard.
Credit cards in India is 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.
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
HDFC credit card
IDBI credit card
ABN AMRO credit card
Standard Chartered credit card
HSBC credit card
Citibank Credit Card
How credit cards works
A user is issued credit after an account has been approved by the credit provider, and is
given a credit card, with which the user will be able to make purchases from merchants
accepting that credit card up to a pre-established credit limit. Often a general bank issues
the credit, but sometimes a captive bank created to issue a particular brand of credit card,
such as Chase, Wells Fargo or Bank of America, issues the credit.
When a purchase is made, the credit card user agrees to pay the card issuer. The
cardholder indicates their consent to pay, by signing a receipt with a record of the card
details and indicating the amount to be paid or by entering a Personal identification
number (PIN). Also, many merchants now accept verbal authorizations via telephone and
electronic authorization using the Internet, known as a Card not present (CNP)
The credit card may simply serve as a form of revolving credit, or it may become a
complicated financial instrument with multiple balance segments each at a different
interest rate, possibly with a single umbrella credit limit, or with separate credit limits
applicable to the various balance segments. Usually this compartmentalization is the
result of special incentive offers from the issuing bank, either to encourage balance
transfers from cards of other issuers, or to encourage more spending on the part of the
customer. In the event that several interest rates apply to various balance segments,
payment allocation is generally at the discretion of the issuing bank, and payments will
therefore usually be allocated towards the lowest rate balances until paid in full before
any money is paid towards higher rate balances. Interest rates can 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 any other credit instrument, or even if the
issuing bank decides to raise its revenue. As the rates and terms vary, services have been
set up allowing users to calculate savings available by switching cards, which can be
considerable if there is a large outstanding balance
Because of intense competition in the credit card industry, credit providers often offer
incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1
percent based on total purchases) to try to attract customers to their program.
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 credit
card to the cardholder. This bank bills the consumer for repayment and bears the risk that
the card 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 the acquiring
Merchant account: This could refer to the acquiring bank or the independent sales
organization, 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 electronic
transactions. May be operated by an independent company, and one company may
operate multiple networks. Transaction processing networks include: Cardnet, Nabanco,
Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet.
Benefits of Accepting Plastic
More Sales: Studies show that credit card customers spend 2 1/2 times more than
customers who only carry cash.
Impulse Buying: Credit cards give customers freedom to spend for previously unplanned
More Expensive Merchandise: Credit cards entice customers to purchase more
expensive merchandise than they had originally planned to buy.
Competitive Weapon: Credit card customers are often less conscious of slight price
differences and will seek out businesses that offer credit card payment options.
Enhanced Advertising: Since customers are more likely to shop at businesses where
they have credit card acceptance, they tend to look for and read those ads first.
Steadier Sales: Credit smoothes out business peaks. Cash shoppers buy heavier on
paydays and just before holidays; credit card customers buy whenever the need arises
Customer Loyalty: Research shows customers who spend more on credit tend to return
to the same business again.
On the other hand, credit cards can
1. Cost much more than other forms of credit, such as a line of credit or a personal loan, if
not paid on time.
2. It damages the credit rating if payments are late.
3. Allow to build up more debt than actually handled by customer.
4. It has complicated terms and conditions.
DIFFERENT TYPES OF CREDIT CARDS
A charge card carries all the features of credit cards. However, after using a charge card
you will have to pay off the entire amount billed, by the due date. If you fail to do so, you
are likely to be considered a defaulter and will usually have to pay up a steep late
At the time of using the card he is not declared not as a defaulter even if misses due date.
A 2.95 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
has its 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
when you 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 is
collected by smart card reading machines. No change is given. Currently this product is
available only in very developed countries like the United States and is being used only
sporadically in India.
Diners Club card
Diners Club is a branded charge card. There are a wide variety of special privileges
offered to the Diners Club cardholder. For instance, as a cardholder you can set your own
spending limit. Besides, the card has its own merchant establishment tie-ups and does not
depend on the network of MasterCard or Visa.
However, since this card is typically meant for high-income group categories, it may not
be acceptable at many outlets. It would be a good idea to check whether a member
establishment does 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
cash or 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 organisations/ institutions which are often non-profit
organisations (Citi-WWF card or the Stanchart-Cricket cards) to offer an affinity card.
When the card is used, a certain percentage is contributed to the organisation /institution
by the card issue
MasterCard and Visa
MasterCard and Visa are global non-profit organisations dedicated to promote the growth
of the card business across the world. They have built a vast network of merchant
establishments so that customers world-wide may use their respective credit cards to
make various 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 and debit cards.
The company was originally named Visa International Service Association. The name
change occurred in the fall of 2007 as a part of Visa’s restructuring and IPO plan. The
company is based in San Francisco, California, USA.
Visa offers through its issuing members the following types of cards:
Debit cards (pay from a checking / savings account)
Credit cards (pay monthly payments with interest)
Prepaid cards (pay from a cash account that has no check writing privileges)
Visa operates the PLUS ATM network and the Interlink EFTPOS network, which
facilitate the "debit" protocol used with debit cards and prepaid cards.
Credit vs. debit
Even though the service is offered by thousands of banks, the end result is standardized
for consumers by the Visa International Association. Two protocols are used, depending
upon the type of card marketed, often called "credit" and "debit." The names of the two
protocols use the arbitrary "debit" and "credit" from accounting meaning left and right,
and they originally had the meanings (and still do to many people) that with credit the
cardholder pays later for the purchase, and with debit the cardholder pays immediately.
The debit protocol involves using the card at a point of sale terminal (POS) or automated
teller machine where the PLUS or Interlink logo is shown, with a Visa card that has the
PLUS or Interlink logo on the back of the card. A PIN (personal identification number,
known by its acronym) is used to identify the cardholder. The money is deducted from
the attached checking account or prepaid account (which is similar with no paper check-
writing capability). The credit protocol involves using the card at a POS or a banking
center where the Visa logo is shown. The cardholder's signature is generally used for
identification, often together with the cardholder's civic registration number or ID
card/passport. Holders of any Visa card may use the credit protocol even if the card is
marketed as a debit card or prepaid card (basically since it has the Visa logo on the front
of the card)
MasterCard: MasterCard Worldwide is a multinational corporation based in Purchase,
New York, USA. Throughout the world, its principal business is to process payments
between the banks of merchants and the banks of purchasers that use its "MasterCard"
brand debit and credit cards to make purchases. MasterCard Worldwide has been a
publicly traded company since 2006. Prior to its initial public offering, MasterCard
Worldwide was a membership organization owned by the 25,000+ financial institutions
that issue its card.
It was originally created by United California Bank (later First Interstate Bank,
subsequently merged into Wells Fargo Bank), Wells Fargo, Crocker National Bank (also
subsequent .As at 31 March 2007, over 187 million MasterCard cards (excluding
Maestro® and Cirrus) had been issued by MasterCard customer financial institutions
across APMEA. Cardholders in the region made more than 667 million purchase
transactions in the first quarter of 2007 and could use their MasterCard cards at 25.1
million acceptance locations worldwide. Serving nearly 25,000 member financial
institutions worldwide, MasterCard is the #2 payment system in the US. The company
does not issue credit or its namesake cards; rather, it markets the MasterCard (credit and
debit cards) and Maestro (debit cards) brands, provides the transaction authorization
network, establishes guidelines for use, and collects fees from members. The company
provides services in more than 210 countries and territories; its cards are accepted at
more than 23 million locations around the globe. MasterCard also operates the Cirrus
As a significant link between monetary institutions plus millions of businesses,
cardholders and traders globally, mastercard card provide services in further than 210
countries along with territories. Debit mastercard plus credit mastercard moves forward
trade worldwide by increasing extra secure, suitable and satisfying payment results,
dealing out billions of expenses flawlessly transversely the globe, and structuring fiscal
connections that speed up business.
The mastercard com modernized and smart approach to dealing out enables competent
trade on a global level. It is found on a supple network, lone of the biggest VPNs in the
globe, which presents unmatched speed, combination, and consistency. MasterCard
assists banks along with merchants raise by enabling fast acceptance of new ways to
disburse and offering modified solutions that bring importance in the course of
As it seems to the prospect, MasterCard are dedicated not just to ongoing to distribute
value to its clients and further stakeholders, but as well to helping the benefits of
electronic payments, speeding up the dislocation of cash as well as checks, and going
forward trade transversely the world.
To help educate consumers on financial management, MasterCard launched free tools
that are designed to be easily understandable for consumers in order to help them manage
DIFFERENCE BETWEEN A DEBIT CARD AND A CREDIT CARD
A debit card looks like a credit card; it works more like cash or a personal check.‖ pay
now." With a credit card, you "pay later."
Debit means "subtract." In case of debit card the amount is automatically subtracted from
checking or saving account, credit cards are used in stores for purchases. At check-out,
the card reader electronically contacts the bank and subtracts the amount from the
account. The money in bank account limits how much the customer can spend. However,
if the customer is not careful in watching the daily account balance, he can over withdraw
the account. Some systems will allow to use the debit card even when don't have enough
money in the account to cover the purchase. This can result in hefty overdraft fees.
Using a credit card is somewhat like taking out a loan from a bank or other financial
institution. Customer have to pay back the credit used each month. If he pays back less
than the full amount owe each month, he is to pay interest on the amount not paid back.
The credit card company sets the total amount that can charge based on your credit
history, income, debts and ability to pay.
Some cards are dual-purpose credit/debit cards. Before swiping the card through the
reader, select a "credit" or "debit" button on the reader. If you select "debit," then enter
your Personal Identification Number (PIN). If select "credit," the credit receipt is given to
sign and credit charges will appear on the next charge account bill.
Combining the wide acceptability of a credit card and the thoughtful prudence of an
ATM card, the ICICI Bank Debit Card is the most convenient accessory. No more fear of
overspending. No more searching for the nearest ATM. Only more comfort and
convenience in the debit cards provided by ICICI.
The ICICI Bank Private Banking Debit Card
The ICICI Bank Gold Debit Card
The ICICI Bank HPCL Debit Card
The ICICI Bank Ncash Silver Card
The ICICI Bank Ncash Debit Card
ICICI Bank Credit Cards give you the facility of cash, convenience and a range of
benefits, anywhere in the world. These benefits range from life time free cards, Insurance
benefits, global emergency assistance service, discounts, utility payments, travel
discounts and much more.
TYPES OF CARDS
Value for Money Cards
Co Branded Cards
HDFC BANK Debit Cards give you complete and instant access to the money in
accounts without the risk or hassle of carrying cash.
TYPES OF DEBIT CARDS
Easy Shop International Debit Card
Easy Shop International Gold Debit Card
Easy Shop International Business Debit Card
Easy Shop Woman's Advantage Debit Card
CREDIT CARD: HDFC bank credit card provide a facility of easy availability of cash
and convenience to the cardholder.
TYPES OF CREDIT CARDS OF HDFC BANK
Silver Credit Card
Value plus Credit Card
Health Plus Credit Card
Gold Credit Card
Titanium Credit Card
Platinum Plus Credit Card
Visa Signature Credit Card
REVIEW OF LITERATURE
Cunningham Julie (Nov 98), Kansas state university in the study “College Student
Using The Credit Card‖ stated that there is a need to determine whether college
students are responsible with their credit cards. This study was concerned with the
problem faced by the credit cardholders. Consumer perception regarding credit cards and
debit cards is very much different as it is precisely in a defined sector. Role of online
commerce or payment over the internet .it future prospects of credit card and debit card in
India. It also includes consumer preference among debit card and credit card, consumer
satisfaction level in case of both cards.
Loebecke S .Elliot (Jan 98) in his article “Smart Card Based Electronic Commerce:
Characteristics And Roles” stated that the origin of smart cards began when consumer
requirements for convenience and security out spaced the capabilities of magnetic stripe
cards. Providing increased data storage and added security, smart cards were introduced
in Europe in the early 1970’s as stored value cards for payphones. These early smart
cards were disposable and were an effective means to reduce losses. Today's advanced
contact less and dual-interface smart card technologies - together with emerging digital
signature laws and the development of biometric techniques - can bring a range of
services to life on a single piece of silicon.
Swift, Kevin (May 1998) in his article “Credit Card And Debit Cards: What New?
Where To?” stated that trends have changed and forces have impact on the card issuer,
and forecasting its future and the resulting impact on the card economy through the year
2002.The report takes a different viewpoint from many studies of the industry which
examined trends from the issuers viewpoint. This study takes those trends as the end –
point, and looks at the forces that will impact the card issuers. It offers insight into the
combination of industry, economic, demographic, and technological changes that will
have an effect on credit and debit card products, and how together they will reshape the
industry landscape and result in a credit/debit card industry that will look far different in
the year 2002 that it does today. The convergence of the internet and various consumer
and other electronic technologies in combination with a desire on the part of companies
in a number of industries to forge new alliances and offer enhanced services has
established a role for electronic cash.
Hayashi, Fumiko and Weiner Stuart E. (sept 2005) in their article ―Competition and
Credit and Debit Card Interchange Fees” stated that there is a bridge between the
theoretical and empirical literatures on interchange fees. Credit and debit card industries
are examples of two-sided markets. The distinguishing Feature of two-sided markets is
they contain two sets of end users, each of whom needs the other in order for the market
to operate. In the case of credit and debit cards, the two end-user groups are cardholders
Payment card systems take one of two principal forms. They may be three-party systems:
Cardholders, merchants, and a single financial institution that offers proprietary network
services, for example, American Express. Alternatively, they may be four-party systems:
cardholders, merchants, card-issuing banks, and merchant acquiring banks, using the
services of a multi-party network such as MasterCard, Visa, or a domestic debit card
network. In four-party systems, the interchange fee is an instrument that networks can use
to achieve a desired
Balance of cardholder.
Chakravorti ,Sujit (June 2003) in his article “ Theory of Credit Card Networks: A
Survey of the Literature” stated that Credit cards provide benefits to consumers and
merchants not provided by other payment instruments as evidenced by their explosive
growth in the number and value of transactions over the last 20 years. Recently, credit
card networks have come under scrutiny from regulators and antitrust authorities around
the world. Focusing on interrelated bilateral transactions, several theoretical models have
been constructed to study the implications of several business practices of credit card
Hunt, Robert in this article “An Introduction to the Economics of Payment Card
Networks” stated that how payment cards work and explains how the market for
consumer payment methods differs from most other markets economists study. These
differences have implications for when, why, and how the rules of antitrust law – which
regulate how firms may exercise market power – should be applied to this industry. He
focused on general-purpose credit cards, such as Visa or MasterCard, and debit cards. We
do not discuss department store cards, oil company cards, or bankcards when they are
used at ATMs Debit cards allow customers to pay for goods and services at the point of
sale by authorizing a withdrawal from their checking or savings account. Most ATM
cards can be used at the point of sale as debit cards. Such transactions are called PIN
debit transactions because the cardholder must enter a four-digit personal identification
number (PIN) to authorize the transaction. Funds are then immediately withdrawn from
the associated bank account. The transaction itself is routed through an electronic funds
transfer (EFT) network, for example Star, NYCE, and Pulse.7 transaction, a signature
debit transaction does not immediately remove funds from the cardholder’s account; it
typically takes a day or two for the transaction to clear. MasterCard must also accept the
comparable brand of debit card.
Chartered financial analyst in the article “Credit Card Crisis In South Korea”
stated that in the aftermath of the economic crisis of 97-98 South Korea has undertaken
several measures to deal with prudential problem relating to credit cards. This study
attempts to find out why the credit cards have been a disaster in South Korea in 1999, the
Korean policy makers came up with some revolutionary changes in the policy and law
that stepped up the usage of credit cards. Banks and credit card companies started issuing
credit cards without properly assessing the credit capacity of the customer. The South
Korean credit industry and the economy suffered a painful blow in 2003.it was a major
credit card fiasco throughout the country with thousands of citizens committing suicide to
avoid the burden of debt & fear of bankruptcy.
Chartered financial analyst (Nov 2007) in the article “Ethical Issues And
Challenges” stated that the credit card company has to take into consideration the
challenges which are their in the markets. Credit cardholders have the fear of loosing the
card and the card is being misused by other person. The credit card is stolen or lost and
being misused .credit card companies have to focus on the security and ethical issues
related to credit cards.
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
OBJECTIVES OF STUDY
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
To study the benefits of debit card and credit cards.
To find out the market leader among the various banks/ companies issuing credit and
To know the problems faced by respondents using plastic money.
To study the satisfaction level of consumers towards plastic money.
Research methodology deals with the method of study i.e. how the study can be carried
out and what techniques can be used. It is the careful investigation and enquiry in a
systematic manner in order to find solution to find problems in research. it consists of
defining and redefining the problems, formulating the hypothesis or suggestions solutions
,collecting data and evaluating the data and at last carefully testing the conclusions to
determine whether they fit he formulated hypothesis or not.
RESEARCH DESIGN: Research design states the conceptual structure within
which research is to be conducted. A research design is the arrangement of conditions for
collections and analysis of data in a manner that aims of data in manner that aims to
combine relevant the research purpose with economy in procedure. The different research
designs available are:
Exploratory research: it generally emphasis on discovery of ideas and insights. It’s
more qualitative rather than quantitive.
Descriptive research: it is concerned with determining the frequency with which
something occurs or extent relationship between two variables. This study will be having
an exploratory research which is based on discovery of ideas and insights.
Universe: the universe consists of all people who are using plastic money for different
Sample size: this refers to the number of respondents to be selected from the universe to
constitute a sample. Large samples gives more reliable results than the small samples. So
the sample size of 100 respondents was taken into consideration in case of research work,
which includes both debit and credit card holders.
Sampling unit: sampling unit implies that who are the respondents. In this sample all
those who are using debit cards and credit cards.
Sampling technique: the technique used for my study is convenient sampling that
consists of questionnaire, which are given to respondents who are the regular users of
METHODS OF DATA COLLECTION:
Primary data is that data which is collected for the first time and thus happens to be
original in character. In the study, primary data will be collected from direct source of
information like customers with the help of questionnaire survey and personal interview.
Questionnaire: The second tool used for study is questionnaire. Various questions
regarding the purposes of plastic money and the various procedures for obtaining credit
cards, the necessity of credit cards, increasing relevance of plastic money among
consumers, market leader among various companies issuing credit and debit cards.
Secondary data are those which have already been collected by some one. For this study
there will be following secondary data.
Articles And Newspapers
TOOLS OF ANALYSIS:
Diagrams and Tables: Various graphs and tables are used to describe the performance
of different credit cards and debit cards.
Weighted Average: Weighted average method is also used to analyze the comparison
between plastic money. Weighted average means finding out the average by assigning the
weights to different factors. Formula for calculating weighted average is ∑WiXi/Wi.
Pie chart and percentage: Pie charts and percentage are also used as a tool for analysis.
The limitations of a study are:
The result are based on primary data.
The accuracy of the result is also limited to the reliability of methods of investigation,
measurement and analysis of data.
The present study is based on the data from jalandhar city only and thus might not be true
for all other areas.
There was lack of time.
The data collected may or may not be accurate because of the biasness from respondent
Findings are not justified because each market player have their unique characteristics of
debit cards and credit cards. so its very difficult to decide which bank has upper edge in
DATA ANALYSIS AND INTERPRETATION
1: To know about respondents who are using the plastic money.
Respondents were asked whether they use plastic money or not .The results are as
Table no. 5.1 Use of plastic money by the respondents.
Options No. of respondents %age of respondents
Yes 100 100%
No 0 -
Figure 5.1 Use of plastic money by the respondents.
Interpretation: From the above figure it can be interpreted that 100 respondents who are
taken for the study are using plastic money and hence it can be said that majority
respondents now a days are using plastic money.
2: Card possessed by respondents.
Respondents were asked to explain that which card they possess and the results are as
Table 5.2 Card possessed by respondents
Options No. of respondents % age of respondents
Debit card 58 58%
Credit card 28 28%
Both 14 14%
Figure 5.2 Card possessed by respondents
Credit card Debit card
38% 48% Both
Interpretation: From the above data collected we can interpret that that people mostly
have debit card, as credit card is little expensive than debit card so people mostly prefer
debit card, but still people have applied for their credit card also. Some people have both
debit card and credit card
3: Debit cards of different companies/banks owned by respondents.
Respondents were asked to explain that how many no. of debit card owned by them and
the results are as follows:
Table 5.3- No. of debit cards of different companies owned by respondent
Options No. of respondents %age of
1 56 56%
2 26 26%
3 12 12%
None 6 6%
Figure 5.3 No. of debit cards of different companies owned by respondent
Interpretation: The above chart reveal that mostly people have one debit card; about
26% of the respondent are using two debit cards from different companies.its clear that
people are satisfied with their debit card.
4: No. of credit cards of different companies/banks owned by respondents.
Respondents were asked to explain that how many no. of credit card owned by them and
the results are as follows:
Table 5.4 No. of credit cards of different companies owned
Options No. of respondents %age of respondents
1 46 46%
2 22 22%
3 10 10%
None 22 22%
Figure5.4 No. of credit cards of different companies owned
Interpretation: From the above information it can be interpreted that 46% of the
respondent have one credit card from different companies. and 22% have don’t own
credit card. But still people have knowledge about these cards.
5: Companies /bank card owned by the respondents.
Respondents were asked to explain which company/bank card owned by them. The result
are as follows:
Table 5.5: Companies /bank card most preferred
Options No. of respondents %age of respondents
HDFC Bank 22 22%
ICICI Bank 28 28%
IDBI Bank 12 12 %
CBOP 6 6%
Any other (PNB) 22 22%
(SBI) 10 10%
Figure 5.5 Companies /bank card most preferred
Interpretation: From the above data it’s clear that people mostly prefer ICICI bank to
get the plastic money, after that respondent prefer PNB and HDFC bank.people usually
like to have credit card with whom they have account.
6: Time period of using the debit card/credit card/both.
Respondents were asked to explain the time period for which they are using them. The
result are as follows:
Table 5.6: Time period of using the card
Options No. of respondents % age of respondents
Less than 1 yr 22 22%
Between 1yr-3yr 26 26%
Between 3yr-5yr 34 34%
More than 5 yr 18 18%
Figure 5.6 Time period of using the card
More than 5yr Less than 1yr
Less than 1yr
Between 3yr-5yr Between 1yr-3yr More than 5yr
Interpretation: The above data reveals that mostly people are using plastic money from
last 3 to 5 yrs and rest are using it for less than one yr. plastic money become a trend
from the last few years.
7: Purpose for using the card.
Respondents were asked to explain the purpose of using the card. The results are as
Table 5.7: Purpose for using the card.
Options No. of %age of respondents
Shopping 36 36%
Withdrawal of money 24 24%
Hotel & restaurant 20 20%
Petrol filling 14 14%
Any other(like going for 4 4%
Figure 5.7 Purpose for using the card.
Withdrawl of money
20% Petrol filling
Any other purpose
Interpretation: It is clear that mostly people use the card for the shopping purpose. and
then for withdrawal of cash, 20%use it for going for hotel and restaurants. So the plastic
money is used by the respondent everywhere.
8: Card which is more beneficial.
Respondents were asked to explain which card is more beneficial according to them.
The result are as follows:
Table 5.8: Card which is more beneficial.
Options No. of respondents % age of respondents
Debit card 36 36%
Credit card 34 34%
Both 30 30%
Figure5.8 Card which is more beneficial
Interpretation: From the above table it is clear people mostly prefer debit card but credit
cards are not far behind, about 34% of the respondents feel that credit card is more
beneficial than debit card and some feel that both are beneficial.
9: Benefits provided by debit card
Respondents were asked to rank the benefits provided by debit card on a scale. The result
are as follows:
Table 5.9: Benefits provided by debit card
Wi 1 2 3 4 5
Options Strongly Disagree Neither agree Agree Strongly Weighted
(Xi) Disagree (No.0f Nor disagree No. of agree average
(No. of (No. of respondents No. of
Security 40 36 2 12 10 14.4
Free from 42 32 4 12 10 14.4
No 30 22 28 20 19.16
Anytime 12 10 2 44 32 25
Easy 8 12 - 36 44 26.4
Figure 5.9 Benefits provided by debit card
free from no interest anytime easy to
fraud charges access carry
no of respondents(weighted 14.4 14.4 19.16 25 26.4
Interpretation: From the above collected data it is clear that respondents are highly
dissatisfied with the security matters relating to debit card. After calculating the weighted
average it is clear that mostly respondents believed that it is easy to carry but they are
highly dissatisfied with security and frauds
10: Benefits provided by credit cards.
Respondents were asked to rank the benefits provided by credit card on a scale. The
result is as follows:
Table 5.10: Benefits provided by credit cards
Wi 1 2 3 4 5
Options (Xi) Strongly disagree Neither agree agree Strongly Weighted
disagree (no. of Nor disagree agree average
responden (no. of (no. of
(no. (no. of
ts) responden respondents
of ts) )
Easy to 8 12 - 36 44 26.4
Convenient to 2 4 - 42 52 27
Overdraft 14 24 4 36 22 22
Prestige to 10 8 2 44 36 25
Figure 5.10 Benefits provided by credit cards
easy to convienent overdraft prestige to
carry to pay facility holder
no of respondents(weighted 26.4 27 22 25
Interpretation: from the above study it can be seen that respondents agreed that credit
card is easy to carry and it give prestige to the holder. After calculating weighted average
it is clear that convenient to pay is the most preferred benefit among respondents.
11. Problems faced in processing the card
Respondents were asked to rank the problems provided by card. The result are as follows:
Table 5.11: Problems faced in processing the card
Wi 1 2 3 4 5
Options (Xi) Strongly disagree Neither agree agree Strongly Weighte
disagree Nor disagree
(no. of (no. of
(no. (no. of responden Average
of ) )
Feeling 10 12 2 38 38 25
Fear of loosing 8 10 - 36 46 25
Unnecessary 8 12 4 36 40 22
High fee charged 8 6 32 54 28
Figure 5.11 Problems faced in processing the card
Weighted avg 20
Feeling of Fear of loosingUnneceesary High fee
Insecurity the card Formalities Charged by bank
No of respondents (weighted average) 25 25 22 28
Interpretation: From the graph it is clear that that the cardholders have the problem in
processing the card .According the weighted average the problem which is faced by most
of the respondents is the high annual fee charged by the banks. They also face the problem
of loosing the card and being misused by some other person.
12. Future prospects of plastic money.
Respondents were asked to explain to future prospects of plastic money. The results are
Table 5.12: Future prospects of plastic money.
Options No. of respondents %age of
Rapid Growth 56 56%
Steady Growth 32 32%
Stagnant 4 4%
Can’t Predict 6 6%
Declining 2 2%
Figure 5.12 future prospects of plastic money
No of respondents
Rapid growth Steady growth Stagnant Can’t predict Declining
Interpretation: It is clear from the graph mostly people believe that the future of plastic
money is at boom. 56% believe that their will be steady growth and 32% are of the view
of steady growth.6% can’t predict anything.
Following are the findings that are drawn from the study:
Respondent taken for this study are those who are using the plastic money in their daily
62% of the respondents believe that plastic money is the currency of modern India.
56% of respondents own one debit card and 26%owns two debit cards.
People have less craze for credit card. Only 46% of the respondents have credit card.
Respondents mostly prefer the plastic money of ICICI bank and PNB.
34% using the cards for the last 3 years and the trend of plastic money have emerged
from the last few years.
Mostly people use the cards for shopping and withdrawl of money .plastic money is
mostly preferred at the time of shopping.
Debit card is more beneficial according to 36% respondents.
Debit card don’t provide security to the cardholders.
42% respondents are dissatisfied that debit card is free from fraud.
Mostly people agreed that debit card provide the facility of anytime access. Anytime you
can withdraw your money.
Credit card is convenient way to pay agreed by most of the respondents.
Credit card provide prestige to holders having the tie up with the famous card companies
it provides the sense of pride.
38% cardholder agreed that the plastic money holders have to tackle with the problem of
Cardholders have to fulfill the unnecessary formalities while obtaining the card.
Plastic money has a rapid growth in the coming years.
The growth credit card in India is still very slow. Companies are going really hard to
increase the sale of credit cars.
According to weighted average method the respondents highly satisfied that the debit
card is easy to carry and credit card provide convenience to pay.
In the last two years, spending pattern through plastic money has changed drastically.
Travelling, dining and jewellery are the top three purchases that Indians make through
credit cards. Two years ago, it was jewellery and apparel purchases that formed the
largest chunk of purchases through plastic money. Fuel accounts for a very small portion
of credit card purchases as these are largely paid through debit cards.
Consumers were not only more open to the possibility of owning a financial card, but
were also more than willing to use their cards to settle dues. The status symbol aspect of
owning and using cards, too, played its part in bringing about such robust growth over the
space of a single year. Debit cards, in particular, proved immensely popular.
According to projections for the 2003-2008 period, the number of financial cards in
circulation will register a compounded annual growth rate of nearly 51 per cent so the
satisfaction of consumers has also increased. There are many ethical issues and
challenges for plastic money issuing banks/companies. Security relating to card should be
first priority for each bank/company.
Consumers are preferring these cards mostly for shopping online E-commerce has given
a better way to use the plastic money.
At last it is concluded that plastic money has a very bright future in the coming years
because of the increasing trend of e-commerce.
Various offers and discounts should be provided on the plastic money so that all the users
feel satisfied with their card choice.
The interest charges on credit cards should be reduced so that people are encouraged to
use it in regular routine
More facility should be provided to the cardholder in order to satisfy them completely.
There should be more sales executives to reinforce new customers.
More outlets should be provided where the cards can be easily accepted.
The unnecessary formalities should be reduced in order to obtain the plastic money.
Advertisements should be given through TVs, magazines and hoarding to have maximum
reach because the respondents perceive these as important promotional tools.
The whole procedure of obtaining the plastic money needs to be authentic. Companies
should provide security to the cardholders.
Companies should reduce the amount of the annual fee charged on the cards.
Kothari C.R, ―Research Methodology: Research and Techniques‖; Vishwa Prakshan,
New Delhi, 4th edition.
E.gordan and Natrajan, Financial Services, Himalaya Publishing House, Mumbai. , 5th
Cunningham Julie, Kansas State University ,article ―College Student Using The Credit
Card‖ Nov’ 98
Loebecke.S Elliot, article ―Smart Card Based Electronic Commerce Characteristics And
Roles‖ Jan’ 98
Swift, Kevin, article ―Credit Card and Debit Cards: What New? Where To?‖ ,May’ 1998
Hayashi fumiko and weiner Stuart E. ,article ―Competition And Credit And Debit Card
Interchange Fees‖ ,Sept’2005
Chakravorti ,Sujit ,article ―Theory Of Credit Card Networks: A Survey Of Literature
―June 03 2003
Hunt Robert ,article ―An Introduction To The Economics Of Payment Card Networks‖
Chartered financial analyst ,article ―Credit Card Crisis In South Korea‖ 2003
Chartered financial analyst ,article ―Ethical Issues And Challenges‖ ,Nov 2007
I am the student of PGDMM in D.A.V College Chandigarh and topic of my project report
is ―Comparative Study of Plastic Money with special Reference to Debit Cards and
Credit Cards‖. I want your cooperation to fill this questionnaire related to my project.
Q1.Do you use plastic money?
Q2.Which card do you have?
(i) Debit card
(ii) Credit card
Q3.How many no. of debit cards of different companies owned by you?
Q4 How many no. of credit cards of different companies owned by you?
Q5: Which companies /bank card do you have?
(i) HDFC Bank
(ii) ICICI Bank
(iii) IDBI Bank
(iii) Centurion Bank
(v) Any Other If yes, specify……………….
Q6: Since how long you have been using debit card/credit card/both?
(i) Less than 1 yr
(ii) Between 1yr-3yr
(iii) Between 3yr-5yr
(iv) More than 5 yr
Q7: Normally for what purpose do you use cards? Rank according to your preference
(ii) withdrawal of money
(iii) Petrol filling
(iv) Hotel & Restaurants
(v) Any other (going to theater etc)
Q8: Which card according to you is more beneficial?
(i) Debit Card
(ii) Credit Card
Q9: What are the benefits provided by debit cards?
Strongly disagree neither agree agree strongly
Disagree nor disagree agree
(ii) Free From Fraud
(iii) No Interest Charges
(iv) Anytime Access
(v) easy to carry
Q10: What are the benefits provided by credit cards?
Strongly disagree neither agree agree strongly
Disagree nor disagree agree
(i) Easy To Carry
(ii) Convenient to Pay
(iii) Overdraft Facility
(iv) Prestige to Holder
Q11: What are the problems you are facing in processing the card?
Strongly disagree neither agree agree strongly
disagree nor disagree
(i) feeling of insecurity
(ii) fear of loosing the card
(iii) Unnecessary formalities
(iv) High fee collected
Q12::What are the future prospects of plastic money?
(i) Rapid Growth
(ii) Steady Growth
(iv) Can’t Predict