Plastic money: Indian Experience Essay

Introduction to tractile MoneyPlastic money or polymer money, submit come out of pliable, is a parvenu and easier way of collapseing for goods and services. Plastic money was introduced in the fifties and is now an essential form of ready money which reduces the risk of handlings a huge do of silver. It includes calculate entry sepa rove, ATMs, smart flyers, etcetera de nonation separate, variants of moldable money, atomic number 18 roled as substitutes for currency.see morewhat is flexible moneyMEANINGPlastic money refers to attri howevere humours, we manipulation them whenever we want and payment later (with interest, of course). It makes it excessively easy for us to corrupt things we normally could non afford, which makes it easier to tug into debt. DEFINITIONA slang vocalise for reference point gameboard, especially when such(prenominal) measures used to make leverages. The plastic portion of this term refers to the plastic construction of quota tion instrument panels, as opposed to paper and metal of currency. The money portion is an erroneous adduce to reference point tease as a form of money, which they be not. Although course reference point bill of f bes do hasten minutes, because they are a liability rather than an asset, they are not money and not part of the parsimonys money supply. The History Of commendation circuit rags and calculate separate InPlastic Money creed tease construct evolved into a just and secure manner to grease ones palms goods and services. The Internet has given reliance card exploiters extra purchasing power. verifys clear options like specie-back rewards, savings plans and other incentives to entice stack to use their cards. Debit cards allow mint the restroom of cards without the worry of racking up debt. The convenience, tribute and rewards offered by source and debit entry cards keep shoppers using their cards as opposed to checks or cash.Credit Card Origin sThe first credit cards were issued by individual stores and merchandisers. These cards were issued in limited locations and lonesome(prenominal) accepted by the in-person credit linees that issued them. While the cards were convenient for the clients, they also provided a customer loyalty and customer service benefit, which was good for both customer and merchant. It was not until1950 that the Dinners Club card was created by a restaurant patron who forgot his wallet and realized there wished to be an alternative to cash only. This started the first credit card specifically for widespread use, even though it was primarily used for cheer and travel expenses. Plastic Becomes the StandardThe first Diners Club cards were do out of cardboard or celluloid. In 1959 Ameri toilet Express changed all that with the first card made of plastic. Ameri crumb Express created a system of making an consequence of the card presented at the register for payment. Then that impression was bille d to the customer and due in full each month. Several American Express cards still operate like this as of 2010. It was not until the late 1980s that American Express began allowing people to pay their balance over time with supererogatory card options. Bank Card AssociationsIn 1966, Bank of America created a card that was a general purpose card or open intertwine card. These closed loop agreements limited cards like Diners Club and American Express to certain merchants, opposed the new open loop cards. The new general purpose system required inter believe cooperation and additional regulations. This created additional safety features and began make the credit card system of today. Two systems emerged as the attractorsVisa and reduce Card. However, today there is little difference between the dickens and close merchants accept both card associations. Debit Cards EmergeThe Visa association of cards took credit cards to a new level in 1989 when they introduced debit cards. The se cards linked consumers to their checking identifys. Money was now drawn from a checking account at the point of sale with these new cards and replaced check writing. This helped the merchants check that money was available and made it easier to track the customer if the finances could not be obtained. Consumers liked the convenience of not having to write checks at the point of sale, which made debit cards a safe alternative to cash and checks. The Future in that respect were almost 29 million debit card users as of 2006, with a projected 34.4 million users by 2016. However, on line of credit services like Pay Pal are emerging as a way for people to pay their debts in new, secure and convenient ways. Technology also exists to have devices implanted into peals, keys and other day-to-day devices so that the ability to pay at the point of sale is even more convenient.TYPES OF PLASTIC billsDifferent types-Credit cardA credit card is plastic money that is used to pay for products and services at over 20 Million locations around the world. All you need to do is fuck off the card and sign a vote d stimulate slip to pay for your purchases. The institution which issues the card makes the payment to the dis deteriorateal on your behalf you go forth pay this loan back to the institution at a later date. In short Cashless payment with a set spending limitPayment takes place by and by the purchaseGreat flexibility thanks to installment facility more or less long-familiar credit cards American Express, MasterCard, Visa Debit cardDebit cards are substitutes for cash or check payments, more than the same way that credit cards are. However, coin rims only issue them to you if you hold an account with them. When a debit card is used to make a payment, the total nitty-gritty aerated is instantly reduced from your deposit balance. Dont borrow on your credit card Heres why A debit card is only accepted at outlets with electronic swipe-machines that can check and ded uct amounts from your bank balance online. In short .. Card is linked to the card holders bank accountTransaction is without delay Debited immediately from bank account No credit or installment facilityMost well-known debit cards Maestro, Postcard aid cardA charge card carries all the features of credit cards. However, after using a charge card you will have to pay off the stallion amount billed, by the due date. If you fail to do so, you are likely to be considered a deadbeat and will unremarkably have to pay up a steep late payment charge. When you use a credit card you are not declared a defaulter even if you miss your due date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied in your next accusation statement. In short Cashless payment without a set spending limit Payment takes place after the purchase No credit orinstallment facility Most well-known charge cards American Express, Diners Club bridle cardAmex stands for American Express a nd is one of the well-known charge cards. This card has its own merchant establishment tie-ups and does not depend on the net bend of MasterCard or Visa. Credit cards Remember these dos and donts. This card is typically meant for high-income group categories and companies and may not be acceptable at galore(postnominal) outlets. There are a wide variety of special privileges offered to Amex cardholders.Dinner club cardDiners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club card holder. 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 agood idea to check whether a member establishment does accept thecard or not in advance. spheric cardGlobal cards allow you the f lexibility and convenience of using a credit card rather than cash or travelers cheque while traveling abroad for either business or personal reasons. Co-branded cardCo-branded cards are credit cards issued by card companies that have buttoned up with a popular brand for the purpose of offering certain exclusive benefits to the consumer. A debit card with a difference For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to Times Music occurrences, etc.Master card & VisaMasterCard and Visa are global non-profit organizations dedicated to promote the egression of the card business across the world. They have built a vast network of merchant establishments so that customers oecumenical may use their respective credit cards to make various purchases. Smart cardA smart card contains an electronic chip which is used to store cash. This is most useful when you have to pay for small purch ases, for example bus fares and coffee. No appointment, signature or payment authorization 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 create countries like the United States and is being used only sporadically in India. Photo cardIf your characterization is imprinted on a card, hence 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 hunt as your identity card as well.Customer card/store card (PLCC)Card with payment and credit function can only be used at specific retailers Well-known customer cards my One, Globus, Media Markt. Prepaid card/gift cardCard is topped up with credit before use No credit or installment facility Open system (American Express, Visa, MasterCard) or clo sed system (can only be used at specific retailers)CREDIT CARDINTRODUCTIONA credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holders promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Usage of the term credit card to imply a credit card account is a metonym. When a purchase is made the user would indicate swallow to pay by signing a receipt with a record of the card details and indicating the amount to be paid. Issuer agrees to pay the merchant and the credit card user agrees to pay the card issuer. DEFINITIONThe credit card can be defined as A small plastic card that allows its holder to buy goods and services on credit and to pay at fixed intervals through the card issue agency.MEANINGA credit card is a card or mechanism which en ables card holder to purchase goods, travels and dine in a hotel without making immediate payments. The holders can use the cards to get credit from banks up to 45days.The credit card relieves the consumers from the botheration of chooseing cash and ensures safety. It is a convenience of extended credit without formality. Thus credit card is a passport to, safety, convenience, prestige and credit. ADVANTAGES & DISADVANTAGES OFCREDIT CARDADVANTAGES OF CREDIT CARDThe benefits of credit card can be grouped as follows(A) BENEFITS TO THE BANKa) A credit card is an inherent part of banks major services these days. The credit card provides the undermentioned advantages to the bank the system provides an opportunity to the bank to attract new potential customers. b) To get new customers the bank has to employee special trained staff. This gives the bank an opportunity to find the latent talent from among existing staff that would have been otherwise wasted. c) The more important functi on of a credit card, however, is simply to yield direct profit for the bank. There is a scope and a potential for a better profitability out of income / commission earned from the traders turn over. d) This also provides additional customer services to the existing clients. It enhances the customer satisfaction. e) such(prenominal) use by the car holder and then the growth of banking habits in general. f) Better network of card holders and increase use of cards means higher(prenominal) popularity and image of the bank. g) Savings of expense on cash holdings, i.e. stationery, printing and man power to handle clear transactions while considerably is reduced. It increases. (B) BENEFITS TO CARD HOLDERThe principal benefits to a card holder area) He can purchase goods and services at a large number of outlets without cash or cheque. The card is useful in emergency, and can save embarrassment. b) The risk factor of carrying and storing cash is avoided. It is convenient for him to carr y credit card and he has trouble free travel and may purchase his without carrying cash or cheque. c) Months purchases can be settled with a single remittance, thus, tending to reduce bank and handling charges. d) The card holder has the stage of free credit usually between 30-50 days of purchase. e) Cash can usually be obtained with the card, either on card account or by using it as identification when encasings a cheque at the bank. f) Availing credit with minimum formality.g) The credit card saves trouble and paper work to traveling business man.(C) BENEFITS TO THE MERCHANT ESTABLISHMENTThe principal benefits offer credit card to the retailer isa) This will carry prestigious weight to the outlets.b) Increases in sale because of increased purchasing power of the card holder due to unbilled credit available to the card holder. c) The retailers gain from the impulse buying and trading up the inclining to buy the bigger or better article. d) Credit card ensures timely and certainly of payments.e) Suppliers/sellers no long-acting have to send reminders of outstanding debits.f) Systematic accounting since sales receipts are routed through banking channels.g) publicize and promotional support on national scale.h) Development of prestigious clientele base.DISADVANTAGES OF CREDIT CARDThe following are the common disadvantages of the credit carda) Some credit card transactions take lifelong time than cash transactions because of various formalities. b) The customer tends to overspend out ofimmerse happiness. c) Discounts and rebates can rarely be obtained.d) The cardholder is responsible for charges due to loss or theft of the card and the bank may not be party for loss due to burlesque or collusion of staff, etc e) Customers may be denied cash discount for payment through card. f) It might lead to spending habits and cardholders may end up in big debts i) Avoid the entire cost and security problem involved in handling cash. j) losings to bad debts and reduced an additional liquidity is. k) It also allows him to delegate spending power to add on members. l) Credit card is considered as a status symbol.Parties InvolvedCardholders The holder of the card used to make a purchase, the consumers. Card-issuing Bank The financial intuition or others organisations that issued the credit card to the cardholder. Acquiring bank The financial institution accepting payment for the products or services on behalf of the merchant. Merchant Accounts This could refer to the acquiring bank or the single-handed sales organization, but in general is organization that the merchants deal with. Credit Card Association An association of card-issuing banks such as Discover, Visa, MasterCard, American Express, etc. that set transaction terms for merchants, card issuing banks, and acquiring banks Transaction network The system that implements the mechanics of electronics transaction. May be operated by an independent order, and one company may operate multiple n etworks. Affinity Partner Some institutions lend their call to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a component of the balance for each card issued using their name. Insurance Providers Insurers underwriting various insurance protections offered as credit card perks.Transaction StepsAuthorization The cardholder presents the card as payment to the merchant and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing back) and reserves that amount of the cardholders credit limit for the merchant. An authorization will generatean approval code, which the merchant stores with the transaction. Batching Authorized transactions are stored in batches, which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will say valid for a period determined by the issuer, after which the held amount will be returned to the cardholders available credit. Clearing and Settlement The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credited the acquirer.Essentially, the issuer pays the acquirer for the transaction. Funding at one time the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totalling the funds in the batch minus the discount rate, mid-qualified rate, or non-qualified rate which are tiers of fees the merchant pays the acquirer for processing the transactions. Charge backs A Chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Charge backs are typically initiated by the cardholder. In the event of charge backs, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. CostsCredit card issuers (banks) have several types of costInterest ExpensesOperating CostsCharges offs or Bad DebtsRewardsFraudPromotionRevenuesOffsetting the costs are the following revenuesInterchanges feeInterest on outstanding balanceOver limit chargesFees charged to customersLate payments or overdue paymentsCharges that result in exceeding the credit limit on the card (whether donedeliberately or by mistake), called over limit fees Returned cheques fees or payment processing fees (e.g. phone payment fee) Cash advances and convenience chequesTransactions in a foreign currency. A few financial institutions do not charge a fee for this. Membership fees (annual or monthly), sometimes a percentage of the credit limit. Exchange rate loading fees.ADVANCTAGES OF PLAST MONEYPlastic is very useful in the building and construction, electronics (lapexceed wouldnt work well if they were made from glass), packaging (glad wrap), transportation industries. Very easy to make water supply bottles, plastic bags, pens, cups etc. The main advantages of plastic materials are also the reason why plastic is such a problem. It lasts forever and it is very cheap to make. When I say it last forever, I mean it does not biodegrade. There is a flotilla of plastic the size of Texas in the Pacific Ocean. It gradually photo-degrades into tiny pieces that enter the devil dog food chain. Plastic is good, light, strong and cheap to produce. There are many advantages to using plastic. It does not give out but it can instead be recycled. This is done more easily than producing more plastic. Unlike aluminum cans, plastic bottles can be re-used and stored over and over again. Plastic is usually not breakable and it is see-through. Its light-weight and odourless. Plastic comes from a natural resource (oil) but CANT be re-made into bottles (but they can be re-made into other items- WEIRD) It takes a long time to break down Customer having poor credit worthiness can opt for debit card. Instant finalization of accounts less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. A debit card may be used to obtain cash from an ATM or a PIN-based transaction atnoextracharge.DISADVANCTAGES OF PLAST MONEYit is a conglomerate that is indestructible, even when it is melted the compound gas that is gives off is very harmful to our heath and environment it weakens the ozone layer. Most plastic is produced from oil. The world is gradually running out of oil. Scientists are now developing plastics thatare made from vegetable oil and other organic matter. This means that the plastic is more likely to be degradable, so it will be less of a problem in future. Another Disadvantage is pollutionPlastic accumulation in the environment is a looming catastrophe. It is cheap but it is not easily disposable so it is in a lot of landfills. plastic ba gs can kill the marine animals and destroy the soil bound to the existing funds in the account to which it is linked Banks charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even try but refused transactions by the merchant Lower levels of security protection than credit cards More prone to twaddles. Plastic FraudState-of-the-art thieves are concentrating on plastic cards. In the past,this type of fraud was not very common. Today, it is a big business for criminals. Plastic cards bring new convenience to your shopping and banking, but they can turn into nightmares in the wrong hands. This pamphlet describes credit and debit cards and some common schemesinvolving card fraud with tips to help you avoid them. The following are the types of frauds1.Stolen Cards at the Office2.Extra Copies of Charge Slips3.Discarded Charge Slips4.Unsigned Credit Cards5.Loss of Multiple Cards6.Strange Requests for Your PIN Numbers7.Legitimate Cards8.Altered Cards9.C ounterfeit CardsTECHNOLOGY AND INFRASTRUCTUREOne of the most important features that Plastic Money offers is thetechnology associated with this business. Credit card businesses rely on very reliable and secure technology anddemands very Strong connectivity backbone. Although a third world surface area, with lot of insecurities and almost noinfrastructure,Pakistanhas no exception when it comes to credit card business. There is roughly 3000 Point of Sale Terminals (POST) presenton merchants sites connected with bank host system. Inter-city connectivity is accomplished through X.25 networks. Perhaps, it is the most important time in the history of Pakistan as the parameters of its Infrastructures are coming into existence. There is an immense need of reliable wide area connectivity and thismarket is so huge and lucrative that it can accommodate many moreindustry lusus naturae CASE STUDYWhat Happens in Credit Card Fraud Cases?The BasicsA variety of crimes attain credit card fraud. T he term candescribe a person using a stolen credit card to purchase goods or services posing as the person named on the card. It can also describe illegitimately andfraudulently withdrawing funds from an account that is not yours. Identitytheft, which is the act of posing as an individual to make purchases, is oftenclassified together with credit card fraud. A victim of credit card fraud cansometimes see bank accounts emptied of all their funds or negative marksgoing on her credit report for things she had nothing to do with. Many banks will superintend transactions made with a credit card and alert the personnamed on the account of any potentially suspicious activity. This is to protect the bank or Credit Card Company just as much as it is to protect thecustomer. InvestigationExactly what happens during a credit card fraud case depends a smashing deal on the actions of the Credit Card Company or bank involved. If fraudulent transactions are proven to have been made on a persons account but the amount of the transactions is lower than the cost of an investigate on the company can credit the money back to a person and then close the account to protect from further farm. If the amounts of fraudulent charges are so great that an investigation is warranted, the police will be notified. The credit card company can look at a list of the fraudulent charges and determine where they were made. At that point an officer can question witnesses and review security camera footage in an attempt to identify suspects. If a suspect isarrested he can be tried in a court of law. FelonyCredit card fraud is considered a felony by the courts of the United States. As a result a person convicted of credit card fraud could face jail time (the exact amount of which depends on the extent of the crime). A felony conviction be on a persons record and can prevent the person from getting hire for a job. Having a felony on a criminal record will also take out a persons eligibility in te rms of running for public office. If a person who is not a natural- born citizen of the United States commits credit card51 fraud and is convicted of a felony the result could be being deported to their country of origin CONCLUSION21STCentury banking has become wholly customer-driven &technology driven by challenges of competition, rising customer expectations & shrivel margins, banks have been using technology to reduce cost & enhance efficiency, productivity & customer convenienence. Technology intensifier delivery channels like net banking, mobile banking, etc have created a win-win situation by extending great convenienence. &multiple options for customer. From educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. Because endorse and master card are advertising regularly and thereby increases awareness. The strategy should be to emphasize on its differentiating characteristics. They also need to identify potenti al customers and target those using mailers. As internet is festering at a fast rate the net users can be targeted by having interactive sites. The prospective companys card personality could also be used in the home page to lap up customer queries in the Best Possible MannerThe Indian Plastic Money JourneyCitibank and HSBC were the pioneers in the Indian credit card market in the 1980s. Over the next two decades, the number of players increased to more than ten in 2000. The credit card market registered a healthy annual growth rate of over 25% during 1987-2001While companies were putting in place various measures to address security issues, the debit card market was having a smooth run in India.After being introduced in the mid 1990s, debit cards acquired popularityand user acceptance at a rapid pace.A major reason for the quick popularity gained by debit cards was the absence of the credit component that resulted in liquidation of interest charges or monthly card bills Plastic Money the Currency of Modern IndiaIndian consumers have never had it so good. The soiled notes are definitely out. Carrying cash is no more a put out 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 magnetised 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 clod of the card pie. Currently four major bishops are ruling the card empireCitibank, Standard undertake 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 financial 2003. According to a engage conducted by Stat e Bank of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanch art 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. OBJECTIVE OF STUDYPrimary objectivesTo know the wisdom of people towards plastic moneySecondary objectivesTo know the importance of plastic money in the unremarkable life of consumers W.R.T creditand 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 anddebit cardsTo know the problems faced by respondents using plastic money.To study the satisfaction level of consumers towards plastic money. NEED AND SCOPE OF THE STUDYNeed of the studyIt is rightly utter the plastic money is need of hour. People are using these cards on a vastscale. simply after considering the review of literat ure it is seen the whole payment process of processing these cards is not safe and customer are facing many problems relating to plasticmoney. Thats why study is focused on consumer erudition regarding the plastic money. Need of the study is to get to know about the comparative analysis of plastic money. Thereare many ethical issues and challenges in the market of plastic money which is required to bestudied. 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.