cf65cmfs module iv 2

8/2/2019 Cf65cMFS Module IV 2

1/30

Telebanking Account information/transactions over the

phones through IVR/Relationship Manager

Secured by T-PIN 24*7 accessibility


2/30

Internet Banking Access to the account on internet Account querying/ transactions like fund

transfer Instantaneous accounting of transactions 24*7 accessibility

Cost effective marketing of various products


3/30

Credit CardsA credit card is part of a system of payments after the smallplasticcard issued to users of the system.

It is a card entitling its holder to buy goods and services based

on the holder's promise to pay for these goods and serv ices.The issuer of the card grants a line of credit to the consumer (orthe user) from w hich the user can borrow money for payment toa merchant or as a cash advance to the user.

Most credit cards are issued by local banks or credit unions, andare the shape and size specified by the ISO/IEC 7810 standardasID-1 . This is defined as 85.60 53.98 mm in size


4/30

Credit CardsCredit cards are issued after an account has been approved bythe credit provider, after which cardholders can use it to makepurchases at merchants accepting that card.

i.When a purchase is made, the credit card user agrees to pay thecard issuer.

ii.The cardholder indicates consent to pay by signing a receiptwith a record of the card detail s and indicating the amount to bepaid or by entering a personal identification number (PIN).

ii i.A lso, many merchants now accept verbal authorizations viatelephone and electronic authorization using the Internet ,known as a 'Card/Cardholder Not Present' (CNP) transaction.


5/30

Parties InvolvedCardholder: The holder of the card used to make a purchase; theconsumer.

Card-issuing bank: The financial institution or other organizationthat issued the credi t card to the cardholder. This bank bill s theconsumer for repayment and bears the risk that the card is usedfraudulently.

M erchant: The individual or business accepting credit cardpayments for products or services sold to the cardholder.

Acquiring bank: The financial insti tution accepting payment for theproducts or services on behalf of the merchant.

Independent sales organization: Resellers (to merchants) of theservices of the acquiring bank.


6/30

Parties InvolvedM erchant account: This could refer to the acquiring bank orthe independent sales organization, but in general is theorganization that the merchant deals with.

Credit Card association: An association of card-issuing bankssuch 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 byan independent company, and one company may operatemultiplenetworks.


7/30

How Credit Cards WorkElectronic veri fication systems allow merchants to veri fy that the card is vali dand the credi t card customer has suff icient credi t to cover the purchase in a fewseconds, allow ing the veri fi cation to happen at t ime of pur chase.

i. The verification is performed using a credit card payment terminal orPoint of Sale (POS) system with a communications link to the merchant'sacquir ing bank.

ii. Data from the card is obtained from a magneticstripe or chip on the card.

Other variations of verification systems are used by eCommerce merchants todetermine if the user's account is vali d and able to accept the charge.

i . These will typically involve the cardholder providing additionalinformation, such as the security code printed on the back of the card, orthe address of the cardholder


8/30

How Credit Cards WorkEach month, the credi t card user is sent a statement indicatingthe purchases undertaken w ith the card, any outstanding fees,and the total amount owed.

After receiving the statement, the cardholder may dispute anycharges that he or she thinks are incorrect.

Otherw ise, the cardholder must pay a defined minimumproportion of the bill by a due date, or may choose to pay ahigher amount up to the entire amount owed.

The credit issuer charges interest on the amount owed if thebalance is not paid in full (typically at a much higher ratethan most other formsof debt).


9/30

Interest ChargesCredi t card issuers usually waive(not-claim) interest charges if the balance ispaid in full each month, but typically will charge full interest on the entireoutstanding balance from the date of each purchase if the total balance is notpaid.

For example, if a user had a $1,000 transaction and repaid it in full within thisgrace period, there would be no interest charged.

If, however, even $1.00 of the total amount remained unpaid, interest would becharged on the $1,000 from the date of pur chase unti l the payment i s received.

The general calculation formula most financial insti tutions use to determine theamount of interest to be charged is APR/100 x AD B/365 x number of daysrevolved .Take the A nnual percentage rate (APR) and divide by 100 then mul tiply to theamount of the average daily balance (ADB) divided by 365 and then take thistotal and mul tiply by the total number of days the amount revolved beforepayment was made on the account.


10/30

Grace PeriodA credit card's grace period is the time the customer has to pay thebalance before interest is assessed on the outstanding balance.Grace periods vary, but usually range from 20 to 50 days dependingon the type of credi t card and the issuing bank.Usually, if a customer is late paying the balance, finance charges willbe calculated and the grace period does not apply.Finance charges incurred depend on the grace period and balance;with most credit cards there is no grace period if there is anyoutstanding balance from the previous bill ing cycle or statement(i.e. interest is appli ed on both the previous balance and newtransactions).However, there are some credit cards that will only apply finance

charge on the previous or old balance, excluding new transactions.


11/30

Transaction StepsAuthorization: The cardholder pays for thepurchase and the merchant submits thetransaction to the acquirer (acquiring bank).

The acquirer verifies the credit card number, thetransaction type and the amount with the issuer(Card-issuing bank) and reserves that amount ofthe cardholder's credi t limit for the merchant.

An authorization will generate an approval code,which the merchant stores with the transaction.


12/30

Transaction StepsBatching: Authorized transactions are storedin "batches", which are sent to the acquirer.

Batches are typically submitted once per dayat the end of the business day.

If a transaction is not submitted in the batch,

the authorization will stay valid for a perioddetermined by the issuer, after which theheld amount will be returned back to thecardholder's available credit.


13/30

Transaction StepsClearing and Settlement: The acquirer sends the batchtransactions through the credi t card association, which debitsthe issuers for payment and credi ts the acquirer.

Essentially, the issuer pays the acquirer for the transaction.Funding: Once the acquirer has been paid, the acquirer paysthemerchant.

The merchant receives the amount totaling the funds in thebatch minus either the "discount rate," "mid-quali fied rate", or"non-qualified rate" which are tiers of fees the merchant paysthe acquirer for processing the transactions.


14/30

Transaction StepsCharge backs: A chargeback is an event in which money in amerchant account is held due to a dispute relating to the transaction.

Charge backs are typically ini tiated by the cardholder.

In the event of a chargeback, the issuer returns the transaction to theacquirer for resolution.

The acquirer then forwards the chargeback to the merchant, whomust either accept the chargeback or contest i t.

A merchant is responsible for the chargeback only if he/she hasviolated the card acceptance procedures as per the merchantagreement with card acquirers .


15/30

Fees Charged to CustomersLate payments or overdue paymentsCharges that result in exceeding the credit limit on the card(whether done deliberately or by mistake), called over limi t feesReturned cheque, fees or payment processing fees (eg phonepayment fee)Cash advances and convenience cheques (often 3% of the amount)Transactions in a foreign currency (as much as 3% of the amount). Afew financial insti tutionsdo not charge a fee for this.Membership fees (annual or monthl y), sometimes a percentage of

thecredit limit.Exchange rate loading fees (these may sometimes not be reported onthe customer's statement, even w hen they are applied)


16/30

Credit Cards in ATMsMany credit cards can also be used in an ATM to withdraw moneyagainst the credit limit extended to the card, but many card issuerscharge interest on cash advances before they do so on purchases.

The interest on cash advances is commonly charged from the datethe withdrawal is made, rather than the monthly bil li ng date.

Many consumers have large cash balances, which have no graceperiod and incur interest at a rate that is (usually) higher than the

purchase rate, and will carry those balance for years, even if theypay off their statement balance each month.


17/30

Benefits to CustomersThe main benefit to each customer is convenience.Compared to debit cards and cheques, a credit card allowssmall short-term loans to be quickly made to a customer who

need not calculate a balance remaining before everytransaction, provided the total charges do not exceed themaximum credit line for the card.

Credit cards also provide more fraud protection than debitcards.

In the UK for example, the bank is jointly liable with themerchant for purchases of defective products over 100.


18/30

Benefits to CustomersMany credit cards offer rewards and benefitspackages, such as offering enhanced productwarranties at no cost, free loss/damagecoverage on new purchases, and pointswhich may be redeemed for cash, products,or airl ine tickets.

Additionally, carrying a credit card may be aconvenience to some customers as i teliminates the need to carry any cash formost purposes.


19/30

RewardsMany credit card customers receive rewards, such as frequent flyerpoints, gift certifi cates, or cash back as an incentive to use the card.

Rewards are generally tied to purchasing an item or service on thecard, which may or may not include balance transfers, cashadvances, or other special uses.

Depending on the type of card, rewards wil l generally cost theissuer betw een 0.25% and 2.0% of the spread.

Networks such as Visa or MasterCard have increased their fees to

allow issuers to fund their rewards system.

Some i ssuers discourage redemption by forcing the cardholder tocall customer servi ce for rewards.


20/30

Benefits to MerchantsFor merchants, a credit card transaction is often more securethan other forms of payment, cash, because they discouragetheft by the merchant's employees and reduce the amount ofcash on the premises.

For each purchase, the bank charges the merchant acommission (discount fee) for this service and there may be acertain delay before the agreed payment is received by themerchant.

The commission is often a percentage of the transactionamount, plus a fixed fee (interchangerate).

Some small merchants require credit purchases to have aminimum amount to compensate for the transaction costs.


21/30

Important Tips for CustomersSign your card -- as soon as you receive it! (Obviously, this is only aseffective as the clerk who's checking i t.)

When you use your card at an ATM, enter your PIN in such a waythat no one can easily memorize your keystrokes .

Don't leave your receipt behind at the ATM.

Your PIN and account number from a discarded receipt could makeyou vulnerable to credit-card fraud. Also, don't throw out yourcredi t-card statement, receipts or carbons w ithout first shreddingthem!


22/30

Important Tips for CustomersNever give your credit-card number over the telephone unless youini tiated the call .

Ignore any credit-card offer that requires you to spend money up-

front or fail s to disclose the identity of the card i ssuer.

Make certain you get your card back after you make a purchase

Always keep a list of your credit cards , credit-card numbers andtoll -free numbers in case your card is stolen or lost.

Check your monthly statement to make certain all charges are yourown, and immediately notify the card issuer of any errors orunauthorized charges.


23/30

Other Types of Cards Debit Card combines the functions of ATM cards andcheques. When the payment of a purchase is made orcash is withdrawn with a debit card, the money isimmediately debited from the card holders bankaccount.

Cash Card/ Prepaid Card These cards work on thetheme of pay now and use at your convenience, verysimilar to prepaid mobile phone cards. All one has todo is buy a card, load it with the desired amount and

the card is ready to be used. One does not require anyaccount to use these cards.Prepaid cards are convenient alternatives to cash andchequesand benefit cardholders in a number of ways.


24/30

Other Types of Cards Charge Card Charge cards, such as American

Express and Diners Club, have no credit limit.One can charge as much as one wants, butone is required to pay off your entire balancewhen the bill arrives.

If the charge card bill is not paid in full, one-

month grace period is given without interestcharges. After that interest is levied as high arate as 30 to 35%.


25/30

Retail Banking Loans Home LoansHome Purchase LoanLand Purchase LoanHome ConstructionHome Improvement LoanHome Extension LoanHome Conversion LoanBridge Loan

Balance Transfer LoanRefinance LoanStamp Duty Loan


26/30

Retail Banking Loans Home LoansEligibilityPre/ Post Approval/Disbursal Stage DocumentationRepayment PeriodCollateral SecuritiesInterestFee ChargesTax Treatment


27/30

Personal Loans Purposes

VacationChildrens admission/marriageHome renovationAppliances & gadgetsAny personal requirement

AmountDifferent limits of different Banks dependingupon borrowers credit worthiness HDFC Bank upto 15 lac


28/30

Personal Loans Terms & Conditions

Flexible Repayment options, ranging from 12 to 60

monthsEasy EMIs

Speedy loan approval

Convenience of service at your doorstep


29/30

Bank MarketingBank marketing is the aggregate of functions,directed at providing services to satisfy

customers financial (and other related) needsand wants, more effectively and efficientlythan the competitors keeping in view theorganizational objectives of the bank.


30/30

Why is Bank Marketing Necessary? The existence of the bank has little value

without the existence of the customers.

Aim is not only to create and win more andmore customers but also to retain themthrough excellent customer service.

Offering a range of services (products) andtheir effective delivery is important for brandbuilding.

cf65cmfs module iv 2

Documents