creditcard bikash

8/9/2019 CreditCard BIKASH

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CREDIT CARD

Presented By-

BIKASH RANJAN MEHER


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INTRODUCTION

Credit is a method of selling goods or serviceswithout the buyer having cash in hand.

A Credit card is only an automatic way of offering

credit to a consumer.

Today, every credit card carries an identifying

number that speeds shopping transactions.

The sales person would have to record your

identity, billing address, and terms of repayment.


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Definition

A credit card is a card or mechanism which

enables cardholders to purchase goods,

travel and dine in a hotel without makingimmediate payment.

The cardholders get credit from banks up

to 45 days.

It is a small plastic card which has a same

shape and size, and as specified by the

ISO7810 standard.


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INVENTION OF CREDIT CARD

According to Encyclopedia Britannica, "the

use of credit cards originated in the United

States during the 1920s

when individual firms, such as oil companiesand hotel chains, began issuing them to

customers." However, references to credit

cards have been made as far back as 1890 in

Europe.


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Continued.

Early credit cards involved sales directly

between the merchant offering the credit

and credit card, and that merchant'scustomer.

Around 1938, companies started to accept

each other's cards. Today, credit cards

allow to make purchases with countless

third parties.


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First Bank Credit Card

The inventor of the first bank issued credit

card was John Biggins of the Flatbush

National Bank of Brooklyn in New York.In 1946.

Biggins invented the "Charge-It" program

between bank customers and local

merchants. Merchants could deposit sales

slips into the bank and the bank billed the

customer who used the card.


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FEATURES OF CREDIT CARD

Owner Identification

Credit Limit

Wide Usage

Technology-Dependent


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FACILITIES AND SERVICES Risk coverage

Emergency cash withdrawal

Twenty-four hour service

Photocard option

Travel privileges

Credit line increase

Service over phone

Purchase protection

Fuel facility

Medical advance facility Supplementary cards

Hotels discount facility

News letters

Joint credit card and ATM facility


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Types of Credit Cards

There are three basic types of credit cards:

Travel and entertainment cards such asAmerican Express or Diners Club. They have nopredetermined spending limits and must be paidin full each month.

Bank cards such as MasterCard, Visa, Discover,

Optima, GM and Ford cards which aresponsored by individual banks. The bankdefines spending limit (sometimes called creditlines) and each offers different terms andconditions.


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.

Types of Credit Cards

Banks offer a choice of payment methods, either

pay the balance in full with no interest or pay a

minimum part or some part of the balance with afinance charge.

Company or Retail store cards such as Sears, J.C.

Penney, Shell, or Mobil. These cards are onlyaccepted by the specific company and do not have

an annual fee. However, the terms and conditions

of these cards vary widely.


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CLASSIFICATIN OF CREDIT CARDS

Based on mode of credit card1. Revolving credit card- This card follows the

revolving credit principle.

2. Charge card It is not a credit instrument.its

make convenient mode for payment.

Based on status of credit card

1. Standard card- This credit cards regularly issued

by all card-issuing banks .It is possible for acardholder to make purchases without having

pay cash immediately.


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Cont..

1. Business card - Its also known as Executivecards .its issued to small partnership firms,

solicitors,firms of chartered accountants,taxconsultants and others use by executives on

their business trips.

2. Gold cardThis card is combination of both

business cards & steandard cards.The gold cardoffers high


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Based on geographical validity

1. Domestic card This cards are valid only in

india and nepal .All transactions will be inrupees.

2. International card - This cards haveinternational validity.This cards are issued to

people who travel abroad .


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Continued

Based on franchise / Tie-up

1. Proprietary card This cards are issued by the

banks themselves,without any tie-up.A bankissues such cards under its own brand.

2. Master card This is a type of credit card

issued under the umbrella of Master card

International.3. VISA card This card is issued by any bank

having tie-up with VISA international

corporation,USA.


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Cont.

4. Domestic tie-up card These are cards issued bya bank having tie-up with domestic credit card

brands such as cancard and indcard etc.Based on the issuer category

1. Individual cards These are the non-corporate

credit cards issued to individuals.generally all

brands of credit cards issue individual cards.2. Corporate cards These are credit cards issued

to corporate and business firm,and the bills are

paid by firm.


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INNOVATIVE CARDS

ATM CardsAn ATM card allows customersto access their accounts at any time-24 hours a

day, every day of the year,through automated

teller machines.

Debit cards A debit card, like an ATM

card,directly accesses a customers account.The

debit card is a hybrid of ATM and creditcard.The card directly debits a designed savings

bank account.


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Cont Prepaid card- it is also known as stored value

cards.The card issuer and the service provider are

identical.They are also called limited purpose

prepaid cards which can be used for a limited

number of well-defined purposes.

Private label cardsThese cards are uniquelytied to the retailer issuing the card and can be

used only in that retailers stores.

Affinity group cards These are credit cardsdesignated for use by a collection of individuals

with some form of common interest or

relationship,such as professional , alumni,retired

persons organisation,etc.


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Cont

Smart cards A smart card is a credit card

sized plastic card with an embedded

computer chip.

Chip card A chip card is a plastic card with an

embedded integrated circuit or a microchip as

opposed to magnetic strips on conventional

card.The chip can be used on existing debit and

credit cards as well as on emerging products likestored value cards.

Co-branded card - The co-branded credit card of

Times of india and citibank Mastercard.


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CREDIT CARD CYCLE

The credit card operating cycle consists of the following six

steps.

1. Credit purchase

2. Credit card processing

3. Bill raising

4. Payment

5. Bill to cardholder

6. Card payment


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The Shape of Credit Cards

Credit cards were not always been made of

plastic.

There have been credit tokens made frommetal coins, metal plates, and celluloid,

metal, fiber, paper, and now mostly plastic

cards


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CREDIT CARD FRAUDS

Major sources

1. Fraudulent applications

2. Lost,stolen and never received cards

3. Counterfeit and altered cards

4. Collusive merchants

5. True cardholder fraud where the truecardholder perpetrates fraud

6. Employee fraud


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PREVENTION

1. Maintaining details of fraudulent apllication files.

2. Establishment of credit information bureaus (CIB)

3. Designing systems to monitor cardholder activity and

identify unusual spending behavior.

4. Educting cardholders on card frauds and creating

awareness about measures to prevent frauds .

5. Merchant education in reconizing and intercepting

counterfeit cards.6. Strict and comprehnsive controls at the manufacturing

level.

7. Merchant monitoring procedures to monitor both

authorizations and deposits.


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BENEFITS OF CREDIT CARDS

Benefits to cardholders

1. Shopping convenience

2. Credit facility3. Safety

4. Meticulous record

5. acceptability


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Cont

Benefits to merchants

1. Enhanced sales

2. Easy validation3. No risk

Benefits to issuer banks

1. Source of income2. Market expansion

3. Cross-selling


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DRAWBACKS OF CREDIT CARDS

1. Waste of money

2. Thoughtless buying

3. Financial problem

4. Mental agony

5. Costly


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User Responsibilities

A credit card user, has the following responsibilities:

Assess your financial situation and determine how

much you can repay monthly. Understand the contract's costs and conditions so

that you know the total cost of credit purchases.

Keep copies of credit transactions and comparewith your monthly statement.

Remove carbons from credit card receipts anddestroy them.


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User Responsibilities

Do not give your credit card numbers to anyone

you do not know and trust

Pay your bill on time. Inform the creditor of any billing errors promptly.

Notify the creditor if you cannot make your

payments.

Make a list of all credit card account numbers and

the issuer's telephone number to use if your

card(s) are lost or stolen.


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Credit Card Vs. Debit Card

Pay later Product

Credit avail for 30-45days.

No sophisticatedtelecommunicationsystem required.

Bank A/C & a requiredamount not necessary

Possibility of risk offraud more.

Pay now Product

Account is debitedImmediately

Sophisticatedcommunicationnetwork required.

Bank A/C & a requiredamount necessary

Possibility of risk offraud less


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THE INDIAN SCENARIO

The first credit card to enter india was the diners

club in the year 1964.

The first indian banks to launch credit cardswere andhra bank and central bank.

The first credit card introduced by andhra bank

was VISA classic in the year 1981.

Then the central bank of indias credit card incollaboration with Master Card corportion in the

1981.


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Cont

After that other nationalised banks,canara

bank,bank of india,and bank of baroda etc.

gradually introduced their credit cards in

india.

Apart from that these indian banks,many

foreign banks such as citibank,standard

chartered bank,ANZ grindlays bank,Bankof America & American express bank have

also introduced their cards through indian

branches.


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Cont.

Now there are about 12 major banks,both

foreign and indian,which currently

provides cards in india.

The RBI is taking special measures to

promote the use of credit cards,debit cards

to ease the pressure on currency printing

and the use of cheques.

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