plastic money by: balaji d (p10012) praveen s (p10052) yoghanand g m (p10078)

Plastic Money By: Balaji D (P10012) Praveen S (P10052) Yoghanand G M (P10078)

Credit Card

What are Credit Cards ? This card will permit the card holder to withdraw cash from an ATM, and a credit card will allow the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high interest loan to the card holder, although the card holder can avoid any interest charges by paying the balance off in full each month. A 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 holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and 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.

Minimum Payment Due Minimum payment due This is the smallest amount of your balance you can pay by the due date and still meet the terms of your card agreement. The minimum payment due is often a specific fraction of the balance, such as 2%. Still You'll owe interest on any portion of the balance that you don't pay. If a customer spends Rs 5,000 and pays back exactly the 'Minimum Amount Due' (subject to a minimum amount of Rs 100) every month, it will take him up to 6 years and 6 months to pay back the total amount.

Parties involved Cardholder: The holder 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. Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. 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.

Parties involved 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 the electronic transactions. May be operated by an independent company, and one company may operate multiple networks. Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name

Interest Rates (ICICI Bank) Card NameTime Period (credit period) Rate of interest (monthly) Platinum Card18 days to 48 days3.15% Gold card 18 days to 48 days3.40% Titanium Card 18 days to 48 days3.15% Preferred Card 18 days to 48 days3.15%

Costs Credit card issuers (banks) have several types of costs: Operating costs Charge offs or Bad Debts Rewards Fraud Promotion

Revenues Offsetting the costs are the following revenues: Interchange fee Interest on outstanding balances Fees charged to customers Late payments or overdue payments Returned cheque fees or payment processing fees (e.g. phone payment fee) Transactions 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.

Pros and Cons to Customer Pros Convenience Allows a short term credit to customer Many credit cards offer rewards and benefits packages Cons High interest and bankruptcy Inflated pricing for all consumers Weakens self regulation

Debit Card

What is Debit/ATM Card ? A debit card is a plastic card account(known as a bank card or check card). that provides the cardholder electronic access to his or her bank. Some cards have a stored value with which a payment is made, while most relay a message to the cardholder's bank to withdraw funds from a designated account in favor of the payee's designated bank account. The card can be used as an alternative payment method to cash when making purchases. This type of card will directly debit money from your bank account, and can directly be used to purchase goods and

Types of debit card systems Online Debit System (PIN debit ) :Online debit cards require electronic authorization of every transaction and the debits are reflected in the users account immediately. Offline Debit System : This type of debit card may be subject to a daily limit or a maximum limit equal to the current/checking account balance from which it draws funds. Transaction would happen within 23 days. Electronic Purse Card System : Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an externally recorded account, so that machines doesnt require network connectivity)

Pros Customer having poor credit worthiness can opt for debit card. Instant finalization of accounts Less identification and scrutiny, thereby making transactions quicker and less intrusive. A debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge

Cons Limited to the existing funds in the account. Banks charging over-limit fees or non-sufficient funds fees based upon pre- authorizations. Payment is immediate. Many people prefer having 20-25 days to pay their credit card bills. No right to withhold payment. Because the money is immediately transferred, consumers using debit cards don't have the right to withhold payment in the event of a dispute with the merchant over the goods or services purchased. Transaction fees. Some banks and merchants charge transaction fees for using debit cards. High risks if stolen. If your debit card number is stolen during an online purchase, the thief may drain your bank account before the bank is able to complete its investigation. This is why you should never use a debit card when shopping online.

Credit Card Vs Debit Card Credit Card Transactions are of Credit Nature Risk of overspending Interest is charged to the holder of card in case of overdrawing Source of additional funds Debit Card Transactions are of Debit Nature No or less risk of over spending Only Fees are charged on yearly basis for card usage Eliminates need to carry hard cash

In-Store Cards

What are In-store cards ? These are used by the departmental stores mainly as marketing tools to retain customers and increases turnover. The main features of in-store cards are as below: Issued by big department stores or retailers. Can be used only in retailers outlet or for purchasing the companys products. Little or no cost to retailers Usually developed by the traders in partnership with banks or financing companies who undertake the administration and sometimes the financing involved.

Types on In-store card Budget Card: This card requires monthly payment on behalf of the holders. The cost of goods purchased is spread over a certain period. Option Card: Here, payment can be either be made in full or at the cardholders discretion. However, option available is subject to a minimum repayment and interest charged on the balance outstanding amount. Monthly Card: The card holder is required to make the payment every month. No extension of credit is given beyond a month. This card differs for budget card, where outstanding credit can be settled in 30 monthly statements.

Pre-paid Cash Cards

As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These are usually re-useable in that they can be 'topped up' however some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent they are disposed of. They provide some specials benefits or discounts. Pre-paid Cash Cards Examples: DMRC Smart Cards. Pantaloons Green card. Cards used in Food courts of Malls.

The Smart card carries a microchip with information on the holder

Why use smart cards? Can store currently up to 7000 times more data than a magnetic stripe card. Information that is stored on the card can be updated. Magnetic stripe cards are vulnerable to many types of fraud. Lost/Stolen Cards Skimming Carding/ Phishing Greatly enhances security. A single card can be used for multiple applications (cash, identification, building access, etc.) Smart cards provide a 3-fold approach to authentic identification: PIN Smartcard Biometrics

Applications Net surfing. Pan card. Passport. Payphones. Electronic purse(Debit/Credit card). Banking(ATM card). Employee attendance. Medical identification. Identity card, Driving license.

Pros Faster and smarter. Portability. Flexibility(no need to carry separate ATM, Debit, Credit card or DL, pan card etc.). Highly secured(deactivates on illegal use). Gives its own network for internet surfing. Reliability (unaffected by electric and magnetic field).

Cons Expensive. Less Availability All readers can not read all types of smart card(depends upon the smart card brand).

plastic money by: balaji d (p10012) praveen s (p10052) yoghanand g m (p10078)

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