CreditCard BIKASH
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Transcript of 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.