Types of cards Introduction The term 'smart card' is subject to a variety of interpretations, but is most usefully understood as a conventional

plastic card with a silicon chip added to it. Some chips merely provide storage, and are roughly comparable to a high-capacity magnetic-stripe. The more interesting chips also contain a micro-processor, enabling the card to become an active component within large-scale systems. Smart cards are programmable, and hence can be applied to all manner of purposes. What kinds of smart-card applications are relevant to executives and professionals in banking and finance?

Stored-Value Cards A variety of means have been implemented whereby people can load value onto a card, and use it to make payments at appropriately equipped, unattended devices. These include multiple-use tickets for public transport, and telephone cards. Schemes that store data using punched holes, and even magnetic stripes, are highly insecure, and very easy to defraud. Since the mid-1980s, a variety of chip-based storedvalue card (SVC) technologies have been developed and trialled. These have the highly desirable feature of being a great deal more secure. Depending on the design, they can also provide a means of gathering statistical information on transactions and card usage. During 1995-96, four separate pilots of chip-based SVCs were run in Australia. Two were by local companies, and combined payment facilities for low-value transactions in various consumer outlets, together with transport ticketing. One of these, Transcard, is now in full operation in Western Sydney. Transcards are loaded with value in return for cash, or against a debit-card or credit-card transaction. The value is used on terminals both on merchants' premises and free-standing at public locations. The transaction totals are transmitted periodically (typically daily) from the terminal to the host processor, and the merchant's bank is advised to credit the merchant's account. This particular scheme also supports ticketing, frequency and incentive rewards, and membership applications. Exhibit 1: The Transcard Scheme

After Clarke (1996), p.94 The other two Australian pilots were the world's first field trials of SVCs by the giants of the payments processing scene, Visa and MasterCard. That this country was chosen for this purpose is a tribute to Australian technical capabilities, and to Australian consumers' readiness to adopt new technologies. Detailed descriptions of the four pilots, of the U.K.-based trial of the much-discussed Mondex card, and of SVC developments in one leading country over an extended period, are provided in Clarke (1996).

Experiences With SVCs SVCs are attractive to merchants because they reduce cash-handling and change-counting tasks, as well as cash-holdings and the attendant risks of error, cashier theft and robbery. For consumers, the benefits include reduced 'wallet-bulge', less cash-handling and changecounting, and the scope for multiple functions within a single, convenient and familiar card. Some banks may choose to leave SVC operation to third parties, and merely handle the deposits received from merchants via scheme operators. There will be an indirect benefit for banks through the reduction in their own costly cash-handling and the carriage of cashfloat.

Other banks perceive the growth in SVC usage as an opportunity to enhance customer relationships. These institutions are seeking to at least co-badge SVCs, and in some cases to play the role of scheme-operator. To date, the Australian schemes have met with mixed success. In general, technical feasibility and reliability have been fully demonstrated. The achievement of sufficiently high adoption rates and hence economic feasibility, on the other hand, appears to depend on the ability to achieve critical mass across several dimensions. A vital lesson needs to be learnt from the experience with EFT/POS. Until the 'any-card/anyterminal' condition was fulfilled, consumers and merchants alike regarded the technology with scepticism, and early-adopter institutions had their fingers burnt. Consumers and merchants need the assurance that SVC schemes will not be fragmented through unhelpful forms of competition. Another concern is the breadth of usability of the card. Experience has been gathered in this regard, because the four Australian pilots have tested the kinds of outlets at which people are prepared to use a card in preference to notes and coins, and have provided evidence of the kinds of additional uses that can gainfully complement stored-value.

Why Yet Another Payment Mechanism? The question has to be asked as to whether consumers and merchants really need yet another form of payment mechanism. Credit-cards are appropriate in particular circumstances. They are, however, very expensive. This is primarily because of the low level of security (which relies on embossing, magneticstripes, signatures and stop-lists), and the resultant high and increasing cost of fraud. In addition, transaction processing costs are significant. Debit cards are relatively highly secure, because they require the customer to confirm that they know something that only the card-owner should know: the PIN. But whereas the costs from error and fraud are very low, the communication costs associated with fully on-line transactions are high. Unlike 'pay-later' credit-cards and 'pay-now' debit-cards, SVCs are a 'pay-before' mechanism. Their great advantages are relative security, and simple, off-line operation. Together, these translate into low transaction costs. The net effect is that payment specialists, such as Cards ETC's Michael Walters, talk of a 'pyramid' of payment transactions. At the top are relatively small numbers of 'pay-later', credit-card transactions, each of relatively high-value (say, above $50), which justifies reasonably high transaction costs. In the middle are moderate volumes of moderately-sized ($20-$200) 'pay-now', debit-card transactions. At the bottom of the pyramid are myriads of low-value transactions too small to justify even debit-card costs. At present these are mostly performed using cash, which has high hidden costs for merchants and banks. This is the target area for low-cost SVC transactions. So the 'pyramid' theory proposes that all of these payment mechanisms have their place.

Multi-Purpose Payment Cards SVCs could be established as, and remain, a standalone payment mechanism: yet another card to be stuffed into the wallet and purse, in return for fewer coins and notes. But many financial institutions have already perceived the scope for chip-based cards to support multiple functions rather than just one. In some cases the chip itself may have no role to play. For example, debit-card and ATM transactions can continue to be performed quite satisfactorily using the magnetic-stripe. Moreover, the 'real estate' on the card can be used to display logos, and thereby sustain a relationship between the financial institution and the card-holder. For credit-cards, on the other hand, chip-based processing offers the possibility of greatly improved security, and hence reduced losses through fraud. Very high costs have to be faced, however, in order to re-equip millions of card-holders and tens of thousands of merchant locations. As a result, there is a strong motivation for issuing multi-purpose payment cards, that support whatever combination of debit, credit and SVC functions the customer seeks. The MasterCard Cash trial in Canberra, and the later phases of the Visa trial on the Gold Coast, expressly tested the combination of multiple payment functions into a single card.

Eligibility and Identity Authentication Because of their programmability, chip-based cards are capable of performing many further functions. Access to buildings and to locations within buildings can be regulated using such devices. Similarly, chip-cards can be an effective and efficient way to represent and check tickets, and to provide evidence of organisational membership. In some applications, the appropriate test is simply whether the person presenting at a location carries a particular kind of authority. In other circumstances, the authority is specific to an individual, rather than just a bearer instrument. The former, looser class is usefully referred to as 'eligibility authentication', and the latter as 'identity authentication'.

Entre to Cyberspace Over a million Australians have already experienced the Internet, and hundreds of corporations and government agencies are committing significant resources in an attempt to exploit the medium for their own purposes: cyberspace is no longer just a playground. Smart cards are capable of playing several important roles in commercial and even community aspects of the Internet. Net-based payment schemes can be card-based, and eligibility and identity testing can be performed remotely just as readily as they can be at a location like a turnstile or an ATM.

Business Impacts

The good news for financial services organisations is that chip-cards are available as a tool to support existing services, to enable integration of existing product-palettes into cohesive bundles, and to lay the foundations for new kinds of products leveraging off existing customer-relationships. There are a couple of very significant downsides, however. One is that innovative financial institutions are well-advanced in their plans to exploit chip-cards, and hence the late adopters will find themselves 'playing catch-up' rather than taking bold initiatives. Another problem for the banking and finance sector is that chip-cards provide new entrants with means to overcome the existing barriers to entry. Worse still, they represent a powerful tool for organisations offering substitute products and services to attack the heartland of financial services organisations' business.

Social Impacts The power of the chip-card gives rise to many concerns among members of the public. These range from the security of the value stored in cards, consumer rights issues, and workplace impacts, to privacy. These were recently examined in a report by a team led by the Monash University Centre for Electronic Commerce (ACFF 1996). Payment schemes, with particular reference to chip-based SVCs, were also the subject of a recent survey of privacy attitudes (MasterCard 1996). There is a very real risk that negative social impacts of smart card applications could hold back the development of these schemes. The smart cards industry, concerned about such problems, has been proactive on the consumer rights and privacy issues, and has just this year published a Code of Conduct designed to be applied to all chip-card schemes (APSCFA 1997).

My Money Card Axis Bank presents the My Money Card, a solution to all the monetary needs for the youth of today. The My Money Card provides youth the freedom to spend anytime and anywhere. Moreover, it inculcates responsibility towards money as the youth take charge of their money, spending and saving the same at the same time. The Card comes with a host of benefits like:
o

Anytime, Anywhere usage Convenient and flexible way to pay Usage at 4,00,000 plus VISA enabled merchant outlets

o o

Cash withdrawal at all bank ATMs

Online shopping at Verified by VISA registered merchants Making the youth financially responsible Parental guidance in all transactions Safer than cash Lost Card Insurance Cover up to Rs 50,000 Travel Currency Card Bon Voyage Axis Bank's Travel Currency Card aims to make traveling abroad a truly memorable experience. Available off the shelf at your nearest Axis Bank Branch and select FFMCs (Full Fledged Moneychangers), the Travel Currency Card is a secure, convenient and hassle free way to carry money and make payments when in foreign shores. With it you can attend to your business, enjoy the delightful tourist spots, dine out, and take in the breathtaking landscape and exotic culture of the country without worrying about money changers and converting your traveller's cheques into local currency. The Travel Currency Card gives you a 24-hour access to your money. Withdraw funds in the local currency from any Visa or Visa Plus ATM's (Automated Teller Machine) as well as pay for all your purchases in any country you visit, anywhere in the world. To get your Travel Currency Card please drop in at your nearest Axis Bank branch or extension counters. Please note: The usage of this Card is strictly subject to regulations stipulated by the Reserve Bank of India and the Foreign Exchange Management Act, 1999 from time to time.

When you return from your trip, you can choose to 1. Get your balance on the card encashed 2. Transfer it to a Resident Foreign Currency Domestic Account 3. Or simply let the balance on your Card (upto $2000 as per RBI Regulation) remain so that you can use it for any future trips. The date of expiry is indicated on the card. During this time you can use your card as many times as you wish. You can also refill it on your subsequent trips. All you need to do is fill in a reload coupon and attach the necessary documents. Your card will be reloaded with additional amount within 24 Hours. Online PurchasesYou can use your Axis Bank Travel Currency Card for online purchases on websites outside India. The card is accepted at over 1,00,000 e-commerce web sites. There are no charges for using your Travel Card for online shopping and you can easily track your expenses using our Internet Banking facility.

Gift Card The Perfect Gift Choosing the perfect Gift has always been tough.

What could be the ideal Gift for him? Will she like the gift? Does this suit her? Where do I buy him a gift? I am so busy; I don't have time to select a gift? With so many questions to address, gifting doesn't remain fun anymore. Nearly Perfect The Axis Bank Gift Card completely does away with these concerns. Just load an equivalent amount onto the card and gift it to your loved ones. It lets your loved one select his own gift for himself. Suitable for all occasions The Axis Bank Gift Card is suitable for gifting for all purposes. So be it festivities like Diwali, Christmas or New Year or occasions like marriages, birthdays, anniversaries or special days like Mother's Day, Valentine's Day, etc, the Axis bank Gift Card is the Perfect Gift. Perfect in more than one ways

Aesthetic Design - The Axis Bank Gift Card comes in a unique Gift Wrap shape thus making it more adorable as a gift. Denomination - Load any amount between Rs. 1000 upto a maximum limit of Rs. 50,000. Simple to Use - It works in the same way as a Debit Card for purchase transactions at merchant outlets including hotels, restaurants, shops, etc. Balance Enquiry - Axis bank provides the facility of Balance Enquiry on the Gift card through our Telebanking facility. Great Acceptance The Axis Bank Gift Card is a VISA Electron signature based card, which signifies the widest acceptance. It is accepted at over 4,00,000 VISA enables merchant outlets across the country.

Smart Pay Now disbursing salaries will be a simple and easy process for the companies using cumbersome instruments like cheque / cash. Now no need to issue cheques or pay

cash, a single loading instruction to the Bank is all you need for making your employee payments. The Smart Pay is an innovative and extremely convenient way to disburse salaries to your employees. By facilitating cash withdrawal and point-of-sale transactions at merchant outlets, the Smart Pay eliminates the need for a separate salary account.

orporate Gift Card The perfect Gift for corporate gifting Choosing the perfect Gift has always been tough

What would be the ideal gift for my employees? Is this gift suitable for my Rewards and Recognition Program? What gift do I buy for gifting during Diwali/Christmas? Where do I buy the Gift? With so many questions to address, gifting becomes a cumbersome exercise. Nearly Perfect The Corporate Gift Card completely does away with all these concerns. Gift Card is a hassle-free, secure and convenient way to gift your employees, vendors or someone truly valuable to your organisation. Just load the Gift Card with any amount you want and you have a marvellous gift in your hands. Suitable for all occasions The Corporate Gift Card can be used by corporates for various purposes:

Gifting to employees, customers, channel partners, associates etc. Gifting during festivals Rewards and Recognition Programs Promotional Campaigns Great Acceptance The Axis Bank Gift Card is a VISA Electron signature based card, which signifies the widest acceptance. It is accepted at over 400,000 VISA enables merchant outlets across the country. Comparison of Corporate Gift Card vis-a-vis Cash and Gift Vouchers Cash Gift Vouchers Corporate Gift Card

Inconvenient to handle and Logistically inconvenient No reconciliation issues. Axis disburse for the corporate. to handling and Bank can provide MIS of cards Paying out cash as gift is a distributing to issues and the respective

rather crude way in today's employees world.. Wide acceptance Limited acceptance as typically, the Gift Vouchers are accepted typically at very few merchant outlets In case of loss, the lost voucher amount normally cannot be recovered

amounts loaded. No operational hassles involved at your end Issued on VISA platform, the Gift Card thus has countrywide acceptance at over 4,00,000 merchants across India.

Insecure way of gifting, may lead to loss of some amount

Very secure, as there's no probability of any loss of any amount. In case of card loss, a replacement card can be taken.

Rewards Card Timeliness and convenience is of critical essence while making payments of salaries and commissions to the employees / agents who are the lifeline of any business. We at Axis Bank appreciate the efforts and understand that it is all about the optimum utilization of the resources with the utmost convenience. In keeping with our endeavor we take great pleasure in offering another innovative and effective business solution with our Rewards Card which will help you to create instant gratification for your employees/agents and at the same time save on time and cut on costs. The Axis Bank Rewards Card is a prepaid reloadable card which can be used for cash withdrawals at all Axis Bank ATMs as well as Visa enabled ATMs or making purchases at the numerous merchant outlets across India, thus making anytime, anywhere access of funds to your employees. Purpose Rewards Card can be used for the following varied payment needs:
o o o o o o o

Payment instrument for disbursement of benefits like Incentives Commission Rewards Bonus Reimbursements Other payments Payment instrument for reimbursements and perquisites like Medical Reimbursement

o o o o o o

Local Conveyance Entertainment Expenses Petrol Entitlement Mobile Phone Reimbursement Bills Credit Other perks

A debit card (also known as a bank card or check card) is a plastic card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. 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. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.[1][2] In many countries the use of debit cards has become so widespread that their volume of use has overtaken or entirely replaced the check and, in some instances, cash transactions. Like credit cards, debit cards are used widely for telephone and Internet purchases. However, unlike credit cards, the funds paid using a debit card are transferred from the bearer's bank account, instead of having the bearer pay back the money at a later date. Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a check guarantee card. Merchants may also offercashback facilities to customers, where a customer can withdraw cash along with their purchase.

There are currently three ways that debit card transactions are processed: EFTPOS (also known as online debit or PIN debit), offline debit (also known as signature debit) and the Electronic Purse Card System.[3] One physical card can include the functions of an online debit card, an offline debit card and an electronic purse card. Although many debit cards are of the Visa or MasterCard brand, there are many other types of debit card, each accepted only within a particular country or region, for example Switch (now: Maestro) and Solo in the United Kingdom, Interac in Canada, Carte Bleue in France, Laser in Ireland, "EC electronic cash" (formerly Eurocheque) in Germany, UnionPay in China and EFTPOS cards in Australia and New Zealand. The need for crossborder compatibility and the advent of the euro recently led to many of these card networks (such as Switzerland's "EC direkt", Austria's "Bankomatkasse" and Switch in the United Kingdom) being re-branded with the internationally recognised Maestro logo, which is part of the MasterCard brand. Some debit cards are dual branded with the logo of the (former) national card as well as Maestro (for example, EC cards in Germany, Laser cards in Ireland, Switch and Solo in the UK, Pinpas cards in the Netherlands, Bancontact cards in Belgium,

etc.). The use of a debit card system allows operators to package their product more effectively while monitoring customer spending. An example of one of these systems is ECS by Embed International. [edit]Online Debit System Online debit cards require electronic authorization of every transaction and the debits are reflected in the users account immediately. The transaction may be additionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction, essentially becoming enhanced automatic teller machine (ATM) cards. One difficulty in using online debit cards is the necessity of an electronic authorization device at the point of sale (POS) and sometimes also a separate PINpad to enter the PIN, although this is becoming commonplace for all card transactions in many countries. Overall, the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status, which alleviates problems with processing lag on transactions that may only issue online debit cards. Some on-line debit systems are using the normal authentication processes of Internet banking to provide real-time on-line debit transactions. The most notable of these are Ideal and POLl. [edit]Offline Debit System Offline debit cards have the logos of major credit cards (for example, Visa or MasterCard) or major debit cards (for example, Maestro in the United Kingdomand other countries, but not the United States) and are used at the point of sale like a credit card (with payer's signature). This type of debit card may be subject to a daily limit, and/or a maximum limit equal to the current/checking account balance from which it draws funds. Transactions conducted with offline debit cards require 23 days to be reflected on users account balances. In some countries and with some banks and merchant service organizations, a "credit" or offline debit transaction is without cost to the purchaser beyond the face value of the transaction, while a fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the retailer). Other differences are that online debit purchasers may opt to withdraw cash in addition to the amount of the debit purchase (if the merchant supports that functionality); also, from the merchant's standpoint, the merchant pays lower fees on online debit transaction as compared to "credit" (offline) debit transaction. [edit]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 accepting the card need no network connectivity) are in use throughout Europe since the mid-1990s, most notably in Germany (Geldkarte), Austria (Quick Wertkarte), the Netherlands (Chipknip), Belgium (Proton), Switzerland (CASH) and France (Mono, which is usually carried by a debit card). In Austria and Germany, all current bank cards now include electronic purses. [edit]Prepaid debit cards Prepaid debit cards, also called reloadable debit cards, appeal to a variety of users. The primary market for prepaid cards are unbanked people,[citation needed]an umbrella term used to describe diverse groups of individuals- typically with poor credit ratings- who do not use banks or credit unions for their financial transactions.[4]

The advantages of prepaid debit cards include being safer than carry cash, worldwide functionality due to Visa and MasterCard merchant acceptance, not having to worry about paying a credit card bill or going into debt, the ability for anyone over the age of 18 to apply and be accepted without regard to credit quality and the ability to direct deposit paychecks and government benefits onto the card for free.[5] Some of the first companies to enter this market were MiCash, RushCard and Netspend who gained high market share as a result of being first to market. However, in the past few years there have been several new providers that carry a number of other benefits, such as money remittance service, card-to-card transfers and the ability to apply without a social security number Advantages and Disadvantages of Credit

Like most things, there are advantages and disadvantages to credit cards. Knowing some of these can help you decide if you do or do not want to use credit cards. Advantages

* Purchase Power and Ease of Purchase - Credit cards can make it easier to buy things. If you don't like to carry large amounts of cash with you or if a company doesn't accept cash purchases (for example most airlines, hotels, and car rental agencies), putting purchases on a credit card can make buying things easier. * Protection of Purchases - Credit cards may also offer you additional protection if something you have bought is lost, damaged, or stolen. Both your credit card statement (and the credit card company) can vouch for the fact that you have made a purchase if the original receipt is lost or stolen. In addition, some credit card companies offer insurance on large purchases. * Building a Credit Line - Having a good credit history is often important, not only when applying for credit cards, but also when

applying for things such as loans, rental applications, or even some jobs. Having a credit card and using it wisely (making payments on time and in full each month) will help you build a good credit history. * Emergencies - Credit cards can also be useful in times of emergency. While you should avoid spending outside your budget (or money you don't have!), sometimes emergencies (such as your car breaking down or flood or fire) may lead to a large purchase (like the need for a rental car or a motel room for several nights.) * Credit Card Benefits - In addition to the benefits listed above, some credit cards offer additional benefits, such as discounts from particular stores or companies, bonuses such as free airline miles or travel discounts, and special insurances (like travel or life insurance.) While most of these benefits are meant to encourage you to charge more money on your credit card (remember, credit card companies start making their money when you can't afford to pay off your charges!) the benefits are real and can be helpful as long as you remember your spending limits.

Disadvantages

* Blowing Your Budget -- The biggest disadvantage of credit cards is that they encourage people to spend money that they don't have. Most credit cards do not require you to pay off your balance each month, so even if you only have $100, you may be able to spend up to $500 or $1,000 on your credit card. While this may seem like 'free

money' at the time, you will have to pay it off -- and the longer you wait, the more money you will owe since credit card companies charge you interest each month on the money you have borrowed. * High Interest Rates and Increased Debt -- Credit card companies charge you an enormous amount of interest on each balance that you don't pay off at the end of each month. This is how they make their money and this is how most people in the United States get into debt (and even bankruptcy.) Consider this: If you have a $100 in savings, most banks will give you at the most 2.0 to 2.5% interest on your money over the course of the year. This means you earn $2.00 - $2.50 a year on your $100 savings. Most credit cards charge you up to 10 times that amount of interest on balances. This means that if you have $100 balance that you don't pay off, you will be charged 20-25% interest on that $100. This means that you owe almost $30 interest (plus the original $100) at the end of the year. A good way to look at this is in comparison to what you would earn in interest from a bank or owe in interest to a bank loan: Savings accounts may pay you around 2% interest; if you have a loan from a bank you may pay them around 10% interest (5 times as much as you earn off your savings); if you owe money to a credit card company, you may pay them around 20% interest (10 times as much as you earn off your savings.) * Credit Card Fraud - Like cash, sometimes credit cards can be stolen. They may be physically stolen (if you lose your wallet) or someone may steal your credit card number (from a receipt, over the phone, or from a Web site) and use your card to rack up debts. The good news is that, unlike cash, if you realize your credit card or

number has been stolen and you report it to your credit card company immediately, you will not be charged for any purchases that someone else has made. Even if you don't realize your credit card number has been stolen (sometimes you might not know until you receive your monthly statement), most credit card companies don't charge you or only charge a small fee, like $25 or $50, even if the thief has charged thousands of dollars to your card. There are several things you can do to prevent credit card fraud: o If you lose your card or wallet, report it to your credit card company immediately. o Don't loan your credit card to anyone and only give out your credit card information to trusted companies or Web sites. o Check your statement closely at the end of each month to make sure all charges are yours. o You can find out more about protecting your personal information by visiting our Personal Safety course.

Credit cards can make life easier and be a great tool, but if they aren't used wisely they can become a huge financial burden. If you do decide to use credit cards, remember these simple rules:

* Keep track of all your purchases. * Don't spend outside your budget. * Pay off your balance on all of your credit cards at the end of each month. * Don't loan your credit or give out your credit card information to anyone but reliable companies.

Disadvantages:

1.

You may become an impulsive buyer and tend to overspend because of the ease of using credit cards. Cards can encourage the purchasing of goods and services you cannot really afford. 2.

Credit cards are a relatively expensive way of obtaining credit if you don't use them carefully, especially because of the high interest rates and other costs. 3.

Lost or stolen cards may result in some unwanted expense and inconvenience. 4.

The use of a large number of credit cards can get you even further into debt. 5.

Using a credit card, especially remotely, introduces an element

of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve.