A Study On The Recent Trends & Customers Perception Regarding Credit Card Market In Chandigarh 1.

Introduction
Last few years have witnessed significant changes in the Indian financial sector. The financial sector reforms have forced commercial banks and development banks to adopt new face of business and go beyond their traditional activities. The product and services innovation has been the focus of financial institutions and banks have started offering new services and products to compete in the emerging environment. One such activity, which banks have tried to focus on, has been the credit card market. Last one decade has witnessed entry of large number of banks and financial institutions to tap this market Credit cards were introduced by individual corporations in America sometime before the 2nd World War. Oil companies as well as Hotel chains were the first pioneers giving their corporate cards out to individual customers, usually personnel from firms that were their largest customers. The cards offered up to a few months credit before the bill had to be paid. A salesman working for Coca Cola could now travel all over the US and have his company pick up his travel and hotel expenses, rather than in the past the individual paying out of his own pocket and then being reimbursed. This was good business for both sides of the transaction as it led to repeat business from the card issuers while the cardholder's company could consolidate all its bills in one simple payment, as well of course as enjoying at least a month's credit. The first piece of plastic, as we know them today, was introduced by Diner's Club with American Express soon following. In the early days they were not known as Credit cards rather Charge Cards because they offered no credit. What you spent that month you had to pay when the bill came due. Diners and American Express made their money by charging their card holders a fixed monthly fee as well as taking a small percentage fee on every transaction.

1.1 The Modern Day Credit Card Is Introduced

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In the early 1960s the modern day Credit Card was introduced which went one step further than the Charge Card. The credit card holder when he received the bill (usually at the end of the month) now had two choices, either payoff the balance in full or pay a small amount (the minimum payment) and be charged interest on the balance until the debt is paid off. In the early 1970s two main players evolved, Visa and Mastercard, but with the business being so lucrative for the banks and finance companies involved competition started to grow at a steady rate. It is now estimated that in 2004 there are over 250 different financial institutions just in Europe offering Credit Cards of all sorts. Store Cards are another form of Credit Card and work in exactly the same fashion (pay off the monthly balance or pay a minimum and get charged interest on the balance) however one can only use them in the stores (or chains) that issue them. Boots, Selfridges and Marks & Spencer are among the large stores offering these style of cards. The advantage with Store Cards is that most of them offer some sort of Rewards Scheme that enables you to enjoy special offers, free gifts and air miles etc. Just about every teenager can't wait until he or she gets their first credit card. It's a chance to become more independent. It gives them more convenient ways to pay for things. And they can finally start ordering things online without bugging their parents to use their credit cards. There's no doubt that credit cards have a lot of conveniences. If you run out of cash when you're on a road trip with friends, you won't be stranded. And being able to buy things online can be quite convenient. Plus they're good for big purchases. This is just one of the benefits of having a credit card. Another is that responsible use can lead to building good credit early so it'll be easy to secure loans for a car or house when you graduate from college.

1.2 The Dangers of Credit

Credit is dangerous. We hear about it all the time but we usually ignore it. So sometimes it takes numbers to get people to pay attention. That's how much the average college student owes on their credit card right now. 500,000. That's the number of people under the age of 35 who have filed for bankruptcy in the last five years. Unfortunately, too many people who have a credit card get into the mindset of "buy now, pay later." It usually starts out with "I get paid next week so I'll go out and buy Rs.4000 of clothes now. I'll just pay it off when I get my paycheck." But then some unforeseen expenses come up and next thing you know, you're carrying a balance that's growing and growing. When a bank or other financial institution issues you a credit card, it's not because they like you. It's because they can charge you interest. And being young, they can charge you a lot of interest. So when you buy something and it takes you a while to pay it off, you can end up paying a lot more than you thought. That Rs.1200 CD player for your car might sound like a great investment but a couple years from now when you've paid Rs.32000-45000 for it because of interest, you'll really hate yourself. The truth is, nobody ever thinks they'll have credit problems. Americans do. But so many

And it's especially a problem for college students who find

themselves out on their own for the first time in their life with no major income but lots of major expenses (books can cost Rs.40000 per school year!). That's why it's important to really limit yourself to your credit uses.

1.3 Your Credit Report

Basically, the credit report is like a permanent report of how you use your credit. Every time we apply for a credit card, finance a car, rent an apartment, buy a cell phone, or take out a mortgage, our credit report will be examined to see if your credit is good enough. As we can say, it's pretty important to have good credit because it affects whether or not you'll be able to buy a car or house in the future. service. It can be find all over the internet. So Its recommended periodically checking out our credit report using a credit reporting

1.4 An Alternative To Having A Credit Card

We can get a credit card when we are as young as 16 if we have a parent to sign on our account with us. But it is not recommend getting one until 18. If we have got a bank account, Its recommended starting out with a debit card. We still get many of the conveniences of a credit card without any risk.

1.5 Potential Of Credit Card Market In India

As already discussed, Master card and visa are worldwide organizations that act as a clearing agencies and lend their name and logo for a prescribed fee. Any bank can apply to be a franchiser based on eligibility. Master card is ahead of Visa by a big margin. Both Master and Visa are working towards the same goal to increase Indians understanding of credit cards as a convenience product, gain customer acceptance and broaden the still tiny user base. The market is enormous in India, says Mr. Chander Agnihitri Visa Internationals country Manager, South Asia.

The whole industry is expanding. Each brand is expanding as the industry grows. Master Card started out here a few years earlier (1981) then we did (1995) but we are catching up. Visa estimates the potential at about 10 millions by year 2K.but there are many hurdles to overcome before this target is reached. The first challenge is gaining acceptance among the Indian consumers, who are traditionally credit adverse. Various surveys have been conducted to estimate the demand of credit cards in Indian market. According to A & M Survey 1993 India is projected to become the second largest credit card market in the world after U.S by the year 2000. Presently it is not true. This was the mistake, which was made of by most of the credit card companies. India is market with a vast commercial potential, home to a rapidly growing consumer class segment at between 100 to 300 million. But India is country, sleeped in culture, superstitions and suspicions. Despite the ten years old economic liberalization programme, India remains a stubborn challenging market.

1.6 Emerging Scenario

In India where cash is king and paper work is a byword for business, two or three inch of plastic is slowly but surely making in roads. Credit card industry growth is estimated at 30-40 percent. The major segments covered by credit cards, travel and entertainment account to 70% of total usage, dining (restaurants) and retail (shopping) 30%. Further, out of total foreign exchange earnings 60% of the hotels earning come from credit cards. Of the total hotel business, 70% is transacted through credit cards.

Due to the expected growth to 40% from the present growth of 30% in credit card industry, Visa thinks that the number merchant establishments accepting Visa cards will increase four fold in a couple of years from the 1,00,000 MEs. This is expected in the light of GE- SBI tie up. Our intention is to replace cash, says Dennis M.Googin President & CEO of Visa International Asia Pacific. Card usage in India is low because of low acceptance. The day will come when the people will pay for utilities and provision with plastic. The future of credit card market is likely to brighten up with the advent of ECommerce. Once people start purchasing goods online from their home by selecting the from the various sites and have charged to their cards, that day will be the day for the credit card companies. However for credit cards operations, there is a need for good infrastructure. But it is obstacle in India. The credit card industrys heavy telecommunication and technology requirements cannot be met in India. It could be met only in urban areas but what about rural areas? It is a question of fact. At present there is an acute competition in the credit card market. A large number of banks are entering in this business. Even the non- banking finance companies have also entered into this business like Mercard Ltd. With banks concentrating more on profitable business, credit cards will become important factor to boost sagging bottom lines. At the same time, banner predict that a few years down the line the inefficient & loss making card issuer would be forced to withdraw from the arena. The only way banks (especially nationalized) survive is by improving their overall functioning & infrastructure system.

1.7 Security
As merchants increasingly adopt chip and authentication technology, the smart Visa card brings you added levels of security. For online shopping, our smart Visa card work with Verified by Visa to authenticate your transaction. And with the Visa Zero Liability, you'll never be responsible for unauthorized uses, online or off.

1.8 Online Account Access

Access your smart Visa account balance any time through your card issuer's Web site to track your spending. An easy way to earn rewards Use your Visa card and earn points towards your chosen affiliation. Collect frequent flyer miles Earn hotel points Show your school spirit Support your favorite charity Convenient, reliable, and safe Have you ever stood behind someone in line at the store and watched him shuffle through a stack of what must be at least 10 credit cards? Consumers with this many cards are still in the minority, but experts say that the majority of U.S. citizens have at least one credit card -- and usually two or three. It's true that credit cards have become important sources of identification -- if you want to rent a car, for example, you really need a major credit card. And used wisely, a credit card can provide convenience and allow you to make purchases with nearly a month to pay for them before finance charges kick in. That sounds good, in theory. But in reality, many consumers are unable to take advantage of these benefits because they carry a balance on their credit card from month to month, paying finance charges that can go up to a whopping 23 percent. Many find it hard to resist using the old "plastic" for impulse purchases or buying things they really can't afford. The numbers are striking: In 1999, American consumers charged about Rs.48 trillion on their general-purpose credit cards.
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In this article we'll look at the credit card -- how it works both financially and technically -- and we'll offer tips on how to shop for a credit card. (Experts say this should be a project on the scale of shopping for a car loan or mortgage!) We'll also describe the different credit-card plans available, talk about your credit history and how that might affect your card options, and discuss how to avoid credit-card fraud -- both online and in the real world. Let's start at the beginning. A credit card is a thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size, that contains identification information such as a signature or picture, and authorizes the person named on it to charge purchases or services to his account -- charges for which he will be billed periodically. Today, the information on the card is read by automated teller machines (ATMs), store readers, and bank and Internet computers.

1.9 Timeline
According to Encyclopedia Britannica, the use of credit cards originated in the United States during the 1920s, when individual companies, such as hotel chains and oil companies, began issuing them to customers for purchases made at those businesses. This use increased significantly after World War II. The first universal credit card -- one that could be used at a variety of stores and businesses -- was introduced by Diners Club, Inc., in 1950. With this system, the credit-card company charged cardholders an annual fee and billed them on a monthly or yearly basis. Another major universal card -- "Don't leave home without it!" -- was established in 1958 by the American Express company. Later came the bank credit-card system. Under this plan, the bank credits the account of the merchant as sales slips are received (this means merchants are paid quickly -- something they love!) and assembles charges to be billed to the cardholder at the end of the billing period. The cardholder, in turn, pays the bank either the entire balance or in monthly installments with interest (sometimes called carrying charges).

The first national bank plan was BankAmericard, which was started on a statewide basis in 1959 by the Bank of America in California. This system was licensed in other states starting in 1966, and was renamed Visa in 1976. Other major bank cards followed, including MasterCard, formerly Master Charge. In order to offer expanded services, such as meals and lodging, many smaller banks that earlier offered credit cards on a local or regional basis formed relationships with large national or international banks. Although phone companies, gas companies and department stores have their own numbering systems, ANSI Standard X4.13-1983 is the system used by most national credit-card systems. Here are what some of the numbers stand for: The first digit in your credit-card number signifies the system: 3 - travel/entertainment cards (such as American Express and Diners Club) 4 - Visa 5 - MasterCard 6 - Discover Card The structure of the card number varies by system. For example, American Express card numbers start with 37; Carte Blanche and Diners Club with 38. American Express - Digits three and four are type and currency, digits five through 11 are the account number, digits 12 through 14 are the card number within the account and digit 15 is a check digit. Visa - Digits two through six are the bank number, digits seven through 12 or seven through 15 are the account number and digit 13 or 16 is a check digit. MasterCard - Digits two and three, two through four, two through five or two through six are the bank number (depending on whether digit two is a 1, 2, 3 or other). The digits after the bank number up through digit 15 are the account number, and digit 16 is a check digit. The stripe on the back of a credit card is a magnetic stripe, often called a magstripe. The magstripe is made up of tiny iron-based magnetic particles in a

plastic-like film. Each particle is really a tiny bar magnet about 20-millionths of an inch long. The magstripe can be "written" because the tiny bar magnets can be magnetized in either a north or south pole direction. The magstripe on the back of the card is very similar to a piece of cassette tape A magstripe reader (you may have seen one hooked to someone's PC at a bazaar or fair) can understand the information on the three-track stripe. If the ATM isn't accepting your card, your problem is probably either: A dirty or scratched magstripe An erased magstripe (The most common causes for erased magstripes are exposure to magnets, like the small ones used to hold notes and pictures on the refrigerator, and exposure to a store's electronic article surveillance (EAS) tag demagnetizer.)

1.10 Information On The Stripe

There are three tracks on the magstripe. Each track is about one-tenth of an inch wide. The ISO/IEC standard 7811, which is used by banks, specifies: Track one is 210 bits per inch (bpi), and holds 79 6-bit plus parity bit read-only characters. Track two is 75 bpi, and holds 40 4-bit plus parity bit characters. Track three is 210 bpi, and holds 107 4-bit plus parity bit characters. Our credit card typically uses only tracks one and two. Track three is a read/write track (which includes an encrypted PIN, country code, currency units and amount authorized), but its usage is not standardized among banks. The information on track one is contained in two formats: A, which is reserved for proprietary use of the card issuer, and B, which includes the following: Start sentinel - one character Format code="B" - one character (alpha only) Primary account number - up to 19 characters

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Separator - one character Country code - three characters Name - two to 26 characters Separator - one character Expiration date or separator - four characters or one character Discretionary data - enough characters to fill out maximum record length (79 characters total) End sentinel - one character Longitudinal redundancy check (LRC) - one character LRC is a form of computed check character. The format for track two, developed by the banking industry, is as follows: Start sentinel - one character Primary account number - up to 19 characters Separator - one character Country code - three characters Expiration date or separator - four characters or one character Discretionary data - enough characters to fill out maximum record length (40 characters total) LRC - one character

1.10.1 Authentication
There are three basic methods for determining whether your credit card will pay for what you're charging: Merchants with few transactions each month do voice authentication using a touch-tone phone. Electronic data capture (EDC) magstripe-card swipe terminals are becoming more common -- so is swiping your own card at the checkout. Virtual terminals on the Internet This is how it works: After you or the cashier swipes your credit card through a reader, the EDC software at the point-of-sale (POS) terminal dials a stored

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telephone number (using a modem) to call an acquirer. An acquirer is an organization that collects credit-authentication requests from merchants and provides the merchants with a payment guarantee. When the acquirer company gets the credit-card authentication request, it checks the transaction for validity and the record on the magstripe for: Merchant ID Valid card number Expiration date Credit-card limit Card usage Single dial-up transactions are processed at 1,200 to 2,400 bits per second (bps), while direct Internet attachment uses much higher speeds via this protocol. In this system, the cardholder enters a personal identification number (PIN) using a keypad. The PIN is not on the card -- it is encrypted (hidden in code) in a database. (For example, before you get cash from an ATM, the ATM encrypts the PIN and sends it to the database to see if there is a match.) The PIN can be either in the bank's computers in an encrypted form (as a cipher) or encrypted on the card itself. The transformation used in this type of cryptography is called one-way. This means that it's easy to compute a cipher given the bank's key and the customer's PIN, but not computationally feasible to obtain the plain-text PIN from the cipher, even if the key is known. This feature was designed to protect the cardholder from being impersonated by someone who has access to the bank's computer files. Likewise, the communications between the ATM and the bank's central computer are encrypted to prevent would-be thieves from tapping into the phone lines, recording the signals sent to the ATM to authorize the dispensing of cash and then feeding the same signals to the ATM to trick it into unauthorized dispensing of cash. If this isn't enough protection to ease your mind, there are now cards that utilize even more security measures than your conventional credit card: Smart Cards.

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1.11 Smart Cards

The "smart" credit card is an innovative application that involves all aspects of cryptography (secret codes), not just the authentication we described in the last section. A smart card has a microprocessor built into the card itself. Cryptography is essential to the functioning of these cards in several ways: The user must corroborate his identity to the card each time a transaction is made, in much the same way that a PIN is used with an ATM. The card and the card reader execute a sequence of encrypted sign/countersignlike exchanges to verify that each is dealing with a legitimate counterpart. Once this has been established, the transaction itself is carried out in encrypted form to prevent anyone, including the cardholder or the merchant whose card reader is involved, from "eavesdropping" on the exchange and later impersonating either party to defraud the system. This elaborate protocol is conducted in such a way that it is invisible to the user, except for the necessity of entering a PIN to begin the transaction. Smart cards first saw general use in France in 1984. They are now hot commodities that are expected to replace the simple plastic cards most of us use now. Visa and MasterCard are leading the way in the United States with their smart card technologies. The chips in these cards are capable of many kinds of transactions. For example, you could make purchases from your credit account, debit account or from a stored account value that's reloadable. The enhanced memory and processing capacity of the smart card is many times that of traditional magnetic-stripe cards and can accommodate several different applications on a single card. It can also hold identification information, keep track of your participation in an affinity (loyalty) program or provide access to your office. This means no more shuffling through cards in your wallet to find the right one -- the smart card will be the only one you need! Experts say that internationally accepted smart cards will be increasingly available over the next several years. Many parts of the world already use them, but their reach is limited. The smart card will eventually be available to anyone

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who wants one, but for now, it's available mostly to those participating in special programs.

1.12 Online Safety

Although the numbers are increasing, consumers are still not using their credit cards on the Internet nearly as much as e-tailers (electronic retailers) would like. That's why many cyber-merchants continue to offer a toll-free order number so that shoppers have the choice of calling their order in. Cyber-shopping may be convenient -- and some people do all of their shopping online -- but credit-card fraud is always a threat, both on the Internet and out in the real world. Hackers have found ways to steal credit-card numbers from Web sites. To illustrate the importance of tight security, a network TV reporter, tipped off about loose security on an Internet Web-hosting site, was able to gain access to about 1,500 customer records, which included everything from credit-card numbers and payment records to comments about particular customers. These are the kinds of stories that deflate consumer confidence. Some e-tailers blame consumer reluctance on the inability in cyberspace to make the kind of personal contact that a shopper gets when he looks into the eyes of a store merchant. Experts say that this kind of comfort level will be boosted when online payment methods and security measures are standardized -- much as they are in the retail and mail-order industries. While Internet companies have taken responsibility for security breaches and resulting losses to credit-card users, there remains the growing problem of people who use stolen credit cards to make purchases on the Internet. And while unfair or fraudulent practices by credit-card companies are not commonplace, they do happen. The good news is that consumers are protected by law -- in case of credit-card fraud online or off, you are only liable for a maximum of Rs.2000 of the amount stolen. And fortunately, the Federal Trade Commission (FTC) and the media are watching closely. In 1994, the FTC ordered TransUnion credit-reporting bureau to stop selling "sensitive" consumer data -- data on 160 million Americans -- to

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junk-mail producers. The FTC charged that TransUnion violated the Fair Credit Reporting Act by selling consumer information to target marketers who lack any of the allowable purposes listed under the act. TransUnion denies that it sold information that could affect customers' appealed the FTC's ruling, but lost. If the mailing-list issue bothers you -- and it bothers most of us -- pay attention when we are completing that credit-card application. Some application forms now provide a box that you can check to allow or disallow the selling of your information to mailing lists. We can also protect yourself by taking your name off the credit bureaus' mailing lists. The Direct Marketing Association (DMA) tracks consumers who prefer not to receive solicitations by mail or phone. Check their Consumer Assistance site for more information. There are a lot of simple steps you can take to protect yourself and your credit card -- starting with making sure you sign it as soon as it arrives in the mail.

1.12.1 Other Methods of Protection

These tips are important and universal: Sign your card -- as soon as you receive it! (Obviously, this is only as effective as the clerk who's checking it.) When you use your card at an ATM, enter your PIN in such a way that 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 make you vulnerable to credit-card fraud. Also, don't throw out your credit-card statement, receipts or carbons without first shredding them!

Never give your credit-card number over the telephone unless you initiated the call.

Even when you place the call to a legitimate merchant (such as a mail-order company), never give your card number out over a cordless phone. Radio

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scanners that eavesdrop on these conversations are available for a few hundred dollars at any electronics store, and your voice can be received by one from a far greater distance than the maximum useful range of your cordless phone. One common scam is when someone calls you "back" right after you place an order, claims to be from the merchant and tells you that there was a problem with your card number -- would you mind giving it to them again? The best thing to do is ask for a contact name and call the merchant back at the number you used originally.

Ignore any credit-card offer that requires you to spend money up-front or fails to disclose the identity of the card issuer. Make certain you get your card back after you make a purchase (one habit to observe is to leave your wallet open in your hand until you have the card back). Also, make sure that you personally rip up any voided or cancelled sales slips.

Always keep a list of your credit cards, credit-card numbers and toll-free numbers in case your card is stolen or lost. Check your monthly statement to make certain all charges are your own, and immediately notify the card issuer of any errors or unauthorized charges. (More on this later!)

1.13 Credit Issues

If you've had credit problems, you might have to settle for a card with a slightly higher rate. If you have poor credit or no credit, some banks will issue you a secured credit card. This means that you deposit money into a savings account that acts as collateral against your credit line. The rate may be high, but a secured card offers you the convenience of a credit card while you work on rebuilding your credit. Secured cards are often the best option available to those with a bankruptcy in their past. Be sure to choose a secured card that pays you interest on your deposit! On the other hand, if you have a very good credit rating and would like a higher limit (Rs.200000 or more), check into applying for a gold card at the same
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interest rates but with a slightly higher annual fee. Most gold cards require that your annual income be at least Rs.1400000, and platinum cards -- even higher! With all of this money getting spread around, and lots more of it out there, it's no wonder why most of us are constantly receiving notice that we're "pre-approved" for an endless stream of credit cards

1.14 Card Types

There are basically three types of credit cards: Bank cards, issued by banks (for example, Visa, MasterCard and Discover Card) Travel and entertainment (T&E) cards, such as American Express and Diners Club House cards that are good only in one chain of stores (Sears is the biggest one of these, followed by the oil companies, phone companies and local department stores.) T&E cards and national house cards have the same terms and conditions wherever you apply. You may also be familiar with what is known as an affinity card. This card -typically a MasterCard or Visa -- carries the logo of an organization in addition to the lender's emblem. Usually, these cardholders derive some benefit from using the card -- maybe frequent-flyer miles or points toward merchandise. The organization solicits its members to get cards, with the idea of keeping the group's name in front of the cardholder. In addition to establishing brand loyalty, the organization receives some financial incentive (a fraction of the annual fee or the finance charge, or some small amount per transaction, or a combination of these) from the credit-card company. No one card is right for everyone. Basically, the right card for you is one that's accepted where you shop and charges you the smallest amount of money for the services you use. Almost any U.S. business or establishment that takes MasterCard also takes Visa, and vice versa.

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1.15 CyberCash
CyberCash has been servicing credit card transactions over the Internet since April 1995. It has strong ties to the current credit card processing infrastructure, through Bill Melton, a founder of Verifone, as one of its fathers. The use of their payment system has grown tremendously over a year. CyberCash claims that they process thousands of transactions a day, they can send payment transactions to 80% of the banks in America, and to have distributed over 400,000 copies of CyberCash Wallet software to buyers who use their system. It is important to note that CyberCash is not a credit card processing company. Unlike First Virtual, they do not transfer funds into the merchant's account. CyberCash sells safe passage over the Internet for credit card transaction data. They take the data that is sent to them from the merchant, and pass it to the merchant's acquiring bank for processing. Except for dealing with the merchant through CyberCash's server, the acquiring bank processes the credit card transaction as they would process transactions received through a point of sale (POS) terminal in a retail store. The CyberCash payment system is centered around the CyberCash Wallet software program, which buyers use when making a purchase. This program must be downloaded and installed on the buyer's machine before they can make a purchase. This program handles passing payment information, encrypted, between the buyer and the merchant. Once a potential buyer has obtained the CyberCash Wallet and installed it, there are still a few steps to take before it can be used. First, a buyer needs to create a persona or wallet ID which is a string of characters which identify the wallet, and a password. These are then registered with CyberCash. Buyers are allowed to create more than one wallet ID, each with its own password. Secondly, they must bind at least one credit card to the wallet. Binding a credit card entails entering pertinent credit card processing information such as credit card number, expiration date, shipping address and phone number. This information is then registered with CyberCash. Buyers can bind multiple credit cards to the wallet.

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Once the wallet ID is established, and at least one card has been bound, the buyer is ready to start purchasing. To be able to accept payment using the CyberCash system, merchants must do two things. First, the merchants must install the CyberCash Internet Payment Software (SMPS). This software allows the merchant to interface with both the CyberCash buyer, or Wallet software, and CyberCash's servers. Secondly, the merchant must establish a merchant account with an acquiring bank that supports Internet transactions using CyberCash's Secure Internet Payment System. CyberCash can only communicate with banks they have an agreement with. The requirements for accepting payments through CyberCash are provided in detail in CyberCash's How to become a CyberCash Merchant document.

1.16 SET (Master Card/ Visa)

SET stands for Secure Electronic Transactions and is a proposed standard for performing credit card transactions over the Internet. It is being developed jointly by Visa and MasterCard, with technical assistance from various Internet, information systems, and cryptology companies such as Netscape, IBM and VeriSign. With these names behind it, in the future SET may very well become the dominant method for paying by credit card over the Internet. MasterCard and Visa are developing SET as a license-free protocol for credit card transactions over the Internet. Even though it is being developed by MasterCard and Visa, the protocol can be used by any type of credit card such as American Express or Discover. It is important to note that SET is still a work in progress. Visa and MasterCard have released drafts of both the business and technical specifications of SET for public comment. MasterCard states that testing of SET should start in the second quarter of 1996, and it should be available for use by the fourth quarter. There are several goals they want to achieve by creating this protocol. First, they want to create a simple, inexpensive way for merchants to conduct credit card sales over the Internet. Second, they want to produce a protocol for processing credit card transactions that would have little impact on the existing financial

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infrastructure. Third, the SET protocol will allow software vendors to produce credit card payment software that will interoperate. Also, by being an open, license-free standard, SET will create a level playing field and insure competition among software vendors. This should keep costs down for merchants and financial institutions interested in processing credit card payments over the Internet. On the surface, the SET protocol looks very similar to the CyberCash payment system. Merchants and buyers will both need software which follows the SET protocol in order to use SET for credit card transactions. Also, acquiring banks process credit card transaction requests delivered to them through SET in much the same way as the process requests coming through a point of sale terminal. Merchants can request the same type of transactions (authorize, authorize and capture, etc..) as they can through CyberCash. There are differences between CyberCash and SET. CyberCash takes an active role in processing each credit card transaction that flows through their system.. CyberCash's server sits in between the merchant and the acquiring bank. It verifies the identity of the buyer and the merchant involved in the transaction. The server also handles the translation from a CyberCash format for transaction data to the format used by the acquiring banks. With SET, There is no single company which will be responsible for processing the transactions. The task of translation from SET request format to the format used by acquiring banks is done by the SET payment gateway. These gateways will either be run by companies contracted by the acquiring banks to do so on their behalf (most likely), or by the acquiring banks themselves. Identity verification of buyers, merchants, and acquiring banks is not handled by a centralized server. SET uses a system of certificates for party verification. Certificates are like the stamp a notary public places on a document to confirm the signatures on it. Certificates are issued by a trusted entity or "certificate authority" that can vouch that the party presenting a digital signature is who they say they are. The certificate shows that the signature has been proven to belong to the party in question. These certificates are passed between the buyer's, merchant's, and acquirer's

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payment gateway software to prove that each entity involved in the transaction is who they claim to be. For a fairly understandable and detailed explanation of how certificates work within the SET protocol, I advise the reader to download a copy of the SET business specifications.

1.17 E-Cash
E-cash or electronic cash is digital money that you use to make online purchases. Consumers interested in shopping with e-cash have special software on their system that allows them to download money from their bank account into their cash wallet on their computer. When making a purchase, they exchange this downloaded money with the merchant for the product they want to buy. The merchant then redeems this money at a bank that accepts e-cash deposits. There are many companies looking into providing e-cash payment systems. In fact CyberCash states on their home page that they are developing a digital cash system. However, only one company that I know of has an actual electronic cash product out on the market: DigiCash. DigiCash does not actually sell e-cash products to consumers. Their business model for e-cash is to license the technology to banks, which will host e-cash accounts for merchants and consumers. Two banks currently offer e-cash accounts to consumers and merchants. The first bank to offer e-cash accounts was the Mark Twain bank of St. Louis Missouri. As of March 1996, EUNet of Finland has also started offering e-cash accounts (warning - their home page is mostly in Finnish).

1.18 Micropayments
One of the latest buzzwords on the Internet is micropayments. Currently, the way many WWW sites make money is from advertising. The content on their pages is free. The prevailing wisdom in the Internet community is that net-surfers are unwilling to pay for content. The concept behind micropayments is that if the fee for content was low enough, people would not mind paying for it. Current payment systems are not set up for handling these types of transactions. The
21

fees associated with processing credit card sales are higher than the actual payment under these circumstances. Carnegie-Mellon University is currently testing a new payment they developed called NetBill. NetBill is an Internet payment system designed to deal with lowcost item transactions; i.e. micropayments.

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2. REVIEW OF LITERATURE

2.1 P.S.EASWARAN (2005) NEED FOR DISCPLINE IN CREDIT CARD WORKING SYSTEM
The RBI has finally woken up to the need to bring some semblance of discipline into the working of credit card issuers. This measure is long awaited as over the years finding it an attractive proposition, banks have virtually been trusting credit/ debit cards on unwary customers. Interest rates have fallen considerably over the last few years but the rates labeled by the card issuers do not reflect this. On the contrary, in many cases, the bill gets loaded in such a way that the customer is the net loser. There is little rational for pegging their interest charges high, always in double digit when they in reality ought to be in single digit only. Fortunately, customers have of late realized that carrying the card is a burden. It is a high time central bank got into action to some how regulate the whole business of credit cards. A good beginning can be to force such issuers to slash their interest rates to some reasonable level of say 10 to 12% p.a. and do not the 30 to 40% they merrily charge now. Secondly, withdrawal limits must have relevance to the cardholders capacity to repay which in turn will depend upon his income. Though this linkage does remain on paper, in there eagerness to retain the existing customers and to enroll new ones, often these checks and balances are cast to the winds. In short, it will be a nice idea for the reserve bank to keep a tight vigil on all the credit issuers, whether they be Indian or foreign public or private sector banks.

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2.2 TANVI VERMA (2005) PLASTICS FANTASTICS

A study was done in which the objective of the study was to study the trouble starts when you dont pick a card and its give to you anyway! An unsolicited credit card can often be a prelude to harassment. Pooja received an unsolicited credit card, pre- activated and free for the first year. It made sense to use the card for a year. She received the bill late, with interest charges added on. On her refusal to pay interest, a debt collection agency started hounding her. There are innumerable Poojas with similar complaints. The litany includes harassment by the card issuers call centers, wrong billing, inadequate information on interest charged, terms and conditions and credit limits. Ultimately, theres no grievance redressal. Luckily the Reserve Bank of India has just issued stringent guidelines to prevent such abuse. Most card issuers are already following the procedures and guidelines prescribed by RBI. These guidelines will effect the few who dont, says Puneet Chadha, head, cards and retail assets, HSBC.

2.3 DR. S. RAMALINGA CHOODAMBIGAI (2005) EXTENT OF USAGE OF CREDIT CARDS IN COIMBATORE
The introduction to the project is money lending is probably one of the oldest professions in the world. In India money lending has its origin in the Vedic period and there are evidences of activities such as acceptance of deposits and lending of money states Manikandan (1997). The credit cards are largely preferred because they are simple to operate and easy to carry. The holders are relived from the risk of carrying cash or chequebook with them; owing to revolving nature of credit, the customers can take advantage of it, when he pleases, within the overall limit; the purchasing power of the card holder increases to the extent of credit limit given in the card.

24

The methodology used was the urban area R.S.Puram in Coimbatore was chosen for the current study considering the fact that among the residents of R.S.Puram there were as many job going people as business men who were expected to hold cards, pertaining to their income. Secondly most of the merchant stores of this locality accept credit cards from their customers owing to their convenience. 150, respondents who posses credit cards were interviewed. The findings were, it was found that 42 percent of the cardholders possessed the card in the past four years. The study exhibited that 27 percent of the cardholders possessed ICICI cards followed by SBI cards (24 per cent).

2.4 NARAYAN KRISHNAMURTHY (2004) JUST ONE TOO MANY

A study was done eight years ago; Shine E.T. was 22 and had just started earning. As a software geek, his salary was terrific and he was spending it like water. Soon, just spending his salary was not enough. He wanted more. So Shine got himself a credit card and went on spending spree. Soon, Shine realized he could spend twice as much with two cards; then he got three, then six. The consequence? His out standings on just one card came to Rs. 1.28 lakh; and he had to pay hefty amounts on the other five as well. Shine realized that it would take a good part of his working li9fe to repay the dues on all his cards, so he looked for a way out. Credit cards work best for cardholders who pay back on time and in full, says Shayam Srivasan, general manager and head, credit cards and personal loans, Standard Chartered Bank. So, should you limit yourself to just one card? Theres much to be said in favour of the one person, one card norm, but there are strong arguments for using two-three cards.

25

2.5 CLIFFORD ALVARES (2003) THE COST OF FREE CREDIT

Buy now, pay later. Credit card companies all over the world use this bait to seduce any number of customers. And, in theory, its a great idea. Used wisely, a credit card can be hugely convenient- you have up to a month to pay, and its handy when you go impulse shopping. But ask Joseph Fernando about credit cards, and hell tell you the other side of the story. This 34- year- old Mumbaibased contractor took his first credit card seven years ago- and hes still paying off his debts. As his purchases increased, Fernando fell into the classic trap of rolling over payments; he paid little over the minimum 5 per cent on out standings. He says: It made paying a lot easier and I thought I would always square off the balance later, but that never happened. What happened instead was that Fernando found himself crossing the credit limit. Fernando is just one of the growing tribe of credit card users who manage to successfully delude themselves that credit card debt can be easily handled. Some people are convinced that they can pay off the balance whenever they need to- not realizing that the credit card company is charging interest on that amount.

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3. RESEARCH METHODOLOGY 3.1 Need Of The Study

In 1990s due to the liberalization of the economy many changes occurred in the economy. In almost all the sectors of the economy changes happened. Whether talk of primary sector or secondary sector, a lot of technological progress had been made. E-Commerce, M-Commerce, Internet is the recent developments. Moreover the Govt. has also declared the 2001-2002 as an E-Goverenvce. What will be the impact of this technology on the credit card industry? What will be the trend of the industry? This project has been carried out to answer these questions. Liberalization has also affected the service sector. Near 40% of countrys GNP comes from this sector. This includes sector like power, insurance, transportation, communication, Banking, hotels, hospitals & courier services. The credit card industry in the banking sector of financial services is one of the main industries. The research project has been undertaken to keep in mind the future of financial services.

3.2 Objectives Of The Study

1. To study the trend of credit card market in Chandigarh. 2. To examine the factors influencing the customer purchase behavior regarding credit cards. 3. To study the customer satisfaction level regarding the credit card. 4. To examine the potential of credit card market in the future in Chandigarh.

27

3.3 Sample Size

For the study, the sample size of the 100 respondents has been taken. For this purposes various banks and MEs has been approached for the list of the credit cardholders. To select the samples convenience sampling method of nonprobability sampling method has been adopted.

3.4 Scope
The area of study for the project undertaken is the Chandigarh city. This city is the industrial city having huge development. There is a huge potential for credit card market. Till Feb, the market share of different credit card players in the Chandigarh city was as follows. Table No.1 S. Bank No. Of credit No. card holders 1. SBI 44,000 2. Citibank 17,000 3. Stan Chart 3,000 4. American Express 1,500 5. ICICI 1,000 6. Others 2,500 Source: - DMA of ICICI Bank, Chd.

3.5 Method Of Data Collection

Due to the lack of complete secondary data, the study includes the primary data collected through the survey. For the purposes of theoretical framework with regard to the credit card industry, the secondary data has been collected from the various magazines, newspapers and books. For the purpose of evaluating the marketing strategies of the various banks both primary as well as secondary data has been collected. The primary data has also been collected for the purpose of meeting the objective of To study the purchase behavior and

28

satisfaction level of the credit card holders. The primary data has been collected through personal interview with structured questionnaire. . Secondary data has been collected through the various pamphlets, brochures, and circulars, application forms and with the personal interview with the official of various banks & DMAs of the banks.

3.6 Tools Of Analysis

After the data was collected, it was complied, classified and tabulated manually and with the help of the computer. Then the task of drawing inferences was accomplished with the help of percentage and graphic methods. Chi- Square Test has been applied to establish the relationship between the various attributes. Finally, the results and suggestions are given.

3.7 Limitations Of The Study

The various limitations of the study are as follows: Certain respondents were not part with the information due to certain apprehensions. The non-response and partial response is one of the major drawbacks of the study. The size of sample is also restricted. Therefore, the limitation of restricted sample size is applicable to the study. The Duration of the study is also in accordance with the academic objectives of the course curriculum. So, obviously in present of academic exercise, the restrictions of time have brought into the study some limitations. Due to the lack of transparency in the banks the information provided by them may not be reliable. A general limitation of the study relate to the inadequacy and incompleteness of the secondary data about the credit cards.

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3.8 Analysis And Interpretation

The main objective of the drafting of the questionnaire was to know the satisfaction level of customer and to evaluate the purchase behavior of the customer regarding credit cards. The whole questionnaire has been divided into the four parts. In the first part, questions related to the demographic features of the customers are included. In the second part, attempt has been made to evaluate the factors affecting the purchase behavior of the customers regarding the credit cards. In this part questions like rank the factors Influence you to buy the credit cards, from which source do you come to know about the credit cards? Have been asked. In the third part efforts have been made to study the satisfaction level of customers regarding the credit cards. Firstly attempt has been made to relate the satisfaction level with the usage and then various reasons that cause dissatisfaction among the customers have been studied. In the fourth & last part, basically suggestions have been seeked out from the customers to make the credit card services better and attempt has been made to know the customer perception towards the future of credit card market with special reference to the E-Commerce. Analysis has been made with the help of percentages, graphs. Then inferences have been drawn. The Analysis & interpretation part has been divided into two phases. In the first part, the various percentages have been counted and customer purchase behavior has been studied. In the second part, the satisfaction level of the customer has been evaluated and association between the various factors has been established.

4. DISCUSSION AND ANALYSIS

30

4.1 Sex wise composition of credit card holders

Table No.2 Sex Male Female Total No of respondents 68 8 76 Percentage 89.47 10.53 100

Table 2 shows that the males are using credit cards more as compared to the female. Out of the total respondents of 100 nearly 89 percent are male. However one fact about the female respondents is that the whole of the female respondents are owning the credit card for status symbol.

4.2 Age wise composition Table No. 3 Age 10-20 No. Of respondents 4 Percentages 5.26

31

20-30 30-40 Above 40 Total

19 43 10 76

25 56.58 13.16 100

Figure No. 1
Percentages 60 50 40 30 20 10 0

56.58 25 5.26 10to20 20-30 30-40 13.16 Above 40

Percentages

Majority of the credit card holders (57%) are in the age group of 30 to 40 years followed by 25 percent in the age group of 20 to 30.This shows that comparatively younger generation is more inclined towards using this facility. Most of the respondents falling in this category are settled in life having a job or profession or business of their own. These people require the credit card services as they travel around mostly and require cash for personal as well as business purposes.

4.3 Educational level wise composition of credit card holders Table No.4 Education level No. Of respondents Matric U. Graduate Graduate 10 7 26 Percentages 13.15 9.21 34.21

32

Post graduate Higher Total

18 15 76 Figure No. 2 Percentages

23.68 19.73 100

Higher Post graduate Graduate U. Graduate Matric 0

19.73 23.68 34.21 9.21 13.15 10 20 30 40 Percentages

About 34.21 percent of the total respondents are the graduates, 23.68 percent are the postgraduate and 19.73 percent are higher. Mostly the users of the credit cards are graduate or higher. These are the persons who are in job, profession or business. One fact about the customer having a higher education level is that these all are the lectures, professors or readers of the PU. Matric and undergraduate are the persons who are doing business. So, overall conclusion is that the customers of the credit cards are educated. 4.4 Occupation wise composition

Table No.5 Occupation Percentages No respondents Service Business 30.26 28.96 23 22 of

33

Professional Student Total

34.21 6.57 100 Figure No. 3

26 5 76

6.57 5
Pr of es St Se si si ne rv o n u de ic ss nt al e

34.21 28.96 30.26 0 20

26 22 23 40 60 80

Percentages No of respondents

Nearly 30.26 percent of the respondents are salaried employees, 28.96 percent of the respondents are those who have their own business and 34.21percent are professionals. This is because due to the quota sampling method is employed. However only 6.57 percent of the customers are students but with additional card only.

4.5 Income wise composition Table No.6 Income Nil 0-10000 10000-15000 15000-20000 20000-25000 Percentage s 5.26 7.89 10.53 26.31 35.53 No. of respondents 4 6 8 20 27

Bu

34

Above 25000 Total

14.48 100

11 76

Figure No. 4 Above 25000 14.48 11 20000-25000 15000-20000 35.53 26.31 20 27 Percentages No. of respondents

10000-15000 10.538 0-10000 7.89 6 Nil 5.26 4 0 20 40 60 80

Most of the respondents who have taken credit cards are those whose income is greater than Rs. 15000 Per month. To be precise nearly 35.53 percent of the respondents belong to the category of Rs. 20000-25000, 26.31 percent to Rs. 15000-20000, 10.53 percent to Rs. 10000-15000, 7.89 percent to the Rs. 0-10000 and the 14.48 percent to the above Rs. 25000, rest 5.26 percent are the respondents having no income I.e. the additional card. It can be concluded that income is an including factor which is considered for credit card services. Those with higher income are willing to avail for better type of services. 4.6 Market Share Of Credit Card Players In Chandigarh City Table No. 7 Bank SBI ICICI Citibank PNB/ HSBC American Express No of respondents 36 16 13 3 4 Market 47.37 21.05 17.10 3.95 5.26 Share in Percentages

35

Stanchart Bank Of Baroda Canara Total

2 1 1 76

2.63 1.32 1.32 100

SBI 1.32 1.32 2.63 5.26 3.95 17.1 21.05 47.37 PNB/ HSBC American Express Stanchart Bank Of Baroda Canara ICICI Citibank

Market Share in Percentages

Figure No.5 The above table shows that SBI is the market leader having 47.37 percent of the market share. ICICI is with 21.05 percent of the market share and Citibank with 17.10 percent of the market share. The above result can also be supported by the data provided by DMA of ICICI bank. Although the three banks are operating through the DMAs in Chandigarh city i.e. starlight (SBI), Walia & Walila (Citibank) and Direct marketing (ICICI) But there is the difference in the reputation of the banks. Moreover for SBI cards particularly, customers come to know from friends about the cards particularly in the customers of PU.
36

4.7 Source of awareness Table No.8 Source awareness Bankers agent Friends Bank Customers Advertisement Total . of Percentage Respondents 28.95 28.95 10.53 31.57 100 of No. 22 22 8 24 76 Of respondents

37

Percentage

31.57

28.95

Bankers agent Friends Bank Customers Advertisement

10.53

28.95

Figure No. 6 The above table shows that nearly 31.57 percent of the respondents came to know about the credit cards by the way of advertisement, 28.95 percent by way of bankers agent and friends and rest 10.53 percent by way of bank customers. We can conclude that since advertisement is an effective media for influencing customer to purchase credit cards. This shows the supremacy of promotional policy as compared to distribution policy and also the effect of opinion leaders in purchase of credit card for the customers. 4.8 Relation between occupation and source of knowledge

Table No. 9 Source Occupation of Business Student 5 6 2 1 2 1 Service Professional 6 9 1 10 5 4 Total 22 22 8

knowledge Banker Agent Friends Bank Customers

38

Advertisement Total

9 22

1 5

7 23

7 26

24 76

The above table shows the customer source of knowledge about the credit card occupational pattern wise. This shows that the professional and business class are influenced by the bankers agent and advertisement. However for the service class the effective source of knowledge is the friends.

4.9 Duration Of Possessing The Credit Card. Table No.10 Duration (in Years) 0-2 2-4 4-6 More than 6 Total Percentag e 77.64 14.47 7.89 Nil 100 No. of respondents 59 11 6 Nil 76

Figure No. 7

39

Percentage

14.47

7.89 0-2 2 to 4 77.64 4 to 6

Nearly 77.64 percent of the respondents are those who are owning credit cards from last two years, 14.47 percent from the period of 2-4 years back and 7.89 percent from the period of 4 to 6 years. From this we can conclude that the credit card market has been booted just up. There is an enough scope of growth of this market.

4.10 Factors motivating for buying the credit cards Table No.11 FactoFactors Convenience Status symbol Credit extension Incentives Total No. of respondents 19 29 21 7 76 Percentage 25 38.15 27.63 9.21 100

40

7 9.21 Credit Convenience extension 21 29 19 0 25 50 100 27.63 38.15 No. of respondents Percentage

Figure No. 8 From the above table it is clear that mostly the customer buy the credit card for status symbol i.e. 38.15, only 25 percent of the customer buy credit card for convenience. People are also influenced by factor like credit extension i.e. 27.63 percent and rest 9.21 percent of the customers are influenced by the incentives. These are mostly business class people.

4.11 Association between motivational factors and purchase behavior

Null Hypothesis: - The null hypothesis is that no factor will motivate customer in buying credit card. However, calculated value of Chi- Square I.e. 13.05 is higher than the table value at degree of freedom 3 at 0.05 percent level of significance i.e. 7.81. The result is that the motivational factors (convenience, credit extension, status symbol and incentives) have impact on the buying of credit cards. People are mostly motivated to purchase the credit card by the factors like the status symbol and convenience.

41

Association between motivational factors and occupation Table No.12 Occupation/ Motivation Convenience Status symbol Credit extension Incentives Total Business 7 8 7 0 22 Student 0 5 0 0 5 Service 8 6 5 4 23 Professional 4 10 9 3 26 Total 19 29 21 7 76

Null Hypothesis: - let us take the hypothesis that there is significant association between motivational factor and the occupation. The tabulated value of the Chi Square is 3.21 than the table value at 9 degree of freedom at 0.05 percent level of significance I.e. 16.9. So the result is that there is Close association between occupation and motivational factor. Professionals and students are influenced by the status symbol and the services one are mostly influenced by the convenience. The behavior of the business people and the professional seems to somewhat closely related as these two are only influenced by the motivational factor incentives. 4.12 Factors influencing the purchase of credit cards. Table No.13 S. No. Factors 1. 2. 3. 4. 5. 6. Acceptance Interest charges More Credit Joining fee Additional Card Card Image 6.5 3 4 6.5 5 8 Business Service Professiona 1 6.5 3 4 5 2 l 2 3 1 7 8 4 Student Total 1 5.5 2 8 9 3 1 3 2 8 7 4

42

7. 8. 9. 10.

Cost Incentives Fulfill Eligibility Liability lost Liability

1 2 9 in 10

6.5 8 9 10

5 6 9 10

4 7 5.5 10

5 6 9 10

case of card 11. in 11 11 11 11 11

case of Death

The table shows the overall ranking of factors in totality as well as occupation wise. Acceptance is the most important factor in totality & more credit is at No. 2. However People consider very little while purchase from a particular bank factors like, Fulfill Eligibility, card lost liability & liability in case of card lost. The Method, which I have employed to calculate the ranks, is weighted average method. I have assigned weights to the factor for e.g. Rank 1 multiplied by 11, rank 2 by 10, rank 3 by 9 and so on then divide the sum by the total of sum of numbers. The table shows that the most influencing factor for the business class for the purchase of the credit card is the cost. However for the service class & professional it is at No. 6.5 & 5 respectively. This shows the trend of purchase behavior of the business class. The business class goes for evaluating the credit card by cost because of the frequent use of the credit cards. Incentive is at No. 2 for the business class it again reflects the cost consciousness of the business people. From the table it is clear that the purchase behavior of the service, professional & student are somewhat same. They prefer acceptance as it in at No. 1,2 and 1 respectively. They are influenced by the other factors like card image and more credit very much. One thing that is common is that Fulfill eligibility, Liability in case of
43

card lost and liability in case of death are not so important factors in influencing the purchase behavior of all classes as most of the classes are giving these factors as the rank 9,10 and 11 respectively. To evaluate the similarity in the purchase behavior of different classes & to judge the purchase behavior of the different classes deeply, we can apply the correlation analysis.

The association between the purchase behavior and occupation. The rank correlation between different occupations is.
1. 2. 3. 4. 5. 6.

R1 (Business) and R2 (service) R1 (Business) and R3 (professional) R1 (Business) and R4 (Student) R2 (Service) and R3 (Professional) R2 (Service) and R4 (Student) R3 (Professional) and R4 (Student)

0.281 0.645 0.386 0.790 0.729 0.88

This shows the association between the purchase behavior of service& student and Service & Professional i.e. 0.790 &0.729. So the purchase behavior of service, student and professional are similar to some extent.

44

Analysis And Interpretation II

As already discussed the whole of the analysis part has been divided into two parts for the convenience of the study. The first part deals with the customer purchase behavior regarding the credit cards and the objective to study the customer satisfaction level with regard to the credit cards has been tried to be met in the next part under the head Analysis and Interpretation II in this part efforts have been made to study the customer satisfaction level with regard to the credit cards.

45

4.13 Usage Composition Table No. 14 Usage Rarely 0-5 times 5-10 times 10-15 times More than 15 times Total Respondents 32 25 7 9 3 76 Percentage 42.10 32.89 9.21 11.84 3.95 100

46

Percentage of respondents 50 40 30 20 10 0 42.1 32.89 9.21 11.84 Rarely 5-10 times Percentage of respondents 3.95 More than 1500020000 12 7 1 0 2000025000 3 13 4 5

Figure No. 9 The above table and graph show the usage of the credit cards by the respondents as the usage of the credit card is very low nearly 42.10% of the customers are such who has used the card rarely in the month, nearly 32.89% of the customers uses the credit cards for 0 to 5 times in a month however 9.21% uses for 5 to 10 times in a month and 11.84 % uses the card between 10to 15 times in a month. There are only 3.95% of the customers who use credit card for more than15 times in a month. On the average the use of the credit card is very low. But we should not jump to the conclusion, as the usage of the credit card may have direct relation with the other factors. So we may have to establish the relation between the usage and the other factors. 4.14 Relation between usage and income

Table No.-15 Usage Rarely 0-5 times 5-10 times 10-15 times Nil 4 0 0 0 010000 6 0 0 0 1000015000 6 2 0 0 Above 25000 1 3 2 4 Total 32 25 7 9

47

More than 15 times Total

20

27

11

76

The above table shows that there is direct relation between the usage and the income level. With the increase in the income level the usage rate increases and vice versa. The people with the low income are using credit cards less times in a month than those who are having the high income. The person who are having the income slab of Rs. 0-10000 per month are using credit card rarely as compared to the persons who are having monthly income of Rs 15000-20000 as 7 respondents are also using the credit card 0-5 times in a month and 1 respondent is also using for 5-10 times in a month. However the person within the income slab of 20000-25000 and above 25000 is also using the credit card more than 15 times also.

4.15 Relation between occupation and usage

Table No. 16 Usage Rarely 0-5 times 5-10 times 10-15 Business 6 6 2 6 Occupation Student Service 5 14 0 9 0 0 0 0 0 5 0 23 Professional 7 10 5 3 1 26 Total 32 25 7 9 3 76

times More than 2 15 times Total 22

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In this table the relation between occupation pattern and the usage has been established. This table gives very significant results about the usage of the credit cards. This shows that the usage of credit cards is more in business class as compared to the student and service class. This seems to be very high in case of professional also. However in the case of student it is almost nil as they are almost with additional card only. The above result can also be supported by the fact that in case of students the respondents are possessing the credit cards only for the sake of status symbol.

4.16 Satisfaction level Table No. 17 Satisfaction level Highly satisfied Moderate satisfied Neutral Moderate dissatisfied Highly dissatisfied Total Respondents 16 25 21 9 5 76 Percentage 21.05 32.89 27.63 11.84 6.57 100

The above table shows the satisfaction level of customer regarding the credit cards. This shows that on the whole the customers are satisfied. Figure No. 10

49

Percentageof repondents 32.89 40 27.63 30 21.05 11.84 6.57 20 10 0 Neutral Highly dissatisfied
Table NO. 18 Usage Satisfaction level Highly Moderat satisfied Rarely 0-5 times 5-10 times 10-15 time s More than 15 2 0 1 0 0 3 3 4 1 5 e Satisfied 14 9 1 1 11 6 2 1 Neutral Moderate Highly Total Dissatisfied Dissatisfied 4 2 1 2 0 4 1 0 32 25 7 9

Percentageof repondents

The above graph shows the satisfaction level of the respondents. It shows that only 6.57% of the respondents are highly dissatisfied, 11.84% of the respondents are moderately dissatisfied. On the whole the credit card holders in the market are satisfied. 4.17 Relation between satisfaction level and the usage

Highly satisfied

50

times Total

16

25

21

76

The above table shows the relation between the usage and the satisfaction level. It shows that there is a direct relation between the usage and the satisfaction level. The respondents who are using more than 15 times are highly satisfied and neutral. Similar the respondents who are using the credit cards 10 to 15 times and 5- 10 times are almost in the satisfaction level. The respondents who are using credit cards between 10-15 times in a month are moderate dissatisfied, so it proves that the respondents are satisfied or dissatisfied only because of the usage not because of other mental or psychological factors. This can be further supported by the cause of dissatisfaction. Regarding the causes of dissatisfaction the person complains of the delayed statements, one of the extra charges, one of the no complaint handling, four for less acceptance and four foe the expensive. Table no.19 Causes of dissatisfaction Delayed statements Expensive Extra charges No complaint handling Less acceptance No. of Respondents 1 4 1 1 4

Only 5 respondents among the total of 76 respondents who are highly dissatisfied wants to shift to the another card in the future among these 3 respondents (60%) says that they will shift to the SBI and the rest 2 respondents (40%) will shift to the ICICI card.

51

4.18 Future trend in credit card market Table No. 20 Trend Grow Fast Moderately grow Constant Decline Total Percentage 25 38.15 26.32 10.53 100 No. of respondents 19 29 20 8 76

The above table shows the customers perception of trends in the credit card market in India in future with special reference to the E-Commerce. Nearly 25 percent of the customers are of the view that it will grow very fast. Figure No. 11
Percentage

10.53 26.32

25

Grow Fast Moderately grow Constant

38.15

Decline

52

38.15 percent are of the view that it will moderately grow. According to them for the credit card operations in India the infrastructure should be sound, which will take time particularly in the Indian economy.26.32 percent are of the perception that the credit card market in India will remain constant. And nearly 10.53 percent are of the view that the credit card market will decline. On the whole we can say that the credit card market in India will grow. Still there is a direct relation between credit card and E-Commerce. So we can say that the credit card market in India will boost up.

4.19 Better Media for the advertisement of the credit cards

Table No. 21 Media Print Internet DMA Television Total Percentage 26.32 18.42 34.21 21.05 100 No. of respondents 20 14 26 16 76

Percentage

21.05

26.32

34.21

18.42

Print Internet DMA Television

Figure No. 12 The above table and the graph show the customer perception regarding the better advertisement of the credit cards. According to the survey DMAs and the Print media are the best media for the advertisement of the credit cards. 34.21% prefer that the DMAs are the best media for the advertisement of the

53

credit cards and nearly 26.32 percent prefer print media. 21.05percent opts. for the Television and rest 18.42 percent favors the Internet. Internet being the costlier mode is less preferred by the credit card holders and the general public.

5. FINDINGS, SUGGESTION AND CONCLUSION 5.1 Findings Of The Study

The main findings of the study are as follows: SBI is the market leader in the Chandigarh city. Bankers Agent and opinion leaders are effective source of communication in credit card market. There is very less influence of Bank customers. In advertisement, particularly print media is effective in influencing the credit card customers. Credit cards have direct relation with the income. People with high income are keeping it and using it very much. That is why; the companies like Am -Ex are using this as a basis for the market segmentation. The numbers of males having the credit cards are more as compared to the females. Females cardholders are keeping it just for the status symbol or they are the cardholders with the Additional card facility. People are having the cards between 0-2 years ago. It means that there is a greater scope of growth of the credit card market. Occupation wise the main users of the credit cards are professionals and business people. The use of credit cards by the service people is very low.

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Cost is the most effective factor for the business people. However for student & service people acceptance is the most important factor. The professional class goes for purchasing the credit card of a particular bank keeping in view the more credit facility.

Most of the people are keeping the credit card for the status symbol. So, they are using it rarely. However those persons who have taken the credit card for convenience and status symbol are using it, but very less number of times.

Usage has only little relation with the income. Even the business people with the low income are using it more. Most of the users of the credit cards are business people and professionals.

The main causes for the dissatisfaction among the credit cardholders are fewer acceptances, no complaint handling and expensive one.

Almost, the people are satisfied with their cards and services. They do not want to shift to the other card. However only few dissatisfied people want to shift to other card. SBI and ICICI are getting popular and people want to shift towards these cards.

The credit card market will grow in near future. There is a lack of infrastructure and if this infrastructure is developed then the credit card market will rise up rapidly.

People are mostly influenced by the type of media, which is easily available to them. DMAs are the effective way to advertise the credit cards. Besides these people also respond to the TV and Print media.

5.2 Suggestions
On the basis of the of the findings and the problems faced by the credit card holders the suggestions for making the marketing of credit card better are as follows:
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The one of the main problem faced by the credit card holders is the low acceptance of the credit card. So the bank should spread the acceptance of their card. For this purpose the bank should tie up with the more member establishments.

It is found in the survey that cardholder doesnt use their card frequently it is mostly seen in the cases of the respondents who belong to service class. The bank should try to increase the frequency of use by offering discount and rebate on certain items in a specific period of time. Regarding the factor that most influence the credit card holder to go for purchasing the credit card is the status symbol. So the bank can segment the market according to this base as one who wants to retain the card for the status symbol and the other who retain it for usage, by offering services to the cardholders having large user the bank can increase the frequency of use of credit cards.

The bank should promote their credit cards as in the small towns the customers are not aware about the credit cards. The best mode for promoting the credit card according to the survey is the print media and DMA (Direct Marketing Associates).

The bank should target high-income class of society. The businessmen are the best under this class, the reason being that they are the frequent user of he card in spite of the even low income. The major problems that customers faces with regard to the credit cards are the delayed statements, extra charges etc. so for making the credit card services better and for better productivity of the card following steps can be taken: 1.

Action to popularize the scheme: - The methods should be adopted to bring a higher degree of popularization through mass media channel like Television, Radio, Air port centers, star hotels, Railway centres, etc. besides these observations can be made weekly or fortnightly marketing celebrations of cards at the busy centres. Steps can be made to organize member establishments and other mass media organizations to establish confidence in accepting the credit cards for all purposes.

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2.

Education; - it needs to education to staff members and also to the customers. But the education to staff is more important. Appropriate training should be provided by conducting special classes as regard to: How to select the clienteles? How to popularize the schemes? How to express idea behind the card? How to make effective follow up for better marketing? Then the staff will be able to meet the customer requirements and carry out marketing strategy carefully.

3.

Client selection: - selection of the clients should be made carefully and technically. Banks should not go for fulfilling the target norms. Bankers should see the genuine needs of the person before issuing card. The bank can adopt its own regulations or norms for selecting the cardholders keeping in view its basic overall objectives as well as the objectives of issuing the cards.

4.

Area selected for marketing: - As the scheme of issuing the credit card is for a specific purpose and usually the purpose is linked mostly with specific classes of people, it is not advisable to extend the market in an unplanned manner. Area should be selected where the marketing can be made more sincerely and productively.

All this belong to the concept of service marketing, no doubt the banks are discharging this duty by way of employing the DMA, who are professional and having specialized knowledge of services marketing. However these DMAs are charging undue for their services. The are mostly concentrating on their target, in other words these DMAs are only concerned about the quantity of the card holders, not the quality of the cardholders. To remove this limitation, the bank s should have to concentrate on the assumption that these organizations itselves are able to meet the customers requirements. For this purpose the banks should have to go for deep planning. Following steps can be carried out to plan the services effectively.

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Call for a seminar: - The top official of the banks can be invited at the seminar to be conducted at the higher level to discuss the position of credit cards. Branch mangers should be asked to make suggestions regarding the credit card marketing, as they are more close to the customers. All these suggestions should be recorded and systematically design can be prepared to carry out the implementation process.

Construct the task force: - keeping in view the systematic plan framed in the seminar, a task force can be prepared to look into the follow up position seriously. Besides the task force being responsible to guide the responsible persons regarding clarifying the doubts, the task force should also be authorized to take action against the responsible persons who not feel the responsibility that result in the bad debts or other consequences.

5.3 Conclusion
The credit card market in India is growing at a high rate of 30% to 40% in the last years. But now it is growing very much. There is a competitive scenario in the credit card market. A large number of the players are entering in this market. These players are trying to differentiate their services from the other. However, in spite of it, the facilities provided by these players are almost the same. Some of the players are trying to co- branding their cards with the various MEs to increase their customer base. In spite of it the customers are mainly attracting to SBI because of its wider network. The main factors influencing the credit card customers are the acceptance, card image, more credit & cost. Customers go after these factors. On the whole the customers are satisfied with the services & if the players want to improve their services then they should concentrate on the services like timely statements, increase acceptance levels, reduce fees etc. as the customer are dissatisfied with these services. They mostly complain of these services.

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The credit card market is expected to be risen with the development of ECommerce. The future of E- Commerce is bright in India. But a lot of infrastructure is needed for it. Once people start purchasing good on Internet at home then that day will be of the credit card players. In fact, the success of ECommerce is heavily built on the position of credit card market.

6. BIBLIOGRAPHY
Business Today, Co-operating Brands, Oct.8th, 2000. Business Week, Amex card. Dec 27th, 1999 Business world, Global Plastic, Nov. 8, 1999. Kotler, Philip. , Marketing management, analysis, planning, implementation and control, Prentice Hall Of India, New Delhi, 1995. Mohan Devendra Business India, Smart cards, No cash, No problem. Oct. 2-15, 2000.P36-37 Nayak Shilpa Business Today, 5 ways Plastic Protects, March 6th, 2000.p 118 Panigrahy, Dibakar., Marketing of Plastic Money, Kanishka Publishers, New Delhi, 1999. Payne, Adrian. The essence of services marketing , Prentice Hall Of India, New Delhi, 1998. Robert, Cole. H, Consumer & Commercial Credit Management Irwin Homewood IL 1992 The Tribune news Service, Credit cards frauds on rise in India April 14, 2001.P 20 The Tribune, On line shopping catching up, April 7, 2001. The Tribune, Play safe with credit cards, April 2nd, 2001. For this report, I have used documents available in various media types. These types include: books, Word documents published on the web, Interviews, and actual WWW pages. In order to make these reference materials easier to find, I have grouped them according to media type.

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Books: Attard, Janet: The Home Office and Small Business Answer Book, Henry Holt and Company, New York, 1993. Baughn, William H.; Thomas I. Stores, Charles E. Walker: The Bankers' Handbook, Dow Jones-Irwin, Homewood Ill., 1988. Mandell, Lewis: The Credit Card Industry, Twayne Publishers, Boston, 1990. Rosenberg, Jerry M.: Dictionary of Banking, John Wiley & Sons Inc., New York, 1993. Word Documents (located on the web): MasterCard and Visa, Secure Electronic Transaction (SET) Specification Book 1: Business Description, Feb 23, 1996. Note - Only current version of document available MasterCard and Visa, Secure Electronic Transaction (SET) Specification Book 2: Technical Specifications, Feb 23. 1996. Note - Only current version of document available WWW sites and pages: Carnegie-Mellon Univ.:The Net Link Project, http://www.ini.cmu.edu:80/netbill/ CyberCash: CyberCash Home Page, http://www.cybercash.com/cybercash/ CyberCash: Secure Internet Credit Card Payment, http://www.cybercash.com/cybercash/who-we-are/sixsteps.html CyberCash: CyberCash Software, http://www.cybercash.com/cybercash/product/get-wallet.html
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CyberCash: How to become a CyberCash Merchant, http://www.cybercash.com/cybercash/how/merch_setup.html Eastlake 3rd, D.; B. Boesch; S. Crocker; M. Yesil (all CyberCash employees): RFC 1898 - CyberCash Credit Card Protocol Version 0.8, http://www.cis.ohiostate.edu/htbin/rfc/rfc1898.html Del West's Market Market: Merchant Credit Card Info, http://www.mktmkt.com/minfofaq.html DigiCash: Digi Cash Home Page, http://www.digicash.com/ EMS Nationwide: EMS Nationwide, http://www.webmall.net/admark/ EUNet Finland: EUNet, http://www.eunet.fi/ First of Omaha: First of Omaha Merchant Processing, http://www.synergy.net/channels/studio23/fbo/foomp.html First Union: First Union's Merchant Sales and Services, http://www.firstunion.com/2/business/merchant/ Borenstein, N.; N. Freed: RFC 1521 - MIME, http://www.internic.net/rfc/rfc1521.txt Rose, T Marshall; Nathaniel Borenstein (First Virtual employee's): The Simple MIME eXchange Protocol http://www.fv.com/pubdocs/smxp-spec.txt Mark Twain Bank: Welcome to Mark Twain Bank, http://www.marktwain.com/

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Moeller, Michael: PC WEEK: IB takes charge of E-commerce, PC WEEK April 29, 1996 http://www.pcweek.com/news/0429/29ibmset.html

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