CREDIT CARD

A credit card is a payment card issued to users

as a system of payment. It allows the
cardholder to pay for goods and services
based on the holder's promise to pay for
them.
 History of Credit Card
Invented in 1887 by Edward Bellamy.
1st - credit card - 1920s in US.
Bank of America - BankAmericard in 1958
Chargex Visa Card
MasterCard - 1966 Group of Banks in US
In 1966 - 1st Non-US Credit Card was issued by
Barclays Bank in the UK.
CREDIT CARD NUMBER STRUCTURING
1ST 6 Nos Bank of Credit Card.
Next 9 Nos Individual A/c No.
Final Digit Validity Check Code.
Extra Codes - Will be Issue & Security Codes.
 CREDIT CARD MARKET SHARE IN INDIA
RBI - 17.4%(2012 up to Apr)
16.2 %(2011)
State Bank of India & Punjab
National Bank Contributes More
for the Growth.
Card base of public sector banks
expanded 7.4 % yoy to 3.09mn.
Private and foreign banks
declined 1.5 % yoy to 14.7
million.
New Entrance - IndusInd Bank
acquired Deutsche Banks
Standard Chartered Bank
bought Barclays card business
in India
Credit Cards in India - 17.77
million
 PROTOTYPE CREDIT CARD
FRONT SIDE
Issuing bank logo
EMV chip on "smart cards"
Hologram
Credit card number
Card brand logo
Expiration Date
Card Holder Name
contactless chip
BACK SIDE
Magnetic Stripe
Signature Strip
Card Security Code
 Parties involved
Cardholder
Card-issuing bank
Merchant
Acquiring bank
Credit Card association
Transaction network
Affinity partner
Insurance providers
TRANSACTION STEPS
Authorization

Charge backs Batching

Clearing and
Funding
Settlement
 Benefits to customers
The main benefit to each customer is
convenience.
Compared to debit cards and cheques, a credit
card allows small short-term loans to be
quickly withdraw.
Different countries offer different levels of
protection.
 Benefits to merchants
More secure than other forms of payment
They discourage theft by the merchant's
employees and reduce the amount of cash on
the premises.
Finally, credit cards reduce the back office
expense of processing cheques/cash and
transporting them to the bank.
 Grace period
A credit card's grace period is the time the
customer has to pay the balance before
interest is assessed on the outstanding
balance.
Grace periods may vary, but usually range
from 20 to 55 days depending on the type of
credit card and the issuing bank.
There are some credit cards that will only
apply finance charge.
FACTORS DETERMINING CREDIT CARD
INTEREST RATES IN INDIA
Repo rate
Reverse repo rate
Prime Lending Rate (PLR)
 VARIOUS KEY FACTOR TO CHOOSE
THE BEST CREDIT CARD
Credit Limit
Credit Time Offered
Rate of Interest
Eligibility Criteria
Acceptance of the Card
Joining fee
Annual fee
 DEBIT CARDS VS CREDIT CARDS
The differences and comparative advantages
and disadvantages of the two types of popular
plastic money on offer in India.
The basic difference between the two is the
fact that a credit card takes the form of a
personal loan from the issuing bank to the
consumer, while a debit card is more like a
cheque: money is directly deducted from a
persons bank account to pay for transaction.
 THE DISADVANTAGES OF THE DEBIT
CARD:
There are almost no security measures and a person can
use a debit card to clean out the cardholders account, if he
knows the PIN.
A debit card does not prevent the account from being
overdrawn, and has less affordability than a credit card.
A debit card also has a narrower acceptable area in India,
with many merchants not accepting it since they are
charged a fee every time they do.
The major problems of a debit card are negated by instant
notifications of transactions via sms and emails. A credit
card or a debit card are both useful tools that must be used
carefully and sparingly to maximize your advantage.
 ADVANTAGES OF A CREDIT CARD
Flexile spending limit
Most features of a debit card such as withdrawal of
cash are available on credit cards as well.
Wider acceptance and recognition, especially in online
transactions.
Greater security measures and checks than debit card.
Credit cards allow for cash back and bonus points
schemes that a debit card is not eligible.
A credit card can be used as a convenient way to check
and record your spending.
There is a fixed credit limit, a cardholder cannot
overstretch his purchases.
 THE DISADVANTAGES OF
Hidden costs.
CREDIT CARD
A debt trap for the cardholder.
Cases of fraud are extremely common today.
Credit cards can be used at ATM cards, but considerable processing fee
required.
Debit cards provide access to ready money in a more convenient and
less invasive form than cheques, and allow for a faster withdrawal of
cash.
Debit card user who are not qualify for a credit card, the advantage is
spent on money he/she possess in their accounts.
A debit card can be used to withdraw money from an ATM with no
processing charge.
A debit card is a more convenient way of carrying cash around.
 Security problems and solutions
Credit card security relies on the physical
security of the plastic card as well as the
privacy of the credit card number.
Whenever a person other than the card owner
has access to the card or its number, security
is potentially compromised.
Merchants would often accept credit card
numbers without additional verification for
mail order purchases.
 Many require the card and also requires
signature for security purpose.
A lost or stolen card can be cancelled, if this is
done quickly, will greatly limit the fraud that
can take place in this way.
Code 10 calls are made when merchants are
suspicious about accepting a credit card.
The operator then asks the merchant a series
of YES or NO questions to find out whether the
merchant is suspicious of the card or the
cardholder.
 Inflated pricing for all consumers
Merchants that accept credit cards must
pay interchange fees and discount fees on all
credit-card transactions.
In some cases merchants are barred by their
credit agreements from passing these fees
directly to credit card customers, or from setting
a minimum transaction amount.
The result is that merchants may charge all
customers higher prices to cover the fees on
credit card transactions.
 Different Credit Cards Advantages
ICICI Bank Preferred Gold Credit
Card
Purchase Interest Rate: 3.15% p.m
Cash Withdrawal Rate: 3.15% p.m
Annual Fee: No Rewards: Yes
Min. Monthly Payment: 5
Grace Period: 20 to 50 days
State Bank Cash Plus ATM-cum-
Debit Card
Purchase Interest Rate: 0.00% p.m
Cash Withdrawal Rate: 0.00% p.m
Annual Fee: Yes Rewards: No
Min. Monthly Payment: NA
Grace Period: Not Applicable
Barclays Bank Smart Budget Credit
Card
Purchase Interest Rate: 2.95% p.m
Cash Withdrawal Rate: 0.00% p.m
Annual Fee: No Rewards: No
Min. Monthly Payment: Rs. 400
Grace Period: 50 days
SBI Platinum Credit Card
Purchase Interest Rate: 3.10% p.m
Cash Withdrawal Rate: 3.10% p.m
Annual Fee: No Rewards: Yes
Min. Monthly Payment: 5% of
outstanding balance or Rs 200,
whichever is higher
Grace Period: Upto 50 days
Jet Airways Citibank Platinum
Credit Card
Purchase Interest Rate: 3.19% p.m
Cash Withdrawal Rate: 2.50% p.m
Annual Fee: Yes
Rewards: Yes
Min. Monthly Payment: 5%
Grace Period: 30 days
HDFC Bank Titanium Credit Card
Purchase Interest Rate: 2.65% p.m
Cash Withdrawal Rate: 2.50% p.m
Annual Fee: Yes Rewards: Yes
Min. Monthly Payment: 5%
Grace Period: 50 days