Plastic Money PDF

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growth of plastic money , types of plastic money , global initiatives , advantage and disadvantages of using plastic money...

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PLASTIC MONEY The plastic money generally a credit or debit card with a magnetic strip many people carry in their wallets or purses is the end result of a complex banking process. Holders of a valid card have the authorization to purchase goods and services up to a predetermined amount, called a credit limit Plastic money is an alternative to the cash or the ‘standard money’. It is used to refer to the credit cards or the debit cards that we use to make purchases in our everyday life. Furthermore, these credit & debit cards also have plastic used in their making and that is where the name ‘plastic money’. Growth of Plastic Money in India: It all began in the year 1951. New York based bank called Franklin National Bank started providing cards (Plastic Money).  Profitable utilization: Credit card can be used online with a sepatare security number to prevent misuse. This has resulted in increasing profitability.  Increasing reach: Indian railway which runs one of the largest travel booking sites in Asia, offers home-delivery of train tickets if booked online using credit or debit cards.  Utmost safety: Safety standards followed by the Indian Financial institutions to prevent misuse match the best in the world.  Feature-oriented: Product features are one of the best in the world. Almost all credit cards come with standard features such as free accident insurance, medical insurance at a heavy discount and much more. Types of Plastic cards:

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Credit card Debit card Charge card In-store card Smart card Add-on cards Petro cards

Global Players in the credit card market: Master Card:- Master Card is the product of Master Card International and along with Visa are distributed by financial institutions around the world. Card

holders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month.  VISA Card:- VISA Card is a product of VISA USA and along with Master Card is distributed by financial institutions around the world. A VISA Cardholder borrows money against a credit line and repays the money with interest if the balance is carried over from month to month in a revolving line of credit.  American Express:- The world’s favorite card is American Express Credit Card. It is very popular in U.S., Canada, Europe & Asia and are used widely in the retail and everyday expenses segment.  Diners Club International:- It is the world’s leading Charge Card providers. Diner’s Club Card holders reside all over the world and the Diner’s Card is an all time favorite for corporate. Different Variants of Credit Cards:The different Variants of Credit Cards are: Standard Card:- It is the basic card.  Classic Card:- It is the Brand name of the standard card issued by VISA.  Gold Card:- It offers a higher credit than a standard card. The required income eligibility is also higher in this case. In addition the issuing company provides extra incentives to card holders.  Platinum Card:- It has a higher credit limit and additional perks than a gold card.  Titanium Card:- It has a even higher credit than a Platinum Card. Performance of Debit Cards:Debit Card also known as check cards, look like a credit card. Hen a debit card is used as a merchant establishment, the merchant swipes card through an electronic point of sale terminal which is directly linked up with the debit card issuing bank and the card holder’s account immediately gets debited. Debit Cards are different from Credit Cards. Credit Card is a way to “pay later” whereas debit card is a way to “pay now”. Debit Cards are accepted at many locations including grocery stores, gasoline stations, restaurants etc. Its an alternative to carry a cheque book or cash.

Features of Debit Card: Obtaining a debit card is often easier than a credit card.  Using a debit card instead of writing cheque saves you from showing identification or giving out personal information at the time of the transaction.

 Using a debit card frees you from carrying cash or a cheque book.  Debit card may be more readily accepted by by merchants than cheque.  The debit card is a quick, “pay now product”, giving you no grace period.

Terms used in Plastic Money :  Card Issuers : They are the banks issuing plastic cards to the consumers . Banks charge about 2.5 % commission from member establishments selling goods and services through credit cards . For the customers , banks offer a credit period of 30-45 days , but charge about around 3 % on all outstanding amount on expiry of the credit period .  Card Holders : The card holders include both salaried individuals and business organizations . The eligibility criteria for individual to acquire plastic money are predicated on the basis of annual incomes .  Member Establishment : Member Establishments are organizations enlisted by the plastic money issuer who accept valid credit cards towards payment for the goods sold or services rendered by them in lieu of cash . Member Establishments include retail outlets , departmental stores , restaurants , hotels , hospitals , travel agencies , garages , petrol pumps , co-operative societies etc. While enlisting Member Establishments factors like their reputation , integrity , standing and popularity are taken into consideration . Based on the type of business , location , turnover and so on the floor limit for Member Establishments is fixed . Member Establishments like Indian Airlines , or Indian Railways do not pay discount to the issuer and in such cases the issuer card collects a transaction fee for the card holder .  Member Affiliates : The issuer , may sometimes enter into a tie up for issuance of credit card . In such cases , the organizations which have tie ups also issues credit cards of the issuer to their clients . These organizations are called Member Affiliates . Credit cards issued by Member Affiliates are similar to those issued by the issuer , expect that they contain the name and logo of the Member Affiliates on the face of the card , besides the issuer’s name and logo . This agreement enlarges the scope and operations of the plastic money .

 Charge Slip : A Charge Slip is a voucher (debit) which is an evidence of the cardholder using the card and consents for the indebtedness of the amount mentioned therein . Charge Slip is prepared in triplicate by the member establishments and signed by the customer / card holder in token of acknowledgement of receipt of goods or services in the amount of total shown thereon and agrees to perform the obligations set forth in the card holder’s agreement with the issuer . Advantages of Plastic Money : Plastic Money is a must need of our busy life. Today it is very easy to y without having a lot of cash or gold. Keep Credit or Debit cards and forget the cash money. This is a new idea of present life-style which has made money transition so easy that anybody can carry it with him or her in a pocket. Today plastic money is the best alternative of the cash. It is also safer to travelling with a plastic money card than cash. If it is stolen you may contact to bank immediately and can block your money from getting stolen. It gives you also better option as extra purchasing capacity, protection of money and much more.  Easy to handleIt prevents to carry out heavy wallets, hence, reducing the chances of theft.  Easy access to moneyIn the situation of instantaneous want for money, one can withdraw / debit the demanded cash amount from the account and thus prevents any risk of getting marooned in travelling.  Easy availabilityNow a day’s every bank facilitates with Credit cards as long as the account become active. The cash ATM machines are also open 24/ 7, therefore whenever in need one does not have to wait for the banks to open, but can take out the money using the card.  Reward Points This indicates that by using the card for purchasing, there are points added which get aggregated in the user’s account. Lastly, when a good amount of these points get collected, the consumer can use them for purchasing any product for free, hence making a double use of money is another advantage of plastic money.  Additional features:

Mostly credit card offer additional benefits, as discount from some particular stores, bonus in airline fare, free insurance policies and much more. This discounts and bonus encourages you to purchase more things as it is good for us Disadvantages of Plastic Money :

 Terms & Conditions Debit/credit cards may have innumerous benefits, most of them usually come with complicated terms and conditions, which you might not understand or comprehend initially.  Risk Of Loss & Misuse The danger of losing a debit/credit card is something, which most card owners' fear.. It is seen that hefty purchases are made under the name of the account holder after the card gets lost or stolen and you end up paying for things, which you have neither bought nor own.  Limited Options With so many companies in the market, chances are that the stores that you step in does not accept card of the particular company you have. Result is that you have to either pay a bulk of cash or just walk out of the shop with no shopping bags (as most of us do not care to carry cash, because we overtly rely on the credit card)....