AN OVERVIEW ON PLASTIC MONEY

Look in your wallet. If you are like an average middle-class, living in metropolitan you probably must have at least one thin plastic card that you use to pay for things at many merchants. Take out one of those cards. The card you picked is about 33/8long, by 21/8wide, weighs about a fifth of an ounce, has magnetic stripe on the back and has a 13 to 16 digit account number embossed on the front. It is called a payment card. Once cardboard, now plastic, the card itself may become an anachronism. The plastic note is same as paper but the only difference is that they are made of plastic. The usage of plastic money (Cards) has increased in the mode of payment of huge amount and time by time there are lots of different types o f plastic money introduced which enhanced the features of plastic money like we can use it anywhere in the world and etc. Now the world is getting globalized so every card is accepted everywhere with the power of VISA which interconnect the different countries. In the last half of the twentieth century, payment cardscredit, debit, and charge cardshave quietly revolutionized how we pay for goods and services. It is increasingly common to find merchants who do not take cash or cheques, and increasingly rare to find merchants who refuse payment cards. Payment cards have also revolutionized how we coordinate the timing of when we purchase goods and services and when we pay for them. The popular media often focus on how credit cards is making it much quicker and easier to borrow, encourage people to spend beyond their means and get mired in debt.. Credit cards enable them to do so. There is agreement that credit cards are faster than checks, but there is disagreement as to how much faster one industry source suggests that the difference in favor of cards is as large as fifty-six seconds. Whether cards are as fast as cash is also a matter of dispute. To use cash, of course, requires spending some time getting it. This is easier today with the proliferation of ATM machines and cards, but for the card industrys first few decades it required trips to the bank window. Time savings of only a few seconds per transaction become worth quite a bit when billions of transactions are involved.

Around the Globe

With nearly 1.3 billion credit cards in circulation at the end of 2003, U.S. credit card use is larger than in the rest of the world combined, according to David Robertson, publisher of industry newsletter the Nilson Report. Behind the U.S., the U.K. is the next largest market with 59 million credit cards, according to the Lafferty Group, a research firm in London. In Europe Debit cards are more popular in Europe by a long mark: The French have 39 million debit cards and just 9 million credit cards; 82 million Germans hold 93 million debit cards, but just 20 million credit cards; and British citizens have 60 million debit cards. Usually combined with overdraft protection, debit cards provide a cheaper alternative but offer lower lines of credit. The Nationwide Building Society, a bank in the U.K., for example, charges 6.75 percent for a debit card overdraft loan, but 15.9 percent for a credit card loan. German banks are legally bound to offer every account holder an ongoing overdraft of three times the borrower's monthly salary, lessening the need for credit. The average French debit and/or credit card holder pays between 11 and 14 percent interest; while the average British cardholder pays between 6 and 15 percent. In Asia In South Korea, the country with the region's largest number of credit cards, the total amount of credit card spending leaped from $53 billion in 1998 to $519 billion in 2002, according to a 2004 report by the Korean Economic Institute in Washington. Total outstanding credit card debt increased from $11.0 billion at the end of 1999 to $57.5 billion at the end of the third quarter 2003

Plastic Money All about credit cards

Credit cards in India is gaining ground. A number of banks in India are encouraging people to use credit card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and AmericanExpress. Credit card however became more popular with use of magnetic strip in 1970.

Credit card in India became popular with the introduction of foreign banks in the country.

Credit cards are financial instruments, which can be used more than once to borrow money or buy products and services on credit. Basically banks, retail stores and other businesses issue these.

Major Banks issuing Credit Card in India

State Bank of India credit card (SBI credit card) Bank of Baroda credit card or BoB credit card ICICI credit card HDFC credit card IDBI credit card ABN AMRO credit card Standard Chartered credit card HSBC credit card Citibank Credit Card

Precautions taken after receiving credit card To Avoid:

Bending the Card. Exposure to electronic devices and gadgets.

Direct exposure to sunlight. Be cautious about disclosing your account number over the phone unless you know you're dealing with a reputable company.

Never put your account number on the outside of an envelope or on a postcard. Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed.

Don't sign a blank charge or debit slip. Tear up carbons and save your receipts to check against your monthly statements. Cut up old cards - cutting through the account number - before disposing of them. Open monthly statements promptly and compare them with your receipts. Report mistakes or discrepancies as soon as possible to the special address listed on your statement for inquiries. Under the FCBA (credit cards) and the EFTA (ATM or debit cards), the card issuer must investigate errors reported to them within 60 days of the date your statement was mailed to you.

Keep a record - in a safe place separate from your cards - of your account numbers, expiration dates, and the telephone numbers of each card issuer so you can report a loss quickly.

Carry only those cards that you anticipate you'll need.

To Do:

Please sign on the signature panel on the reverse of the Card immediately with a nonerasable ball-point pen (preferably in black ink). This will ensure that the benefits of membership are yours and yours alone.

Keep the Card in a prominent place in your wallet. You will notice if it is missing.

Reasons credit card being rejected at retail outlet:

One may have exceeded the borrowing limit or defaulted (constantly) on minimum payment due.

The Card is hotlisted. The card has crossed its expiration date. Non-receipt of dues of one-card blocks future transactions on any other card(s) held of the same card-issuing bank.

The magnetic stripe on the reverse of the card is damaged i.e. has been scratched or exposed to continuous heat/direct sunlight or magnetic field-like card kept near a TV set / other electronic appliances.

Systems or technology failures have in rare instances also led to non acceptance of cards when swiped through an Electronic Terminal.

Global player in credit card market

MasterCard

MasterCard is a product of MasterCard International and along with VISA are distributed by financial institutions around the world. Cardholders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in 220 countries and territories. In 1998, it had almost 700 million cards in circulation, whose users spent $650 billion in more than 16.2 million locations.

VISA Card

VISA cards is a product of VISA USA and along with MasterCard 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. Nearly 600 million cards carry one of the VISA brands and more than 14 million locations accept VISA cards.

American Express

The world's favorite card is American Express Credit Card. More than 57 million cards are in circulation and growing and it is still growing further. Around US $ 123 billion was spent last year through American Express Cards and it is poised to be the world's No. 1 card in the near future. In a regressive US economy last year, the total amount spent on American Express cards rose by 4 percent. American Express cards are very popular in the U.S., Canada, Europe and Asia and are used widely in the retail and everyday expenses segment.

Diners Club International

Diners Club is the world's No. 1 Charge Card. Diners Club cardholders reside all over the world and the Diners Card is a alltime favourite for corporates. There are more than 8 million Diners Club cardholders. They are affluent and are frequent travelers in premier businesses and institutions, including Fortune 500 companies and leading global corporations.

JCB Cards

The JCB Card has a merchant network of 10.93 million in approximately 189 countries. It is supported by over 320 financial institutions worldwide and serves more than 48 million cardholders in eighteen countries world wide. The JCB philosophy of "identify the customer's needs and please the customer with Service from the Heart" is paying rich dividends as their customers spend US$43 billion annually on their JCB cards.

Grace / Interest Free Period

The number of days you have on a card before a card issuer starts charging you interest is called grace period. Usually this period is the number of days between the statement date and the due date of payment. Grace periods on credit cards are usually 2-3 weeks. However, there is likely to be no grace for balances carried forward from previous month and fresh purchases thereafter if any.

The following are some of the varieties of credit cards in India

ANZ - Gold ANZ - Silver Bank Of India - Indiacard Bol - Taj Premium Bol - Gold BoB - Exclusive BoB - Premium Canara Bank - Cancard Citibank - Gold Citibank - Silver Citibank WWF Card Citibank Visa Card for Women Citibank Cry Card Citibank Silver International Credit Card Citibank Women's International Credit Card Citibank Gold International Credit Card Citibank Electronic Credit Card Citibank Maruti International Credit Card Citibank Times Card Citibank Indian Oil International Credit Card Citibank Citi Diners Club Card HSBC - Gold HSBC - Classic

ICICI Sterling Silver Credit Card ICICI Solid Gold Credit Card ICICI True Blue Credit Card SBI Card Stanchart - Gold Stanchart - Executive Stanchart - Classic Thomas Cook Standard Chartered Global Credit Card

Standard segregation of credit cards

Standard Card - It is the most basic card (sans all frills) offered by issuers. Classic Card - Brand name for the standard card issued by VISA. Gold Card/Executive Card - A credit card that offers a higher line of credit than a standard card. Income eligibility is also higher. In addition, issuers provide extra perks or incentives to cardholders.

Platinum Card - A credit card with a higher limit and additional perks than a gold card. Titanium Card - A card with an even higher limit than a platinum card.

The following are some of the plus features of credit card in India

Hotel discounts Travel fare discounts Free global calling card Lost baggage insurance Accident insurance Insurance on goods purchased Waiver of payment in case of accidental death

Household insurance

Some facts of credit cards

The first card was issued in India by Visa in 1981. The country's first Gold Card was also issued from Visa in 1986. The first international credit card was issued to a restricted number of customers by Andhra Bank in 1987 through the Visa program, after getting special permission from the Reserve Bank of India.

The credit cards are shape and size, as specified by the ISO 7810 standard. It is generally of plastic quality. It is also sometimes known as Plastic Money

FAQs

What does Grace / Interest Free Period Mean? What is implied in Cash Advance? How to make payments from Dubai to the already existing Citibank cards in India. How to avail of the statements to know the current bank balance of each card. Is online facility available?

Can I use my Global credit card on the net to pay some US company for web hosting charges? or I have to obtain permission from RBI. If any permissions are needed, How to get them?

How will I know if my Credit Card application has got approved? How will I know if my Credit Card application has got declined?

What to do if Credit Card is Lost or Stolen?

What does Grace / Interest Free Period Mean? The number of days given to you on your card before the card issuer starts charging you interest is called grace period. Generally the grace period is the number of days between the statement date and the due date of payment. Grace periods on credit cards are usually 2-3 weeks. However, there is likely to be no grace for balances carried forward from previous month and fresh purchases thereafter if any.

What is implied in Cash Advance? Cash advances on Credit Cards are convenient and the easiest facility to utilise. Manority of the banks in India charge a transaction fee as well as service fee / interest charge on cash advances. This service fee accrues from the date of the advance (as soon as you receive the cash) to the date of full payment. The charges varies from banks to banks. Cash advance facility is a part of the overall credit limit assigned to a cardholder. The limit is of cash acvance is always lesser than the borrowing limit or the credit limit.

How to make payments from Dubai to the already existing Citibank cards in India. How to avail of the statements to know the current bank balance of each card. Is online facility available? According to RBI " Resident Indians may be nominated as additional/add-on card holders by non-residents. However, the non-residents from their foreign currency funds should meet claims arising out of use of such cards by residents only.In cases where the cards have been arranged by NRIs these liabilities may be met out of NRE/FCNR accounts in India also. Under no circumstances will any remittance be allowed by residents from India to settle their claims against use of such additional/add-on cards". NRIs get rupee credit cards which are valid for use in India, Nepal and Bhutan.

Can I use my Global credit card on the net to pay some US company for web hosting charges? or I have to obtain permission from RBI. If any permissions are needed, How to get them? The RBI's exchange control manual mentions that 'International Credit Cards' can be used for "Registration of Internet domain name, hosting charges for website/home pages overseas and access fees for Internet related services through website". Before using your Global Credit Card on the net for web hosting charges, you further clarify the aforesaid issue or seek permission from your card issuer. Even get in touch with the card issuing bank or organisation directly for such clarifications.

How will I know if my Credit Card application has got approved? It is suggested to give your mobile number and e-mail id at the time of application for the Credit Card. This will help the issuer to intimate you either through SMS or through e-mail with the approved status of your application. You will also receive a letter by post informing you of the Card approval. You should be receiving your Card around the same time as the approval letter.

How will I know if my Credit Card application has got declined? You will receive a letter from the Bank even if your application for Card is not approved. If in case there is a further information of missing documents, you will be sent a letter asking for the same. Then you need to fulfil with the documents to the specified address.

What to do if Credit Card is Lost or Stolen? Report the loss or theft of your credit cards to the card issuers to the earliest through their 24hour helpline service. Follow up your phone calls with a letter. Include your account number, when you noticed your card was missing, and the date you first reported the loss.

After doing these, check your homeowner's insurance policy to see if it covers your liability for card thefts. If yes its fine otherwise change your policy to include this protection.

Before the intimation, different banks have their own limit of loss bearing by the card holder.

After the intimation, it is the bank who bears the loss if any amount is spent.

Plastic Money All about Debit Cards Debit cards, also known as check cards look like credit cards or ATM cards (automated teller machine card). It operate like cash or a personal check. Debit cards are different from credit cards. Credit card is a way to "pay later," whereas debit card is a way to "pay now." When we use a debit card, our money is quickly deducted from the bank account.

Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations, and restaurants. Its an alternative to carrying a checkbook or cash.

With debit card, we use our own money and not the issuer's money.

In India almost all the banks issue debit card to its account holders.

Features of Debit Card

Obtaining a debit card is often easier than obtaining a credit card. Using a debit card instead of writing checks 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 checkbook. Using a debit card means you no longer have to stock up on traveler's checks or cash when you travel.

Debit cards may be more readily accepted by merchants than checks, especially in other states or countries wherever your card brand is accepted.

The debit card is a quick, "pay now" product, giving you no grace period. Using a debit card may mean you have less protection than with a credit card purchase for items which are never delivered, are defective, or were misrepresented. But, as with

credit cards, you may dispute unauthorized charges or other mistakes within 60 days. You should contact the card issuer if a problem cannot be resolved with the merchant.

Returning goods or canceling services purchased with a debit card is treated as if the purchase were made with cash or a check.

Tips for responsible use of Debit Card

If your card is lost or stolen, report the loss immediately to your financial institution. If you suspect your card is being fraudulently used, report it immediately to your financial institution.

Hold on to your receipts from your debit card transactions. A thief may get your name and debit card number from a receipt and order goods by mail or over the telephone. Your card does not have to be missing in order for it to be misused.

If you have a PIN number, memorize it. Do not keep your PIN number with your card. Also, don't choose a PIN number that a smart thief could figure out, such as your phone number or birthday.

Never give your PIN number to anyone. Keep your PIN private. Always know how much money you have available in your account. Don't forget that your debit card may allow you to access money that you have set aside to cover a check which has not cleared your bank yet.

Keep your receipts in one place -- for easy retrieval and better oversight of your bank account.

Plastic money: Advantages & Disadvantages

It was the fact that thirty years ago, if you had a credit card and many people didnt you probably had only one, but now days the use of Plastic money has become so common that according to the stats today, the typical American adult has four or five cards and uses them in one out of every four transactions. So with this rapid increase in the usage of plastic money as compare to paper money, there involves various pros and cons with them. Let us study some of them. Advantages of Credit cards or Plastic money:

Easy to handle- it prevents to carry out heavy wallets, hence, reducing the chances of theft. Easy access to money- in 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 availability- Now a days 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.

MIles of Cards- Most credit cards companies offer miles on every purchase. This indicates that by using the card for purchasing, there are points added which get aggregated in the users 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.

Disadvantages of Credit cards or Plastic money:

Just a plastic- Besides all the advantages, Credit card is just a plastic which can get either lost or stolen. This may results in crimes in which extensive purchases can be made under the name of the account holder. These cases might get resolved in the benefit of the applicant, but there is still an identity theft which is a very serious issue.

Shops using other vendors- There are numerous shops which accept credit cards of a specific company only. In this situation the cash is the only way of payment for those who use a credit card of another company.

Less Global availability- there are many cases where various companies do not permit their cards to be used in areas where they have a regional dispute with.

Worn out Magnetic strip- The magnetic strip of a credit card can get worn out due to massive use. If such a condition happens while travelling, and this is the only way of cash that the consumer has, then he or she has to wait till the time they receive a new card, which can take a minimum of 48 hrs.

PLASTIC CARD VULNERABILITIES In one survey conducted in the United States in 1993, a group of 14 credit cardfraudsters admitted to employing over 100 different ways of using credit cards toobtain funds dishonestly.

Alteration and Counterfeiting The first area of vulnerability lies within the card itself. Ever since plasticcards were introduced, attempts have been made to alter or counterfeit them inorder to obtain funds illegally.Cards used to perpetrate fraud are generally lost or stolen cards which could be used intact or altered by re-embossing and re-encoding, or counterfeit cardsthat are entirely new. In order to counterfeit a card it is necessary to know thedetails of a current valid cardholder -- hence the desire of offenders to obtainlegitimate credit card details from sources such as the Internet (a method which is being used increasingly by offenders in Australia). Blank, white plastic cards arethen embossed with stolen numbers, the magnetic stripe is encoded with matchingnumbers, and the signature panel on the card installed. Identifying logos andcolour printing are added to mimic a real card. Sometimes information on thecard's magnetic strip is obtained is "card skimming". This is when a legitimatecard is obtained for a few seconds to enable it to be passed over a magnetic tapereader so that a counterfeit copy may be

made.Another technique is "buffering", which involves modifying the informationstore d in the magnetic strip of the card or obtaining security codes electronically.Although magnetic stripe cards are relatively easy to forge, smart cards are moredifficult to counterfeit, but there are claims that they are not absolutely tamper- proof.

PIN Fraud Other vulnerabilities arise out of the way that the individual making use of the card authenticates his or her identity when using the card. This is mainly a problem with debit cards used in electronic card reading machines, which can verify the identity of cardholders by requiring them to enter a PIN or password. Inorder to enhance the security of the system, the user's PIN is encrypted before it travels through the network, thus making it difficult for the PIN to be discovered by hacking into the network. A m o r e s u b s t a n t i a l s e c u r i t y r i s k a r i s e s f r o m t h e m a n n e r i n w h i c h t h e P I N i s communicated to the cardholder, recorded and remembered by the cardholder, induced by the cardholder at a terminal during a transaction. Although card holder sare clearly warned of the dangers associated with disclosing their PIN, writing it on the card, or keeping it in the same place as the card, a considerable proportion of cardholders refuse to heed such advice, thereby placing them at risk of loss for which they will be personally responsible. Hacking Credit card information is illegally obtained either by hacking into databases of account numbers which are held by Internet service providers, or by intercepting account details which travel in unencrypted form. In Sydney, on 27 March 1998,for example, a computer hacker was sentenced to 18 months imprisonment for having illegally obtained access to an Internet Service Providers database of credit card holders and published details relating to 1,225 cardholders resulting inthe business losing more than $2 million .T h e r e a r e a l s o m a n y o n l i n e s c a m s perpetrated by

customers who make use of false credit card details, as well as merchants who fail to honor online agreements. ATMs and EFTPOS terminals have also been targeted by offenders who have done everything from stealing entire ATMs laden with cash, using stolen cardsa n d P I N s t o m a k e u n a u t h o r i z e d c a s h w i t h d r a w a l s , t o i n t e r f e r i n g w i t h b a n k computers in order for sums in excess of account credit balances to be withdrawn. In the United States it has been estimated that 40 per cent of ATMs have been subjected to fraud.

FUTURE OF PLASTIC MONEY IN INDIA.

Starting from 'Diners Club', some 50 years ago, the card industry has beengrowing with a rapid pace world over and so has been the growth in the

domesticc a r d i n d u s t r y . W i t h o n l y t w o p l a ye r s i n d o m e s t i c c a r d i n d u s t r y , H S B C a n d Citibank in the early 80s, the number swelled to over 25 in the year 2001. Creditcards in India, made their debut in 1981, and are on the verge of an unprecedented boom. Between 1987 and 2001, the market has virtually grown to over 4 millioncards with over 2530% of compounded annual growth in new cardholders base. Its not that only the card numbers have increased, but even the types of cards on offer have seen a surge. Today the domestic card industry is flooded withdifferent types of cards ranging from gold, silver, global, co-branded credit cards,smart to secure, the list is endless. Foreign banks have shouldered the major responsibility of increasing the card base and adding value-added services to thecard products in the past. This is also evident from the fact that the market shareof these foreign banks is estimated to be well over 70%. But the scenario haschanged dramatically in the last of couple of years with the entry of State Bank of India (SBI), a domestic major in the banking sector. More and more nationalized b a n k s a n d p r i v a t e s e c t o r b a n k s l i k e I C I C I a n d H D F C B a n k a r e a g g r e s s i v e l y launching credit card with value added features.There is immense growth potential in the domestic card industry. A glanceat the Indian population reveals that India's middle/upper middle class

(targets e g m e n t ) r e p r e s e n t s a p o p u l a t i o n o f o v e r 1 0 m . T h e r e a r e o n l y 2 t o 3 m cardholders, each possessing an average of 2 cards. This is a very low figure givenIndia's huge middle to upper class population. There is no doubt that the domesticc a r d i n d u s t r y h a s t o ye t t o m a t u r e a n d o f f e r s s i g n i f i c a n t l o n g - t e r m g r o w t h potential.Given the lack of maturity of the domestic card industry, its growth willdepend upon building core retail business, with more sophisticated products. Inthe expansion of domestic credit card market, the existing foreign players, SBI,other nationalized banks and the new domestic private sector banks are expectedto play important role with complementary

What Does Credit Card Mean?

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. [1] The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual's credit rating.

How credit cards work? Credit cards are issued by a credit card issuer, such as a bank or credit union, after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. Merchants often advertise which cards they accept by displaying acceptance marks generally derived from logos or may communicate this orally, as in "Credit cards are fine" (implicitly meaning "major brands"), "We take (brands X, Y, and Z)", or "We don't take credit cards". When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). Also, many merchants

now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a card not present transaction (CNP). Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland, and is implemented as an EMV card. For card not present transactions where the card is not shown (e.g., e-commerce, mail order, and telephone sales), merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card, date of expiry, and billing address. Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see 15 U.S.C. 1643, which limits cardholder liability for unauthorized use of a credit card to $50, and the Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit issuer charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). In addition, if the credit card user fails to make at least the minimum payment by the due date, the issuer may impose a "late fee" and/or other penalties on the user. To help mitigate this, some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding such penalties altogether as long as the cardholder has sufficient funds.

Features

As well as convenient, accessible credit, credit cards offer consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks (such as rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card cash back).

Some countries, such as the United States, the United Kingdom, and France, limit the amount for which a consumer can be held liable due to fraudulent transactions as a result of a consumer's credit card being lost or stolen.

Benefits to customers The main benefit to each customer is convenience. Compared to debit cards and cherubs, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the

maximum credit line for the card. Credit cards also provide more fraud protection than debit cards. In the UK for example, the bank is jointly liable with the merchant for purchases of defective products over 100 Many credit cards offer rewards and benefits packages, such as offering enhanced product warranties at no cost, free loss/damage coverage on new purchases, and points which may be redeemed for cash, products, or airline tickets.

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 50 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met. Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

Parties involved

Cardholder: The holder of the card used to make a purchase; the consumer. Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case. Cards issued by banks to cardholders in a different country are known as offshore credit cards.

Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.

Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.

Independent sales organization: Resellers (to merchants) of the services of the acquiring bank.

Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.

Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.

Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks.

Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities, charities, professional organizations, and major retailers.

Security

problems

and

solutions

This is the age of plastic money. It's not uncommon for the typical consumer in the western world to go weeks at a time without ever handling a coin or bill. Everything we need is available to us with the simple "swik-swik' sound of a credit card sliding through a reader. Supplies for the office, flowers for the wife, meals and drinks out, and an endless supply of useful products available for sale through the Internet can all be bought with naught a cent to be seen.

The

big

question

is:

"How

safe

is

all

this

plastic?"

Cash has its obvious benefits. When you buy a sandwich for $2.95 and you hand the cashier a $5 bill, you know you haven't been ripped off when he hands you $2.05 right then and there. But when you and your card to a waitress at the local chain restaurant, how do you know she hasn't taken a moment to sneak into the office and copy your card number and signature? You don't, and the implications of this question are having a serious effect on credit card companies and the merchants they do business with.

In response to these issues, the big credit card companies have developed more secure ways to do business. MasterCard International and Visa got together and came up with a set of guidelines called the Payment Card Industry Data Security Standards. This is a list of 12 guidelines that imposes strict regulations on all transactions taking place between the card company and the merchants it trades with. While these standards have been in place since 2005, merchants are taking some time to catch up to them. However, in the past year there has been marked improvement, and both credit card companies have stepped up their tactics to the point where merchants may be experiencing losses of service if they do not fall in line soon. (You can read the 12 guidelines and the details of this plan on the homepages of Visa or MasterCard.)

Discover Card has responded to the pressure for more secure methods with it's own program. They call it the Secure Online Account Number program. Anytime you use your Discover card to purchase a product online, their program will generate a random account number to "stand-in" for the one on your card. You then send this number to the merchant in place of the real number. When the number is verified with Discover Card, it will link to your account and the purchase is charged to you. The benefit of this system is that the merchant never sees your true account number. Only you and Discover Card have access to it. Once the transaction is completed the randomly generated account number is no longer valid, so any attempts to use it result in denial.

A security method that online merchants are employing is the requirement of a shipping address that matches the billing address on your credit card. This is to guard against thieves who may steal your account number but will have no access to your billing address. This way, if your card is stolen, it can only be used to make purchases that will ship to your address. Any prospective thieves will have to pick up their orders from your mailbox, not something the average anonymity-seeking thief will want to do.

There are also third party systems in place for ensuring online credit card security. VeriSign's SSL (Secure Sockets Layer) technology is the leader in the field. VeriSign will give each merchant it conducts business with 2 "keys" (like coding alphabets), a public key and a private key. The public key is used to encrypt information, and the private key is used to decipher it.

VeriSign's technology now offers this encryption in 128- to 256-bit encryption, which provides a nearly un-guessable number of possible combinations of codes.

Fraud

In relative numbers the values lost in bank card fraud are minor, calculated in 2006 at 7 cents per 100 dollars worth of transactions (7 basis points).[18] In 2004, in the UK, the cost of fraud was over 500 million.[19] When a car is stolen, or an unauthorized duplicate made, most card issuers will refund some or all of the charges that the customer has received for things they did not buy. These refunds will, in some cases, be at the expense of the merchant, especially in mail order cases where the merchant cannot claim sight of the card. In several countries, merchants will lose the money if no ID card was asked for, therefore merchants usually require ID card in these countries. Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill. Most banking services have their own credit card services that handle fraud cases and monitor for any possible attempt at fraud. Employees that are specialized in doing fraud monitoring and investigation are often placed in Risk Management, Fraud and Authorization, or Cards and Unsecured Business. Fraud monitoring emphasizes minimizing fraud losses while making an attempt to track down those responsible and contain the situation. Credit card fraud is a major white collar crime that has been around for many decades, even with the advent of the chip based card

(EMV) that was put into practice in some countries to prevent cases such as these. Even with the implementation of such measures, credit card fraud continues to be a problem.

Promotion

Promotional purchase is any purchase on which separate terms and conditions are set on each individual transaction unlike a standard purchase where the terms are set on the cardholders account record and their pricing strategy. All promotional purchases that post to a particular account will be carrying its own balance called as Promotional Balance.

Credit card numbering The numbers found on credit cards have a certain amount of internal structure, and share a common numbering scheme. The card number's prefix, called the Bank Identification Number, is the sequence of digits at the beginning of the number that determine the bank to which a credit card number belongs. This is the first six digits for MasterCard and Visa cards. The next nine digits are the individual account number, and the final digit is a validity check code. In addition to the main credit card number, credit cards also carry issue and expiration dates (given to the nearest month), as well as extra codes such as issue numbers and security codes. Not all credit cards have the same sets of extra codes nor do they use the same number of digits.

Design Credit cards are designed with complex security features to prevent the possibility of fraud. These features involve the card's account number, its signature panel, and its magnetic stripe. The card's unique account number is the key piece of information needed to conduct a financial transaction and must be carefully protected. To prevent someone from using a wrong account number, or from making up a phony number, companies rely on the laws of statistics for protection. By using long account numbers they make it unlikely that a number can be faked. For example, the Visa card has 13 digits, American Express has 15, Diners Club 14, and MasterCard has 20. Mathematically, nine digits would provide one billion unique account numbers (000000000, 000000001, 0000000002, and so forth up to 999999999) which would be enough for all the customers of a given company. (The largest companies, Visa and MasterCard, only have about 65 million customers.) If only 65 million numbers are assigned out of a possible 10 trillion possibilities, it is unlikely that anyone will be able to mistakenly use another account number. If an incorrect account number is mistakenly entered by a store clerk, it will almost certainly not be accepted. This statistical security gives companies confidence that someone is not making up a number when conducting business over the phone. Of course, this security measure does not help if someone obtains a real number and uses it fraudulently. Another security design feature involves the signature panel on the back of the card. The signature is intended to document the owner's handwriting so a forged signature on a receipt can be detected. To prevent criminals from erasing the back panel of a stolen car and putting on their own signature, the panel is printed with a fingerprint design that is difficult to duplicate and that will come off when the original signature is erased. If the signature is erased, this design will disappear too leaving a white spot, which instantly indicates the card has been tampered with. Some card manufacturers imprint the word VOID beneath this panel, which is revealed upon erasure. The magnetic stripe on the back of the card is a third security feature. The stripe is an area coated with particles of iron oxide that can be encoded with binary information, which identifies the card as authentic. It is difficult to determine exactly what information is coded on the strip because for security reasons companies do not wish to discuss this. However, it is likely that the

card's expiration date is one fact recorded on the strip because automatic teller machines (ATMs) will retain cards that have expired. It is unlikely that information like credit limit, address, phone number, employer, is recorded on the stripe because banks do not reissue cards when this type of information changes. Finally, some cards feature special features that make them hard to duplicate, such as complicated holograms. The Process The manufacturing process consists of multiple steps: first the plastic core and laminate materials are compounded and cast into sheet form; then the core is the printed with appropriate information; next the laminates are applied to the core; and finally the assembled sheet is cut into individual cards. Plastic compounding and molding

Manufacturing

1 The plastic for the core sheet is made by melting and mixing polyvinyl chloride acetate with other additives. The blended components are transferred to an extrusion molding apparatus, which forces the molten plastic through a small flat orifice known as a die. As the sheet exits the die, it goes through a series of three rollers stacked on top of each other that pull the sheet along. These rollers keep the sheet flat and maintain

As the sheet exits the die, it goes through a series of three rollers stacked on top of each other that pull the sheet along. These rollers keep the sheet flat and maintain the proper thickness. The sheets may then pass through additional cooling units before being cut into separate sheets. The proper thickness. The sheets may then pass through additional cooling units before being cut into separate sheets by saws, shears, or hot wires. The cut sheets enter a sheet stacker that stacks them into place and stores them for subsequent operations.

2 The laminate films used to coat the core stock are made by a similar extrusion process. These thinner films may be made with a slot cast die process in which a molten plastic film is spread on a casting roller. The roller determines the film's thickness and width. Upon cooling the films are stored on rolls until ready for use.

Printing

3 The plastic core of the card is printed with text and graphics. This is done using a variety of common silk screen processes. In addition, one of the laminate films may also undergo subsequent operations where it is imprinted with magnetic ink. Alternately, the magnetic stripe may be added by a hot stamping method. The magnetic heads used to code and decode the iron oxide particles can only operate if the magnetic medium is close to the surface of the card, so the metal particles must be placed on top of the laminating layer. Upon completion of the printing process, the core is ready to be laminated.

Lamination

4 Lamination helps protect the finish of the card and increases its strength. In this process, sheets of core stock are fed through a system of rollers. Rolls of laminate stock are located above and below the core stock. These rolls feed the laminate into the vacuum shoes along with the core stock. The vacuum holds the three pieces of plastic together while they travel to a tacking station. At the tacking station a pair of quartz infrared heat lamps warm the upper and lower plastic films. These lamps are backed with reflectors to focus the radiant energy onto a narrow area of the films, which optimizes a smooth bonding of the film to the core stock. The laminate films are then fully bonded to the core stock by pressing with metal plates, which are heated to 266 F (130 C) and applied with a pressure of 166 psi/sq inch. This lamination process may take up to 3 minutes.

Die cutting and embossing

5 After lamination has been completed, the finished assembly is cut and completed by die cutting methods. Each assembly yields a sheet, which is cut into 63 credit cards. This is achieved by first cutting the assembly longitudinally to form seven elongated sections. Each of the seven sections is then cut and trimmed to form nine credit cards. In subsequent operations, the card is embossed with account numbers. The finished cards are then prepared for shipping, usually by attaching the card to a paper letter with adhesive.

Quality Control Key quality issues are associated with the compounding of plastic and colour matching of the inks. The American National Standards Institute has a standard for plastic raw materials (ANSI specification x4.16-1973). As with any compounding procedure, ingredients must be properly weighed and mixed and blended under the appropriate temperature and sheer conditions. Similarly, the molding process must be monitored to avoid defects, which could cause the cards to crack or break. The final quality check is to make sure the correct numbers are stamped on the cards during the embossing process. Transaction steps

Authorization: The cardholder pays for the purchase and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant. An authorization will generate an approval code, which the merchant stores with the transaction.

Batching: Authorized transactions are stored in "batches", which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will stay valid for a period determined by the issuer, after which the held amount will be returned to the cardholder's available credit (see authorization hold). Some transactions may be submitted in the batch without prior authorizations; these are either transactions falling under the merchant's floor limit or ones where the authorization was unsuccessful but the merchant still attempts to force the transaction through. (Such may be the case when the cardholder is not present but owes the merchant additional money, such as extending a hotel stay or car rental.)

Clearing and Settlement: The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays the acquirer for the transaction. Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totalling the funds in the batch minus either the "discount rate," "midqualified rate", or "non-qualified rate" which are tiers of fees the merchant pays the acquirer for processing the transactions.

Chargebacks: A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargebacks are typically initiated by the cardholder. In the event of a chargeback, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. Credit card processing occurs every second of every minute of every hour of every day. Can you recall a time when we did not have credit cards and werent applying them all the time? They are so accessible that it is almost impossible to live without one; or three. All you have to do is leap online, find something you want, enter some details and press a button. It is that simplified and we do not even stop to think about how it is done, or how hiring someone to do this process for us could improve our business and take away some of the tension and worry about money. It is only too common that while something is as easy as making a payment via credit card that we genuinely do not stop to think about how it is done and what happens when something goes incorrect, who is liable and what will happen to our money and product? That is why we ought let the professionals worry about it while we sit back and unwind.

Basic Background About Credit Card Numbers and How They Work

Rather than ask you to take out a credit card out of your wallet to examine it, I've provided a picture of a prototypical card - in this case, it's a Visa credit card. While different card types offer different lengths of numerical digits, most major credit card issuers popular in the United States have 16 primary numbers on the front face of the card. Visa, MasterCard, and Discover cards all have 16 digits. American Express is the only major credit card issuer in the U.S. with one less number - at 15 digits. Regardless of the length of numbers, their numerical sequencing is still guided by the same Luhn validation formula, the mathematical check sum equation that makes all valid credit card numbers error free. As you can see from the picture of the Visa card above, the very first 6 credit card number sequence is known as the issuer identification number (IIN) or bank identification number (BIN). These first 6 numerical digits denote the credit card network and the banking institution the card is a member of. The issuer identifier number also incorporates the card type's special identifying numerical prefix.

All typical 16 digits Visa account credit card numbers start with a prefix of 4. All 16 digits MasterCard account numbers start with a prefix of 5. All 16 digits Discover account numbers start with a prefix of 6011. All 15 digits American Express credit card numbers start with a prefix of 37.

There is less randomization during this initial set of 6 digits as the numbers are determined purely by the card issuing source. Validation systems that want to go the extra mile in verifying authenticity oftentimes scan this first numerical sequence to match the known bank and issuing location of the card with the provided customer billing address for further validation accuracy. The lone digit at the very right end of the complete 15 or 16 digit credit card number sequence is known as the "check digit", which often is the final number that is computer generated to satisfy the mathematical formulations of the Lehn check sum process. Meanwhile, in between the first 6 digits and the last single check digit is the actual personalized account number - the 8 or 9 digit sequence given by the card issuer. For more basic background information about credit card numbers, check out this credit card features brochure for more useful knowledge about the embossed and printed information found on your typical plastic credit card.

The Future

Future credit card manufacturing processes are likely to evolve in three key areas. First, continued improvements in plastic chemistry and molding technology are likely to allow cards to be made increasingly cheaper and easier. Second, breakthroughs in digital technology are likely to improve the way credit cards are kept secure with advanced magnetic coding. One recent advance is the use of a new generation of magnetic stripes which are harder to duplicate. This improvement combats the trend toward duplicating card information and copying it to phony cards. Perhaps even more importantly, new generations of credit cards will carry integrated computer chips, containing a variety of useful information. For instance, these future cards will be able to operate a frequent flyer program on the same card as a debit or credit account. Other services will allow users to participate in frequency or loyalty programs with merchants, including storing hotel reservation preferences. Financial institutions may develop partnerships with local mass transit systems so public transit could be paid for with these "smart" cards in various cities throughout the world. Third, marketing initiatives resulting from these advances in card technology are likely to make credit cards even more pervasive in society. For example, American Express has just launched a new Blue card that is expected to reach new levels of worldwide acceptance.

Credit Card Companies Love College Students

College students are a credit card companys prime prospect. (If you havent seen the documentary Maxed Out, rent it before you step foot on campus.) They like to get you while youre young for a couple of reasons. First, they have a strong hunch that your parents will bail you out if you run up your credit card bill. Second, you have a long credit life ahead of you. That means lots of years of interest payments for the credit card companies. Credit card companies are so hungry for college students, they approve applications even then students don't meet the criteria. For example, a college student can get a credit card with no job, no verifiable income, no credit history, and even without a co-signer.

Banks are getting more aggressive and creative in their efforts to pitch credit cards to college students by hawking cards near college campuses and striking exclusive partnerships with college alumni associations, according to a growing body of research. Banks have also increasingly forged credit card partnerships with colleges. No national numbers are available on these deals. But by 2006, each of the largest 10 colleges and universities through their alumni or athletic associations had partnered with a bank to issue co-branded credit cards to alumni and students, earning the colleges up to millions in annual fees, the paper found. Banks often receive student information and exclusive marketing access at campus events. Colleges defend these partnerships as a way to offset severe cuts in state funding. But consumer groups worry that these alliances are encouraging students to sign up for products with high interest rates or fees, making it easier to get mired in debt. Most students who responded to US PIRG's latest survey 1,584 students from 40 schools were randomly surveyed on campus from October through February favored some form of card reform on campuses. Specifically, 38% of students supported a ban on schools or student groups receiving money from banks in exchange for the right to market credit cards on campus, while 67% opposed schools selling or sharing student information with credit card companies. advertising. Here are five tips to assist you reach your possible consumers:

LOWES PROJECT OVERVIEW

The Lowes Project Card is offered by GEMB. This card offers an unprecedented 0% APR for every new project window opened. During this time, interest does not accrue at all. You make monthly payments and if the project isnt paid off in 6 months then the interest starts to apply. In order to open a project window, you have to spend $1,000 at Lowes. Once your project window is open, you cannot open another one for 6 months. You can, after the six months are up, start a new project window at 0% APR while making payments on an existing project. The interest rates for the Lowes Project Card are interesting. Rates start at 7.99% for your first project window. If you pay it off before opening another project window, then your new interest rate will still be 7.99%. If, however, you open a second project window while still paying on your first project window, then your second project will have an interest rate of 9.99% after the 6 months are up. The

highest interest rate is 17.99% and that is if you have 4 or more project windows open at a single time