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December 2004
CRITICAL RIVIEW OF CREDIT CARD TRANSACTION SYSTEM
by
December 2004
Internship
by
December 2004
_______________________
Mr. S. J. Ahmed
Lecturer
School of Communication
Independent University, Bangladesh
Abstract:
During the last decades the world changed greatly because of rapid exchange of
information. Through telecommunication and network the world became a smaller place
as people can send or receive information from one end to the other within a second.
The main purpose of exchanging information is trading and commerce. In a nut shell the
generated sales worth US $12.2 billion in 2003. This statistics indicates the vast
As the security of electronic transaction was ensured the usage of electronic card
increased remarkably. Electronic fund transfer guaranteed easy and reliable transfer of
One of the world's leading electronic payment brands is Visa. There are more than one
billion Visa cards in circulation, which are accepted in 150 countries throughout the
world.
Bangladesh is one of the countries where electronic payment system is available. Master
Card and Visa are the two leading brands existing in our country. For instance financial
institution such as Premier Bank issues Visa credit card. Now a days the number of credit
card holders are increasing as different kinds of financial institutions and shopping malls
in the major cities are providing the facility of paying money through credit cards. The
safety and ease of carrying credit card is the main reason behind using it.
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ACKNOWLEDGMENTS
This is my humble attempt to present gratitude in preparing this report. I have truly
drawn upon my own experience as a student of computer science. This project would not
have been possible without the dedicate ions and contributions of a number of
individuals.
First and foremost, I would like to express my gratitude to Mr. S. J. Ahmed for agreeing
to supervise me during the internship project. His eagerness helped me in every step of
Then I want to show my gratefulness to the staffs of Premier Bank Limited. Specially to
Mr. Zahid and Mr. Shamsul Huda for their continuous and cordial support during my
internship.Special thanks to Dr. Indrani Haque for sparing her valuable time to read my
opportunities to work and gain experience of the professional field and writing formal
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TABLE OF CONTENT
Chapters Page
INTRODUCTION………………………………………………………………. …1
Origin of the report…………………………………………………………………2
Objective of the report………………………………………………………………3
Limitations…………………………………………………………………………..3
COMPANY PROFILE……………………………………………………………...4
The company overview……………………………………………………………..4
Working platform of premier bank………………………………………………….5
Mission of the bank…………………………………………………………………6
Goals……………………………………………………………………..………….6
Objective ………………………………………………………………………........7
METHODOLOGY ………………………………………………………………….8
Interview …………………………………………………………………………….8
Questionnaires ……………………………………………………………………....9
Observation ………………………………………………………………………....9
System design ……………………………………………………………………….9
SYSTEM ANALYSIS……………………………………………………………...27
Transaction processing system through POS………………………………………32
Example of transaction processing system…………………………………………33
Clearance part of the TPS…………………………………………………………..33
CONCLUSION…………………………………………………………………….35
REFERENCES……………………………………………………………………..37
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LIST OF FIGURES
Figures Page
1. List of DFD symbols….……………………………………………….. 10
2. Application collection procedure……………………………………… 23
3. Rich picture of card production and delivery…………………………... 24
4. Organogram of credit card division …………………………………… 25
5. DFD of transaction processing system (Base I: context level)..………...27
6. DFD of transaction processing system (Base I: system level)…………..28
7. DFD of transaction processing system (Base II: context level) ………...29
8. DFD of transaction processing system (Base II: system level) ………... 30
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1. INTRODUCTION
Overview of Internship:
graduating students in her course curriculum. The curriculum requires every student
oneself confident enough to enter into service life and start building career. As the
outside world is very much competitive for anyone after graduation, IUB provides
This gives the student great opportunity in the service world and also to get exposure
to various diversifications of the service world. Intern students are supervised under a
particular faculty member throughout their Internship stage. Here the student gets the
chance to apply his theoretical knowledge and practical skill that he has gained in the
entire under graduation student life. They are responsible to report weekly or
fortnightly to his/her respective Supervisor to get his/her assistance. And the project
for at least 3 months. After that the student submits a report on his project work,
which reflects his knowledge gained in the entire B. Sc. course. That is the main
purpose of this report to give an outline of the outcome of internship during the entire
Purpose of Internship
In our study period mainly we gain theoretical knowledge but now a day, in the job
priority a vital par of college education. Today students with career related work job
experience is getting the best interviews and job offers. The major targets to offer
To help students enhance their creativity and efficiency in dealing with projects
To increase the confidence level of IUB students, which would help them work
after graduation.
This report has been prepared as a requirement of the internship program. The report
was based upon the organization Premier Bank Limited. My organization supervisor
was Mr. Md. Abdul Wali, Senior Vice President and Head of Credit Card Division
Communication, Independent University. The topic, which was decided for doing the
report, was duly approved by my institute supervisor. The report will give the idea
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about credit card processing system and transaction processing system in premier
Bank.
This literature is written on the Credit Card Division in Premier Bank Limited in
Bangladesh. Apart from the overall organization part of Premier Bank Limited (PBL),
the project part is divided into two phases. On the first phase, it is focused about the
credit card policy of the premier bank. In that phase it is described about the organ
gram of Credit card division. From the collection of application, data capture, card
delivery etc described in this part. On the next phase, it is focused about the
Transaction processing system on credit card system. That means how the transaction
is done through POS machine or ATM that is tried to be described in this part.
1.3 Limitations:
database.
short time. So that’s why there is some lacking regarding some topics of the
project.
• Sometime the officials of the organization not assist me properly because they
Act, 1994 as a public Limited Company. The Bank stared its operation as on 26th
October 1999.They are also working actively to set tip new Braches in different prime
Head office:
Banani Dhaka-1213.
Bangladesh.
1 branch in Narayangonj
2 branches in Chittagong
1 branch in Khulna
1 branch in Sylhet
1 branch in Barishal
1 branch in Brahmanbaria
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2.2 Working Platform of Premier Bank
Compaq PCs, IBM Servers and HP Printers. They use standard monitors as the
screen.
The software used by the Premier Bank can be categorized into three broad
categories:
System software: The PCs are equipped with the Microsoft’s Windows 2000
professional operating system. All PCs are connected with a central server
Database software: They have their own database software named “Prime”.
Reporting tools: The reporting tool used by the Premier Bank is Seagate
Crystal Report.
All computers are attached with the network. A central server controls all security
information and authentication information of the users of the PCs, as well as, the
databases is kept in different servers. They use Lotus Notes for their internal mailing
system.
The Premier Bank has 20 branches all over the Bangladesh. These Branches are
mainly situated in divisional city. The Board consists of 13 (thirteen) Directors. The
members of the Board of Directors of the Bank hold very respectable positions in the
society. They are from highly successful group of business and Industries in
Bangladesh. Out of 13 members one is from Taiwan. Each member of the Board of
shareholders investments.
2.4 Goals:
• To grab the maximum relative market share in the industry to compete with
• To achieve highest growth rate in the industry in terms of Asset, Liability and
Profit.
The objective of this project was to analysis the transaction processing through credit
card. Some specific formalized steps were followed for this analysis.
efficiency and control of my project. I have used Gantt chart for my project
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
week week week week week week week week week week week week
Observation
System analysis
tools and documentation aids, which help the system developers in their efforts to
System design:
Process Model
3.1. Interview:
Interviews are formal meetings where the Analyst can obtain information about the
operations of the present systems and the requirements for the new system. This is the
most common and best method for getting qualitative and subjective information.
• To gather facts about the procedures and decisions taking place in the
organization.
• To check the analyst understands of system operations with users of all levels.
Following are the personnel who were interviewed for the requirement analysis:
9
3.2 Questionnaire:
The use of questionnaire allows analysts to collect information about various aspects
questions were used to find the answers about their requirements. Most of the time
Close-ended questions were used. Because Closed -ended questions are unambiguous
and allows the respondent to give a definite answer. I followed the close ended
question.
A sample questionnaire is given in the appendix that has been used in Premier Bank
3.3 Observation:
Study and proper observation of the system is necessary. After gathering all the
over the existing system by observation method. the observation method for
As the documents represent formal information flow in the organization of the using
Process Model:
A graphical tool used to describe and analyze the movement of data through a system-
manual or automated. The diagram reveals the data flows into and out of the process,
DFD is prepared during the system analysis stage to portray flows and processes of
One main process which is encompassed within a single circle and more then one
entity are here. Entities are outside the scoop of the process being documented.
Neither of the entities is a source of data. Also no data stores appear in the context
Definition:
systems. Electronic commerce may also involve the electronic transfer of information
History:
Historical development the meaning of the term electronic commerce has changed
Today it includes activities more precisely termed "Web commerce" -- the purchase
of goods and services over the World Wide Web via secure servers (note HTTPS, a
special server protocol which encrypts confidential ordering data for customer
protection) with e-shopping carts and with electronic pay services, like credit card pay
authorizations.
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innovation as companies look for ways to serve customers faster and at lower cost.
Electronic payment systems and e-commerce are intricately linked given that on-
line consumers must pay for products and services. Clearly, payment is an Integral
part of the mercantile process and prompt payment (or account settlement) is
banks and nonbanks are not balanced because of payment delay or, even worse
default, then the entire business chain is disrupted. Hence an Important aspect of e-
commerce is prompt and secure payment, clearing, and settlement of credit or debit
claims.
Electronic payment systems are proliferating in banking, retail, health care, on-line
markets, and even government—in fact, anywhere money needs to change hands.
Organizations are motivated by the need to deliver products and services more cost
effectively and to provide a higher quality of service to customers. This section will
overall picture of electronic payment systems of the past and present. Research into
electronic payment systems for consumers can be traced back to the 1940s, and .the
stands in .marked contrast to conventional money and payment modes that rely on
physical delivery of cash or checks (or other "paper orders to pay) by truck, train, or
dispensers)
2. Retailing payments
(e.g. NetCheque)
. Smart cards or debit cards (e.g., Mondex Electronic Currency Card) • Credit card-
Entirely new forms of financial instruments are also being developed. One such
are equivalent to cash that is backed by a bank. (Electronic tokens are of three
types:
2. Debit or prepaid. Users pay in advance for the privilege of getting information.
Examples of prepaid payment mechanisms are stored in smart cards and electronic
3. Credit or postpaid. The server authenticates the customers and verifies with the
bank that funds are adequate before purchase. Examples of postpaid mechanisms
To avoid the complexity associated with digital cash and electronic checks
consumers and vendors are also looking at credit card payments on the Internet as
one possible time-tested alternative. There is nothing new in the basic process. If
consumers want to purchase a product or service, they simply send their credit card
details to the service provider involved and the credit card organization will handle
Credit card payment on on-line networks can be divided into three basic categories:
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The easiest method of payment is the exchange of unencrypted credit cards over a
public network such as telephone lines or the Internet The low level of security
inherent in the design of the Internet makes this method problematic (any snooper
can read a credit card number, and programs can be created to scan the Internet
traffic for credit card numbers and send the numbers to its master). Authentication
is also a significant problem, and the vendor is usually responsible to ensure that the
person using the credit card is its owner. Without encryption there is no way to do
this.
It would make sense to encrypt your credit card details before sending them out, but
even then there are certain factors to consider. One would be the cost of a credit
card 0transaction itself. Such cost would prohibit low-value payments (micro
party: a company that collects and approves payments from one client to another.
After a certain period of time, one credit card transaction for the total accumulated
amount is completed.
5.0 SYSTEM STUDY:
In this section the total market approach of premier bank card division and the card
The Premier Bank is a 3rd generation private Bank that has been approved as a
2. Credit Limit:
financial soundness and employment status etc. The following card limits may be
immovable property.
6. Credit worthiness
7. TIN
The Card will be issued for a Minimum period of 2 years (But Card may be
suspended or cancelled at any time if the Management find that the Card is no longer
For Banker’s, any officer drawing monthly salary of minimum Tk. 10,000/-
and above.
Any borrowers who have credit limit of Tk. 5.00 Lac with any bank with
regular payments.
(Govt.& Private).
Corporate customers of other banks enjoying credit facility of Tk. 1 crore and
All transactions against the card will be billed once in a month and payment must be
made within 15 days from the statement date either in full or minimum amount shown
in the statement.
Gold Card on individual capacity may be issued to high government officials like
Corporations, high officials of Defense and Multinational Companies etc and other
d. TIN
f. Salary Certificate
d. TIN
f. Income Certificate
Supplementary cards may be issued against guarantee of basic cardholder and will be
the card.
2. 5-45 days credit from the date of transaction. When customer receive their monthly
statement, they can either choose to pay in full or just the minimum due amount
shown in the statement. No interest is charged if they pay in full within payment due
date.
5. The highest Premier Bank Bonus Point holder can enjoy free air ticket Dhaka
of card account within the payment due date, cardholder does not need to pay
late payment charge. If payment received late twice (two months) then the
3. Any excess over limit must be repaid immediately otherwise further penalty
may be applied.
5. Interest: 2.5% (monthly) both Local and International Cards. Interest will be
6. If the cardholder pays the full-billed amount within the payment due date as
thus the member has the option to enjoy a maximum of 45 days interest free
credit facility.
7. Cash advance interest: 2.5% (month) both Local and International Cards.
8. Cash advance fees: 3% or Tk. 150 whichever is higher. Fee will be debited on
card account on the posting date. In case of Cash Advance, Cardholder must
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pay Cash Advance fee once and cash advance interest until the amount is paid
in full.
9. Interest, excess limit charge and cash advance interest (if any) will be debited
to card account on the statement date. Late payment charge (if any) will be
a. For Local Cards: When the current outstanding is less than or equal to
d. If the current outstanding balance is more than the credit limits for both
e. Any overdue account: for both local and international cards it is the
amount.
The above charges are subject to change by the bank time to time at its own
discretion.
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5.2 Credit Card Application Form Collection Procedure:
Assessment
Final Judgment
Not
Approved Approved
People can apply for a credit card either through branch or directly to the card
division. After receiving the application the reception section checks the require
documents and make the data entry into the register book and make a file of the
application. Then the application file passes to the credit section for credit assessment.
They analyze the application and make credit limit for the applicant. Then the file is
sent for the data capture into the computer. After capturing the applicant’s
information the file is sent to the production room for card production. Then the card
is sent to the delivery section and the file is stored in the file management section.
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Submit application
Card is delivered
to the cardholder
Applicant
Reception and delivery
Card is sent to
the delivery section
Operation
Processed information is
sent for card production
Card production
Head of Card
Card Maintenance
Fraud detection/Monitoring
Mostafizur Rahman, FEO
Ms Anjuman Parvin, MTO
Required-three Offic er (Roster)
25
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Target Plan for all the employees of Premier Bank Limited
Each of the Officers and Executives of our Bank should provide at least 20 (Twenty)
approved credit cards in the year 2004. The employees are requested to take necessary
precautionary measures while selecting the personals who may default to pay credit
card bills.
If we can issue credit cards according to the above target hopefully we can issue more
Being a new player in the Credit Card business they have to compete with the existing
competitors who have already expose their products in the market and they are
already marketing their products with marketing agents instead of employees of the
Bank. Initially they may start their credit card marketing with their existing employee
of the Bank. Afterwards they have to go with marketing agents like other Banks, such
as: Standard Chartered Bank, Prime Bank, Dhaka Bank, etc for marketing their
products. Marketing agents are needed to expose their product rapidly in the market
so that they can catch up the maximum market share of credit card business.
5.4 Advertisement:
2) Media coverage provided through Btv, Satellite channels i.e. Ntv, Atn,
3) Going for a rally from Motijheel to Ashulia by decorating some pick up or Bus
4) Participation in various national events like sports, trade fairs, etc. to draw the
Customer
Punch card
1
Invoice from SCB server(acquirer) Unauthorized data from SCB
Transaction
Invoice from PBL (Issuer) server processing Invalid user info of PBL
system Valid user info of PBL
PBL data
PBL user info to SCB Visa
1.0
Invoice(acquirer)
POS
Invoice (issuer) machine
processing
Invoice Invoice
Card
from from
info
acquirer issuer
2.0
Check info D1 Authorized clients info of acquirer
Acquire server
processing
Invoice
from
issuer
Visa server
Check info D3 List of authorized financial institution
processing
Invoice from
Card info
issuer
4.0
Issuer server
Check info D4 Database for card holder of issuer
processing
Customer
1
Give payment
Payment Clearance payment
system for
Give info
merchant
Payment info
Credit account
Visa
CONTEXT LEVEL
30
Show Invoice
Give information
Store info
Visa D1 Merchant info
1.0
SCB’s
Credit accounts Server
D1 Payment info
Processing Store payment
info
Debit accounts
Update
cardholder info D1 Cardholder information
1.0
PBL
Server Account information
Processing D1
Payment Store account
information info
In this phase we will describe about the transaction processing system (Verification
and clearance). Before that some definition are necessary to be given which are as
follows:
interact with merchants from personal computers over the Internet. A cardholder is an
authorized holder of a payment card (e.g. Master card, Visa) that has been issued by
an issuer.
the cardholder. Typically, these goods and services are offered via a website or by
electronic mail. A merchant that accept payment cards must have a relationship with
an acquirer.
Issuer: this is a financial institution, such as a bank, that provides the cardholder with
the payment card. Typically, accounts are applied for and opened by mail or in
person.
Ultimately, it is the issuer that is responsible for the payment of the cardholder. For
Acquirer: this is a financial institution that establishes an account with the merchant
and processes payment card authorizations and payments. Merchants will usually
accept more than one credit card brand but do not want to deal with multiple
individual issuers. The acquirer provides authorization to the merchant that a given
card accounts is active and that the proposed purchased does not exceed the credit
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limit. The acquirer also provides electronic transfer of payments to the merchant’s
account. Subsequently the acquirer is reimbursed by the issuer over some sort of
payment network for electronic funds transfer. For example Standard Chartered Bank
6.1 Transaction processing system through POS (Point of Sale) machine (Base 1
system):
When client punches card into the POS machine, the card information goes to the
acquirer’s server. The server checks that the card holder is authorized by them
(acquirer)
or not. If so, then the server checks the status of the card. That means the card status is
normal or not and then checks that the requested transaction can satisfied his credit
availability or not. If satisfied all the conditions then it generates an invoice with
authentication unique number and sends it back to the POS machine and thus
If the card holder is not the clients of the acquirer then the card information is passed
to their payment brand’s (Visa, MasterCard etc). Then the payment brand’s server
checks that under which financial institutions the card is issued and then sends it to
the issuer’s server. The issuer’s server then checks the status of the card. That means
the card status is normal or not and then checks that the requested transaction can
satisfied his credit availability or not. If satisfied all the conditions then it generates an
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invoice with authentication unique number and sends it back to the POS machine and
When a PBL customer punches card to the POS machine, the card information first
goes to the Standard Chartered Bank’s server as acquirer. Then SCB server found that
the card holder is not authorized by them. As they are under the payment brand of
Visa, they send it to the Visa server which is located in Singapore for the south Asian
region. Then Visa checks under which member (financial institution) the card holder
exist. They found PBL as the issuer. Then they send it to the PBL’s server. The PBL’s
server then checks the status of the card. That means the card status is normal or not
and then checks that the requested transaction can satisfied his credit availability or
not. If satisfied all the conditions then it generates an invoice with authentication
unique number and sends it back to the POS machine. The cardholder then signs on it
The whole process described above is the 1st part of the transaction processing system
In the 2nd part of the system the payment are settled between merchant and the
After getting the invoice signed by the cardholder the merchant goes to the acquirer
(ex. Standard chartered bank) and shows the invoice. Then the acquirer pays the
payment to the merchant. The acquirer then sends the information to the visa. Visa
then debit the amount from issuer. The issuer collects the information from visa
through Internet.
7. CONCLUSION:
In the competitive world of business, E commerce becomes essential for the nature of
global business. Now a day people can get there daily needs by sitting there own
home. for example in USA 16 percent cars are sold through Internet. Here credit card
comes in to the picture. People can reserve air ticket, hotel booking, can pay the
various utility bill by using credit cards. This makes life quite comfortable. The main
complaint heard about Credit card is that while they are convenient, they are
business. Regardless of what we think of Credit Cards, there is no doubt that they
have changed the world and the way in which we do things. For example, think how
many times we have been out somewhere only to discover we have no cash and we
are out of checks, ah, but in the corner, there is a Credit Card. In the blink of an eye,
we swipe the card and now have cash on hand. In addition to pulling money out, the
Credit Card also makes it convenient to deposit money, transfer money, and check
balances. Best of all, to use a Credit Card, we do not have to go to the bank. We will
find Credit Cards at other banks, grocery stores, shopping malls, along the roadside,
Buckingham Palace, airports, in casinos, and even on the South Rim of the Grand
In our country the number of credit card holder increasing at an outstanding rate.
Most of them are found as young generation. It was a nice experience for me to work
on credit card division in Premier Bank Ltd. And this internship project gives
communicate with people and learn me how to service in a company like The Premier
Bank. I also like to mention that without basics of our university computer courses, it
37
would be difficult on my part to complete and understand this project. The internship
experience cannot eliminate the fact that the textbooks, different database
management system projects helped me a great extent regarding the basic concepts. In
fact, they helped me to acquire the relevant knowledge. I merely want to state that
along with studying from the books, it is extremely important to understand the real
Lastly I would like to mention that within the short period of time and with other
constraints I managed to gather as much information as possible for the analysis of the
system. However, to make more efficient project much more attention and time is
required to pay.
38
REFERENCES
2. Kendall, Kenneth E., Kendall, Julie E. 2003 Systems Analysis and Design,
Prentice-Hall India.
McGraw-Hill.
4. Whitten, Jeffrey L., Bentley, Lonnie D., Dittman, Kevin C. 2001 Systems
6. Systems Analysis And Systems Design, page 92, “Systems analysis and design”
Behrouz A Forouzan.
Web pages:
www.premierbankltd.com
www.visa.com