Chapter 1

Introduction, Review of Literature and Research Design

Introduction
The significance of money and credit need no exaggeration. Application of Technology
has transformed very lifestyle of the people and the entire world is dependent on it. In
service sectors like banking, education, health, retailing, etc. technology has become the
main player. Integration of banking services with the technology has given rise for new
‘technology-driven’ services, apart from enhancing overall efficiency of the banking
industry in serving customers. Credit card facility of banks combines technology with the
flow of credit and serves the needs of customers.1
As civilization progressed, the support systems in the society got transformed with
improved techniques and technology. Banking is one of such support systems. Today, the
technology has transformed banking system from traditional, manual system to modern
technology–driven industry. In this transformation, the role played by credit card is very
significant.2
India is one of the fastest growing economies in Asia; however, credit card use remains
limited.3 The credit card market in India had witnessed a steady growth in the late 1980s
and early 1990s, but currently stands stagnant. Indian banks such as State Bank Group,
Citi Bank, Axis Bank, Bank of Baroda, Corporation Bank and HDFC offer credit card
services to their customers.4
Credit card use represents a customer lifestyle and increase in the standard of living.5 The
growing income of the upper middle class is an important driver of the credit card use.
During the year 2007, credit card use in the Asia Pacific region stood at $1.3 trillion,
which was 30 percent of global credit card transactions. Japan led the region in total
transactions made through credit cards ($209 billion), followed by South Korea ($203

1
B. S. Hugar & Dr. Basavaraj C. S., (2014), “A study on usage pattern of credit cards in Gulbarga city”, Asian Journal of Research in
Banking and Finance, Vol. 4, No. 11, November 2014, pp. 181-187.
2
B. S. Hugar & Dr. Basavaraj C. S., (2014), ibid.
3
The Times of India (2010), “Use of CCs goes down in India”, available at: http://timesofindia.indiatimes.com/business/india-
business/Use-of-credit-cards-goes-down-in-India/articleshow/6543407.cms (accessed 1 November).
4
Goyal, A. (2008), “Managing perceived risk for credit card purchase through supplementary services”, Journal of Financial Services
Marketing, Vol. 12 No. 4, pp. 331-46.
5
Goyal, A. (2008), ibid.

1
billion). The total transaction made through credit cards in India was merely $2 billion.
Nearly, 70 percent transactions made through credit cards in India were for purchase of
goods and services. For credit card companies targeting the Indian market and
understanding credit card use patterns would be of great significance.6
Taking cue from global economies, India too has been rapidly venturing into the plastic
money business. In today's economy the credit cards are being widely used. During the
past decades, these cards have become more and more popular in India. The holders are
relieved from the risk of carrying cash or cheque book.7
In India, credit card use has been slow to catch on as compared to other countries such as
China, Saudi Arabia, and Turkey. However, it is hoped that recent introduction of
security features in credit cards is likely to increase its use among Indians.8 One of the
major problems related to credit card use is that about 40 percent people in India do not
have a bank account. In the years 1987-2000, the Indian credit market comprised of 3.8
million card holders with 25-30 percent growth rate.9
However, in the recent past the scenario has changed dramatically. The number of
Nationalised and private banks issuing credit cards has increased significantly. Credit
cards are now not only integral parts of the consumer’s life in metros, but even residents
of smaller cities and towns have taken to them. This can be attributed to the aggressive
strategy of nationalised and private banks to promote card products in smaller towns and
cities. These banks have far wider reach and depth in smaller cities and towns as
compared to foreign banks. They capitalized on this advantage to play a major role in
expanding the credit card base in terms of number and usage in smaller cities and towns.

6
KPMG (2009), Card Payments in Asia Pacific Region: The State of Nation, available at: www. kpmg.com.hk/en/virtual
library/Financial services/Card_Payments.pdf (accessed 30 October 2010).
7
A. Anto Bright Prabhu, (2014), “A Study on Usage of Credit Card System”. IOSR Journal of Business and Management (IOSR-
JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 16, Issue 1. Ver. IV (Jan. 2014), PP 136-140
8
The Times of India (2010), ibid.
9
Gnanapushpam, J.S. (2007), “A short history of CCs”, available at: http://archives.chennaionline.com/columns/variety/2007/07
article26.asp (accessed 30 October 2010).

2
Review of Literature
The researcher reviewed the literature pertaining to credit card services from a host of
sources. The important of such literature mainly consists of review of Ph. D. theses,
review of committee reports and review of research articles, which are presented below.

Ph. D Theses:
Sarma E. J., (1989)10, used the ‘Lifestyle’ concept to understand the users of credit card
psycho graphically in 1989. He concluded that “the users of credit cards in contrast to
non-users exhibit a contemporary state of mind and reject conservative traditional
concepts, can indicate that the type of purchases that can be made on credit cards could
be viewed as ‘luxury or necessity’ based on the lifestyles rather than broadly classifying
them for all groups. Therefore the traditional orientation towards cash which can be a
major barrier to the use of credit cards must be tackled by card marketing banks through
better marketing”. He further concluded that “the major problem with the banks today is
not only of popularizing the credit card concept but also of increasing the credit card
usage.” Even after two decades much has not changed.

Yeo (1990)11, in his Ph. D. thesis looks at identifying household credit card choice and
usage behaviour of cardholders. It was found that several factors were significant in
determining the choice between the bank and retail credit cards in USA. These were the
level of family income, the household age, the number of bank card holdings, the number
of store card holding the related interest rate, the relative membership fees and the card
preference.

Yeo Jung Sang (1992)12, in his thesis had focused on the attitude and behaviour of credit
card holders. The researcher had used dichotomous multi nominal logic to analyse the
demographic factors like age, education level, size of the house hold, income level,
number of bank card holdings, store card holdings, relative interest rate, and relative

10
Sarma E. J, (1989), Consumer Response to Marketing of Bank Credit Card Service – A Study of certain segments. Ph.D. Thesis,
University of Mumbai, pp. 206.
11
J. Yeo. “Household credit card choice and usage.” Unpublished Ph.D. Thesis. US: Cornell University (1990), pp.135.
12
Yeo Jung Sang, “House hold Credit Card s Choice and Usage” Ph.D., Thesis Cornell University, Dissertation Abstract International,
Volume 51, No.4, October 1992, pp. 1140A.

3
membership fee. The results of the study revealed that the effects of the explanatory
variables were significant except the number of store card holdings

Punjavat (1993) 13 , in his Ph. D. thesis examines Graduate International Students’

knowledge, attitude, experience, practices and satisfaction relating to credit card. This
study was conducted on 261 students. Finding showed that the respondents’ credit card
knowledge was low, attitudes were favorable and Pre U.S experience is limited. Since
living in the U.S respondents had become regular user with a mean of 3.3 cards and a
majority charging more than $200 per month. They followed commonly recommended
practices and eight of ten were satisfied with their credit card use, several statistically
significant relationship were found among the credit card variables and between this
variables and socio-demographic characteristics such as country of origin and length of
U.S. pre-developed and evaluated.

Parimala (2001)14, in her Ph. D. thesis highlighted the marketing environment of credit
cards in Trichirappalli. Her major findings are not sufficient merchant establishment to
honoring credit cards, cardholders were not aware of all services offered by the issuers,
lack of sufficient advertisement and publicity. Her suggestions to overcome these and
reduce charges for penalty, interest, annual charges are a much scope for growth and
expansions of credit cards market.

Swarnalatha (2002)15, in her Ph. D. thesis analyses and the results of the credit cards
services. The study based on the perception of selected credit cardholders of various
issuing banks in Chennai city. This research finding and conclusion based on the
hypothesis that single cardholders are less satisfied than multiple cardholders. Further the
results also stated that there are cardholders holding cards both in Indian and foreign
banks are more aware of the services and experienced their greater satisfaction.

13
T. Punjavat. “Credit card: Understanding international graduate students.” Unpublished Ph.D. Thesis. Corvallis, USA: Oregon State
University (August 1993), pp.441.
14
B.J. Parimala (2001). “A study of bank services with special reference to the credit cards in Trichirappalli, Tamilnadu.”
Unpublished Ph.D. Thesis, Tiruchirappalli, India: Bharathidasan University, pp.214.
15
N. Swarnalatha. “‘Credit cards services’: A study based on the perception of selected credit cardholders of various issuing banks in
Chennai city.” Unpublished Ph.D. Thesis, Chennai: University of Madras, India (2002), pp.282

4
C. Prakash (2003)16, in his study had focused on the impact of credit cards on spending
pattern to study the conceptual aspects and the evolution of credit cards in India.
Interview schedule was given to three hundred credit card holders. Simple Percentage, F-
test, ANOVA and Chi-square test were used to analyse the collected data. It was found
out that almost all the respondents irrespective of their income levels had agreed that their
purchasing power had increased after they had begun to use their credit cards. The
accessibility of the credit cards is limited to very small institutions like airlines, jewelers
shop and restaurants.

V. K. Anitha (2003)17, in her study had focused on the purchase behaviour of customers,
their satisfaction with regard to the services offered by Citi Bank through its agencies and
their functioning. The Merchant Establishments should be encouraged to accept more
cards. It was concluded that the service centers must maintain good relationship with
their customers and they should solve their problems and clarify doubts regarding
settlements.

Murugesan (2007)18, in his Ph. D. thesis entitled “A study on bank credit card culture in
Chennai city” analyses that the credit card gives ample scope for the expansion and
growth of business. More innovative and user-friendly schemes should be introduced to
make more number of people to have credit cards. To reduce the burden of existing
cardholders, reduction should be given in the collection of penal interest and other
charges, incentive scheme should be introduced to the account holders of the bank willing
to get credit card.

Joji, Alex N (2010)19, the study attempts to understand the impact of retailing and the
credit card environment on materialism, compulsive buying, credit card usage pattern and
credit default among shoppers in Kochi Municipal Corporation. The goals of the study

16
Prakash. C, “Impact of Credit Cards on Spending Patterns” 2003, Unpublished MPhil Thesis, Bharathidasan University, pp. 89-92.
17
V. K. Anitha, “A Study on Customer’s Attitude Towards Credit Cards with Specific Reference to Citi Bank Cards in Tiruchirappalli
Town, Nov 2003, Bharathidasan University pp. 80-82.
18
S. Murugesan. “A study of bank credit card culture in Chennai city.” Unpublished Ph.D. Thesis. Tiruchirappalli: Bharathidasan
University, India (2007), pp.259.
19
Joji, Alex N (2010), Compulsive buying behaviour and its relationship on credit default, Department of Management Studies,
Kannur University

5
 are to understand the extent of materialism and compulsive buying among shoppers in
Kochi Municipal Corporation. The study further attempts to understand whether the
presence of credit cards has in any way changed the pattern of spending (usage) and also
refine the understanding of what influences (causes) credit card usage pattern. The final
accomplishment of the study is to find the extent of influence of the above said variables
on credit default.

Mandeep Kaur (2011)20, perception of cardholders and member establishments towards

plastic money in India is a study that examines the perspective of users as well as
member establishments has towards the use of plastic money. It focuses on some vital
aspects like challenges experienced by customers and bankers, value attribution to
plastic-money adaptation and some factors attracting them to adopt and use plastic money.
It also analyses the current status and trends of plastic money in India.

Sudhakara, A. M. (2012)21, the objective of this thesis is to review the technological

progress made by the banking industry in India in provision of security to its customers in
the light of continuous cyber race between devisers of security standards and the
fraudsters hacking such security standards.

Other doctoral these and working papers reviewed are as under:

Sl. Researcher University &
Title of the topic Year
No name Country
E-banking adaptation and School of
C. R. Unnithan
dot.com viability: A comparison Management
1 and 2001
of Australian and Indian Information Systems,
P. Swatman
experiences in the banking sector. Deakin University,
E-Banking: An Emerging University of Delhi,
2 Vij. M 2001
Perspective of the Regulation and India

20
Mandeep Kaur (2011), Perception of card users and member establishments towards plastic Money in India, Guru Nanak Dev
University
21
Sudhakara, A. M.(2012), An evaluation of security standards for online banking adopted by Indian Banks offering credit debit card
facility, Department of Commerce, University of Mysore

6
 Taxation Issues
Essay on customers in the dawn University of
3 Mattila, M 2001
of interactive banking Jyvaskyla, Finland
Nanyang Business
Click and mortar of retail
School, Nanyang
banking: A case study in Hong D. Janice
4 Technological 2002
Kong.
University,
Singapore
Furst, Karen.
Internet banking: Developments William, W. Harvard University,
5 2002
and prospects Lang, and Nolle, US
E. Daniel
New York
University: Federal
Do Internet activities add value?
6 Hassan, I Reserve Bank of 2002
The Italian bank experience
Atlanta. Berkley
Research Centre
Electronic Banking in Finland:
University of
Consumer Beliefs, Attitudes, Karjaluoto, H
7 Jyvaskyla, Finland 2002
Intentions, and Behaviours
A strategic perspective on the
University of
8 emergence and evolution of e- M.N. Al-Jadeed
Edinburgh, UK 2007
banking in Saudi Arabia
Center for
Internet banking: Developments K. Furst Information Policy
9 2012
and prospects Research, Harvard
University
A study on the consumer adoption
Veer Narmad South
of electronic banking technology Vaghela Jignesh
10 Gujarat University, 2012
with reference to Indian banking P
India
sector

7
 An evaluation of security
standards for online banking University of
11 Sudhakara, A. 2012
adopted by Indian Banks offering Mysore, India
credit debit card facility
Perception towards E banking a
Nyangosi, Guru Nanak Dev
12 comparative study of India and 2012
Richard University
Kenya
Comparative study on e-banking
services between nationalized and
Bharathidasan
13 private banks in Trichirapalli Maheswari, N 2013
University
district: a study from customers’
perspectives
An empirical investigation of e-
Bharathidasan
14 banking / internet banking from Gunasekaran, K 2013
University
bank customers’ perspective
A study on customer satisfaction
Acharya Nagarjuna
15 towards e banking services and Shaik, Shakir 2013
University, India
products in commercial banks
Banking practices and customer
Dhandayuthapani, Bharathidasan
satisfaction –in Thanjavur district
16 SP University 2013
Tamilnadu: an empirical study
A study on adoption of internet
Manonmaniam
banking in public and private
17 Dhillipan, J Sundaranar 2013
sector banks with special
University
reference to Chennai
Chaudhary Charan
Role of e-banking in private and
18 Parashar, Deepak Singh University, 2014
public sector banks
India
E banking in India: Opportunities Karimzadeh, Aligarh Muslim
19 2014
and Challenges Majid University, India
20 Reception and resistance of Ugesh, D Manonmaniam 2104

8
 customers on e banking services Sundaranar
in Thoothukudi district University, India
A Comparative Study of E
Banking in Public and Private
The IIS University,
21 Sector Banks With Special Sharma, Rashmi 2014
India
Reference to SBI and HDFC
Bank
Customers satisfaction with
Manonmaniam
internet banking in public and
22 Kalpana Devi. S Sundaranar 2014
private sector banks with special
University
reference to Tirunelveli district
E banking practices in selected Sree Sakthi Alagappa University,
23 2015
scheduled commercial banks Velan, M India
Role of information technology in
Farooqi, Ataur Aligarh Muslim
24 banking industry_ a case study of 2015
Rahman University, India
state bank of India in Aligarh city
An evaluation of e banking
service users in nationalized and Shivaji University,
25 Bhosale, S T 2015
private sector banks with India
reference to Sangli District
Shri Jagdishprasad
Customers perception towards E
Shetty Smita Jhabarmal
26 banking products services of 2015
Shankar Tibarewala
select public sector banks A study
University
Shri Jagdishprasad
Study of customer Satisfaction Thakur Jitendra Jhabarmal
27 2015
about E Services of SBI Bank Krishanchandra Tibarewala
University
Customers satisfaction
Maharaja Sayajirao
28 measurement of internet banking Alam, Mahtab 2015
University of Baroda
an analytical study based on

9
 selected customers and banks in
western India
Shri Jagdishprasad
Study of electronic banking with
Poonam Sachin Jhabarmal
29 special reference to internet 2015
Biyani Tibarewala
banking in private sector banks
University
An empirical study of customers Shiksha o
Dash,
30 attitude towards using internet Anusandhan 2015
Manoranjan
banking in Orissa University

The other important research papers reviewed are shown below:

Research Papers
Slocum and Matthews (1969)22, found that people in the lower socio-economic classes
used their credit cards more for installment financing while people in the higher socio-
economic groups used credit cards for convenience.

Mandel, L. (l972)23 found that primary determinants of credit card usage were family
income and education of the cardholders. Higher income and better educated families
were more likely to use credit cards than lower income families. This is because credit
card was initially marketed to higher income people. Another finding of his research was
that families living around the largest cities are more likely to use credit cards. This
finding matches with the Greek cardholders’ demographic profile, where a very high
concentration of cardholders is observed in urban areas. He also found that families with
different incomes perceived differently the advantages and disadvantages of credit cards.
Lower and middle income families considered the credit facility as a definite advantage,
while high income families found safety and convenience to be definite advantages.

22
Slocum, J.W. and Matthews, H.L. (1969), “Social Class and Commercial Bank Credit Card Usage”, Journal of Marketing, Vol. 33
No. 1, January, pp. 71-80.
23
Mandel, L. (1972). Credit Card Use in the US. Institute of Social Research University ofI\/Iichigan, Internal Report, Michigan, IL.

10
Kinsey (1981)24, sought to identify if there was a relationship between the financial and
demographic characteristics of households and the number of credit card accounts that
they maintained. Households with very high incomes were found to hold the largest
number of credit cards. Other characteristics, which were found to have a significant
influence on the number of cards held, were place of residence, use of checking and
savings accounts and attitude towards credit.

Canner and Cyrnak (1986)25, showed that the major reason for credit card use was
convenience, and this factor was positively correlated with income, age, and relative
financial liquidity. In contrast, a liberal attitude toward borrowing is related to the use of
revolving credit.

Hawes (1988)26, established the demographic characteristics of cardholders, the types of

card they owned, the frequency of card usage and the advantages and disadvantages of
card ownership.

Barker (1992)27, investigate the attitude of Turkish consumers towards credit cards, and
the approach of card issuers by surveying two samples of 200 card holders and non-
holders. The better educated, middle aged members of the upper middle class seem to be
the prime target; the most important reasons for using a credit card were “case of
payment”, followed by “risk of carrying cash”, Non holders do not carry credit cards
because they do not know much about it; informal sources of information appear to be
more influential than mass media advertising in penetrating the market; proposes that the
usage and the administration of credit cards are influenced very much by the
infrastructure of the country and hence, credit card companies have to modify their
marketing and administrative procedures rather than following a standardized approach.

24
Kinsey, J. (1981), “Determinants of Credit Card Accounts: an Application of Tobit Analysis”, The Journal of Consumer research,
Vol. 8 No. 2, pp. 172-82.
25
Canner, G.B. and Cyrnak, A.W. (1986), “Determinants of Consumer Credit Card Usage Patterns”, Journal of Retail Banking, Vol. 8
Nos 1 and 2, pp. 9-18.
26
Hawes, D.K. (1988), “Bankcard-Holder Profiles: Changes Over an Eleven-Year Period”, Akron Business and Economic Review,
Vol. 19 No. 2, pp. 106-24.
27
Barker, T.S.A.(1992). Globalization of credit card usage: The case of a Developing Economy. International Journal of Bank
Marketing 10(6): 115-124.

11
Natarajan and Manohar (1993) 28 , attempted to know that to what extent the credit
cards are utilized by the cardholders and the factors influencing the utilization of credit
cards. The study is confined to cards issued by the Canara Bank.

Vora and Gidwani (1993) 29 , show the usage facilities and varieties of cards. The
research shows that credit card is extremely useful to those people who use it as to
increase their purchasing power through the plastic card. Different cards provide the
different packages to attract the customers like tele-ticketing, discounts, insurance
coverage and provide reward points etc. According to author, the card holders market has
a potential to grow to 7 million, if all taxpaying citizens are taken into account. But these
manful efforts at upgrading services can only have a limited impact as long as the Indian
customer remains credit shy. For this, they have to change their spending habits and keep
their card active, so that a piece of plastic becomes a premium card in an effective way.

Zhu and Meeks (1994) 30 , analyzed consumer credit use in low-income families and
discovered that age and employment status were significant determinants of the amount
of credit outstanding. Younger households and those employed full-time were found to
have higher outstanding credit balances as compared to the elderly or the unemployed.

Mathur and George (1994)31, show the usage behavior pattern of older people with
credit card spending. Using a large national sample of respondents from different age
groups, find that older adults use credit cards as frequently as younger adults when
circumstances and opportunities for consumption in both groups are similar. Contrary to
it, the commonly held belief that older people do not use credit cards, the data suggests
the need for practitioners to stop thinking about consumer targets in terms of age and
focus more on circumstances that determine one’s likelihood to use credit cards. Factors
such as income, employment, retirement status, shopping habits should be considered.

28
Natarajan and Manohar (1993). Credit Cards–An Analysis, Financial Express, 14 April.
29
Vora, S. and Gidwani, R. (1993). Plastic at a premium. Business India, July 5-18. pp 95.
30
Zhu, L.Y. and Meeks, C.B. (1994), “Effects of Low Income Families’ Ability and Willingness to Use Consumer Credit on
Subsequent Outstanding Credit Balances”, The Journal of Consumer Affairs, Vol. 28 No. 2, pp. 403-422.
31
Mathur, A. and George P. Moschis (1994). Use of Credit cards by older Americans. Journal of Services Marketing, 8(1), 27-36.

12
While credit card usage may overall decline with age, certain segment of mature
consumers continues making use of credit cards throughout the life.

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu (1994)32, studied to examine
college students’ perceptions and preferences of credit cards. More specifically there are
no studies reported that offer guidelines to the managers of credit card issuing companies
on how college students make their credit card choice decisions among several available
alternative brands. Keeping in mind based on these attributes like, factors that affect
college students’ credit card choice decision, relative importance of these factors in their
overall credit card choice and managerial implications of these behavioral patterns.

Meidan and Davos (1994)33, developed fifteen attributes which were considered useful
in determining what influences consumers when selecting a credit card. Responses about
the importance of these attributes were factor analysed, creating five selection dimensions.
The most important dimension was the level of acceptability abroad, followed by the
level of acceptability in Greece, in-built security features, “economic” benefits and
prestige afforded.

Dagobert L. Brito and Peter R. (1995)34, observe that borrowing on credit cards at high
interest rates might appear irrational. However, even low transaction costs can make
credit cards attractive to bank loans. Credit card also provides liquidity services by
allowing consumers to avoid some of the opportunity costs of holding.

Almeida (1995)35, shows that credit card business is booming as more than 1.1 million
Indians have credit cards with them. Their numbers are expected to grow at an even faster
pace as issuing banks get aggressive. Studies show that more than 4000 business
establishments in the country accept credit cards. The country now provides all the

32
Ali Kara, Erdener Kaynak, Orsay Kucukemiroglu, (1994),"Credit Card Development Strategies for the Youth Market: The Use of
Conjoint Analysis", International Journal of Bank Marketing, Vol. 12 Iss: 6 pp. 30 – 36.
33
Meidan, A. and Davos, D. (1994), “Credit and charge card selection criteria in Greece”, International Journal of Bank Marketing,
Vol. 12 No. 2, pp. 36-44.
34
Dagobert L. Brito, PeterR. Hartely, (1995), Credit Card & Consumer Rationality, The journal of political Economy, Volume 103,
issue 2, (April), pp 400-433.
35
Almeida, M. (1995). The Future’s in Cards. Business India February 13-26:113-116.

13
ingredients for a healthy credit cards industry: a rapidly expanding, increasingly
acquisitive middle class, a growing yen for travel and entertainment sophisticated
merchant establishment and greater transparency in financial system.

George (1995) 36 , shows that VISA and Master Card play a major role in any
international payment system. Both VISA and Master Card act also as franchisers,
lending their names to member banks’ card and acting as guarantor of payment to
merchants willing to accept the cards. For this and for handling transactions, VISA and
Master card charge a fee which varies from country to country, but is approximately 3
cents (90 paisa) per transaction. They are card clearing agencies. VISA and Master card
each have nearly 22000 banks all over the world as their members and handle several
million transactions each day. This gives them a transaction handling capability
unmatched by any individual bank. They are not credit card companies but function on
the line to provide a global network that allows authorization, clearing and settlement of
card transactions, both of credit and debit cards.

Torbet and Marshall (1995)37, explore the potential use of behavioral and physiological
biometric techniques in the battle against credit card fraud in the retail environment. It
discusses different techniques such as automatic speaker, dynamic signature verification,
fingerprint, facial recognition, retinal and iris scanning, hand and finger geometry.
Authors feel that while biometric technologies have the potential to reduce plastic card
fraud there are several problems which must be addressed before they can be used in
retail environments, like the recognition performance, speed of use, usability, customer
acceptance, device cost are considered along with industry standards for biometric
devices.

Radhakrishan (1996)38, shows that the debit cards also have found wide acceptability
than credit cards because of assurance of payments to retailers, switching of cardholders

36
George, P. (1995). The Card Major Lead the Way, Business World, pp. 116.
37
Torbet, E. Gail and Marshall M. Ian (1995). One in the eye to Plastic Card Fraud. 23(5): 3-11.
38
Radhakrishan, R. (1996). Debit Cards. PNB Monthly Review. June: 309-317.

14
to debit card because of using interest free period to avoid high interest cost, annual
charges as compared to debit cards etc.

Chan (1997)39, studied the demographic and attitudinal differences between active and
inactive cardholders in Hong Kong. The relevance of this article was that, at the time of
the research, Hong Kong (as described by the researcher) had evolved from a developed
to a more developed economy and thus it provided an opportunity to examine the
adoption of credit cards in a newly-industrialized nation and hence it provides a reference
point for the study of the adoption of this product in mainland China.

Nash and Sinkey (1997)40, studied that the market for credit cards has been the subject
of recent attention and controversy because of “High” profits earned on credit cards and
substantial premiums on the resale of credit card receivable. This paper estimates risk-
return profiles for credit card banks and explores the role of intangible assets in
determining resale premiums on credit card receivable.

Chan R (1997)41, studied the demographic and attitudinal differences between active and
inactive cardholders in Hong Kong. The relevance of this article was that, at the time of
the research, Hong Kong (as described by the researcher) had evolved from a developed
to a more developed economy and thus it provided an opportunity to examine the
adoption of credit cards in a newly-industrialized nation and hence it provides a reference
point for the study of the adoption of this product in mainland China.

Black and Morgan (1998)42, show the dramatic rise in credit card charge-offs in the
midst of a vigorous expansion suggest that bank card borrowers have become inherently
riskier. This paper investigates how the mix of credit card borrowers has changed in
recent years, and how those changes affect delinquency risk.

39
Chan, R. (1997), “Demographic and Attitudinal Differences between Active and Inactive Credit Cardholders – the case of Hong
Kong”, International Journal of Bank Marketing, Vol. 15 No. 4, pp. 117-225.
40
Nash, R.C., and Sinkey, J.F., Jr (1997). On Competition, Risk, and Hidden Assets in the Market for Bank Credit Cards, Journal of
Banking and Finance, 21(1): 89-112.
41
Chan, R. (1997), “Demographic and Attitudinal Differences between Active and Inactive Credit Cardholders – the case of Hong
Kong”, International Journal of Bank Marketing, Vol. 15 No. 4, pp. 117-225.
42
Black, S. and Morgan, D. (1998). Risk and democratization of credit cards. Federal Reserve Bank of New York. Research Paper
No.9815.

15
Fernand (1998)43, shows that convenience of credit card is not without its cost. The
author warned the customers to use the card in effective and in a rational way because
while choosing a particular card, the cardholder need to check different cost like annual
fees, transaction fees, membership fees, and interest on revolving credit, lost card liability,
reward point and facilities attached to different cards. Sometimes attractive facilities
caught the cardholders in their debt trap if they don’t appraise the card before using it.

Gambhir (1998)44, describes that credit cards are relatively new to India. Treated as a
status symbol and as a vehicle of consumerism Indian banks burst this business. Till
recently as it did not go along very well with the spirit of people because they do not have
much money to spend because of bad economic conditions. But with increasing
economic and financial liberalization and growing prosperity of the urban middle class
banks fells that it is desirable to enter into this line of business. Author feels that Credit
Cards and money transfers with latest technological changes would definitely reduce the
burden on cash in our system. Therefore, RBI has to give an impetus to the popularity of
plastic money which is consistent with present policy of economic and monetary
liberalization.

Paquin and Squire-Weiss (1998)45, showed that the personal bankruptcy rate can be
explained by the supply of consumer credit, interest rates, the capacities of cardholders to
service their debts, and the conditions of the job market. Their study revealed a general
consensus that the consumers’ lack of understanding about the use of credit is a problem
in the credit markets.

Carow and Kenneth (1999) 46 , analyzed the consumer payment option to use debit,
general purpose credit cards, gasoline credit cards, or cash. Based on the results from a
nested multinomial logit model, authors found consumers are more likely to use cash

43
Fernand, L. (1998).What Credit Cards Firms won’t tell you?, Business World, 22 June – 6 July, 108-109
44
Gambhir, A.C. (1989). Credit cards in India, Punjab National Bank Monthly Review, 11(8): 413-420.
45
Paquin, P. and Squire-Weiss, M. (1998), “Personal Bankruptcies: Study Finds four Key Determinants”, Journal of Retail Banking
Services, Vol. 20 No. 1, pp. 49-55.
46
Carow and Kenneth, A.S. (1999). Debit, credit, or cash :survey evidence on Gasoline Purchases. Journal of Economics and Business.
Sept.-Oct. 51(5):409-21.

16
when they have less education, lower incomes, are middle-aged and own fewer credit
cards. Debit and credit card users are younger, more educated and hold more credit cards.

Steindl (2000) 47 , shows the effect of interest rates on use of credit cards, which are
increasingly used to finance consumption. The corollary is a reduction in money demand,
which reduces the interest rates. Greater credit card usage increases the demand for credit,
which raises the interest rate.

Warwick and Mansfield (2000)48, show that the proliferation of the credit card industry
in today’s US household, and the aggressive promotional tactics employed to get college
students to sign on as customers. This exploratory study takes a look at the credit card
activity of college students at Midwestern campus.

Leung and Lai (2001)49, propose that the quality of a company’s authorization system
should be measured by two major considerations. First, the system should enhance
quality of customers’ service by reducing the waiting time at the point of sale. Second, it
should reduce the risk of accepting transactions of bad credit. In this paper, a major credit
card company is used to demonstrate how the credit authorization process can be
improved using a quantitative approach.

Soman and Cheema (2002)50, found that consumers regarded the size of their credit
limits as a signal of their future income and hence, were more likely to spend up to the
maximum credit limit.

Gross and Souleles (2002) 51 , observed that an increase in credit limits generates an
immediate and significant rise in debt. Liquidity constraints would disproportionately
affect young and low income people, and people with low credit scores.

47
Steindl-Frank-G (2000). Credit cards, Economization of Money, and Interest rates, Journal of Economic Education. Summer 31(3):
271-79.
48
Warwick and Mansfield (2000). Credit card consumers: college students, Knowledge and attitude. Journal of Consumer Marketing,
17(7): 617-626
49
Leung, W.K. and Lai, K.K. (2001). Improving the quality of the credit authorization process. International Journal of Service
Industry Management. 12 (4): 328-341.
50
Soman, D. and Cheema, A. (2002), “The Effect of Credit on Spending Decisions: the Role of the Credit Limit and Credibility”,
Marketing Science, Vol. 21 No. 1, pp 32-53.

17
Guthrie, Graeme and Julian Wright (2003) 52 , presented a model of competing
payment schemes. The model highlights the fact that, in a payment system, one type of
user (merchants) competes to attract users on the other side of the market (card holders).
It also analysed how competition between card associations affects the choice of
interchange fees and thus the structure of fees charged to cardholders and merchants.

Chakravorti (2003) 53 , shows that credit cards provide benefits to customers and
merchants not provided by other payment instruments as evidenced by their explosive
growth in the number and value of transactions over the last 20 years. Recently, credit
card networks have come under scrutiny from regulators and antitrust authorities around
the world. The cost and benefits of credit cards to network participants are discussed.
Focusing on interrelated bilateral transactions several theoretical models, have been
constructed to study the implications of several business practices of credit cards
networks.

Gupta (2003)54, asserts that the regulations of credit card business in India is diffused
and need to be streamlined. Whereas in developed countries the law on credit card
business in comprehensive and straight forward, its Indian version requires a structural
change. Hence, there is a need to explore that various legislative premises of the inferior
and unclear Indian version for protection of interest of cardholders and healthy growth of
the industry.

Gong (2003)55, had concentrated on the unique nature of the Chinese cultural heritage
and explored the impact of Chinese culture on each stage of the Chinese consumers’
decision making process. This work emphasised the collective-orientated characteristics
of the relationships defined by the Confucian doctrine, which underpins much of Chinese
culture. It opens up the issue of “face”, which is particularly salient for people of

51
Gross, D.B. and Souleles, N.S. (2002), “Do liquidity constraints and interest rates matter for consumer behavior?”, Quarterly
Journal of Economics, February, pp 150-85.
52
Guthrie. Graeme and Julian Wright. (2003). Competing Payment Schemes. Victoria University of Wellington and University of
Auckland, Working Paper, No.245, February.
53
Chakravart Sujit (2003). Theory of Credit Card Network: A Survey of The Literature, Review of Network Economics 2(2): 50-68.
54
Gupta, P.K. (2003). Legal and Regulatory Framework of the Credit Card Industry in India. Chartered Secretary XXXIII. 26-33.
55
Gong, W. (2003), “Chinese Consumer Behaviour; a Cultural Framework and Implications”, The Journal of American Academy of
Business, Vol. 3 Nos 1/2, pp. 373-80.

18
Confucian cultures, in which proper living, social consciousness, moderation and moral
self-control are stressed. Thus the Chinese way of life centre’s on adoption and the
passive acceptance of fate, by prizing stability and seeking harmony and happiness within
the given natural conditions.

Rysman, Mare (2004)56, exploited a unique data set on the payment card industry to
study the issues associated with net work effects and two sided-markets. The study
showed that consumers concentrate their spending on a single payment net work (single -
homing), although many maintain unused cards that allow the ability to use multiple
networks (multi-homing). A regional correlation between consumer usage and merchant
acceptance within the four major networks (Visa, Master Card, American Express and
Discover) were established. This correlation is suggestive of the existence of a positive
feedback loop between consumer usage and merchant acceptance.

Bandyopadhyay (2004)57, put the light on various issues like, major card players are
issuing cards without much checking credentials. It adds to non performing assets [NPA]
levels in its portfolio but overall, about 0.6 percent of personal consumption expenditure
in India is through credit cards.

Braunsberger (2004)58, investigates how vulnerable consumers (i.e. College students)

might respond to the revised credit card disclosure requirement (i.e. amendments in Truth
in Lending Act) and investigates credit card knowledge of college students. The study
examine external validity issues, that is, whether urban college students are more
knowledgeable about credit cards than rural students, and whether adult populations are
more knowledge than student populations.

56
Rysma, Mare. (2004). An Empiricat Analysis of Payment Card Usage. Boston University 29.
57
Bondyopadhyay S. (2004). Delhi Government employees get easy-to-use credit cards. Financial Express, 2 July.
58
Braunsberger, K. (2004). The effectiveness of credit–card regulation for vulnerable consumers Journal of Services Marketing 18
(5):358-370

19
Cunningham (2004)59, examines the use of credit cards among college students and the
need for on-campus financial counseling and planning service. The research objective
was twofold: (a) to determine if college students are responsible with their credit cards
and (b) to evaluate the need for on-campus financial counseling.

Easwar and Kumar (2004) 60 , found that the perception of owning credit card has
changed and they are viewed as being convenient substitute to carrying cash and also
availing credit for short period. But in the context of home country, India ranks at the
bottom in terms of usage of credit cards, when compared to China, Taiwan and Malaysia.

Goyal (2004) 61 , describes that service products being intangible and experiential in
nature are different to evaluate prior to purchase and consumption. Consumers perceive
risk while purchasing services and rely on various information sources to make a
purchase decision. In services, personal sources of information and considered more than
non personal sources of information. The present study focuses on understanding the
significance of supplementary services as non personal source of information of
consumers for pre-purchase evaluation of credit card services.

Hogarth and Hilgert (2004)62, have studied on “Consumers resolution of credit card
problems and exit behaviors.” Using data from the survey of consumers, this study
focuses on consumer’s resolution efforts with credit card problems and the likelihood of
“exiting”- that is, discontinuing the use of a given credit card or of the financial
institutions associated with the card.

Swan (2004)63, made a survey on credit cards and observed that with the more entrants in
the field of credit cards, major players are trying to gain a market share with aggressive
promotional strategies and additional value added services. Some banks though offer

59
Cunningham Julie (2004). College Student Credit card Usage and the need for on Campus Financial Counseling and Planning
service, Undergraduate Research Journal for the Human Science, 1-13.
60
Easwar, S.A. and Rawani, N.K. (2004). Credit Card on a growth trajectory. Chartered Financial Analyst. Jan: 50-53.
61
Goyal A. (2004). Role of Supplementary Service in the Purchase of Credit Card service in India, Asia Pacific Journal of Marketing
and Logistics, 16(4): 17-34.
62
Hogarth and Hilgert (2004). Consumers’ resolution of credit card Problems and exit behaviours, Journal of Services Marketing,
18(1): 19-34
63
Swan, A. (2004). Credit Card: A competitive market. Chartered Financial Analyst. Jan: 53-55.

20
international level of services and credit support to card holders but had failed to make an
impression in the market due to lack of awareness and low key advertising. It also
observed that in spite of aggressive effort of the banks, vast majority of the Indian
population is yet to come to grips with credit cards.

Lu (2004)64, has studied the segmentation of credit cardholders in the urban areas of
China and concluded that there were significant differences existing between card holders,
which were then characterised as elite, fundamental, emerging and laggards. This
research also showed that the frequency and average amount of purchase by card holders
had grown significantly in the two years prior to the research and that the higher the
income and education level of the card holder, the more inclined they were to use credit
cards.

Jagdeesh (2005) 65 , has studied on “Credit card fraud: causes and cures from
professional’s perspective.” Put a light on credit card fraud which is increasing
worldwide. He observed that the culprit is not only the outsiders but insider fraudsters
who cheat their organization to make quick buck. Bank credit card issuers lose about $1.5
to $ 2 billion every year because of fraud. The VISA and the Master Card, the two largest
credit card issuers lose most. Major credit card frauds like unauthorized use of credit
cards, on line frauds, shave and paste of card, counterfeiting. Mail order frauds are the
techniques used by the fraudster. The author also discusses the tips for prevention of
frauds like using smart cards, computer edits, PIN numbers, and suggests that it is in their
own interest that the cardholders should keep their cards safely and use the cards wisely
to protect themselves from frauds.

Johnson (2005)66, in his study entitled “Recent development in credit card market and
the financial obligation ratio” exhibits that over the past fifteen years, U.S. household in
the aggregates have devoted an increasing share of their after tax income to the payment

64
Lu, X. (2004), “Segmentation of the Credit Cardholders in the Urban Areas of China”, working paper, Chinese Marketing Research
Centre of Fudan University, Shanghai.
65
Jagdeesh, S. (2005). Credit Cards Fraud: Causes and Cures from Professional Perspective, Chartered Accountant, Jan. 53 (7) 907-
909.
66
Johnson, K. (2005). Recent Development in the credit card market and the financial obligation ration. Federal Reserve Bulletin
91(4): 473-86.

21
of financial obligations. Much of the increase is attributable to a rise in the level of credit
card debt, which has raised the share of households’ aggregate after tax income that is
devoted to credit card payments. This article argues that three important developments in
the credit card market over the period account for most of the rise in credit card payments
relative to income and played a strong role in the rise of the total financial obligation ratio
(FOR).

Pinto and Beth (2005)67, Show that credit card use among college students has reached
at unprecedented level. As a result, there is a movement to educate college students for
usage credit card in a better way. This research examines the credit information provided
by four socialization agents (parents, peers media and schools). In addition, it assesses the
relationship between these socialization agents and the credit usage behaviour of college
students.

Mann, Ronald J. (2005)68, dealt with global use of the credit card connected policy
questions. The pressures of globalisations are rapidly driving convergence in card usage
except in those countries that have dropped substantial ‘speed bumps’ to slow the growth
of cards. Main focus is to devise policies that will be useful to confine the problems
related to credit cards without creating undue inefficiencies in retail payment systems. It
also analysed different reforms that might be useful to policy makers of different
perspectives.

Cabral, Luis M.B. (2005)69, commented on the main ideas of R and T models used for
economic analysis of card payments and lay down a simple basic model that essentially
captures the features of R and T model.

Mann, Ronald J. (2005)70, analysed the effects of credit card use on broader economic
indicators, specifically consumer credit. Savings and consumer bankruptcy filings. Using

67
Pinto and Mary Beth (2005). Information Learned from socialization Agents: It relationship to Credit card use, Journal of Family
and Consumer Science Research, June, pp. 357-367
68
Mann, Ronald J. (2005). Global Credit Card Use and Debt: Policy Issues and Regulatory Responses. Law and Economics Working
Paper, No.049, University of Texas School of Law, April.
69
Cabral, Luis M.B. (2005). Market Power and Efficiency in Card Payment Systems: A Comment on Rochet and Tirole. New York
University & C EPR. ; \lo\~'embc1'.

22
aggregate national level data from Australia, Japan, the UK and the US, it is found that
credit card spending, lagged by l-2 years has a strong positive effect on consumer credit.
There is no significant relation between credit card use and savings. There is strong
relation between credit card debt and bankruptcy and weaker relation between consumer
credit and bankruptcy. The relations are robust across a variety of different lags and
models that include variables to control for the effects of economic cycles on bankruptcy.

Masters, Adrain and Rodriguez (2005)71, pointed out with a model, how the use of
credit cards can differ so widely across countries. Retailer’s propensity to accept cards
reduces the need for buyers to hold cash as the chance of a stock-out- (of cash) is reduced.
When retailers make their decision with respect to credit card acceptance they do not take
in to account the effect that decision has on other seller.

Smitha Ramachandran (2006)72, discussed in her article that the shift in transactions
from paper money to plastic money had revolutionised the banking and payment sector in
recent times. The future of banking technology lay with the refinement of RFID (Radio
Frequency Identification) technology and the conversion of normal plastic cards into
smart cards embedded with RFID tags. Credit card companies like Visa and Master card
were trying to move towards Contactless Payment Systems, which had already been
tested. The compactness of the card and its easy - to carry mode make it more convenient
for the card holders and fear of theft can also be eliminated. The long waiting queue and
the problems of payment with regular credit cards could be eliminated drastically with
the help of this technology.

Willis and Worthington (2006) 73 , have researched the degree to which credit cards
should be adapted or standardised to meet the needs of Chinese consumers. This was
based on the conceptual idea that products and services of high status and value need to

70
Mann, Ronald .1. (2005). Credit Cards, Consumer Credit and Bankruptcy. Law and Economics Working Paper, l\lo.044. University
of Texas School of Law. March.
71
Masters. Adrain and Rodriguez. (2005). Endogenous Credit Card Acceptance of Precautionary Demand for Money. ().r/ord
University Papers, 57(1), January, pp. 157 -168.
72
Smitha Ramachandran, “RIFTD technology, and the Payment Process Systems”, Treasury Management, February 2006 ICFAI
University press, pp. 37 - 41.
73
Willis, M. and Worthington, S. (2006), “Foreign Credit Cards in China: to Adapt or not to Adapt?”, Journal of Asia Pacific Business,
Vol. 7 No. 3, pp. 45-77.

23
be delivered in China in an un-adapted manner, so as to preserve their international status
and image. The conclusion drawn by the researchers was that foreign credit cards should
be kept as original and authentic as possible, in order to sustain their sense of status,
value and international brand equity. This obviously offers all credit card issuers in China
a challenge, as they must both be aware of CUP’s ambitions as a potential rival to
MasterCard and Visa, and yet they must deal with the reality of the international
acceptance and brand power of MasterCard and Visa.

Lydia L, Ramin C and Hian C (2006)74, in their study analysed Singapore’s diverse
cardholders in search of variations among demographic groups, credit card profiles, and
their perception with regard to credit card ownership and use.

James F. Devlin, Steve Worthington and P. Gerrard (2006)75, in their study seek to
examine why most multiple credit cardholders have a “main” card (i.e. a card used more
often than others) and “subsidiary” cards (i.e. cards used less often or only in an
emergency) and the spending patterns associated with main and subsidiary cards.

Devlin (2007)76, seeks to examine why most multiple credit cardholders have a “main”
card (i.e. a card used more often than others) and “subsidiary” cards (i.e. cards used less
often or only in an emergency) and the spending pattern associated with main and
subsidiary cards.

Steve Worthington and David Stewart (2007)77, adopt an exploratory research into the
holding and usage of credit cards by a distinct segment of the Chinese population, who
are “early adopters” of this product.

74
Lydia L, Ramin C and Hian C (2006), Singapore Credit Cardholders: Ownership, Usage Patterns, and Perceptions, Journal of
Services Marketing, pp 267-279.
75
James F. Devlin, Steve Worthington and P. Gerrard (2006), An Analysis of Main and Subsidiary Credit Card Holding and Spending,
International Journal of Bank Marketing, Vol. 25 Iss: 2 pp. 89 – 101.
76
Devlin F.J., Worthington S. and Gerrand. P. (2007). An Analysis of main and subsidiary credit card holding and spending. Journal
of Bank Marketing 25 (2). 89-101.
77
Steve Worthington, David Stewart, Xiongwen Lu, (2007),"The Adoption and Usage of Credit Cards by Urban-Affluent Consumers
in China", International Journal of Bank Marketing, Vol. 25 Iss: 4 pp. 238 – 252

24
Amin (2008) 78 , shows that mobile phones have provided an opportunity for banking
institutions to introduce new services to the public. The latest service, which is now
available in Malaysian banking institutions, is the mobile phone credit card. The purpose
of this paper is to provide a preliminary investigation of the factors that determine
whether Malaysia’s bank customers will use the new mobile phone credit card
technology.

Gan (2008)79, analyses Singapore’s diverse cardholders in search of variations among

demographic groups, credit card profiles, and their perceptions with regard to credit card
ownership and use. It then aims to discuss possible reasons governing Singaporeans’
credit card ownership and use.

Linda Delamaire (UK), Hussein (UK), John Pointon (UK) (2009)80, in their study
defines common terms in credit card fraud and highlights key statistics and figures in this
field. Depending on the type of fraud faced by banks on credit card companies, various
measures can be adopted and implemented. The proposals made in this paper are likely to
have beneficial attributes in terms of cost savings and time efficiency. The significance of
the application of the techniques reviewed here is in the minimization of credit card fraud.
Yet there are still ethical issues when genuine credit card customers are misclassified as
fraudulent.

Mr. Ch. Srikanthverma and Mr. V. Ranaprathap (2011)81, in their study say that
Indian credit card industry has been changing consumer spending patterns. And, the
credit card market in emerging economies has expanded rapidly in recent years. In India,
the credit card business boomed in the 1990s. The number of credit cards in circulation
has increased from 1.7 million in March 2006, to around 22.6 million by 31st March,

78
Amin H and Pagar S.J. (2008). Factors affecting the intentions of customers in Malaysia to use mobile phone credit card.
Management Research News 31 (7) 493-503.
79
Gan L.L, Maysami. R., Koh C.H. (2008), Singapore Credit cardholders: ownership, usage patterns, and perceptions. Journal of
Services Marketing 22 (4). 267-279.
80
Linda Delamaire (UK), Hussein (UK), John Pointon (UK) (2009), Credit Card Fraud and Detection Techniques: A Review, Banks
and Bank Systems, Vol 4, Issue 2, pp 57-68.
81
Mr.Ch. Srikanthverma and Mr. V. Ranaprathap (2011), Cashless Society: A Study on Trends and Issues in Credit card Industry in
India, Summer Internship Society, Vol III Issue II, pp 93-97.

25
2010. The total expenditure through credit cards went up to Rs. 584.46 billion during
2009-10.

Dr. S. Sudhagar (2012)82, says that 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.

Statement of the problem

The review of literature reveals that no study has been undertaken in relation to usage of
credit card in Hyderabad-Karnataka Region, in recent years. Hence, the present study
entitled “A Study on Usage Pattern of Credit Card Holders in Hyderabad-
Karnataka Region” has been undertaken. The present study is conducted in the districts
of Hyderabad-Karnataka Region viz. Bidar, Kalaburagi, Yadgir, Raichur, Bellary and
Koppal.

Objectives of the study

Following are the main objectives of the study:
 To study the demographic factors influencing the use of credit card in the districts
of Hyderabad-Karnataka Region.
 To study the attributes influencing the use of credit cards in the districts of
Hyderabad-Karnataka Region.
 To study the purpose and pattern of use of credit card in the districts of
Hyderabad-Karnataka Region.
 To ascertain findings from the study and suggest measures to improve credit card
system.

82
Dr. S. Sudhagar (2012), A Study on Perception and Awareness on Credit Cards among Bank Customers in Krishnagiri District,
ISOR Journal of Business and Management (IOSRJBM), pp 14-23.

26
Scope of the study
The researcher has covered all the six districts of Hyderabad-Karnataka Region to study
the usage pattern of credit card holders. The study covers all the banks, which have
issued credit cards to the respondents covered under the study. All types of credit cards
are covered. Sample size of 400 respondents has been taken and survey was conducted in
the years 2013 and 2014. The present study focuses on the usage pattern of credit card
holders. The study is designed to gain better understanding of the factors influencing the
use of credit card and satisfaction level of the existing credit card holders. The study also
covers the extent of utilization of credit cards.

Research Methodology
 Sources of data
Both primary and secondary sources of data are used for the study. Primary data
was collected by administrating the structured questionnaire to respondents in the
Hyderabad-Karnataka Region. Secondary data was collected from books,
magazines, Government publications and related articles.
 Sampling
The study is undertaken in all the six districts of Hyderabad-Karnataka Region viz,
Bidar, Kalaburagi, Yadgir, Raichur, Bellary and Koppal. As the total number of
card holders in the study area is not clear, convenience sampling technique was
used. Sample size of 400 respondents has been taken. The district-wise breakup of
the sample respondents is as under:
Districts Number of respondents
Bidar 60
Kalaburagi 100
Yadgir 60
Raichur 60
Bellary 60
Koppal 60
Total 400

27
 Statistical tools and techniques
The researcher has used the following tools and techniques for the study:
 One way and two way tables.
 Graphs and Charts.
 Chi-Square test (Test of Independence).
 Co-efficient of Correlation (Test of Association).
 Z-Test (Test of Proportion).

 Hypotheses
H1: Membership duration and age factor of card holders are independent.
H2: Occupation and usage of credit card are independent.
H3: Income and usage of credit card are independent.
H4: Credit card limit and monthly spending of cardholders are independent.
H5: Cash back offer and monthly spending of cardholders are independent.
H6: Occupation and purpose of cardholders are independent.
H7: The co-efficient of correlation between usage of credit card limit and
expenditure per month is not significant.
H8: The co-efficient of correlation between Income and Expenditure per
month is not significant.
H9: The co-efficient of correlation between usage and purchase pattern is not
significant.
H10: The co-efficient of correlation between average percent of cash back and
expenditure per month is not significant.
H11: At least 75% of the respondents use credit card for shopping purpose.
H12: At least 75% of the respondents have Visa credit card.
H13: At least 90% of the respondents have single credit card.

28
Limitations of the study
The study is subject to the following limitations:
 The study is based on the response of sample respondents.
 Personal bias of the respondents in providing information may not be ruled out.
However, the researcher has taken enough care to overcome the limitations.

Chapter Scheme
The study is divided into following five chapters. The details of chapters are as under –

First chapter: Introduction, Review of Literature and Research Design –

Covers introduction, review of literature, statement of the problem,
objectives of the study, scope of the study, research methodology,
limitations of the study and chapter scheme.
Second chapter: Profile of Indian Banking Industry. – It deals with origin,
history and evolution of banking, types of banks, functions of
banks, Indian banking system, technology & banking and
operational statistics.
Third chapter: Overview of Credit Card System in India. – It discusses the
origin, history and evolution of cards, card mechanism, benefits of
credit card, functions of credit card, major players in credit card
industry, credit card frauds, RBI guidelines for credit card
operation and operational statistics pertaining to credit card.
Fourth chapter: Field study. – The chapter analyses the field data and tests the
hypotheses.
Fifth chapter: Findings and suggestions. – The chapter covers findings
emerging from the study are discussed and suggestions for
improvement of credit card system are recorded.

29