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Ason
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8/9/2011
^WV`S^V_

^WV`S^V_
-A Iinonciol Services Honoqement Project

















Contents
nLroducLlon 3
PlsLory 3
vlsual leaLures 6
1 ssulng bank logo 6
2 LMv chlp on smarL cards 6
3 Pologram 6
4 CredlL card number 6
3 Card brand logo 6
6 LxplraLlon uaLe 6
7 Card Polder name 6
1ypes of CredlL card 6
1radlLlonal 1ypes 6
new 1ypes 7
nLeresL 8aLes 8
LllglblllLy Lo geL a CredlL Card 8
arLles Lo a CredlL Card 9
Pow a credlL card works 9
8eneflLs of CredlL card 10
8eneflLs Lo cusLomers 10
8eneflLs Lo MerchanLs 10
uemerlLs of CredlL Card 11
ueLrlmenLs Lo cusLomers 11
CosLs Lo merchanLs 12
CredlL Card MarkeL ln ndla 12
luLure 12


ntroduction
A credlL card ls a small plasLlc card lssued Lo users as a
sysLem of paymenL L allows lLs holder Lo buy goods and
servlces based on Lhe holders promlse Lo pay for Lhese
goods and servlces 1he lssuer of Lhe card creaLes a
revolvlng accounL and granLs a llne of credlL Lo Lhe
consumer (or Lhe user) from whlch Lhe user can borrow
money for paymenL Lo a merchanL or as a cash advance
Lo Lhe user
A credlL card ls dlfferenL from a charge card a charge card requlres Lhe balance Lo be pald ln
full each monLh n conLrasL credlL cards allow Lhe consumers a conLlnulng balance of debL
sub[ecL Lo lnLeresL belng charged A credlL card also dlffers from a cash card whlch can be
used llke currency by Lhe owner of Lhe card MosL credlL cards are lssued by banks or credlL
unlons and are Lhe shape and slze speclfled by Lhe /LC 7810 sLandard as u1 1hls ls
deflned as 8360 3398 mm (3370 2123 ln) (33/8 21/8 ln) ln slze
istory
1he concepL of uslng a card for purchases was descrlbed ln 1887 by Ldward 8ellamy ln hls
uLoplan novel Looklng 8ackward 8ellamy used Lhe Lerm credlL card eleven Llmes ln Lhls
novel
1he modern credlL card was Lhe successor of a varleLy of merchanL credlL schemes L was
flrsL used ln Lhe 1920s ln Lhe unlLed LaLes speclflcally Lo sell fuel Lo a growlng number of
auLomoblle owners n 1938 several companles sLarLed Lo accepL each oLhers cards
WesLern unlon had begun lssulng charge cards Lo lLs frequenL cusLomers ln 1921 ome
charge cards were prlnLed on paper card sLock buL were easlly counLerfelLed
1he ChargalaLe developed ln 1928 was an early predecessor Lo Lhe credlL card and used
ln Lhe u from Lhe 1930s Lo Lhe laLe 1930s L was a 2Z 1x recLangle of sheeL meLal
relaLed Lo Addressograph and mlllLary dog Lag sysLems L was embossed wlLh Lhe
cusLomers name clLy and sLaLe L held a small paper card for a slgnaLure n recordlng a
purchase Lhe plaLe was lald lnLo a recess ln Lhe lmprlnLer wlLh a paper charge sllp
poslLloned on Lop of lL 1he record of Lhe LransacLlon lncluded an lmpresslon of Lhe
embossed lnformaLlon made by Lhe lmprlnLer presslng an lnked rlbbon agalnsL Lhe charge
sllp3 ChargalaLe was a Lrademark of larrlngLon ManufacLurlng Co ChargalaLes were
lssued by largescale merchanLs Lo Lhelr regular cusLomers much llke deparLmenL sLore
credlL cards of Loday n some cases Lhe plaLes were kepL ln Lhe lssulng sLore raLher Lhan
held by cusLomers When an auLhorlzed user made a purchase a clerk reLrleved Lhe plaLe
from Lhe sLores flles and Lhen processed Lhe purchase ChargalaLes speeded backofflce
bookkeeplng LhaL was done manually ln paper ledgers ln each sLore before compuLers
n 1936 Amerlcan Alrllnes and Lhe Alr 1ransporL AssoclaLlon slmpllfled Lhe process even
more wlLh Lhe advenL of Lhe Alr 1ravel Card 1hey creaLed a numberlng scheme LhaL
ldenLlfled Lhe ssuer of card as well as Lhe CusLomer accounL 1hls ls Lhe reason Lhe modern
uA1 cards sLlll sLarL wlLh Lhe number 1 WlLh an Alr 1ravel Card passengers could buy
now and pay laLer" for a LlckeL agalnsL Lhelr credlL and recelve a flfLeen percenL dlscounL aL
any of Lhe accepLlng alrllnes 8y Lhe 1940s all of Lhe ma[or domesLlc alrllnes offered Alr
1ravel Cards LhaL could be used on 17 dlfferenL alrllnes 8y 1941 abouL half of Lhe Alrllnes
8evenues came Lhrough Lhe Alr 1ravel Card agreemenL 1he Alrllnes had also sLarLed
offerlng lnsLalmenL plans Lo lure new Lravellers lnLo Lhe alr n cLober 1948 Lhe Alr 1ravel
Card becomes Lhe flrsL lnLernaLlonally valld Charge Card wlLhln all members of Lhe
nLernaLlonal Alr 1ransporL AssoclaLlon
1he concepL of cusLomers paylng dlfferenL merchanLs uslng Lhe same card was expanded ln
1930 by 8alph chnelder and lrank Mcnamara founders of ulners Club Lo consolldaLe
mulLlple cards 1he ulners Club whlch was creaLed parLlally Lhrough a merger wlLh ulne and
lgn produced Lhe flrsL general purpose charge card and requlred Lhe enLlre blll Lo be
pald wlLh each sLaLemenL 1haL was followed by CarLe 8lanche and ln 1938 by Amerlcan
Lxpress whlch creaLed a worldwlde credlL card neLwork (alLhough Lhese were lnlLlally charge
cards LhaL acqulred credlL card feaLures afLer 8ankAmerlcard demonsLraLed Lhe feaslblllLy of
Lhe concepL)
Powever unLll 1938 no one had been able Lo creaLe a worklng revolvlng credlL flnanclal
lnsLrumenL lssued by a LhlrdparLy bank LhaL was generally accepLed by a large number of
merchanLs (as opposed Lo merchanLlssued revolvlng cards accepLed by only a few
merchanLs) A dozen experlmenLs by small Amerlcan banks had been aLLempLed (and had
falled) n epLember 1938 8ank of Amerlca launched Lhe 8ankAmerlcard ln lresno
Callfornla 8ankAmerlcard became Lhe flrsL successful recognlzably modern credlL card
(alLhough lL underwenL a Lroubled gesLaLlon durlng whlch lLs creaLor reslgned) and wlLh lLs
overseas afflllaLes evenLually evolved lnLo Lhe vlsa sysLem n 1966 Lhe ancesLor of
MasLerCard was born when a group of Callfornla banks esLabllshed MasLer Charge Lo
compeLe wlLh 8ankAmerlcard lL recelved a slgnlflcanL boosL when ClLlbank merged lLs
proprleLary LveryLhlng Card (launched ln 1967) lnLo MasLer Charge ln 1969
Larly credlL cards ln Lhe u of whlch 8ankAmerlcard was Lhe mosL promlnenL example
were mass produced and mass malled unsollclLed Lo bank cusLomers who were LhoughL Lo
be good credlL rlsks 8uL 1hey have been malled off Lo unemployables drunks narcoLlcs
addlcLs and Lo compulslve debLors a process resldenL !ohnson's peclal AsslsLanL 8eLLy
lurness found very llke 'glvlng sugar Lo dlabeLlcs'" 1hese mass malllngs were known as
drops ln banklng Lermlnology and were ouLlawed ln 1970 due Lo Lhe flnanclal chaos LhaL
Lhey caused buL noL before 100 mllllon credlL cards had been dropped lnLo Lhe u
populaLlon AfLer 1970 only credlL card appllcaLlons could be senL unsollclLed ln mass
malllngs
1he fracLured naLure of Lhe u banklng sysLem under Lhe ClassLeagall AcL meanL LhaL
credlL cards became an effecLlve way for Lhose who were Lravellng around Lhe counLry Lo
move Lhelr credlL Lo places where Lhey could noL dlrecLly use Lhelr banklng faclllLles n 1966
8arclaycard ln Lhe uk launched Lhe flrsL credlL card ouLslde of Lhe u
1here are now counLless varlaLlons on Lhe baslc concepL of revolvlng credlL for lndlvlduals
(as lssued by banks and honoured by a neLwork of flnanclal lnsLlLuLlons) lncludlng
organlzaLlonbranded credlL cards corporaLeuser credlL cards sLore cards and so on
AlLhough credlL cards reached very hlgh adopLlon levels ln Lhe u Canada and Lhe uk ln Lhe
mld LwenLleLh cenLury many culLures were more cashorlenLed or developed alLernaLlve
forms of cashless paymenLs such as CarLe bleue or Lhe Lurocard (Cermany lrance
wlLzerland and oLhers) n Lhese places adopLlon of credlL cards was lnlLlally much slower
L Look unLll Lhe 1990s Lo reach anyLhlng llke Lhe percenLage markeLpeneLraLlon levels
achleved ln Lhe u Canada or uk n some counLrles accepLance sLlll remalns poor as Lhe
use of a credlL card sysLem depends on Lhe banklng sysLem belng percelved as rellable
!apan remalns a very cash orlenLed socleLy wlLh credlL card adopLlon belng llmlLed Lo only
Lhe largesL of merchanLs alLhough an alLernaLlve sysLem based on 8lus lnslde cell phones
has seen some accepLance 8ecause of sLrlcL regulaLlons regardlng banklng sysLem
overdrafLs some counLrles lrance ln parLlcular were much fasLer Lo develop and adopL
chlpbased credlL cards whlch are now seen as ma[or anLlfraud credlL devlces ueblL cards
and onllne banklng are used more wldely Lhan credlL cards ln some counLrles
1he deslgn of Lhe credlL card lLself has become a ma[or selllng polnL ln recenL years 1he
value of Lhe card Lo Lhe lssuer ls ofLen relaLed Lo Lhe cusLomers usage of Lhe card or Lo Lhe
cusLomers flnanclal worLh 1hls has led Lo Lhe rlse of Co8rand and AfflnlLy cards where
Lhe card deslgns ls relaLed Lo Lhe afflnlLy (a unlverslLy or professlonal socleLy for example)
leadlng Lo hlgher card usage n mosL cases a percenLage of Lhe value of Lhe card ls reLurned
Lo Lhe afflnlLy group

isualeatures
MosL credlL cards are lssued by banks or credlL unlons and are Lhe shape and slze speclfled
by Lhe /LC 7810 sLandard as u1 1hls ls deflned as 8360 3398 mm (3370 2123 ln)
(33/8 21/8 ln) ln slze
1he lronL slde conLalns Lhe followlng nformaLlon
1 ssulng bank logo
2 LMv chlp on smarL cards
3 Pologram
4 CredlL card number
3 Card brand logo
6 LxplraLlon uaLe
7 Card Polder name
8 ConLacLless Chlp

1he 8ack slde conLalns Lhe followlng nformaLlon
1 MagneLlc Lrlpe
2 lgnaLure Lrlp
3 Card ecurlLy Code

ypesofCreditcard
raditionalypes
Cred|t Card Lhe baslc form of credlL card glves credlL (loan) Lo Lhe user 1he days of credlL
one geLs could range from 2030 days dependlng on Lhe daLe when one made Lhe purchase
ne can choose Lo pay your enLlre dues aL one go or sLagger Lhem afLer paylng Lhe
mlnlmum amounL due every monLh 8esldes Lhls lL enLlLles Lhe member Lo pleLhora of
beneflL llke Lravel dlscounL dlscounL on reLall loans
Charge Card L ls slmllar Lo credlL card excepL LhaL on Lhe due daLe for paymenL Lhe whole
ouLsLandlng amounL has Lo pay arL seLLlemenL of Lhe amounL paylng Lhe resL laLer ls noL
permlLLed
Deb|t Card a deblL card ls baslcally llke an A1M card on Lhe move (or llke bank a/c on Lhe
move) L enables user Lo access hls/ her bank a/c for paymenL When she/he makes
purchases uslng deblL card Lhen hls/ her bank a/c ls lnsLanLaneously deblLed Lo Lhe exLenL
of Lhe purchase amounL ueblL card can also be used for merchanL LransacLlon (shopplng)
provlded Lhe user has adequaLe balance ln Lhe bank a/c
@, Card 8anks offer Lhls card as a free servlce Lo lLs deposlL holders A1M card are used
Lo wlLhdraw cash from bank accounLs when bank counLers are closed even when counLers
are open Lo save on Llme

ewypes
ba Card Clobal Card enables you Lo use your credlL card oLher forelgn currency sLlll
seLLle Lhe dues ln your local currency olnL Lo noLe here ls LhaL your credlL llmlL wlll be
based on Lhe baslc Lravel quoLa enLlLlemenL A global/ lnLernaLlonal card enables user Lo use
credlL card even when he ls an overseas Pe can wlLhdraw cash up Lo u 300 agalnsL Lhe
credlL 1hus one can spend ln dollars or any oLher forelgn currency sLlll seLLle Lhe dues ln
Lhe local currency (rupees) 1he credlL llmlL wlll be based on Lhe baslc Lravel quoLa (81C)
enLlLlemenL A bank can lssue a slngle credlL card whlch can be used LhroughouL Lhe world
Lhe global card 1he llmlLs of Lhe money LhaL can be spenL ln forelgn currency are
deLermlned by Lhe 88 based on cerLaln norms
art Card A smarL card ls a card LhaL ls embedded wlLh elLher a mlcroprocessor a
memory chlp or only a memory chlp wlLh non programmable loglc 1he mlcroprocessor
card can add deleLe and oLherwlse manlpulaLe lnformaLlon on Lhe card whlle Lhe memory
chlp card (for eg prepald phone cards) can only underLake a predeflned operaLlon marL
cards unllke magneLlc sLrlpe cards can carry all necessary funcLlons lnformaLlon on Lhe
card 1herefore Lhey do noL requlre access Lo remoLe daLabases aL Lhe Llme of Lhe
LransacLlon
Crprate Cred|t Card ssuers negoLlaLe a package wlLh ma[or employers for lssuance of
credlL cards Lo Lhelr execuLlves 1hese are lssued under one umbrella scheme aL heavy
dlscounLed annual fees employees can use separaLe cards for Lhelr personal buslness
expenses ersonal card for personal expenses and corporaLe for buslness lor Lhose who
Lravel a greaL deal havlng a separaLe record for buslness expenses can be helpful for
malnLalnlng personal flnances as well as for submlLLlng accuraLe compleLe Lravel
relmbursemenL requesLs followlng a Lrlp CorporaLe also negoLlaLes exLra prlvlleges for Lhelr
cardholders
Cranded Card Leadlng MerchanL esLabllshmenLs especlally chalns have sLarLed lssulng
cobranded cards 1helr name and logo appears on fronL of Lhe card ln addlLlon Lo Lhe
bankers name and logo 1hese organlsaLlon offer exLra beneflLs Lo Lhe cardholder on Lhelr
usage of Lhe card 1hese beneflLs are of Lhelr own producLs and aL Lhelr own ouLleL only

nterestates
CredlL card lssuers usually walve lnLeresL charges lf Lhe balance ls pald ln full each monLh
buL Lyplcally wlll charge full lnLeresL on Lhe enLlre ouLsLandlng balance from Lhe daLe of each
purchase lf Lhe LoLal balance ls noL pald
lor example lf a user had a 1000 LransacLlon and repald lL ln full wlLhln Lhls grace perlod
Lhere would be no lnLeresL charged f however even 100 of Lhe LoLal amounL remalned
unpald lnLeresL would be charged on Lhe 1000 from Lhe daLe of purchase unLll Lhe
paymenL ls recelved 1he preclse manner ln whlch lnLeresL ls charged ls usually deLalled ln a
cardholder agreemenL whlch may be summarlzed on Lhe back of Lhe monLhly sLaLemenL
1he general calculaLlon formula mosL flnanclal lnsLlLuLlons use Lo deLermlne Lhe amounL of
lnLeresL Lo be charged ls A8/100 x Au8/363 x number of days revolved 1ake Lhe annual
percenLage raLe (A8) and dlvlde by 100 Lhen mulLlply Lo Lhe amounL of Lhe average dally
balance (Au8) dlvlded by 363 and Lhen Lake Lhls LoLal and mulLlply by Lhe LoLal number of
days Lhe amounL revolved before paymenL was made on Lhe accounL llnanclal lnsLlLuLlons
refer Lo lnLeresL charged back Lo Lhe orlglnal Llme of Lhe LransacLlon and up Lo Lhe Llme a
paymenL was made lf noL ln full as 88lC or resldual reLall flnance charge 1hus afLer an
amounL has revolved and a paymenL has been made Lhe user of Lhe card wlll sLlll recelve
lnLeresL charges on Lhelr sLaLemenL afLer paylng Lhe nexL sLaLemenL ln full (ln facL Lhe
sLaLemenL may only have a charge for lnLeresL LhaL collecLed up unLll Lhe daLe Lhe full
balance was pald le when Lhe balance sLopped revolvlng)
ligibilitytogetaCreditCard
nce cr|ter|a
a ndlvldual 8s60000pa (gross) above
b Company/flrm (pald up caplLal) 8s 3 lakhs above
Dcuents t be sub|tted
a f card ls applled on company/ flrm accounL laLesL balance sheeL proflL or loss a/c
board resoluLlon
b f card ls applled on personal accounL laLesL salary sllp / form 16 or lL reLurns copy
c hoLograph of appllcanLs address proof
8esldes Lhls lssuers carry ouL credlL check Lhrough Lhelr agencles 1he facLors whlch go
agalnsL lssuances (negaLlve facLors) are
1 Clvll crlmlnal courL [udgmenLs agalnsL appllcanL
2 revlously decllned credlL card or loan appllcaLlons
3 uefaulLs of paymenLs of any klnd
4 MorLgage arrears
3 roperLy repossesslon

artiestoaCreditCard
O Cardhder 1he holder of Lhe card used Lo make a purchase Lhe consumer
O Card|ssu|ng bank 1he flnanclal lnsLlLuLlon or oLher organlzaLlon LhaL lssued Lhe credlL
card Lo Lhe cardholder 1hls bank bllls Lhe consumer for repaymenL and bears Lhe rlsk
LhaL Lhe card ls used fraudulenLly Amerlcan Lxpress and ulscover were prevlously Lhe
only cardlssulng banks for Lhelr respecLlve brands buL as of 2007 Lhls ls no longer Lhe
case Cards lssued by banks Lo cardholders ln a dlfferenL counLry are known as offshore
credlL cards
O ,erchant 1he lndlvldual or buslness accepLlng credlL card paymenLs for producLs or
servlces sold Lo Lhe cardholder
O Cred|t Card assc|at|n An assoclaLlon of cardlssulng banks such as ulscover vlsa
MasLerCard Amerlcan express eLc LhaL seL LransacLlon Lerms for merchanLs card
lssulng banks and acqulrlng banks
owacreditcardworks
CredlL cards are lssued by a credlL card lssuer such as a bank or credlL unlon afLer an
accounL has been approved by Lhe credlL provlder afLer whlch cardholders can use lL Lo
make purchases aL merchanLs accepLlng LhaL card MerchanLs ofLen adverLlse whlch cards
Lhey accepL by dlsplaylng accepLance marks generally derlved from logos or may
communlcaLe Lhls orally as ln CredlL cards are flne (lmpllclLly meanlng ma[or brands)
We Lake (brands x ? and Z) or We donL Lake credlL cards
When a purchase ls made Lhe credlL card user agrees Lo pay Lhe card lssuer 1he cardholder
lndlcaLes consenL Lo pay by slgnlng a recelpL wlLh a record of Lhe card deLalls and lndlcaLlng
Lhe amounL Lo be pald or by enLerlng a personal ldenLlflcaLlon number (n) Also many
merchanLs now accepL verbal auLhorlzaLlons vla Lelephone and elecLronlc auLhorlzaLlon
uslng Lhe nLerneL known as a card noL presenL LransacLlon (Cn)
LlecLronlc verlflcaLlon sysLems allow merchanLs Lo verlfy ln a few seconds LhaL Lhe card ls
valld and Lhe credlL card cusLomer has sufflclenL credlL Lo cover Lhe purchase allowlng Lhe
verlflcaLlon Lo happen aL Llme of purchase 1he verlflcaLlon ls performed uslng a credlL card
paymenL Lermlnal or polnLofsale () sysLem wlLh a communlcaLlons llnk Lo Lhe
merchanLs acqulrlng bank uaLa from Lhe card ls obLalned from a magneLlc sLrlpe or chlp on
Lhe card Lhe laLLer sysLem ls called Chlp and n ln Lhe unlLed klngdom and reland and ls
lmplemenLed as an LMv card
lor card noL presenL LransacLlons where Lhe card ls noL shown (eg ecommerce mall
order and Lelephone sales) merchanLs addlLlonally verlfy LhaL Lhe cusLomer ls ln physlcal
possesslon of Lhe card and ls Lhe auLhorlzed user by asklng for addlLlonal lnformaLlon such
as Lhe securlLy code prlnLed on Lhe back of Lhe card daLe of explry and bllllng address
Lach monLh Lhe credlL card user ls senL a sLaLemenL lndlcaLlng Lhe purchases underLaken
wlLh Lhe card any ouLsLandlng fees and Lhe LoLal amounL owed AfLer recelvlng Lhe
sLaLemenL Lhe cardholder may dlspuLe any charges LhaL he or she Lhlnks are lncorrecL (see
13 uC 1643 whlch llmlLs cardholder llablllLy for unauLhorlzed use of a credlL card Lo
30 and Lhe lalr CredlL 8llllng AcL for deLalls of Lhe u regulaLlons) Lherwlse Lhe
cardholder musL pay a deflned mlnlmum proporLlon of Lhe blll by a due daLe or may choose
Lo pay a hlgher amounL up Lo Lhe enLlre amounL owed 1he credlL lssuer charges lnLeresL on
Lhe amounL owed lf Lhe balance ls noL pald ln full (Lyplcally aL a much hlgher raLe Lhan mosL
oLher forms of debL) n addlLlon lf Lhe credlL card user falls Lo make aL leasL Lhe mlnlmum
paymenL by Lhe due daLe Lhe lssuer may lmpose a laLe fee and/or oLher penalLles on Lhe
user 1o help mlLlgaLe Lhls some flnanclal lnsLlLuLlons can arrange for auLomaLlc paymenLs
Lo be deducLed from Lhe users bank accounLs Lhus avoldlng such penalLles alLogeLher as
long as Lhe cardholder has sufflclenL funds
enefitsofCreditcard
enefitstocustomers
1he maln beneflL Lo each cusLomer ls convenlence Compared Lo deblL cards and cheques a
credlL card allows small shorLLerm loans Lo be qulckly made Lo a cusLomer who need noL
calculaLe a balance remalnlng before every LransacLlon provlded Lhe LoLal charges do noL
exceed Lhe maxlmum credlL llne for Lhe card CredlL cards also provlde more fraud
proLecLlon Lhan deblL cards n Lhe uk for example Lhe bank ls [olnLly llable wlLh Lhe
merchanL for purchases of defecLlve producLs over 100
Many credlL cards offer rewards and beneflLs packages such as offerlng enhanced producL
warranLles aL no cosL free loss/damage coverage on new purchases and polnLs whlch may
be redeemed for cash producLs or alrllne LlckeLs
enefitstoercbants
lor merchanLs a credlL card LransacLlon ls ofLen more secure Lhan oLher forms of paymenL
such as cheques because Lhe lssulng bank commlLs Lo pay Lhe merchanL Lhe momenL Lhe
LransacLlon ls auLhorlzed regardless of wheLher Lhe consumer defaulLs on Lhe credlL card
paymenL (excepL for leglLlmaLe dlspuLes whlch are dlscussed below and can resulL ln
charges back Lo Lhe merchanL) n mosL cases cards are even more secure Lhan cash
because Lhey dlscourage LhefL by Lhe merchanLs employees and reduce Lhe amounL of cash
on Lhe premlses
rlor Lo credlL cards each merchanL had Lo evaluaLe each cusLomers credlL hlsLory before
exLendlng credlL 1haL Lask ls now performed by Lhe banks whlch assume Lhe credlL rlsk
CredlL cards can also ald ln securlng a sale especlally lf Lhe cusLomer does noL have enough
cash on hls or her person or checklng accounL LxLra Lurnover ls generaLed by Lhe facL LhaL
Lhe cusLomer can purchase goods and/or servlces lmmedlaLely and ls less lnhlblLed by Lhe
amounL of cash ln hls or her pockeL and Lhe lmmedlaLe sLaLe of hls or her bank balance
Much of merchanLs markeLlng ls based on Lhls lmmedlacy
lor each purchase Lhe bank charges Lhe merchanL a commlsslon (dlscounL fee) for Lhls
servlce and Lhere may be a cerLaln delay before Lhe agreed paymenL ls recelved by Lhe
merchanL 1he commlsslon ls ofLen a percenLage of Lhe LransacLlon amounL plus a flxed fee
(lnLerchange raLe) n addlLlon a merchanL may be penallzed or have Lhelr ablllLy Lo recelve
paymenL uslng LhaL credlL card resLrlcLed lf Lhere are Loo many cancellaLlons or reversals of
charges as a resulL of dlspuLes ome small merchanLs requlre credlL purchases Lo have a
mlnlmum amounL Lo compensaLe for Lhe LransacLlon cosLs
n some counLrles for example Lhe nordlc counLrles banks guaranLee paymenL on sLolen
cards only lf an u card ls checked and Lhe u card number/clvlc reglsLraLlon number ls
wrlLLen down on Lhe recelpL LogeLher wlLh Lhe slgnaLure n Lhese counLrles merchanLs
Lherefore usually ask for u nonnordlc clLlzens who are unllkely Lo possess a nordlc u
card or drlvlng llcense wlll lnsLead have Lo show Lhelr passporL and Lhe passporL number
wlll be wrlLLen down on Lhe recelpL someLlmes LogeLher wlLh oLher lnformaLlon ome
shops use Lhe cards n for ldenLlflcaLlon and ln LhaL case showlng an u card ls noL
necessary
emeritsofCreditCard
etrimentstocustomers
|gh |nterest and bankruptcy
Low lnLroducLory credlL card raLes are llmlLed Lo a flxed Lerm usually beLween 6 and 12
monLhs afLer whlch a hlgher raLe ls charged As all credlL cards charge fees and lnLeresL
some cusLomers become so lndebLed Lo Lhelr credlL card provlder LhaL Lhey are drlven Lo
bankrupLcy ome credlL cards ofLen levy a raLe of 20 Lo 30 percenL afLer a paymenL ls
mlssed ln oLher cases a flxed charge ls levled wlLhouL change Lo Lhe lnLeresL raLe n
some cases unlversal defaulL may apply Lhe hlgh defaulL raLe ls applled Lo a card ln good
sLandlng by mlsslng a paymenL on an unrelaLed accounL from Lhe same provlder 1hls
can lead Lo a snowball effecL ln whlch Lhe consumer ls drowned by unexpecLedly hlgh
lnLeresL raLes lurLher mosL card holder agreemenLs enable Lhe lssuer Lo arblLrarlly ralse
Lhe lnLeresL raLe for any reason Lhey see flL As of uecember 2009 llrsL remler 8ank ls
reporLedly offerlng a credlL card wlLh a 799 lnLeresL raLe
2 nfated pr|c|ng fr a cnsuers
MerchanLs LhaL accepL credlL cards musL pay lnLerchange fees and dlscounL fees on all
credlLcard LransacLlons n some cases merchanLs are barred by Lhelr credlL agreemenLs
from passlng Lhese fees dlrecLly Lo credlL card cusLomers or from seLLlng a mlnlmum
LransacLlon amounL (no longer prohlblLed ln Lhe unlLed LaLes) 1he resulL ls LhaL
merchanLs may charge all cusLomers (lncludlng Lhose who do noL use credlL cards)
hlgher prlces Lo cover Lhe fees on credlL card LransacLlons
Coststomercbants
MerchanLs are charged several fees for Lhe prlvllege of accepLlng credlL cards 1he merchanL
ls usually charged a commlsslon of around 1 Lo 3 percenL of Lhe value of each LransacLlon
pald for by credlL card 1he merchanL may also pay a varlable charge called an lnLerchange
raLe for each LransacLlon n some lnsLances of very lowvalue LransacLlons use of credlL
cards wlll slgnlflcanLly reduce Lhe proflL margln or cause Lhe merchanL Lo lose money on Lhe
LransacLlon MerchanLs musL accepL Lhese LransacLlons as parL of Lhelr cosLs Lo reLaln Lhe
rlghL Lo accepL credlL card LransacLlons MerchanLs wlLh very low average LransacLlon prlces
or very hlgh average LransacLlon prlces are more averse Lo accepLlng credlL cards n some
cases merchanLs may charge users a credlL card supplemenL elLher a flxed amounL or a
percenLage for paymenL by credlL card 1hls pracLlce ls prohlblLed by Lhe credlL card
conLracLs ln Lhe unlLed LaLes alLhough Lhe conLracLs allow Lhe merchanLs Lo glve dlscounLs
for cash paymenL
CreditCardarketinndia
Crowlng consumer spendlng changlng spendlng paLLern and emergence of onllne shopplng Lrend
Lhe ndlan credlL cards markeL ls expecLed Lo conLlnue growlng aL robusL raLe
now people more frequenLly use plasLlc money (llke credlL and deblL cards) for paylng Lhelr dayLo
day expenses 1ravellng dlnlng and [ewelry are Lhe Lop Lhree purchases LhaL ndlans make Lhrough
credlL cards luel accounLs for a very small porLlon of credlL card purchases as Lhese are largely pald
Lhrough deblL cards Alrllne LlckeLs boLh domesLlc and lnLernaLlonal are now boughL Lhrough credlL
cards maklng lL Lhe largesL caLegory ln Lravellng for credlL card purchases
uLlllLy paymenL ls anoLher segmenL where more paymenLs are belng made Lhrough plasLlc money
slnce Lhe lasL Lwo years n Lhe lasL Lwo years Lhe number of cusLomers paylng Lhelr elecLrlclLy and
waLer bllls Lhrough credlL cards has rlsen Lhough Lhe overall cusLomer base ls sLlll small
uture
8nC a leadlng markeL research flrm says ln lLs new reporL Clobal CredlL Card ndusLry
Lmerglng MarkeLs" wlLh Lhe growlng consumer spendlng changlng spendlng paLLern and surglng
Lrend of onllne shopplng Lhe ndlan credlL cards markeL ls expecLed Lo grow aL CAC8 of nearly 23
beLween 200809 and 201112 As per Lhe reporL ln Lhe lasL few years spendlng paLLern has
changed drasLlcally ln ndla L ls esLlmaLed LhaL Lhe credlL markeL has a huge poLenLlal Lo grow aL a
raLe much hlgher Lhan Lhe pro[ecLed 23 ndla ls [usL one of Lhe many emerglng credlL card markeLs
dlscussed ln Clobal CredlL Card ndusLry Lmerglng MarkeLs"