A project submitted in the subject of

“SOCIETY ATTITUDE TOWARDS DEBIT AND CREDIT

CARDS”
A Project Submitted to
University of Mumbai
for partial completion of the degree of
Bachelor of Commerce
Under the Faculty of Banking and insurance
By
MISS. MONICA KUMOD MONDAL
Under the Guidance of
YATIN KENE
G.R.PATIL COLLEGE OF ARTS & COMMERCE, DOMBIVALI (E)
(2019-2020)
 MUMBRA SHIKSHAN PRASARAKH MANDAL’S

G.R.PATIL COLLEGE ARTS

SCIENCE & COMMERCE OF DOMBIVALI (EAST)
CERTIFICATE
This is to certify that Miss. Monica Kumod Mondal has worked and duly
Completed his project work for the degree of Bachelor of Commerce under
the Faculty of banking and insurance in the subject of Financial Services and
his project is Entitled, “SOCIETY ATTITUDE TOWARDS DEBIT AND
CREDIT CARDS” Under my supervision. I further certify that the entire
Work has been done by the learner under my guidance and that no part Of it
has been submitted previously for any Degree or Diploma of any University.
It is his own work and facts reported by his personal findings and
investigations.
Date of submission: Name and Signature of Guiding Teacher

PROF. YATIN KENE

Internal Examiner External Examiner Principal

 ACKNOWLEDGEMENT

To list who all have helped me is difficult because the are so numerous and the

Depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh

Dimensions in the completion of this projects.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me

chance to do this project.

I would like to thank my Principal. ANURAG SINHA for providing the

necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator, PROF. YATIN KENE for

his moral support and guidance.

I would like to express my sincere gratitude towards my project guide,

PROF. YATIN KENE whose guidance and care made the project successful.

I would like to thank my college teacher’s for having provided various reference books and

magazines related to my projects.

Lastly, I wouldlike to thank each and every person who directly or indirectly

helped me in the completion of the project especially My Parents and Peers

who supported me throught out my project.

 INDEX
SR. NO. PARTICULARS PAGE NO.

CH.1 INTRODUCTION 1

CH.2 NEED OF STUDY 25

CH.3 REVIEW OF LITERATURE 27

CH.4 OBJECTIVE 41

CH.5 RESEARCH METHODOLOGY 42

CH.6 ANALYSIS 44

CH.7 LIMITATIONS OF THE STUDY 67

CH.8 SUGGETIONS 68

CH.9 FINDING 69

CH.10 CONCLUSION 70

CH.11 BIBLIOGRAPHY 71
 CHAPTER 1

INTRODUCTION

Banks are playing vital role in the economic development of a

country. A sound and effective banking system is the backbone of an
economy. The emergence of private/new generation banks has been
changed the entire banking operations drastically by the use of sophisticated
new technologies like internet banking, ATMs (Automated Teller Machines),
EFT (Electronic Fund Transfer), Debit cards, Credit cards, Mobile banking,
etc., are accessible to customers on a 24x7 basis across the world. These
modern technologies enable the bankers to overcome the barriers of time and
space in extending their customer services.

The Indian banking market is zooming, with assets expected to

reach $1 trillion by2010. An expanding economy, a growing middle class and
technological innovations are contributory factors for this. The industry is
focusing on the retail side of the market, with a CAGR of 23 percent in the
past five years. However, despite this thrust on retail banking, banks will have
to come up with creative and simple solutions to make money in India. This is
because India has a huge banked population and unless this is included,
neither will banks prosper, nor the country. Banks have also realized the
potential of this market and have come up with innovative means of reaching
it. They are going back to rural pockets for financial inclusion. Building more
branches in the countryside may not always be cost-effective. So banks need
to explore other options by developing a better understanding of what rural
households need and offer new products and distribution networks to suit
them. This trend has influenced tremendous grow hand opportunities in other
banking allied activities. One noteworthy recent trend is the success of
constant innovation, and adoption and implementation of electronic payments
in the Indian payments market. The payment system in India has seen
unprecedented growth since the inception of electronic payment
mechanisms. India is dominated by paper-based transactions; however,
electronic transactions are quickly catching up. Various kinds of payment
mechanisms in the retail payments space have ensured more timely and
efficient completion of financial transaction. India has been one of the fastest
growing countries for payment cards in the Asia-Pacific region. About 35–
40% of India‘s population is working, with increasing disposable income year
on year. Consumerism is set to add impetus to growth in the card base. India
currently has approximately 130 million cards (both debit and credit) in
circulation. Its card market is growing at over 30% in the last three to five
years. Card payments are becoming vital in e-payments growth. Banking
customers now hold multiple cards for day-to-day activities like bill payments,
fund transfers, shopping, dining, and

1
traveling etc. Debit cards entered India about a decade ago, in 1998. The
debit card market is growing faster than credit cards.

HISTORY

Credit cards were first issued in the USA in the early twentieth
century. Since then, they have become a major system for exchange of
transactions (or payments) that stimulates household and personal spending
even in many developing countries of the world (Watkins, 2000). It is
necessary to define and differentiate the characteristics of credit cards versus
debit cards from a consumer‘s perspective in order to understand the
consumer‘s behavior. The features (including credit limit) of a particular credit
card or debit card issued through a bank Association, however, are
determined by the individual firm and not by the bankcard association. Some
credit and debit cards are restricted in their usage to the is user‘s retail outlets
(such as store credit cards) and are therefore, limited in their functionality.
Credit cards are a mode of payment that allows a buyer to purchase a
product or service immediately even if the buyer does not have the money at
hand. The buyer is able to do this because a financial institution has extended
credit to him/her. Upon use of the credit card, the buyer is obliged to pay back
the amount used in full by a certain time (i.e. grace period) without interest or
in smaller payment amounts over time with interest. Debit cards, on the other
hand, are a form of payment that requires that the buyer has the funds (or a
line of credit attached to the account) in his/her account before a purchase
transaction is consummated. The chief advantage of using a debit card is that
it is a cashless way of paying cash for a product or service. The immediate
deduction of the payment amount from the account also ensures that the
customer does not spend more than what he/she has in his/her account.
However, a service fee may be levied by the financial institution processing
the debit transaction. Studying payment methods is important because
different modes have different

2
effects on a consumer‘s willingness to spend. For example, Hirschman
(1979) found differences in consumer purchase behavior based on credit
card characteristics. Feinberg (1986) demonstrated that credit cards can
serve as a facilitating stimulus that encourages spending. Consumer
research on credit and debit cards has been lopsided in favor of credit
cards.

In the late 1990s, the plastic cards market in India, comprising

credit cards, smart cards, debit cards, charge cards, stored value cards
and others, picked up momentum like never before, growing at an annual
rate of 25%. Analysts attributed this growth largely to the rapidly
increasing user base of debit cards.

Though initially, there were only two plyers, (HDFC, and

Citibank), the debit card base grew considerably through 1999 and
reached the 3 million mark in March 2000. The usage figures indicated a
very healthy growth of the market in future, as seven out of 10 cardholders
were reportedly using there card regularly. The annual spending through
debit cards in India reached over billion. The growth of debit cards was all
the more impressive considering the fact that credit cards, introduced in
the country in the country in the early 1980s, had managed to reach the
10 million-user base level only in 2000.

Thus, the debit card user base had reached one-third of the credit
card user base in just around one-tenth of the time. Also, smart cards
introduced in the late 1990s, had become very popular, especially in the
financial services, banking, healthcare, transport and telecommunication
businesses. The demand for co-branded cards during 2001 was a further
indication of the fact that the Indian market had finally realized the
potential of plastic money.

3
ABOUT CREDIT CARDS & DEBIT CARDS

The evolution of plastic money dates back to the 1920s, when the
first payment card was introduced in the USA. Diners Club and American
Express launched the world's first plastic card in the USA, in 1950. The
first credit card was introduced by Diners Club in 1951. The global card
market is dominated by two US-based players, Visa and MasterCard. Visa
introduced its first credit card, Bank Americard in 1958, which went on to
become a great success acquiring universal merchant acceptance. Visa's
card base increased significantly through the decades and reached the
one billion marks in 2000. MasterCard International was established in the
1970s.

In the 1990s, having covered a majority of US and European markets,

Master Card and Visa shifted their focus to the East, especially the Asia
Pacific region. By 2000, MasterCard and Visa had established their debit
cards as well in the Asia Pacific region. In 2000, Visa debit cards reached
the 48 million mark in the Asia Pacific region, while the MasterCard debit
card base touched the 37 million mark. MasterCard's credit card base
touched 80 million during the period.

History of Credit Cards and Debit Cards In Plastic Money

Credit cards have evolved into a safe and secure manner to
purchase goods and services. The internet has given credit card users

4
additional purchasing power. Banks have options like cash-back rewards,
saving plans and other incentives to entice people to use their cards. Debit
cards allow people the convenience of cards without the worry of racking up
debt. The convenience, security and rewards offered by credit and debit
cards keep shoppers using their cards as opposed to cheque or cash.

Credit Card Origins

The first credit cards were issued by individual stores and
merchants. These cards were issued in limited locations and only accepted
by the business that issued them. While the cards were convenient for the
customers, they also provided a customer loyalty and customer service
benefit, which was good for both customer and merchant. It was not until
1950 that the Dinner‘s Club card was created by a restaurant patron who
forgot his wallet and realized there needed to be an alternative to cash only.
This started the first credit card specifically for widespread use, even though it
was primarily used for entertainment and travel expenses.

Debit Cards Emerge

The Visa association of cards took credit cards to a new level in
1989when they introduced debit cards. These cards linked consumers to
their checking accounts. Money was now drawn from a checking account
at the point of sale with these new cards and replaced check writing. This
helped the merchants check that money was available and made it easier
to track the customer if the funds could not be obtained. Consumers liked
the convenience of not having to write checks at the point of sale, which
made debit cards a safe alternative to cash and checks.

The Future

5
 There were almost 29 million debit card users as of 2006, with a
projected 34.4 million users by 2016. However, online services like PayPal
are emerging as a way for people to pay their debts in new, secure and
convenient ways. Technology also exists to have devices implanted into
phones, keys and other everyday devices so that the ability to pay at the
point of sale is even more convenient

Charge card
A charge card carries all the features of credit cards. However, after
using a charge card you will have to pay off the entire amount billed, by
the due date. If you fail to do so, you are likely to be considered a
defaulter and will usually have to pay up a steep late payment charge.
When you use a credit card you are not declared a defaulter even if you
miss your due date. A 2.95 per cent late payment fees (this differs from
one bank to another) is levied in your next billing statement.

6
CREDIT CARD

A credit card is a small plastic card issued to users as a system of

payment. It allows its holder to buy goods and services based on the holder's
promise to pay for these goods and services. The issuer of the card 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. Usage of
the term "credit card" to imply a credit card account is a metonym. When a
purchase is made the user would indicate consent to pay by signing a receipt
with a record of the card details and indicating the amount to be paid. Issuer
agrees to pay the merchant and the credit card user agrees to pay the card
issuer. The credit card can be defined as ―A small plastic card that allows its
holder to buy goods and services on credit and to pay at fixed intervals
through the card issuing agency. A credit card is a card or mechanism which
enables card holder to purchase goods, travels and dine in a hotel without
making immediate payments. The holders can use the cards to get credit
from banks up to 45days. The credit card relieves the consumers from the
botheration of carrying cash and ensures safety. It is a convenience of
extended credit without formality. Thus, credit card is a passport to, ―safety,
convenience, prestige and credit.

Credit Card is a small plastic card that is issued by financial

institutions such as banks. As the name Credit when one buys using credit
card, one is buying by taking loan. One needs to pay back later (there are
no free lunches in life!). There is a limit to which one can buy on a credit
card. So, even if you have only Rs. 10,000 in your account but your credit
limit is Rs 50,000, you are free to spend up to Rs 50,000. You could also

7
have Rs 1,00,000 in your account, but your credit limit is only Rs 50,000.
You need to repay the amount bought on credit by a due date.

A credit card is plastic money that is used to pay for products and services at
over 20 Million locations around the world. All we need to do is produce the card and
sign a charge slip to pay for our purchases. The institution which issues the card
makes the payment to the outlet on our behalf; we will pay this ‗Loan‘ back to

the institution at a later date.

8
 Advantages of Credit Card


This also provides additional customer services to the existing
clients. It enhances the customer satisfaction.


 holder and consequently the growth of banking
More use by the car
habits in general.


The risk factor of carrying and storing cash is avoided. It is
convenient for him to carry credit card and he has trouble free
travel and may purchase his without carrying cash or cheque.


  the period of free credit usually between 30-50
The card holder has
days of purchase.
 
Availing credit with minimum formality.


saves trouble and paper work to travelling
The credit card
businessman.



Increases in sale because of increased purchasing power of the 
card holder due to unbilled credit available to the card holder.
 
Credit card ensures timely and certainly of payments.


  since sales receipts are routed through
Systematic accounting
banking channels.
 
Advertising and promotional support on national scale.

9
 Disadvantages of credit card


  than cash
Some credit card transactions take longer time
transactions because of various formalities.
 
Discounts and rebates can rarely be obtained.


The cardholder is responsible for charges due to loss or theft of the
card and the bank  may not be party for loss due to fraud or
 collusion of staff, etc.
 
Customers may be denied cash discount for payment through card.


 lead to spending habits and cardholders may end up in big
It might
debts
 
 Avoid the entire cost and security problem involved in handling cash.
 
 Losses to bad debts and reduced an additional liquidity is
 
 It also allows him to delegate spending power to add on members
 
Credit card is considered as a status symbol.

10
DEBIT CARD

A debit card (also known as a bank card or check card) is a plastic

card that provides the cardholder electronic access to his or her bank
account(s) at a financial institution. Some cards have a stored value with
which a payment is made, while most relay a message to the cardholder's
bank to withdraw funds from a designated account in favour of the payee's
designated bank account. The card can be used as an alternative
payment method to cash when making purchases. In some cases, the
primary account number is assigned exclusively for use on the Internet
and there is no physical card.

In many countries the use of debit cards has become so

widespread that their volume has overtaken or entirely replaced checks
and, in some instances, cash transactions. The development of debit
cards, unlike credit cards, has generally been country specific resulting in
a number of different systems around the world, which were often
incompatible. Since the mid 2000s, a number of initiatives have allowed
debit cards issued in one country to be used in other countries and
allowed their use for internet and phone purchases.

However, unlike credit cards, the funds paid using a debit card are
transferred from the bearer's bank account, instead of having the bearer
pay back the money at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as the
ATM card for withdrawing cash. Merchants may also offer cash back

11
facilities to customers, where a customer can withdraw cash along with
their purchase.

Debit card is linked to the account of the cardholder i.e. one who
owns the cards. They are usually issued by Banks and financial
institutions. When ones use a debit card the money is immediately
deducted directly from one‘s account associated with the card. One can
buy things as long as there is money in account. A debit card is a way to
―pay now‖ Say you have Rs 10,000 in your account. The amount you can
spend, or withdraw, through your card cannot exceed this limit.

A debit card is also called as 'plastic money'. Physically, it

resembles a credit card. It is a better alternative way of carrying cash or
cheque book. It is an electronic card serving as a convenient payment
mechanism. Debit card allows the customers to spend only up to the limit
of balance available in their account. Debit cards are substitutes for cash
or cheque payments, much the same way that credit cards are. However,
banks only issue them to us if we hold an account with them. When a
debit card is used to make a payment, the total amount charged is
instantly reduced from our bank balance. Don't borrow on your credit card!
A debit card is only accepted at outlets with electronic swipe-machines
that can check and deduct amounts from your bank balance online.

12
 Advantages of Debit Card


  easily and can
Plastic money, unlike paper money, will not burn
resist higher temperatures than paper money.
 
You have no fear to be theft. And its easy to use.


 picks up dirt and stains more easily than
Paper money also
plastic money.


Plastic money is the debit card and credit cards. Plus point of
plastic money  is that you won‘t have to carry your cash around
 all the time.
 
 It also doesn‘t wear after time as paper does not rip and tear.
 
Be more convenient to carry than cash.



Provide a convenient payment method  for purchases made on
the internet an over the telephone.
 
Help you establish a good credit history.

13
 Disadvantages of Debit card



Cost much more than other forms of credit, such as a line of
credit or a personal loan, if you don‘t pay on time.
 
 Damage your credit rating if your payment are late.
 
 Allow you to build up more debt than you can handle.
 
 Have complicated terms and conditions.
 
 It‘s around 2.5% of the money you spent.
 
 Some extra money will be deducted for the bank services.
 
It is cheaper to make.

14
What are Plastic Cards: Debit Cards and Credit Cards?

Credit cards or debit cards are called Plastic cards. Plastic

cards are one of the most popular forms of payment. In fact, Plastic
cards are an inevitable part of our life. They allow cardholders to pay
for goods and services easily and conveniently and provide an
alternative to cash and cheques. As Credit Card, Debit card, ATM card
etc. are, used as the alternative to money such as cash or cheque,
and are made of plastic, they are also called Plastic money. This
article is about: What are plastic cards? Debit cards and Credit cards,
Kinds of Cards, (Add-on card, charge card), Details of plastic cards,
EMV card etc.

Plastic cards are issued to users by a variety of organizations

(called as card issuers) such as banks, retailers such as Big Bazaar,
Shopper Stop. There are various plastic card schemes such as
MasterCard, Visa, Rupay Cards, American Express, Diners Club,
Maestro etc. These operators work behind the scene to make sure
that card works the types of cards issued, and their levels of
functionality vary from card issuer to card issuer and between the
different card schemes under which the cards are issued.

Cards that are made of plastic are called plastic cards. The
identification card, Membership card, Smart Card, Credit Card, debit
cards, ATM cards are all plastic cards. Some example of Plastic cards
are shown below:

15
Types of Plastic Cards

There are basically two kinds of Plastic cards which are

commonly used to buy goods and services: Debit Card and Credit Card

Comparing Credit Card and Debit Card

Credit Card and Debit Cards are similar in appearance except

on the front side ―Debit card‖ is printed in small letters while for credit
cards ‗Credit Card‘ is printed. Credit is like buying money, goods,
services now but paying for it in future. As in buying the two people or
business involved are buyer and seller. In credit the person who
agrees to provide money, goods, services etc is called as creditor or
lender and one who takes money, goods or services for the promise of
future payment is called as debtor or borrower.

Other Kinds of Cards

There are different types of plastic money available in the

market today. Such as Credit cards, Debit cards, add-on cards, charge
cards, co-branded cards, affinity cards or Diners Club cards. More and
more Indians are using them as a convenient mode of payment. Let‘s
check out these cards.

Charge card carries all the features of credit cards. However,

after using a charge card you will have to pay off the entire amount

16
billed, by the due date. If you fail to do so, you are likely to be
considered a defaulter and will usually have to pay up a steep late
payment charge. In case of credit card, one can pay late payment fee
if one misses the due date. Popular charge cards are American
Express cards also called as Amex cards

Photo card If card holder photograph is imprinted on a card,

then card is known as a photo card. This helps identify the user of the
credit card and is therefore considered safer.

Global cards allow one the flexibility and convenience of

using a credit card rather than cash or travelers checks while travelling
abroad for either business or personal reasons.

Co-branded cards are credit cards issued by card

companies that have tied up with a popular brand for the purpose of
offering certain exclusive benefits to the consumer. For example, the
Citi-Times card gives you all the benefits of a Citibank credit card
along with a special discount on Times Music cassettes, free entry to
Times Music events, etc.

Affinity Card An affinity credit card program allows an

organization to offer its members and supporters–those who have an
―affinity‖ for that organization–a credit card that promotes the
organization‘s brand and imagery each time a cardholder uses the
card. When the card is used, a certain percentage is contributed to the
organization /institution by the card issuer.

An add-on card allows you to apply for an additional credit

card within the overall credit limit. You can apply for this card in the
name of family members like your father/ mother/ spouse/ brother/
sister/ children above 18 years of age. You are liable to make good all
the payments for the purchases made using the add-on card(s). Your
billing statement would reflect the details of purchases made using the

17
add-on card. Normally an issuing bank permits two add-on cards per
credit card.

Analysing Credit Card Number

Credit card number has a lot of information. The number of

digits in credit card varies from 13 to 19 depending on the issuer.
Note: In the section first digit mean the leftmost digit and we read
numbers left to right.

First six digits of the credit card represent the card issuer. The
first digit is called as the system number. It is the Major Industry
Identifier (MII), which represents the type of institution that issued the
card. For example, American Express, Diner‘s Club are in the travel
and entertainment category, VISA, MasterCard are in the banking and
financial category. Different MII are shown below

Major Industry Identifier of Credit Cards

Digits 7 to last but one digit of credit card number is for account
number. The last digit is the check digit. Credit cards numbers use check
digits to guard against mistakes and to check for validity. A check digit in
a credit card number is used as: It can determine if a person keys in a
number incorrectly. If a credit card is scanned it can determine of the
scanner made a mistake. The check digit is calculated based on some
pattern and it is verified with the check digit on the card. If the check digit
calculated matches the check digit on the card, the card is valid. As
mentioned, the maximum length of a credit card number is 19 digits.
Since the 7 digits are reserved, account number field is 19 – 7,

18
or 12 digits. Each issuer therefore has a trillion (1,000,000,000,000)
possible account numbers.

How do Credit Card Work?

Mr. Kumar wants to buy a Sony T.V with ICICI credit card
with a MasterCard logo. The shopkeeper at Sony Showroom swipes
the ICICI credit card on a machine provided by SBI banks. Various
parties involved when one uses Plastic cards as explained below.

The cardholder is an individual to whom a plastic card is

issued. Typically, this individual is also responsible for payment of all
charges made to that card.

Card Issuer is an institution that issues cards to

cardholders. This institution is also responsible for billing the
cardholder for charges.

Credit Card association – An association of card-issuing banks such

as Visa, MasterCard, etc. that set transaction terms for merchants,
card-issuing banks, and acquiring banks.

Merchant – The individual or business accepting card payments for

products or services sold to the cardholder also called as Card
Accepter.

Acquirer – an organization that collects (acquires) credit authorization

requests from Card accepters and provides guarantees of payment.
The merchant swipes the card on the acquirer‘s swipe machine. He
submits all the signed slips to the acquirer and collects payments from
the acquirer.

19
 Mr. Kumar wants to buy a Sony T.V with ICICI credit card with a
MasterCard logo. The shopkeeper at Sony Showroom swipes the
ICICI credit card on a machine provided by bank say SBI bank. In the
example Mr. Kumar is the cardholder, ICICI bank is the card issuer,
the merchant is the shop or Sony Showroom and SBI Bank is the
acquirer and MasterCard is the card association.

DEBIT CARD VS CREDIT CARD

Debit cards are extremely useful and convenient as it relieves us

from the stress of carrying a cash heavy wallet, a chequebook, and yet
gives us the freedom to have free access to your money through ATMs
and swiping the card at merchant outlets instead of paying by cash.
Linked to the cardholder‘s bank account, debit cards are ideal for quick
and hassle-free usage.
As soon as you charge a purchase (online or offline) to your
debit card (by swiping it or feeding in the card details online) the same
amount gets debited from your bank account. You also receive SMS and
email alerts for the same to help you keep a track of your spending. These
alerts also depend on the services provided by your card/issuing bank.
Credit cards on the other hand function differently. It is more like
offering you a line of credit. In simple words it is more like you getting a
loan, i.e to need to buy/spend on something this month and don‘t have the
cash to do so, hence you charge that spending to your credit card (without
having to pay money from your wallet or account at that very moment. But
the same amount is charged to your credit card bill generated the next
month and that is when you have to pay that amount from your own
pocket. Failing to pay your credit card bill on time leads to interest
accumulation, late payment fee and bad credit score.
While a debit card is linked to your bank account, credit card is
linked to the bank which has issued you the card. When you use your
credit card for a transaction, technically at that time the bank is paying for
it and you become debted to the bank to clear that amount whenever the
bill is generated.
Most users feel that debit card is not only more convenient, but
less stressful as it lets you spend within your financial abilities without
accumulating and debt or interest in future. It relieves you from a lot of stress,
from getting into a debt cycle and overspending. Using a credit card

20
is tempting because you can spend a lot more than you have the cash for,
but the flipside is that you end up being under the burden of clearing up
the debt/loan eventually. Also, there are a lot of places in India which
accept payments only in cash and debit card enables you to withdraw
cash conveniently from ATMs.

Fight Against Fraud

Nobody enjoys being a victim of fraud. Not only is it costly, fraud can your
ability to trust another person who is attempting to help you out financially.
Although March is fraud prevention month, individuals should take every
opportunity to avoid placing oneself in situations to be an easy target for
fraud.

Debit / Bank Card Fraud

1. Avoid using automatic bank machines that are not associated with a
bank. These machines are known to have cloning devices which will
obtain a copy of your card and the information that is stored on it.

2. Do not write down your Personal Identification Number (PIN). Be sure

to select a number that is easy to remember but it should not be easy to
figure out such as a birthday or a portion of a phone number.

3. When making a payment, be sure that the card does not leave your
sight. If you are told by an individual that he or she has to go to another
terminal to process payment, go with them to ensure that card does not
get tampered with or switched for another card.

4. Monitor your balance. Be sure that your credits and debits are correct.
Any errors should be reported immediately to your bank. Unsuspected
debits are signs that someone has indeed gain access to your bank
account.

Credit Card Fraud

1. Destroy past statements. If you still receive your statements via the
mail, be sure to destroy them once they are no longer needed. Use a pair
of scissors to shred portions of the document, especially your account

21
number. Consider disposing the number in another container and or
manner.

2. Track your automatic charges. If you have a monthly expense placed

on your card, check if the amount charge remains the same. Any
additional charges should be questioned and reported.

3. Verify your bill before sign it. Be sure that you are paying for the items
that you actually bought and free from other charges.

4. Shop online in a security environment. If you are an online shopper,

always double check if the site has security features that prevents online
fraud of any kind.

Card Transaction Data

Card transaction data is financial data generally collected through

the transfer of funds between a card holder's account and a business's
account. It consists of the use of either a debit card or a credit card to
generate data on the transfer for the purchase of goods or services.
Transaction data describes an action composed of events in which master
data participates. Transaction focuses on the price, discount and method of
payment interaction between the customer and the organization. They are
based on volatility as each transaction data changes every time a purchase is
made, one time it could be $10, the next $55. Since debit and credit cards are
commonly used to pay for goods and services, they represent a strong
percentage of the consumption expenditure in the country.

Overview

When a transaction is made, the card holder is offered a paper or

electronic transaction record containing information about the purchase. This
includes transaction amount, transaction number, transaction date and time,
transaction type (deposits, withdrawal, purchase or refund), type of account
being debited or credited, card number, identity of the card acceptor
(organization/store address) as well as the identity of the terminal (company
name from which the machine operates). The use of debit cards in 2014
increased by 18% from the 2011 total volume of Canadian Payment Methods.
As for credit cards, it increased by 26% from the 2011 total volume of
Canadian Payment Methods. These two types of payment methods combined
make up for more transactions than cash. Card transaction data has
increased through the expansion of payment channels available to
customers. Additionally, incentive and reward programs have increased the

22
use of electronic cards for their benefits. The use of contactless and e-
commerce payment has also allowed for a growth in card transaction data
to increase due to the simplicity of the transaction. The use of Interact
Debit transactions has increased rapidly in the last 6 years according to
Interact Debit statistics. However, Canada has a lower rate debit use
transaction by inhabitant in comparison to the United States, Sweden,
Netherlands, Australia, and Great Britain.

Card transaction data levels

Some companies such as PayPal offer an incentive rates

program for merchants who offer more detailed information on their sales
transactions. They are only eligible for merchants who comply with Level 2
or Level 3 transactions, transactions that fall under Level 1 qualify as a
normal card transaction. To ensure that data being shared is accurate,
card companies perform strict verification of data being collected at either
Level 2 or 3, therefor only accurate information is eligible for incentive
rates being offered by card issuers. This is another form of collecting card
transaction data that can be more individualized as it is completed by the
merchant after the transaction has been made. The levels refer to the
amount of transaction data submitted for the card, the higher the level the
more data is needed to be reported.

Level requirements usually differ between companies but are similar to the
following offered by PayPal:
Level 1
Any merchant who accepts credit cards complies with this level. It
functions as a normal credit card and is authorized and associated with
normal transaction data.
Level 2
Additional data regarding the actual sales such as tax, customer code,
purchase number, invoice number etc. is captured at the point of sale.
Most of the time it is combined with the merchant information such as Tax
ID number, state and postal code data.
Level 3
Significant additional information on the actual product or service is shared
such as line items, product codes, item description, unit price and
quantities as well as shipping postal code data are needed in addition to
the Level 2 requirements.

23
Advantages

Sharing card transaction data can be beneficial to consumers as

it allows for card companies and merchants to provide better products and
services tailored to them directly. This increases consumer's spending
habits, but for a favourable product or service for the consumer. Allowing
for marketers to understand consumers better can increase the chances
of consumer's getting more products and searches that they want tailored
in a way that they desire. This also ensures that less mass marketing is
done and instead only specific groups that are interested in the
information will be targeted. It is also beneficial to companies as this type
of information analysis is useful to identify promising areas of growth,
enhance direct marketing response rates and improve retention of existing
customers. Offering the opportunity for a competitive advantage within
other companies in this high technologically advanced era, this information
is crucial in today's business world. Exposing payment and spending
trends can offer more opportunity not only for company revenue growth
but for consumer's spending experiences in stores and online. This
encourages the idea of promotional services to be offered to select groups
who will take the most advantage from the opportunity.

Disadvantages

Keeping this type of data anonymous is a challenge for debit and

credit card companies who share the information with third parties.
Metadata with certain properties, especially a geographical location
attached are hard to keep unsourced Other patterns of behavior are also
unique enough on their own to identify individuals to using metadata,
indicating that complete anonymity is impossible. As more information
becomes available and is tagged by people's consuming behavior, this will
only get harder to do.The standards for protection and enforcement
against the release of this metadata varies among OECD member
nations. The United States does not have any enforced national law for
reporting consumer data breaches.

24
 CHAPTER 2

Need for study

In current scenario banks are promoting Debit cards in place of
Credit cards this may because of severe liquidity crunch or credit-averse
behavior of Indian consumer. To know the fact specially in Kanpur region,
I have undertaken this subject for my management thesis. My area of
research for this topic is to know the cause behind this trend. This
outcome of this study will certainly help to the concerned Banks to know
the consumer behavior in this regard and also be helpful to consumer for
knowing pros& cons of this service.
With the advent of many new payment form factors, today the
customer has many payment options available – debit cards, credit cards,
prepaid cards, m-wallets, among others. The most-preferred options are debit
cards and credit cards, but do you know when a credit card should be used and
when you should go for debit cards? Here‘s what you need to know:

1. Consumer behavior
If you are prone to unnecessary expenditure and want to stop being spendthrift, a
debit card is a safer option. It allows you to spend only as much as you have in
your savings account, so you can spend immediately and be done with it. But

if you know how to use a credit card judiciously and can be responsible
enough to pay monthly bills on time, then use a credit card by all means.

2. Associated benefits
Debit cards simply help you keep a grip on your expenses. Credit cards come
loaded with benefits – there are umpteen reward points and loyalty programs that
your card could be linked to, in addition to cash back and discount programs
on various merchants in retail, travel, e-commerce, electronic retail etc. Many
cards sweeten the deal with a joining bonus too. People often use credit cards

for the frequent flyer miles that they can accumulate. So if you are looking
for more rewards and benefits, credit cards are a great payment mode.

25
3. Type of purchase
If you are shopping at small establishments/mom-and-pop stores, you may
want to use a debit card and save your credit card for expensive
purchases, so your savings account is not debited of a large amount at
one shot. (Just for information, debit cards are preferred by merchants as
they have to pay lesser fees for accepting debit transactions as compared
to the credit card fees they pay). Also, credit cards are preferred during
foreign vacations as fraud monitoring is stricter and also because many
countries accept only credit cards for bookings.

4. Safety against fraud

Both credit and debit cards are safe to use in India, thanks to the
additional factor of authentication required to validate any transaction. The
only drawback is that in case of fraud on a debit card, the fraudster could
clean out your account in a jiffy before you raise an alarm. When it
happens against a credit card, you can raise a chargeback and get
appropriate reversals before the credit card bill hits you.
Nowadays, EMI (equated monthly installments) are available on both
debit and credit cards. In reality, both forms of payment cards provide
some very useful benefits, but if credit cards are not used wisely, you
could end up with a bad credit score and pay late payment fees and
interest charges. For debit cards, all you need to do is maintain a sufficient
balance that allows you to spend as you want.

26
 CHAPTER 3

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. Many of these studies focus on
the descriptive nature of who uses credit cards and debit cards.

Many empirical studies have been conducted on the subject of

‗Plastic Money‘ in India and abroad. The major emphasis of research has
been on various issues like frauds, security, usage pattern, new method of
e-payment, etc.

The previous work done on plastic money needs perusal. It has

been reviewed to indicate in a general way the type of work done on this
subject in India. It is expected that the critical examination of the studies
would give focus to our problem and help to indicate the areas which have
remained neglected at the hands of the researchers. From the review of
literature, it was found that hardly there was a study which examined the
perception of both users and traders on the usage of plastic money. Also,
many studies concentrated on individual cards, for instance, credit or debit
card and neglected the joint effect and new innovative cards like smart
card, charge card and check card. In this study, an attempt is made to
include all types of cards in the analysis.

Handelsman and Munson (1989),

―Switching behaviors from credit card to cash payment among ethnically
diverse retail customers‖ shows that the credit card sales constitute an
important revenue source for many retailers. Their ever-increasing use and
evaluation into other forms, such as debit and electron cards, demands that
retailers gain a more complete understanding of how they are used by
diverse consumer segments. Particularly needed is a better understating of
the propensity to switch over from credit card to cash payment and the
incentive required to initiate switching. In view of the cost to the retailer of
administering credit card payment systems, the retailer‘s overall profit position
may be enhanced by converting a larger proportion of credit card sales to
cash sales. Four aspects of credit card usage and switching ethnicities are
investigated, propensity to switch over from credit card to cash payment at
various levels of monetary incentive, the effect of product price on propensity
to switch, the frequency of credit card usage, and the

27
preferred method of payment of credit card balances (installment versus
full payment). Several significant differences are shown among the three
ethnic groups studied (Anglo-American, Chinese-American and his panic-
American) in these usage behavior‘s such differences might even be
Review of Literature 32 extended to international comparisons involving
consumers domiciled in different countries.

Barker (1992) in his study, Globalization of credit card usage: The case of
a developing economy‖ 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.

Natarajan and Manohar (1993) ―Credit Cards–an Analysis‖. A study has

been 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. A random
sampling technique is used to collect the data. Ten components i.e.
numbers of purchases, shops, percentage of purchases, place, frequency,
type of product, type of services, cash withdrawal facilities, add on facility,
insurance schemes are identified and used for the measurement. Chi
square test has been conducted to know the level of utilization. For this,
both personal and nonpersonal factors also have been taken into
consideration. Chi square test reveals that sex, age, educational
qualification of card holders has no relationship with utilization of Can
Card. While occupation, income, employment status of spouse, mode of
getting card has relationship with utilization of Can Card.
Vora and Gawain (1993), ―Plastic at a premium‖ 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 ticketing discounts, insurance coverage and provide
reward points etc. According to Review of Literature 33 author, the card
holders market has a potential to grow to 7 million, if all tax paying 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

28
keep their card active, so that a piece of plastic becomes a premium card
in an effective way.

Mathur and George (1994), ―Use of credit-cards by older American‖ shows

the usage behavior pattern of older people with credit card spending. Using a
large national sample of respondents from different age groups, finds 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. While
credit card usage may overall decline with age, certain segment of mature
consumers continue making use of credit cards throughout the life. The data
in the present study suggests alternative criteria like income and employment
status, for appealing to mature Americans. Targeting older consumers on the
basis of age might not only alienate them but is also likely to reach fewer
prospective customers.

Kaynak (1995), ―Correlates of credit card acceptance and usage in an

advanced developing Middle Eastern Country.‖ Study shows that with
increases level of socio- Review of Literature 35 economic and
technological development, credit card usage particularly increases in
developing countries. An empirical research study conducted in urban
Turkey indicates that there is certain relationship between socio-economic
and demographic characteristics of Turkish consumers and their credit
card holding and usage behaviors. It was observed that one of the
determinants of credit card use is related to the age of the family head and
family life– cycle stage. Generally, those household heads who are in
middle and upper age having large discretionary income level are more
likely to use credit cards. This may be termed a social class effect of credit
card usage and acceptance. Despite most of credit card users are urban
dwellers, more educated with professional type of jobs, and high-income
earners. Authors feel that getting more people to use credit cards is
indeed a marketing challenge. For this credit card issuers are meeting this
challenge by offering to cardholder‘s different benefits and incentives and
by urging merchants to promote debit/credit at the point of sale.

Torbet and Marshall (1995), ―One in the eye to plastic card fraud.‖ Paper
explores 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. Author feels that while biometric
technologies have the potential to reduce plastic card fraud there are

29
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. ―The cashless society‖ paper
describes the cashless society, where clumsy and expensive-to handle
coins and notes are replaced by efficient electronic payments initiated by
various types of plastic cards is a tantalizing prospect for the twenty-first
century. Some of the interested parties stand to gain more than others if
the cashless society becomes a reality. Paper outlines the rationale of
those who are keen to promote the cashless society and the implications
for marketers charged with winning consumer acceptance for payment by
plastic card. Commencing with a European-wide view of the European
plastic card market, focuses on recent developments within the UK, one of
Europe‘s leading countries in the use of plastic Review of Literature 36
cards as a means of payments. The plastic card payment product is
analyzed under the three headings of pay later, pay now and pay before
and a view is offered as to the future prospects for each type of plastic
card in contributing to the development of the cashless society.

Joshi (1996), ―Variants in plastic.‖ Author analysis that card issuers seeks
to introduces the emerging payment card technology like debit and smart
cards. Credit cards are being gradually revolutionized by various factors:
introduction of customers– friendly technology, a competitive marketing
environment, the rise of the financially sophisticated consumer who avoids
paying interest and the emergence of new competitors. The concept of
debit cards as a new emerging payment system has gained acceptance in
the Asia-Pacific region in past few years. Being a new concept, mass
acceptance is gradual and not instantaneous. It shows that spending on
credit cards is higher than debit cards but the number of transactions are
more on debit cards. There are technological and infrastructure hurdles for
debit cards as it is significantly different from credit cards. For this, system
should be on line and the investments in technology are huge. Study
shows that profit margins in debit cards are one-third than those from
credit cards. Author believes that India by virtue of a late starter in the card
industry is at an advantage as it can except to shorten its learning curve
by utilizing global experience and expertise in electronic payment system.
Maganty (1996), ―Changing Dimension.‖ the author discusses the emerging
trend and importance of debit card in daily lives of Indian society. Debit cards
are expected to be in use in places where most transactions are done by
cash or cheque in supermarkets, petrol stations, convenience stores. There
cards are designed for customers who like paying by plastic card but do not
want credit. These cards not only keep the cardholder debt free but also
provide a detailed account of spending. These types of cards are ideal for
those who have a tight budget and want to keep within it. Study shows that
there are two types of debit cards i.e. on line and off-line debit cards. With the
computerization and modernization plastic money will become the

30
status symbols in the 21st century of Indian traditional bound society.
Review of Literature 37
Radhakrishnan (1996) study on ―DEBIT CARDS‖ shows that the debit cards
also have found wide acceptability than credit cards because of assurance of
payments to retailers, switching of cardholders to debit card because of using
interest free period to avoid high interest cost, annual charges as compared
to debit cards etc. The study shows that the growth of service industry in the
country, electronic fund transfer, point of services offer a large potential for
banks to cutting down cost associated with the paper-based clearing and
payment services. The introduction of debit cards can take place
subsequently and the objective should be to attain a critical mass in issuing
number of such cards so that the operation becomes cost effective.
Worthington (1996), ―Smart Card and retailer-who stand to benefit?‖ Paper
describes the major current payment options which are open to consumers,
and accepted by retailers with a review of the costs and benefits of each
payment option. Retailers, as the merchant acceptors of payment by suffer
from the introduction of the smart card. Article sets out to explore the pros
and cons of the smart card for retailers. The introduction of the smart card will
not eliminate any of the existing method of payment and it is probable that the
smart card will even introduce new means by which nonfinancial data, such
as purchase patterns, can be collected and exchanged. There will also be
substantial costs involved for retailers such as upgrading thousands of stores
and head office systems, replacement of point-of –service terminals, training
to thousands of cashiers for the acceptance of smart cards. The smart card
could be a useful addition to the existing payment options at the point of
service. It could offer retailers to access to new delivery channels and better
communication channels and help to maintain relationship with customers.

Chan Ricky (1997), ―Demographic and attitudinal differences between

active and inactive credit cardholders–the case of Hong Kong,‖ The study
was to examine the demographic and attitudinal differences between
―inactive‖ and ―active bank credit cardholders in Hong Kong. The groups of
card holders have been classified according to their differences in usage
rates. Active card holders‖ in this study were operationalized as those
whose monthly card usage rate was over ten times, where as ―inactive
card holders‖ were those whose monthly card usage rate was below ten
times. As far as, demography is concerned, income was found to be the
single most important Review of Literature 38 variable influencing the card
usage rate. Specifically, inactive card holders were found to earn less than
their active counterparts Paper also examine, to induce less resourceful
card holders to increase their card usage rate, card issuers are advised to
strengthen their co-operation with various retailers so as to turn their cards
into the most preferred mode of payment.

Nash and Sinkey (1997), On competition, Risk, and Hidden Assets in the
Market for Bank Credit Cards‖ show that the market for credit cards has

31
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. In addition, the effect on resale
market of securitization and the opportunity cost of acquiring new
accounts are analyzed. Using alternative measure of risk and alternative
control groups, authors find, for the year 1989 to 1995, that Credit-Card
banks earned significantly higher return on assets but that these returns
were associated with greater risk-taking.

Black and Morgan (1998), ―Risk and democratization of credit cards‖.

Research paper 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. The new card holders seem riskier along several
dimensions. They tend to earn less, and as a result, they owe relative to
income. This rise in debt burden almost certainly contributed to the rise in
charge offs, since debt burdens are a key determinant of delinquency risk.
Cardholders are also more likely to work at relatively unskilled blue-collar
jobs. This occupation shift may also have contributed to the rise in charge-
offs, since delinquency rates are higher in those occupations, perhaps
income is more cyclical. Some of the personal characteristics and
attitudes that have changed, such as marital status and job tenure also
imply somewhat higher risk. Fernand (1998), ―What credit card firms won‘t
tell you.‖ shows that convenience of credit card is not without its cost. The
author warned the customers to Review of Literature 39 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. It happens in the normal course, that
card companies won‘t tell each and every thing to cardholder like whether
interest charges are annually or monthly, transaction fees for using ATM,
annual fees VS. transaction fees, lost card liabilities for unauthorized use
of card etc. According to author the card pushers offer a convenience but
a good thing never comes with any strings attached.

Gambir (1998), ―Credit cards in India‖. He 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

32
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. ―Debit, Credit, or Cash: Survey evidence on Gasoline
Purchases.‖ analyzed the consumer‘s payment option to use debit,
general purpose credit cards, gasoline credit cards, or cash. Based on the
results from a nested multinomial logit model, author‘s found consumers
are more likely to use cash 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.
Respondents who use their debit card are less likely to use their gasoline
credit card. The result suggests that greater debit card usage will place
the greatest competitive pressure on the gasoline credit card program.

Yandenbosch and Hulland (2000), ―Why smart cards have failed looking
to consumers and merchant reactions to a new payment technology‖
describes that more than a decade, bankers and other outside financial
services community such as hardware manufacturers have sought to
solidify the place of smart card technology as a viable retail point-of-sale
alternative and, more boldly, as an outright replacement for cash in
everyday consumption situations around the globe. Despite strong
development efforts and numerous fact- finding market trials, many banks
have found smart card technology to be a losing proposition. This article
presents a detailed case study of both consumer and merchant adoption
of one smart card –based retail point-of-sale system. The system, called
―Exact‖, was test marketed for a full year in Canadian market. Various
perceptual and demographic data from consumers as well as firm –level
data from retailers are both presented and assessed. The ensuing
discussion offers pragmatic suggestions for those in the financial services
community as to how the apparent difficulties and shortcomings of smart
card technology may be overcome.

Lee, Jinkook (2002), ―Consumers Use of Credit Cards: Store Credit Card
usage as an Alternative Payment and Financing Medium.‖ asserts consumers
use of store issued credit cards with particular attention to their function as an
alternative payment and financing medium. Using 1998 survey of consumer
finances data, the researchers found that credit availability through bank
cards is negatively correlated with consumer use of store cards as a financing
medium, suggesting the role of store cards as a Review of Literature 42
supplementary credit line. A negative relationship is also found to exist
between consumer‘s bankcard usage and their use of store cards for a
transaction purpose, indicating that store cards function as

33
a substitute payment medium. Consumer‘s usage of store cards varies
according to function and is related to number of variables including the
use of bank cards, credit history, and attitude towards credit, income,
education and ethnicity.

Chakravorti (2003), ―Theory of credit card networks: A survey of the

literature‖ shows that credit card 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) ―Legal and regulatory framework of credit cards‖ 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.
Saha (2003), ―The booming credit card business of Indian banker.‖ In this
study analysis has been done of the credit card business in India. Article is
both from the banker point of view and from the users point of view. It is
estimated that the credit card volume is increasing around 15% p.a. on
average for last 10 years and volume of transaction increased by 20% on
an average in last 10 years in India. Various hypothesis and objectives are
set to find out which bank offer varieties of services to consumer in
relation to credit card. A comparative analysis is made for all the credit
cards. In general, most of the credit card is doing very well and the
competition is cut throat. Different factors such as income level, fees
customers‘ service network, add on card facility, revolving credit facility,
insurance facilities, cash withdrawal charges, lost card Review of
Literature 43 liabilities etc. taken into account for selecting the best credit
card provider in country. The study also finds that city bank is the best
card which provides all the facilities at the minimal charges.

Bandyopadhyay (2004) in his article ―Credit cards look for an Ace‖ put the
light on various issues like, major card players are issuing cards without much
checking credentials. It adds to nonperforming assets [NPA] levels in its
portfolio but overall, about 0.6 percent of personal consumption expenditure
in India is through credit cards. He suggested that (I) the increasing card use
could be by making all utility payments through cards

34
by installing more electronic draft capture (ii) the government can do by
waiving the tax on credit cards which is a big disincentive for card users
(iii) to bring down the default rate, bank must set up credit bureau. This will
enable banks to detect the first sign of default in advance and sound a red
alert so that prospective defaulters can be weeded out. Bhargava (2004)
title ―Debit cards: A new generation plastic money‖ analyses that debit
cards are fast catching up with the customers. A combination of factors
like ease of availability, debit-averse profile of customer and zero interest
rates are propelling the usage of Debit Cards. The study emphasizes to
increase the usage of these cards, bank will need to improve infrastructure
and continues to focus an increasing installation of point of sale [POS] in
smaller cities and on the locations, which are frequently used by
cardholders, and to develop new marketing programmers that educate
customers on the benefits of replacing cash with plastic.

Braunsberger (2004), ―The effectiveness of credit–card regulations for

vulnerable consumers‖. The study 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 examines 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. This study
further investigates the relationship among objective and subjective
knowledge and product usage. The result shows that consumer in general
are not very knowledgeable about Review of Literature 44 credit cards. In
order to avoid government regulation of the industry, it is recommended
that credit card issuers become involved in educating consumers.
Cunningham (2004) ―College Student credit card usage and the Need for
on campus financial counseling. And planning services‖. The purpose of
this study was to examine the use of credit cards among college students
and the need for on-campus financial counseling and planning service.
The research objective was two fold: (a) to determine if college students
are responsible with their credit cards and (b) to evaluate the need for on-
campus financial counseling. Participants in the survey (N=110)
completed a survey consisting of various question about students‘ use of
credit cards. Results showed that while a majority of the students who
completed the survey were very responsible with their credit cards, there
as a group (composed of study) who were having significant credit
problems. The paper concludes with suggestion regarding on campus
financial counseling services. Easwar and Kumar (2004) asserts in the
studies titled,‖ Credit cards: on a growth trajectory‖ 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.

35
Goyal (2004) ―Role of supplementary services in the purchase of credit
card services in India‖ 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. In other words, whether information regarding supplementary
services can help consumers make pre-purchase evaluation of credit
cards. In addition to pre-purchase evaluation, the impact of supplementary
services is studied towards post-purchase evaluation credit card services.
Supplementary services being a part of full service product offer by
marketers can be Review of Literature 45 utilized as a beneficial tool to
create interest and developing awareness among consumers.

Hogarth and Hilgert (2004) ―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. Among all households with
a problem, nearly two-thirds (63 percent) were able to resolve their problem,
while over half (55 percent) exited. Exist was associated with marital status,
race, how dissatisfied the consumer was, the number of problem related to
credit cards, and attribution. Holding all the else constant, consumers who
were likely to resolve their problem were only half as likely to exist. Thus,
credit card companies need to carefully and quickly address their customer
problems and resolve their complaints. ―Replacement of cash by cards in US
consumer payments‖ Authors uses over the past 25 years‘ time series data.
The results show that the share of cash in consumer payments appears to
have fallen from 0.31 in 1974 to 0.20 in 2000, cheque replaced cash during
the 1970, credit cards replaced some cheque during the 1980, while debit
cards replaced both cash and cheque in the 1990s. Author feels even though,
cash is not projected to go to zero anytime.

Johnson (2005), ―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 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

36
developments in the credit card market over the period account for most of
the rise in credit card Review of Literature 47 payments relative to income
and played a strong role in the rise of the total financial obligation ratio
(FOR). First, improvements in credit scoring technology and the advent of
risk-based pricing of credit card debt have increased the share of house-
holds particularly lower income households with a credit cards. Second, in
the 1990‘s, credit card interest rate begins to vary with changes in broader
market interest rates, which in turn led to an especially pronounced
decline in credit card interest rates turned sharply lower; the decline in
credit card rates raised the demand for credit card debt. Finally, household
have increased their use of credit card as a convenient means of paying
for daily purchases.

Park and Burns (2005), ―Fashion orientation credit card use, and
compulsive buying.‖ The study was to identify the direct impact of fashion-
related factors on compulsive buying and the indirect impact of fashion-
related factors on compulsive buying through credit card use. It was found
credit card usage to be the most influential factor followed by expenditure
on fashion goods. Research shows that fashion orientated consumers are
heavy credit card users. Consumers who tend to have fashion leadership
and know the importance of being well dressed might use their credit card
more while those who have anti–fashion attitude are least likely to use
their credit cards. The authors observe that the credit card is the most
significant factor in encouraging compulsive buying and suggest that since
other antecedents of such behavior are hard to pin down, regulatory action
should focus on the control of credit.
Pinto and Beth (2005), ―Information learned form Socialization Agents: Is
Relationship to Credit Card Use.‖ Shows 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. Using paired sample ‗t‘ tests,
the results indicate that the amount of credit information given
by parents is significantly greater than the information from the other three
sources (Schools, Peers and media). The more information provided by
parents, the lower the outstanding balance carried by college Review of
Literature 48 students on their credit cards. Media sources, educational
sources and peer sources of information showed no significant relationship
with credit use. Sant (2005), ―Credit cards emerging Trends and Prospects‖
shows benefits, growth/potential growth, usage pattern, technological
changes, delinquency rates, and fraud settlement, by the credit card
companies. Survey shows that spend per card in India are very low at around
Rs. 20,000 per year against international average of around $900 (i.e. about
Rs. 40,000) per year per card. Demands have increased for

37
higher quality and level of services. Major card issuers in India, domestic
and foreign, are currently busy racking their brains in trying to protect their
organizations from frauds. To overcome this problem a new technology
i.e. ―Smart-Card‖ that allows for greater security against fraud. Authors
feels that with the establishment of credit information bureau of India Ltd.
(C/B/L) customer had motivation to maintain good credit history and helps
in lowering of delinquency rates. Article also shows that credit card
industry grows by 37% with ten million cards in circulation.

Al-Alawi and Al-Amar (2006), ―Young Generation Attitudes and Awareness

Towards the implementation of Smart Card in Bahrain: an exploratory study.
The study puts a light on latest advancement and innovations in the world of
information and communication technology by the way of smart card. A smart
card resembles in size and shape to a normal credit card or bank ATM card,
with a microprocessor chip implanted into card. These cards are used not just
as identity cards,but hold a relatively huge amount of editable information
including the cardholder‘s bank data, e-purse, finger print, health record,
blood group, traffic and license details and other vital information. Study
present a general overview history, features application and introduction of
smartcards in the kingdom of Bahrain. A total of 513 questionnaires were
distributed to the students of the University of Bahrain. The questions asked
included question to check the acceptance of the people to replace their
current cards with a smart card and their awareness of the new National
Smartcards in Bahrain. It also evaluates the effects taken by the government
to create awareness among the public about the usage and features of the
smart cards.

Worthington (2007) ―The adoption and usage of credit cards by urban-

affluent consumers in China‖. The purpose of this paper was to present
exploratory research into the holding and usage of credit cards by a
distinct segment of the Chinese population, who were ―early adopters‖ of
this product. Primary data was collected for taking sample of the urban
affluent population in china to gauge preferences and attitudes towards
the use of credit cards. The sample was drawn from a narrower base than
the actual target population of urban-affluent market but an available and
valid respondent set, which offers insights into the ―early adopters‖ of the
credit card product in china. It was found, that the respondent were
comfortable with the holding and use of credit cards particularly
recognized their value for spending on travel and entertainment. The
research also identified purchase trigger points, which indicated that the
use of credit cards for purchases above certain values, is already
prevalent with the sample of urban – affluent Chinese consumers.

38
Devlin (2007) ―An Analysis of main and subsidiary credit card holding and
spending.‖ This study 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. This study is a qualitative
in nature, using a survey which contained open-ended questions to acquire
data. Response were subject to content analysis to categories the reasons
given for having a main and subsidiary card. Results show that 85 per cent of
the 141 respondents indicated that they had a main card and the most
frequently quoted reason for having such a card was the superior discount
and promotions which were offered by the card issuer. Not surprisingly, main
cards were used for the broadest range of transactions while subsidiary cards
were used for a more restricted range of transactions, a majority saying that
their subsidiary cards were held for ―stand by purpose‖. The results suggest
that managers who market credit cards should aim to ensure that, in all times,
the discount they offer, the promotions they arrange and their loyalty
schemes are superior to those offered by competitors. By meeting these
aims, higher number of consumers, who are multiple cardholders, are likely to
use their card as a main card, thereby generating more income for their credit
card issuer.

Amin (2008), ―Factors affecting the intentions of customers in Malaysia to

use mobile phone credit cards‖ 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. Paper extends the applicability of the technology acceptance
model (TAM) to mobile phone credit cards and includes ―Perceived
credibility (PC)‖, the ―amount of information about mobile phone credit
cards (AIMCs)‖ and ―perceived expressiveness (PE)‖, in addition to
―Perceived usefulness (PU)‖ and ―Perceived ease of use (PEOU)‖. The
result indicate that PU, PEOU, PC and the amount of information
contained on mobile phone credit cards are important determinants to
predicting the intentions of Malaysian customers to use mobile phone
credit cards. However, PE is not an important determinant in predicting the
intentions of Malaysian customers to use mobile phone credit cards.

Gan (2008) ―Singapore credit cardholders: ownership, usage patterns and

perceptions.‖ The purpose of this study is to analyse 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. In this study, decision trees were constructed

39
using chi-square technique to examine the association between number of
credit cards and the demographic characteristics, perceptions and other
credit card-related variables. The number of credit cards was found to be
significantly influenced by income and gender as well as perceptions that
include ―credit cards leads to over spending‖, ―Saving as payment source‖,
―unreasonable interest rates‖, ―credit card as status symbol.‖ The number
of credit cards was also affected by credit-card-related variables such as
missing payments sometimes, frequency of use, entertainment
expenditures, and patrol purchase. This research provides an in-depth
understanding of Singaporean multiple cardholders thus it is useful in
designing marketing strategies for card-issuers as well as anti-debit
strategies for policy-makers in Singapore.

Al-Lapham (2009) in his research ―Development of Electronic Money and

its Impact on the Central Bank Role and Monetary policy‖ asserts that, in
recent years there has been considerable interest in the development of
electronic money schemes. Electronic money has the potential to take
over from cash as the primary means of making small-value payments
and could make such transactions easier and cheaper for both consumers
and merchants. Electronic money is a record of the funds or ―value‖
available to a consumer stored on an electronic device in her possession,
either on a prepaid card or on a personal computer for use over a
computer network such as the internet. This paper argues that electronic
money, as a network goods, could become an important form of currency
in the future. Such a development would influence the effectiveness and
implementation of monetary policy. Author feels that, if an increased use
of e-money substantially limits demand for central bank reserves, it would
require changes in the operational target of the central bank and a closer
coordination of monetary and fiscal policies.

40
 CHAPTER 4

Objectives

 Compare to the various cards provided by the various banks to the

 satisfaction level of customer.
 A comparative study on level of customer perception & behavior
 towards Debit Cards and Credit cards.
 To evaluate the impact of different Debit & Credit Cards services
 offered by the one Bank to other bank services
 To evaluate that is this, the impact of liquidity crunch facing by the
banks during recessionary period.

 To study the socio - economic background of the sample debit
cardholders.

 To study the pattern of usage of debit cards by the sample
customers.

 To study the customers' choices and preference in the usage of
 debit cards.
 Compare to the various cards provided by the various banks to the
 satisfaction level of customer
 A comparative study on level of customer perception & behavior
 towards Debit Cards and Credit cards.
 To evaluate the impact of different Debit & Credit Cards services
 offered by the one Bank to other bank services.
 To evaluate that is this, the impact of liquidity crunch facing by the
banks during recessionary period.

41
 CHAPTER 5

RESEARCH METHODOLOGY
Survey Method has been followed for the study. Both primary and
secondary sources of data are used. Well structured questionnaire is designed
to elicit necessary data and details from the consumers of debit and credit
card holder. The secondary data were collected from the books, journals,
magazines and web portals.

A proportionate random sampling method was employed to elicit the

necessary information from the debit & credit cardholders in Mumbai City. The
sample size of 102 respondents.

The primary data collected from the respondents has been analyzed
with the help of Statistical Package for Social Sciences (SPSS). Percentage
analysis and Chi-square test has been employed for testing the hypothesis.

Sources of data: The data is collected mainly from primary and

secondary data. Primary data:

•Questionnaire method.
•Direct interview method Secondary data:
• Various websites using

Internet Sample Size:

•102-member Type of sampling:

•Convenience method. The information collected will interpret using a
pie chart, bar chart, line chart.

Project Schedule –

I will do the project as per the guidelines, 1St of all I will make
questionnaires and discuss it with the faculty guide, then after make some
corrections as suggested by my faculty guide. I have started the work with
finalize the topic and discuss with my faculty guide, now I am preparing
the questionnaires and then after I will make the research process
schedule and then I will go for data collection and then findthe solution of
the problems in my thesis and also try to mention the possible solution for
the same problems. Then I analyze the data and make a report on
hypothesis what I done in the research process. Limitations
•This research is limited to only surroundings of Mumbai.

42
•The data is to be collected from the Online Survey.

Survey Method has been followed for the study. Both primary and
secondary sources of data are used. Well structured questionnaire is
designed to elicit necessary data and details from the credit and debit card
holders. The secondary data were collected from the books, journals,
magazines and web portals.

A proportionate random sampling method was employed to elicit

the necessary information from the debit and credit card holders in
Mumbai City.

43
 CHAPTER 6
Analysis
List Of Tables And Figures
Table No Title Page No.
4.1 Analysis of question no 1 53

4.2 Analysis of question no 2 54

4.3 Analysis of question no 3 55

4.4 Analysis of question no 4 56

4.5 Analysis of question no 5 57

4.6 Analysis of question no 6 58

4.7 Analysis of question no 7 59

4.8 Analysis of question no 8 60

4.9 Analysis of question no 9 61

4.10 Analysis of question no 10 62

4.11 Analysis of question no 11 63

4.12 Analysis of question no 12 64

4.13 Analysis of question no 13 65

4.14 Analysis of question no 14 66

4.15 Analysis of question no 15 67

4.16 Analysis of question no 16 68

44
Primary Data

1) Do you have Debit / Credit Card?

Response No of Percentage
Respondents
Yes 92 90.2
No 10 9.8
Total 102 100

Table No. 4.1

10%
Yes
No

90%

Figure No. 4.1 analysis of question no 1

INTERPRITETION - 90% peoples are using debit and

credit cards.

45
2) Which Bank Debit/ Credit Card you use?

Response No of Percentage
Respondents
BOM 11 10.8
SBI 21 20.6
AXIS 5 4.9
ICICI 10 9.8
OTHERS 55 53.9
TOTAL 102 100

Table No. 4.1

10.8

20.6

53.9

4.9
9.8

Figure No 4.2 analysis of question no 2

INTERPRITETION – as per survey as compare to other

banks peoples are giving less preference to use of Axis
Bank Debit and Credit card.

46
3) How do you prefer to pay for the Purchase?

Response No of Percentage
Respondents
By Cash 38 37.3
Debit Card 53 52
Credit Card 4 3.8
Internet Banking 7 6.9
Total 102 100

Table No. 4.3

3.8
6.9

37.3 BY CASH

DEBIT CARD
CREDIT CARD
INTERNET BANKING

52

Figure No. 4.3 analysis of question no 3

INTERPRETATION – Mostly Peoples are using Debit
card for the transactions.

47
4) What type of Credit Cards you use?

Response No of Percentage
Respondents
Visa 67 65.7
Masters Card 33 32.4
American 2 1.9
Express
Total 102 100

Table No. 4.4

1.9

32.4 VISA
MASTER CARD
AMERICAN EXPRESS

65.7

Figure No.4.4 analysis of question no 4

INTERPRETATION – 66% peoples are using Visa Cards.

48
5) What is highest category of the Credit Card you are using?

Response No of Percentage
Respondents
Silver 48 47.1
Gold 19 18.6
Platinum 22 21.6
Signature 13 12
.7
Total 102 100

Table No. 4.5

21.7

SILVER
47.1
GOLD
PLATINUM
21.6
SIGNATURE

18.6

Figure No. 4.5 analysis of question no 5

INTERPRETATION – 43% peoples are using silver

category credit card.

49
6) How did you apply for your Domestic Credit/ Debit Card?

Response No of Percentage
Respondents
By Myself 69 67.6
By Company 14 13.7
Applied For Me
I Use a3 3
Supplementary
Card
Other 16 15.7
Total 102 100

Table No. 4.6

15.7
3 BY MYSELF

BY COMPANY APPLIED FOR

ME
13.7 I USE A SUPPLEMENTARY
CARD
67.6 OTHER

Figure No 4.6 analysis of question no 6

INTERPRETATION – 67% peoples are apply by their own

for Debit and credit card.

50
7) Do you find use of Credit/ Debit Card to be Safest mode
of transactions?

Response No of Percentage
Respondents
Yes 90 88.2
No 12 11.8
Tots 102 100

Table No. 4.7

11.8

YES
NO
3rd Qtr

88.2

Figure No. 4.7 analysis of question no 7

INTERPRETATION – 88% Respondents think that debit

and credit card to be safest mode of transaction.

51
8) Which type of Security measurement you expect for
stepping misuse of Credit/ Debit Card?

Response No of Percentage
Respondents
Password 43 42.2
Photocard 4 3.9
PIN 34 33.3
Biological 21 20.6
Imprints
Total 102 100

Table No. 4.8

20.6
PASSWORD
42.2
PHOTOCARD
PIN
BIOLOGICAL IMPRINTS
33.3

3.9

Figure No. 4.8 analysis of question no 8

INTERPRETATION – Respondents are giving less

preference to the password as a security measurement.

52
9) Do you think more Credit/ Debit Card transaction in our
country over cash transaction will help to crap Black
Money circulation in economy?

Response No of Percentage
Respondents
Yes 82 80.4
No 20 19.6
Total 102 100
Table No. 4.9

19.6, 20%
YES
NO

80.4, 80%

Figure No. 4.9 analysis of question no 9

INTERPRETATION – 81% Respondents are giving

Positive Review.

53
10) On an average how many times do you use your
Debit/ Credit Card?

Response No of Percentage
Respondents
Daily 11 10.8
2-3 Times a 25 24.5
Week
Once a Week 15 14.7
Monthly 26 25.5
Hardly Ever 24 23.5
Not Having 1 1
Debit/ Credit
Card
Total 102 100

Table No. 4.10

11%
23% DAILY
2-3 TIMES A WEEK
25% ONCE A WEEK
MONTHLY
26% HARDLY EVER
15%

Figure No. 4.10 analysis of question no 10

INTERPRETATION – On an average Respondents are

using cards 2-3 times a week.

54
11) Why do you apply for Credit/ Debit Card?

Response No of Percentage
Respondents
Can get Discount 24 23.5
During Shopping
Convenient to 70 68.6
Make Payment
Feel Superior to 8 7.8
Others
Total 102 100
Table No. 4.11

Sales

CAN GET DISCOUNT DURING

8% SHOPPING
23%
CONVENIENT TO MAKE
PAYMENT
FEEL SUPERIOR TO OTHERS

69%

Figure No. 4.11 analysis of question no 11

INTERPRETATION – Mostly Respondents are using

Cards for the reason of Convenient to make payment.

55
12) For what purpose you used your Debit/ Credit Card?

Response No of Percentage
Respondents
Money 35 34.3
Transactions
Online Shopping 37 36.3
Ticket 15 14.7
Reservation
Other 15 14.7
Total 102 100
Table No. 4.12

15%

34% Money transaction

15% Online Shopping
Ticket Reservation
Other

36%

Figure No. 4.12 analysis of question no 12

INTERPRETATION - Respondents are use card for the

purpose of Online Shopping as well as Money
Transactions.

56
13) Have you ever Lost your Credit Cards?

Response No of Percentage
Respondents
Yes 8 7.8
No 94 92.2
Total 102 100
Table No. 4.13

8%
YES
NO

92%

Figure No. 4.13 analysis of question no 13

INTERPRETATION – There are very less Respondents

who loss there Credit cards.

57
 14) Was there any Financial Loss?
Response No of Respondents Percentage
Yes 8 7.8
No 94 92.2
Total 102 100
Table No. 4.14

7.8, 8%
1st Qtr
2nd Qtr

92.2, 92%

Figure No. 4.14 analysis of question no 14

INTERPRETATION – Respondents who loss there cards

they only
Suffer from financial Loss.

58
15) Do You find Credit Card to be Expensive as many
other charges are charged on it?

Response No of Percentage
Respondents
Yes 55 53.9
No 47 46.1
Total 102 100
Table No. 4.15

YES

46% 2nd Qtr

54%

Figure No. 4.15 analysis of question no 15

INTERPRETATION – As per 54% Respondents Credit

card is expensive as many charges charged on it.

59
16) As a Credit Card and Debit Card Holder what rating
you would give for Services provided by bank?

Response No of Percentage
Respondents
1 7 6.9
2 12 11.8
3 29 28.4
4 37 36.3
5 17 16.7
Total 102 100
Table No. 4.16

7%
17% 1
12%
2
3
4
36% 28%
5

Figure No. 4.16 analysis of question no 16

INTERPRETATION – Respondents are giving average

rating to Card Holders.

60
Secondary Data –

In June 2018, the number of debit cards increased to 944.3 million, with
19.2 million new cardholders, while a total of 39.37 million credit cards
were in operation, with the addition of 0.76 million cards, according to the
Reserve Bank of India. Between June 2017 and June 2018, India added
some 7.89 million credit cards and 150.45 million debit cards.

61
 Card usage spiked during the months of November 2016,
December 2016 and January 2017, following the demonetization of Rs
500 and Rs 1000 notes. The unavailability of cash forced cardholders to
use them. But since February 2017, both debit card and credit card usage
have been range-bound. In June 2017, debit cards were down by 86.2
million to 793.83 million, shaving off most of the increase that
demonetization brought in.

62
 The number of transactions using credit cards at POS terminals or
swipe machines grew by 24% year-on-year, while it increased by 11% for
debit cards for the 12 month period ending June 2018. In June, the total
number of POS transactions through credit cards was 135.98 million,
while the figure for debit cards was 283.3 million.

63
 Total amount transacted through credit cards at POS terminals —
which was Rs 46,276 crore in June 2018 — increased by 30% in the 12
month period ending June 2018. Amount transacted using POS terminals
through debit cards went up by 28% during the same time. In June 2018,
Rs 47,923 crore were transacted through debit cards at POS terminals.
Note that in the chart above, the amount transacted using debit cards had
surpassed credit cards in November 2016, but by January 2018 the
amount transacted through credit cards and debit cards became almost
the same, and now credit card transactions are slightly more than debit
card transactions.

64
 Total amount transacted through credit cards at POS terminals
went down by Rs 776 crore in June 2018, while the amount transacted
through debit cards grew by Rs 1,115 crore.

65
indication of how much amount people are willing to spend in one
transaction — increased 5% between June 2017 and June 2018. For debit
cards, it grew 14.8% during the same time period

66
 CHAPTER 7

LIMITATIONS OF THE STUDY

a) A major limitation of the study was a very small population size and a non-co-
operating and sometimes stark refusal by the credit card companies (issuers) to
divulge the list of credit card holders in the cities of Ludhiana and Jalandhar.
b) Another major limitation was non-availability of resources to undertake the
survey because this project was not sponsored and all the costs were to be borne
by the researcher himself.
c) Contacting respondents to collect data for such lengthy questionnaires proved
to be another limitation.
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.

67
 CHAPTER 8

SUGGESTIONS

* The maximum amount of withdrawal per day through ATM should be

increased at least up to Rs. 1,00,000.

* More number of ATM centers should be opened especially at important places

of the city and outside the city.

* Create more awareness among the customers about the depositing cheque/cash
through ATM which facilitates to reduce work burden of the bank branches.

* All banks should increase tie up with more number of

merchandise establishments without any service charges.

* The Debit Card is used only as a substitute for ATM cards. There is no
awareness among the customers about the other uses like shopping and on-
line shopping. The customers should be educated about these services.

* Most of the banks are maximum allowing five withdrawals between tie up banks
that should be increased more. In future, all the public sector, private sector and
foreign banks should create tie up among themselves for the withdrawal of cash
through ATMs without any service charges or any restrictions.

* All banks should also take necessary actions to promote all of their modern
operations through proper media of advertising. Extensive and aggressive
advertising is must for capturing stable position among the public.

68
 CHAPTER 9

FINDING

The study indicated that useful information regarding credit cards and
debit cards was considered important by respondents. Various credit terms,
such as percentage rates and finance charges were considered to be main
focus of respondents for the required disclosures. The study further indicated
that in India 90% peoples are using debit and credit card for many purpose
such as online shopping, Money transaction, ticket reservation etc.

India had around 2.7 crore credit cards in the economy. 81% of the
respondents are agreed that using debit and credit card will help to crab
black money as each transaction will be having the record with a mere
swipe so that no corruption will take place in all the cash or any kind of
transaction of the goods services or money.
Banking industries has also provided the 24*7 customer service for
their customers. These services are often used by customer for any
problems regarding their cards. There are many super market like D mart
Big bazar offers discounts to the customer if they are having debit or credit
cards.
The study shows that the convenience and security element that
credit cards offer is most important for women. Considering the increasing
number of independent working women, a specialized product that gives
extra benefits for shopping household items can be launched focusing to
these women

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 CHAPTER 10
Conclusion

The problem of this study was to access the impact of debit card
and credit cards on commercial bank customer‘s cash flow management
control in Mumbai. The study intended to establish the use and management
of credit cards on various cash transaction and determine the effect of credit
cards and debit cards on card holder‘s cash flow. Both cards had the effects
of reducing bank balances and cash balance to significant level. Both cards
were highly used by youthful and employed population that risked engaging
into impulse purchases due to the flexibility offered by the two cards when
accessing the money. Credit cards had the effect of increasing the level of
indebtedness to the cardholders hence, keeping them in cash deficit
positions. Both cards can assist the cardholder in tracking his/her
transactions but cannot put a control on how one uses his/her money. A
significant fraction of both cardholders ran the risk of misuse of their cards by
withdrawing money without proper planning due to insufficient knowledge on
the use of the cards.

The study further indicated that the degree of difficulty in obtaining

useful information about credit terms, differ on the basis of their personal
experiences vis-à-vis the other card users. Responses regarding the
information provided by credit card companies towards wise use of credit
cards were favourable. Across checking question elicited similar
responses from them.
The study further indicated that credit card holders consider
managing their finances easier or no different, because of flexibility,
smoothing of expenditures and repayments. But their personal
experiences differ sharply on account of their perceptions about the
experiences of other card users. The study further indicated that spending,
heavy debt and a continuous cycle of debt are the most common reasons
for card users‘ contentions about other consumers of credit cards.

70
 CHAPTER 11

Bibliography

LINKS
 
 www.wikipedia.com
 
 ww8.indianinfoline.com
 
 Shodhganga.inflibnet.ac.in
 
www.researchgate.in

Book
 
Credit Risk Management for Indian Banks

Reference
 
 Journal of Bank Research

 
Banking Annual

 
 Ventrue Infotek, (2000 to 2004) Payment Card Industry Survey.


 - Pushing credit cards to Grassroots level, Financial
Narayan T. (2003). ICICI
Express, 27 February.


Biswas, N. (2010). CoreBanking Solution: A Panacea for Modern Banking Services.
The Nehu Journal, 8(2).

71

 Joshi, M. K. (2006). Customer Service in Retail Banking in India.
 in Indian Banks: An Overview(ed), ICFAI University
Customer Services
Press, 32-41.

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