PRESENTATION ON CREDIT CARD

Any card that may be used repeatedly

to borrow money or buy products and services on credit. Normally we know Credit cards as Plastic money...! A credit card is a way of payment by using the plastic cards which are issued to customers for their payment. Credit cards are different than the

About credit cards

1. How credit cards work 2. Interest charges 3. Benefits to customers 4. Grace period 5. Benefits to merchants 6. Parties involved 7. Transaction steps 8. Rewards 9. Fees charged to customers 10.Credit cards in ATMs 11.Tips 12.Types of cards in INDIA

Credit cards
A credit card is part of a system of payments after the small plastic card issued to users of the system. It is a card entitling 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.
Most credit cards are issued by local banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. This is defined as 85.60 53.98 mm in size

Service Providers
VISA

MASTER
AMERICAN EXPRESS ICICI Bank Axis Bank Barclays Bank

Parties involved in Credit Cards

Card holder

Card-issuing bank
Merchant Acquiring banks Merchant account

Cardholder: The holder of the card used to make a purchase; the consumer. Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.

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

 Merchant account: This could refer to the acquiring

bank or the independent sales organization, but in general is the organization that the merchant deals with.

Credit Card association: An association of card-

issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks. the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks.

Transaction network: The system that implements

 An acquiring bank (or acquirer) is the bank or

financial institution that processes credit and or debit card payments for products or services for a merchant. The term acquirer indicates that the bank accepts or acquires credit card payment from the cardissuing banks within an association. The bestknown (credit) card associations are Visa, MasterCard, American Express, Diners Club, Japan Credit Bureau, Attijariwafa Bank, and China UnionPay

Transaction

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

Types of Credit Cards

Premium credit card Cash credit card Gold credit card Air line credit card Silver credit card Business credit card Balance transfer credit card Co-branded credit card Low interest credit card Life time free credit card

Advantages of Credit Cards

Purchase Power and Ease of Purchase

Protection of Purchases
Emergencies Credit Card Benefits Protection against fraud

 The main benefit to each customer is convenience.

Compared to debit cards and cheques, a credit card allows

small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card. cards.

Credit cards also provide more fraud protection than debit

In the UK for example, the bank is jointly liable with the

merchant for purchases of defective products over 100.

Many credit cards offer rewards and benefits

packages, such as offering enhanced product warranties at no cost, free loss/damage coverage on new purchases, and points which may be redeemed for cash, products, or airline tickets.
Additionally, carrying a credit card may be a

convenience to some customers as it eliminates the need to carry any cash for most purposes.

Grace period
A credit card's grace period is the time the

customer has to pay the balance before interest is assessed on the outstanding balance.
Grace periods vary, but usually range from 20 to

50 days depending on the type of credit card and the issuing bank.
Usually, if a customer is late paying the balance,

finance charges will be calculated and the grace period does not apply.

 Finance charges incurred depend on the grace

period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

Late payments or overdue payments

Charges that result in exceeding the credit

limit on the card (whether done deliberately or by mistake), called over limit fees Returned cheque, fees or payment processing fees (eg phone payment fee) Cash advances and convenience cheques (often 3% of the amount)

 Transactions in a foreign currency (as much as 3% of

the amount). A few financial institutions do not charge a fee for this. Membership fees (annual or monthly), sometimes a percentage of the credit limit. Exchange rate loading fees (these may sometimes not be reported on the customer's statement, even when they are applied)

TRANSATION STEPS
Authorization: The cardholder pays for the

purchase and the merchant submits transaction to the acquirer (acquiring bank).

the

The acquirer verifies the credit card number, the

transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant.
An authorization will generate an approval code,

which the merchant stores with the transaction.

 Batching: Authorized transactions are stored in

"batches", which are sent to the acquirer.

Batches are typically submitted once per day at

the end of the business day.

If a transaction is not submitted in the batch, the

authorization will stay valid for a period determined by the issuer, after which the held amount will be returned back to the cardholder's available credit.

 Clearing and Settlement: The acquirer sends the batch

transactions through the credit card association, which debits the issuers for payment and credits the acquirer. transaction.

Essentially,

the issuer pays the acquirer for the

Funding: Once the acquirer has been paid, the acquirer

pays the merchant.

The merchant receives the amount totaling the funds in

the batch minus either the "discount rate," "midqualified rate", or "non-qualified rate" which are tiers of fees the merchant pays the acquirer for processing the transactions.

 Charge backs: A chargeback is an event in which money in a

merchant account is held due to a dispute relating to the transaction.

Charge backs are typically initiated by the cardholder. In the event of a chargeback, the issuer returns the transaction

to the acquirer for resolution.

The acquirer then forwards the chargeback to the merchant,

who must either accept the chargeback or contest it.

A merchant is responsible for the chargeback only if he/she

has violated the card acceptance procedures as per the merchant agreement with card acquirers.

Credit cards in ATMs

Many credit cards can also be used in an ATM to

withdraw money against the credit limit extended to the card, but many card issuers charge interest on cash advances before they do so on purchases.

The interest on cash advances is commonly charged

from the date the withdrawal is made, rather than the monthly billing date.
have no grace period and incur interest at a rate that is (usually) higher than the purchase rate, and will carry those balance for years, even if they pay off their statement balance each month.

Many consumers have large cash balances, which

These tips are important:

Sign your card -- as soon as you receive it! (Obviously,

this is only as effective as the clerk who's checking it.)

When you use your card at an ATM, enter your PIN in

such a way that no one can easily memorize your keystrokes.

Don't leave your receipt behind at the ATM. Your PIN and account number from a discarded receipt

could make you vulnerable to credit-card fraud. Also, don't throw out your credit-card statement, receipts or carbons without first shredding them!

These tips are important:

Never give your credit-card number over the telephone unless

you initiated the call.

Ignore any credit-card offer that requires you to spend money

up-front or fails to disclose the identity of the card issuer.

Make certain you get your card back after you make a purchase Always keep a list of your credit cards, credit-card numbers and

toll-free numbers in case your card is stolen or lost.

Check your monthly statement to make certain all charges are

your own, and immediately notify the card issuer of any errors or unauthorized charges.

Credit card business in India

A number of credit card providers offer

business credit cards for the Indian customers. Features of business credit cards are designed to take care of the financial requirements of all types of customers. In India, business credit cards come with wide range of basic and additional benefits. Lucrative reward schemes that are offered with business credit cards make them highly popular among the credit card users in India.

Leading Business Credit Cards in India

Deutsche Bank Corporate Credit Card

Standard

Chartered Executive Credit

Card HDFC Bank Corporate Credit Card BOBCARD Corporate Global Credit Card HDFC Bank Gold Business Credit Card Can card Visa Corporate Credit Card Jet Airways Citi Business Credit Card Axis Bank Corporate Credit Card

Features of Deutsche Bank Corporate Credit Card:

It is a corporate branded credit card. Cash advance fee is 2.5% per month. Issuer is MasterCard. Cardholders receive insurance benefits. Issuing bank is Deutsche Bank. Joining and renewal are free. Regular interest rate is 2.95% per month. There are special rewards.

Features of HDFC Bank Corporate Credit Card:

There are MIS reporting facilities.

Regular

interest rate is 2.65% per

month. Cardholders receive discounts all over the world. Cash advance fee is 2.5% per month. Minimum cash advance fee is INR 300. There are 0% fuel surcharge facilities. Issuer is MasterCard. Interest rate is low.