Plastic Money

PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.1 EXECUTIVE SUMMARY The recent growth in the use of plastic money mainly credit and debit cards has been phenomenal. There are hundreds of millions of credit cards in circulation today, these little rectangular pieces of polymerized substance have become a way of life. India alone is home to millions of them. Initially positioned as a status symbol these plastic cards have caught on in a big way amongst the educated population of the country. Spending pattern through plastic money will change drastically. Traveling, dining and jewellery are the top three purchases that Indians make through credit cards. Two years ago, it was jewellery and apparel purchases that formed the largest chunk of purchases through plastic money. Fuel accounts for a very small portion of credit card purchases as these are largely paid through debit cards. This growing trend will soon rise up to the point where the plastic money will completely replace the need for carrying cash. Will this change be for good or bad only the future will decide. Plastic Money business is definitely going big time. In a country where a decade back people have hardly heard the word plastic money or credit card It has been estimated that there are likely to be around half million potential card users in the near future. This forecasting derives credibility from the fact that more and more local and international financial institutions are exhibiting enthusiasm in this direction. This in turn reflects prospects in India market in accommodating numerous credit card competitors operating on the circuit, ensuring healthy and competitive card business deals

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.2 OBJECTIVES OF STUDY It is rightly said the plastic money is need of hour. People are using these cards on a vast scale. But after considering the review of literature it is seen the whole payment process of processing these cards is not safe and customer are facing many problems relating to plastic money. That’s why study is focused on consumer perception regarding the plastic money. Need of the study is to get to know about the comparative analysis of plastic money. There are many ethical issues and challenges in the market of plastic money which is required to be studied. This study is concerned with the Seven perks of plastic money Convenience, Budgeting technology, Reputation boosting, Corporate might, Cops and robbers, The float, Openness to negotiations.

Primary objectives 

To know the perception of people towards plastic money.

Secondary objectives    

To know the importance of plastic money in the daily life of consumers’ W.R.T credit and debit cards. To study the benefits of debit card and credit cards. To find out the market leader among the various banks/companies issuing credit and debit cards To know the problems faced by respondents using plastic money.  To study the satisfaction level of consumers towards plastic money.

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.3 RESEARCH METHODOLOGY Research problem Spending through credit cards rose by 30% year-on-year to Rs22,128 crore during the April-June quarter of 2011-12 against Rs16,948 crore last year, according to data released by the Reserve Bank of India (RBI). Spending through debit or ATM cards, increased by 45% year-on-year to Rs11,691 crore during the April-June quarter compared to Rs8,065 crore last year. “It’s a natural progression for country like India, which is growing rapidly and more people availing banking facilities,” said Anand Selvakesari, country business manager, global consumer group, Citibank. “However, there is still much potential left as penetration of plastic money in India is less than countries such as the US and China.” However, the total number of credit cards in the country witnessed a marginal fall as total outstanding credit cards at the end of June 2011 declined 6% to 1.8 crore from 1.9 crore at the end of June 2010. On the contrary, the number of debit cards rose 25% to 24.0 crore at the end of June 2011 compared to 19.0 crore at the end of June 2010. “The growing number of point-of-sale terminals in the country have also helped in increasing payment through credit and debit cards,” said M Narendra, chairman, Indian Overseas Bank. However, bankers are likely to be cautious in selecting their customers for credit cards due to the uncertainty in the global economy. “We will continue expanding our cards base in India, but will select customers cautiously.

Therefore, the statement of the problem would be, 1. How can plastic cards usage be increased? 2. How can a country like India make maximum use of plastic cards?

Research objectives Macro  

To identify the factors affecting the usage of plastic money. To understand the future of plastic money in India.

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PLASTIC MONEY-THE FUTURE CURRENCY

Research Design. 



The research will be exploratory followed by descriptive because the entire project is based on questionnaire and analysis so that the detailed description will be there in the project, so this will be descriptive design. The nature of the study is statistical pertaining actual environmental conditions (field conditions).The reason for choosing this type of data is, qualitative research provides insights and understanding of problem setting while quantitative research seeks to quantify the data and typically applies some form of statistical analysis.

Research Methodology SAMPLE UNIT 

Individuals who are salaried people and students of various colleges.

SAMPLE SIZE Total Sample size: 100 SAMPLING TECHNIQUE The sampling method used will be Non probability convenience sampling because the respondents chosen for filling the questionnaire will be chosen conveniently from Mumbai.

Data sources Primary Sources: This data include both qualitative and quantitative data. Data are generated through questionnaire as a research instrument.

Research Approach: Survey Method

Research Instrument: Questionnaire

Types of Questionnaire: Structured non-disguised

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PLASTIC MONEY-THE FUTURE CURRENCY

Type of Questions: Open-ended and Close-ended questions

Secondary Sources: This data will be collected from journals, internet, reports and Industrial publications.

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.4 LITERATURE REVIEW 1) In this paper, we revisit the contents and method of Keynes’s Indian Currency and Finance(1971a). By focusing on the rationale of his proposal for a new international monetary system combining cheapness with stability, we argue that Keynes’s analysis of monetary developments in Asia in the first years of the twentieth century may provide useful hints for an overall rethinking of the major faults of today’s Bretton Woods II system. (2010–11)

2) The article reports on the problem regarding fake currency in India. It is said that the country's battle against fake currency is not getting easier and many fakes go undetected. It is also stated that counterfeiters hitherto had restricted printing facilities which made it easier to discover fakes. According to chief economist Soumendra K. Dash, the solution to the problem is to provide people incentive to use plastic cards and make cashless transactions. (3/8/2009) By: Alvares, Cliford

3) The article reports on the plan of the Indian government to introduce plastic currency that will have enhanced security features to counter the growing problem of counterfeiting in the country. (Sep2012)

4) Reports on the use of polymers for currency as an alternative to paper money. Conversion of all of Australia's circulating notes; Marketing of the polymer bank note substrate by Securency Pty Ltd.; Use of the polymer for commemorative issues; Advantages offered by plastic bills.( Dec99)

5) The article reports on the plan of the U.S. Reserve Bank to issue 100 crore pieces of Indian rupees (Rs) 10 polymer banknotes. The polymer banknotes are described to be four times more durable than normal currency and harder to imitate by counterfeiters. The notes' average life span of five years, its cleaner appearance, and its counterfeit-proof qualities are the reasons for the preference of the for these polymers. The notes are the first issued in Australia and thereafter in other countries including New Zealand, Papua New Guinea, and Romania.( Oct2009)

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PLASTIC MONEY-THE FUTURE CURRENCY 6) The article presents a perspective on the history of credit card in the U.S. According to the author, the future of money in country is increasingly identified with the credit card. The author indicated that Americans are used to easily available credit. Furthermore, credit cards have become an important factor in the American market. (2007) By: Mudd, Douglas A. 7) The article offers tips on the use of credit and debit cards overseas. One should use credit or debit card to make purchases and debit card to get cash when one needs it. Both Visa and MasterCard charge currency-conversion fees on credit-card purchases. One can minimize fees by using the right card. HSBC, Washington Mutual and most credit unions don't add a surcharge. Withdrawing cash from an overseas ATM not part of one's bank network could cost $5 or more on top of the conversion fee. INSET: CREDIT CARDS.(9 Jun2006) By: Goldwasser, Joan 8) Presents highlights of the report `Plastic Cards in Japan,' by Steve Worthington and Ronald Brown. Focuses on the development of a `smart' card in Japan, which looks like plastic credit cards but contain a microchip; Sophisticated and diverse applications for the card; Future forecast for the cards in the world market. (May/Jun91) 9) The author comments on issues related to credit cards. He asserts that he has never owned a credit card. After the mortgage crisis, Bank of America Chief Executive Ken Lewis has expressed concern about credit-card defaults. The author criticizes the use of credit cards, particularly the idea of renting his own money back while paying nearly 14%, on average, for the privilege. (Dec2008) By: Martin, Edward 10) The article reports that paying cash is better for the environment than using a credit card. Credit cards, made of plastic, take decades to decompose, the computers that effect credit card transactions consume large amounts of energy, and most people in the U.S. still receive paper credit card statements. Bills, however, are made largely of materials like cotton, which creates less carbon emissions than paper when harvested. Also, bills stay in circulation for up to five years. (12/1/2008) By: Stone, Daniel

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11) This article discusses the competitive advantage held by conventional credit card issuers and what steps they can take in order to maintain their market share against online upstarts that offer lower interest rates. The article describes the fierce competition online to offer low interest rates and attract credit card applicants. The article states that incumbent credit card companies need to establish strong online presences and cut costs. The article suggests cutting costs by offering online account services and distributing advertising and customer acquisition costs over numbers of new accounts. (2000) By: D'Silva, ViJay,Stephenson, Jack, Waitman, Robert M. 12) The article offers pieces of advice on credit card use for college students in the U.S. from the Certified Public Accountants (CPAs). According to various surveys, reliance on credit card spending presents problems to college students. CPAs addressed the credit crisis through financial literacy and education programs for college students. One form is through accounting programs on college campuses with interaction to CPA firms. Increased awareness could be achieves through AICPA websites and financial literacy workshops. (Sep2008) By: Hoffman, Michael J. R., McKenzie, Karen S.2, Paris, Susan3

13) Examines the use of debit cards and credit cards in the United States. Similarities of cash cards, including limitations and advantages; How banks reward debit card customers if the debit card is treated as a credit card; Why card issuers are steering card-holders toward paper transactions rather than personal identification numbers. (Oct2001) By: Burt, Erin

14) The article presents credit cards as the best payment option for entrepreneurs. Paying by credit card is convenient, it allows business owners to maximize their cash flow, and it offers the accumulation of rewards or points that can add up to thousands in free services. For regularly recurring bills, however, nothing beats the convenience of automatic bill payment, the kind typically offered online through consumer and business checking accounts. Paying recurring bills automatically by credit card, which offers the best of both worlds, is catching on big with small businesses. (Jan2005) By: Prince, C. J.

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15) The article focuses on electronic transactions which are cheaper and more secure for businesses, reducing the possibility of employee theft and other concerns. Moreover, retailers favor debit cards because the fee charged by banks to process the transaction, typically 2 percent, is less than that on a credit card purchase. Personal finance experts say that the trend towards cashless living offers both peril and opportunity for consumers. For businesses, the trend means new opportunities to capture customer loyalty. Traditional credit card companies like VISA, which also issue debit cards, offer premiums based on the amount of spending cardholders do. (12/9/2003) By: Bongiorni, Sara 16) The article offers tips on the use of credit and debit cards overseas. One should use credit or debit card to make purchases and debit card to get cash when one needs it. Both Visa and MasterCard charge currency-conversion fees on credit-card purchases. One can minimize fees by using the right card. HSBC, Washington Mutual and most credit unions don't add a surcharge. Withdrawing cash from an overseas ATM not part of one's bank network could cost $5 or more on top of the conversion fee. INSET: CREDIT CARDS. (Jun2006) By: Goldwasser, Joan

17) Presents highlights of the report `Plastic Cards in Japan,' by Steve Worthington and Ronald Brown. Focuses on the development of a `smart' card in Japan, which looks like plastic credit cards but contain a microchip; Sophisticated and diverse applications for the card; Future forecast for the cards in the world market. (May/Jun91)

18) The article focuses on the growth of debit cards for health savings accounts in the U.S. The cards can be used by patients to pay for their pharmaceuticals, medical equipment and hospital expenses, among others. According Jody Dietel of WageWorks, a debit card is the easiest and most cost-effective method for accessing their funds for health care. Despite the market exit of some players, the future of the debit cards is still optimistic for industry observers. (Oct2009) BySHEPHERD, LEAH CARLSON,

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PLASTIC MONEY-THE FUTURE CURRENCY 19) In today's busy world, nobody has the time to withdraw money from the bank account for shopping. Everybody is interested in carrying the plastic money (credit card and debit card) in their wallet for shopping as it gives convenience, safety, easiness and even style. In this cutthroat competition, banks have to work hard to gain market share and to meet the expectations of customers so that they can delight their customers. This study is carried out to identify customer preferences and expectations from credit/debit card services. The main objective is to identify the factors that influence the choice of credit cards, customer satisfaction, and consumer behavior regarding the credit card in Tier-III cities. Primary data was collected from 200 respondents by the questionnaire method. Results show that the choice of credit card depends upon income, gender and profession of the respondent. Customer satisfaction depends upon income, frequency of usage in a month and amount of usage per month. (Feb2011)

By: Khurana, Sunayna1,Singh, S. P. IUP Journal of Bank Management; Feb2011, Vol. 10 Issue 1, p71-87, 17p, 31 Charts

20) The article reports on the renewed popularity being experienced by the Green Earth Card, a biodegradable plastic card that was introduced 10 years ago by Versatile Card Technology of Downers Grove, Illinois. It explains that a key ingredient in the Green Earth Card is corn starch, and its plastic core and overlay are completely biodegradable. (May2007)

21) The article offers information regarding the increasing trend of using debit cards instead of cash amongst youth of the U.S. It states that spenders between 18-25 years of age prefer to swipe their debit cards even for petty expenses. It states that convenience and speed of such transactions are the factors responsible for the trend, however, those who don't keep a track of their bank balances face financial crisis. (6/17/2007)

By: Olson, Elizabeth

22) The article discusses the benefits of payroll cards for employers and examines ways on how companies can provide financial services and education to so-called underbanked

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PLASTIC MONEY-THE FUTURE CURRENCY and unbanked workers in the U.S. Payroll consultants explained how the use of such cards can lessen a firm's expenses on payroll administration. Gary Lott, vice president of a division at ADP, says that some employers view the use of such cards in providing pay checks to employees without a bank account and introducing them into the field of electronic banking. (Dec2009) By: BRIDGEFORD, LYDELL C.

23) Focuses on the efforts of banks to minimize personal checks with point-of-sale electronic checks. Attempts to increase debit card use; Details on electronic check conversion at the point of sale; Advantages of phasing out paper checks for banks. (Dec2002) By: Bruno, Mark.

24) The theme of the 6th annual conference on the Financial Sector Specialist Group, which was held at the Regent Crest Hotel in London on 16 May was Plastic money and beyond. Surprisingly, this very relevant and informative topic attracted only 30 or so delegates, a large proportion of whom were from the building society world. The format followed that of previous conferences where four speakers with different backgrounds gave a view of the future potential and problems associated with the introduction of plastic money and Electronic Funds Transfer Systems (EFTS). For the uninitiated EFTS is another of the increasing number of acronyms and means EFTS. The chairman for the day was Ian Dunbar, general manager of the Eagle Star Group, who controlled the proceedings well although had some difficulty restraining Mike Fitzsimons philosophising on the future of work and shopping from home. Mike was assistant general manager marketing with the Nottingham Building Society when he was approached to give a paper, but has since turned freelance, The other three speakers were John Beckley of NCR, Dougald McCallum formerly of National Westminster Bank PLC but now chief executive at EFTPOS Development and Terry Molloy. (Aug1985)

25) Focuses on the US Bureau of Engraving and Printing's assessment of the possibility of using alternative materials, such as plastic, in making folding money. Australia's conversion of all its bills to plastic; Effort to lengthen the lifetime of bills and to deter counterfeiting; Canadian producer Domtar Inc.'s patents for Luminus, a polyester product that could replace paper currency.( July 1998).

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Chpt.5 INTRODUCTION OF PLASTIC MONEY

Banking has evolved a long way from the days of the medieval moneylenders counting coins on the bench to the present scenario, where it is hard to trace the trail of money from the beginning to the end. The trail starts right from the small saver leaving a few rupees in his local bank to the billions of rupee loans raised by a syndicate banks and financial institutions, capable of financing projects in any country in the world. Still, these banking majors are heavily dependent upon their retail home base of savers and borrowers. Most of the bankers began focusing on this retail market segment as global competition intensified in late seventies and early eighties. Credit cards, one of the banking products that cater to the needs of retail segment has seen its number grow in geometric progression in recent years. This growth has been strongly supported by the development in the field of technology, without which this could not have been possible.

5.1 HISTORY With hundreds of millions of credit cards in circulation today, these little rectangular pieces of polymerized substance have become a way of life. India alone is home to millions of them. Initially positioned as a status symbol these plastic cards have caught on in a big way amongst the educated population of the country.

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PLASTIC MONEY-THE FUTURE CURRENCY Extending credit to their customers has always been an extremely common practice. However in the early 1940s, when individual retail merchants in America found it more and more difficult to afford credit to these patrons, financial institutions came into the picture. 1946

The earliest credit card was called Charge - It and was invented in 1946. It revolved around a system of credit developed by John Biggins a credit consultant at Flatbush National Bank, Brooklyn, New York. This "card" allowed the customers to charge local retail purchases. The merchant deposited the same at Biggins Bank. The bank reimbursed the merchant and collected payment from the customer.

1951

The Franklin National Bank in Long Island New York issued the first official credit card. In 1951, a Mr. Frank McNamara had just finished dinner in a New York restaurant when, to his acute embarrassment, he discovered that he had left his wallet in another suit. While talking the restaurant owner into letting him pay the bill the next day, an idea for a new credit card was already being concocted in his mind. Within a few months he formed a company called Diners Club and convinced 27 restaurants and 200 people to join it. By 1951 there were 42,000 Diners club cards in circulation.

1958

American Express saw this as direct competition to its traveler's cheque division and brought out its own charge card in 1958. Within three months they managed half a million cardholders.

1960

Bank of America introduced its own card called BankAmericard. Beginning with a small group of cardholders and merchants, the bank began to license regional financial institutes to act as BankAmericard for their region. BankAmericard grew and in the next few years more and more communities across the US became serviced by a regional member.

1966

Fourteen US banks in Buffalo, New York formed Interbank - a new association on the same guidelines. In 1967, four California banks changed their name to the Western States Bankcard Association. They opened membership to other financial institutions in the west the product called Mastercharge.Eventually all financial institutions and banks interested in issuing credit cards became members of either BankAmericard or MasterCharge. All parties benefited from this system and led to rapid growth in cardholder accounts, merchant accounts and sales volumes.

1977

BankAmericard became VISA and in 1979 MasterCharge became MasterCard International.

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1980 With only two players in domestic card industry, HSBC and Citibank the number swelled to over 25 in the year 2010. 1981 Credit cards in India made their debut and are on the verge of an unprecedented boom. 1981 – 2010 The market has virtually grown to over 4 million cards with over 25-30% of compounded annual growth in new cardholder’s base.

Grown over 4 million cards with 25 – 30 % compounded annual growth

It’s not that only the card numbers have increased, but even the types of cards on offer have seen a surge. Today the domestic card industry is flooded with different types of cards ranging from gold, silver, global, co-branded credit cards, smart to secure ….the list is endless. Foreign banks have shouldered the major responsibility of increasing the card base and adding value-added services to the card products in the past. This is also evident from the fact that the market share of these foreign banks is estimated to be well 70%. 70 %

Foreign Bank

Indian Banks

30 % 14

PLASTIC MONEY-THE FUTURE CURRENCY

5.2 CURRENT STATISTICS The scenario has changed dramatically in the last of couple of years with the entry of State Bank of India (SBI), a domestic major in the banking sector. More and more nationalized banks and private sector banks like ICICI and HDFC Bank are aggressively launching credit card with value added features. Between 2008 and 2011, there’s been a 55 per cent increase in the number of payment cards in circulation–from 3 million in 2008 to 44 million in 2011. Of this, some 14 million are credit cards; the rest are debit cards.

14 million

2011

2008

3 million 55 % 40 %

95 %

Given the explosive growth in e-payments, Visa International commissioned the National Council of Applied Economic Research (NCAER) to conduct a study on e-payment systems in India. A look at the key findings: Switching from cash to e-payment puts more money in the bank. The study estimates that it costs a bank 1. Rs 10 to process a cash withdrawal for a walk-in customer, 2. Rs 4 at an ATM 3. Re 1 when a debit card is used at a merchant establishment. Banks lend money based on their reserves. The e-payment boom In India, credit cards have been around for at least 25 years, but it needed the ATM revolution to really accelerate card usage. Card volumes, which were at $1 billion in 2008, swelled to $23 billion by the end of 2011. But the numbers are still low: of the total banking population of 150

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PLASTIC MONEY-THE FUTURE CURRENCY million, there are only 14 million credit card customers, largely because they are unsecured loans, and eligibility norms are more stringent. Other e-payment systems like the electronic clearing system or ECS are popular for bulk and retail payments, as they mean lower transaction costs and less manual work. For instance ECS for bulk stock transactions and remittances grew to Rs 9,676 crores in 2011, up from Rs 67.4 crores in 2008. Simultaneously, electronic funds transfer (EFT) for individual payments such as credit, debit, smart cards, prepaid and ATM cards grew to Rs 15,711 crores in 2011 from Rs 0.6 crores in 2000. Both the ECS and the EFT systems work on a deferred net settlement basis. Interestingly, in the 90s, there has been a marked decrease in the growth rate of cheque issued, from 5.50 per cent in 2000-2003 to a negative growth of -1.89 per cent in 2008-11. There has also been a decrease in the value of transactions through cheque over the same period. Similar shifts in payment methods have occurred in developed economies during the transition from paper to e-payment systems. In the US, for instance, annual cheque transactions fell from $49.5 billion in the mid-1990s to $42.5 billion in year 2008. Debit cards or cash? The ‘buy now pay now’ character of debit cards has proved very popular and there’s been a dramatic increase in the number of debit cards in India i.e. 68 per cent of payment cards are now debit cards, up from 2 per cent in 2011. The year-on-year growth rate for these cards is put at 76 per cent.

68 % 2%

2001

2011

However the NCAER study has zeroed in on one critical detail in the upward graph for debit card penetration–ATM cash withdrawals account for over 80 per cent of debit card volumes. 16

PLASTIC MONEY-THE FUTURE CURRENCY And that’s closely linked to the phenomenal growth of ATMs–from 1,100 in 1999 to 14,000 in 2008. Savings account holders who receive a debit card as a default accessory in most automated banks, go on to use the card to withdraw cash from their accounts, and then pay for transactions with paper currency. It’s been found that over 90 per cent of debit card holders withdraw cash from ATMs to pay for goods and services. Proof that India is still largely a cash-based economy– more than 90 per cent of personal consumption expenditure is still made by cash.

Increased acceptance To encourage more customers to use plastic to pay for goods and services, more merchants should accept this e-payment mode. The number of terminals to process electronic payments at merchant locations grew to 150,000 in 2006. Even three years ago, only metro establishments accepted e-payments. Today, 150 cities, including those in tier-I and II towns, accept cards. Typically, consumers prefer to use cards to pay for high-value items. Electronic payments for purchase of consumer durables grew by 56 per cent, while jewellery purchases paid by card grew 49 per cent. However, there’s a discernible increase in the number of consumers who are now using cards to pay for items of daily expenditure as well as big-ticket items. One of the main reasons for this is the increase in the number of establishments accepting e-payments. The survey has tracked a growth of 49-53 per cent year-on-year in card payments for consumables bought at supermarkets and department stores. A recent study conducted by American Express among cardholders across six cities of Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad reveals that credit cards are used the most for dining and shopping, and is also popular for travel-related expenses such as air tickets, hotels and car rentals. The graph reveals the same as below

Dining & shopping

air tickets

hotels

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car

PLASTIC MONEY-THE FUTURE CURRENCY The Indian survey results are in line with the other markets in the Asia Pacific region that were surveyed. Cardholders in countries such as Singapore, New Zealand, Thailand, Malaysia, Hong Kong and Australia spend 10-30 per cent more on the same services. Indian consumers are also using the plastic money for everyday spends such as petrol, hospitals, telephone services and home furnishing. Consumers in India are also using credit cards more and more to pay school dues for their kids. However, India is at a low 11 per cent in comparison to other countries in the Asia-Pacific region when it comes to using plastic money for recurring bills such as utilities, subscriptions and insurance. There is no doubt that the domestic card industry has to yet to mature and offers 11 % compare to significant long-term growth potential. Asia pacific countries Given the lack of maturity of the domestic card industry, its growth will depend upon building core retail business, with more sophisticated products. In the expansion of domestic credit card market, the existing foreign players, SBI, other nationalised banks and the new domestic private sector banks are expected to play important role with complementary strategies. Foreign banks with the advantage of technology and industry experience are expected to concentrate on increasing card spending and customer loyalty in the major cities. SBI, on the other hand is expected to capitalize its superior distribution network to expand card acceptance in the smaller towns. The new private sector banks would have the opportunity to capture significant market share by combining the strengths of foreign banks and nationalised bank like SBI. Although at present the card market is mainly limited to India’s relatively bigger cities and tourist locations only, there is also a potential in smaller cities. Domestic banks, owing to their vast network and reach to smaller cities, can easily tap this potential. They would be better off, penetrating into smaller cities and bringing credit card to the masses rather than cannibalising other foreign banks’ existing cardholder base.

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5.3 CONCEPT OF CREDIT CARDS Credit Cards - It's credit to you! A Credit Card is referred to as 'plastic money'. Carrying a lot of cash on you can be cumbersome, risky and sometimes, you run short of it, just when you most need it. A Credit card is the smart solution to these problems. It is a convenient and safe alternative for cash. Besides, it says things about you. Most people associate a credit card with a prestige, which it most certainly bestows on you, but more importantly, it says that you have taken the onus of being responsible - to be extended credit! So, when you get yourself a card, remember that, because your bank does!

Salient Features 1. All credit card issuers charge an annual fee which is payable at the start of the year. The start of the year, of course, is your membership year, and not the calendar year. So, if you got yourself a card in March, you can expect to be billed the annual fee every March until you cancel your card. As a privilege, this fee is sometimes waived the first time. When the time comes for renewal of your card, you can even use the reward points you have accumulated from using the credit card over the year to settle your annual fee. Example:  ICICI’s & Citibank offers rewards points I.e. on every purchase you do from super market, some points will be accrued to your account which you can redeem against any of the durables or consumer goods.  They also have petrocard on which if you use you will get 5% money back 2. The most attractive feature of a credit card is that you need not pay off your dues in whole. You can option to pay 5% of the total amount on or before the due date, every month, the rest is carried forward. But there's a price to pay for this extended credit interest! Normally, interest varies between 2.5% and 3% per month. The interest rate that reflects the yearly cost of the interest the outstanding on your card is called the annual percentage rate. This rate is charged to the cardholder on the amounts carried forward beyond the due date for the payment of balances. Most card issuers will tell you their monthly rate of interest. It might sound low at 3%, but when you look at the interest rate over the year, it turns out to be as high as 43%. Example: 19

PLASTIC MONEY-THE FUTURE CURRENCY If your credit is 50000 you can option to pay 5 % of 50000 before due date ie 2500 before due date and the rest amount is carried forward with the interest charge of 2.5 % or 3%. 3. An important feature - lets you withdraw cash from designated ATMs using your credit card. Use discretion when withdrawing cash on your credit card because the charges for this facility are high, around 2.5% to 3% per transaction!

Benefits 1. When you use a Credit card to pay for anything, you get an interest-free period of 45 days. Billing cycles are structured in such a way that you definitely get at least 30 days out of these as clean credit time, which is especially beneficial to salaried people. Better still, you can option to pay your bill in full when you receive it or you can carry forward your payments by paying as little as 5% of the total amount on or before the due date, every month. You can spend now, pay later. 2. With a credit card on you, you don't need to run the risk of carrying a lot of cash. 3. Another advantage of a Credit card is that you can use it as an ATM card too! But, there's a fee to it. It typically starts with a flat fee going up to a percentage-based fee on the amount of the withdrawal.

5.4 FREQUENTLY ASKED QUESTIONS (FAQ) 1. What kind of credit card should I get? Before you start shopping for a credit card, you need to think about what kind of cardholder you are. Are you the type who tends to pay off the entire balance at the end of every month? Or are you the type who likes to make only minimal payments? If you pay a card's entire balance at the end of each month, you don't really need a card with an extremely low interest rate because you probably won't have to pay any finance charges anyway. Instead, search out credit card companies that charge no or very low annual fees. If you instead tend to carry an outstanding balance on your credit card from month to month, look for card issuers who charge unusually low interest rates. Just a onepercentage point difference can outweigh the difference in annual fee. Better yet, develop the habit of paying your entire balance every month, and get free of costly credit card debt. 2. How do I get a credit card? Simple! Review our spread of credit cards and choose one that's right for you (in fact, we'll even help you do that). After you make your choice, give us a few details online and our executive will get in touch with you within 24 hours. Pay nothing! The joining fee

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PLASTIC MONEY-THE FUTURE CURRENCY will be billed to you in your first statement and. Subsequently, you will be charged the annual membership fee every year to renew your card's validity. 3. What makes me eligible for a credit card? The eligibility criteria for a credit card are simple, though they could vary from card to card. In general, you need to be an adult and you need to be working. In short, you need to be –  Between 21 and 65 years of age.  Salaried or self-employed income tax payee with an annual earning of atleast Rs. 72,000.

4. How do lenders and credit-card companies make credit-granting decisions? When a lender or credit card company reviews your credit application, it's basically trying to gauge the likelihood that you can, and will, pay the money back. They do this by examining your "Three Cs": Character, Capacity and Credit. Character: Credit grantors get a sense of your financial and personal character through such factors as the length of time you have lived in one place and the length of time you have stayed on your current and previous jobs. They get this information from your credit application. Capacity: This refers to the amount of debt you can realistically pay given your income and savings. To estimate your capacity, lenders look at your current living expenses, debts and the additional payments that the proposed new obligation would require. This information comes from your both your credit application and credit report. Credit: A key factor here is how you have handled your current and past credit relationships. Do you pay your bills on time, or are you habitually late? What are your current credit limits, and how close are you to those limits? The answers to such questions can usually be derived directly from your credit report. 5. What should I do if my credit card is lost or stolen? Contact your bank immediately! The bank will de-activate your lost credit card to prevent any misuse. Also, check with your bank on what's called "lost card liability". This is a feature that protects you when you have lost your card. Depending upon your bank's policies, you will need to pay only a limited amount on any fraudulent charges that could have accumulated between the time you lost the card and the time you reported the loss to the bank.

21

PLASTIC MONEY-THE FUTURE CURRENCY

6. What is my liability when I lose my credit card? After you have reported the loss of your card to the issuing bank your liability is limited to a fixed amount which could be as low as even Rs. 1000 (this amount may differ from bank to bank), but if you delay in reporting the matter and your card is misused, you will be required to pay all the expenses charged to it. Some banks also charge a card replacement fee. It makes sense to read the booklet that is sent to you with your card (especially the fine print that we so often ignore), to know all there is to know about your card. 7. How much and when do I pay to get my credit card? Only on acceptance of your credit card application, you will be charged a joining or membership fee, which varies between Rs. 100 and Rs. 2,500 depending on the card applied for. The issuing bank will add this amount to your first monthly billing statement, and thereafter, every year as a membership renewal fee. 8. Do I have to pay interest whenever I use my card? Not at all! You are offered an interest free period of up to 45 days after which you have to pay the dues for purchases made. You also have a choice of payment - you can either opt to pay the 'minimum due amount', which is typically 5% and carry forward the balance till the next billing cycle or you can pay for your purchases in full. If you pay the entire amount within the interest-free period, then no charges are due but if you avail of the credit facility, a credit charge between 2.5% to 3% is charged.

9. Is it a good idea to pay off credit-card bills with savings? If you have some extra money in your savings account, give serious consideration to taking the cash and paying off your high-interest credit card bills. You'll benefit because the interest you earn on your savings is far less than the interest you're paying on the credit card's balance. Just be sure to keep enough money in an emergency fund to cover three to six months' worth of living expenses! 10. When traveling, should I use my credit card or traveler's checks? When traveling, it's usually more convenient, and sometimes financially savvy, to pay your expenses with a credit card rather than traveler's checks. In a sense, credit cards 22

PLASTIC MONEY-THE FUTURE CURRENCY have become a universal currency. They let you charge whatever you want in just about any part of the world, but you get to pay for it when you go back home in Rupees. You might even save some money, if currency rates go your way between the time you make your purchase and the time you return home and pay your bill. Traveler's checks, on the other hand, require lots of upfront cash to purchase. Sales fees are also involved. In addition, using traveler's checks requires that you plan your vacation spending well in advance in order to buy the appropriate amount of checks. And if you have checks left over when you return from your trip, cashing them in can be a nuisance. However, if your credit card is lost or stolen, it can be a lot harder to get a replacement on short notice in a foreign country than with traveler's checks.

11. What is the fee for a supplementary or add-on card fee? Depending on the card you have, the Supplementary or Add-on card fee varies between Rs. 125 and Rs. 1,000 12. How do banks that issue credit cards calculate interest each month? The bank that has issued you a card first calculates the APR or Annual Percentage Rate. Then, it employs either one of three methods to arrive at your monthly interest rate  Average Daily Balance This is the most common way of computing monthly interest whereby each day's dues are added together and then divided by the number of days in a billing cycle.  Previous Balance The bank uses the outstanding balance at the end of the previous period i.e. the period prior to the one covered by the current billing statement.  Adjusted Balance The balance is derived by subtracting the payments you've made from the previous balance. You must also check with your bank on whether fresh purchases that you intend to revolve upon get charged interest from the date of the transaction, or from the due date only. If it's the latter, you enjoy a longer credit free period.

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PLASTIC MONEY-THE FUTURE CURRENCY 13. How many types of cards can I choose from? 1.Visa Card 2.MasterCard 3.Diners Club 4.American Express Most banks issue Visa or MasterCard, or both. Diners Club is a proprietary brand of Citibank in India. American Express is also a proprietary brand, which is not affiliated with any of the other brands. While most banks offer Visa and MasterCard, Diners Club is offered only by Citibank and American Express cards by American Express. Visa and Master Card are the most popular cards in India and have an almost equal market share.

14. What is the difference between a Credit Card, Charge Card and Debit Card? A credit card allows you to pay for purchases made over a period of time. The first 45 days of credit (calculated from the day of billing and not from date of purchase) come interest free. After which, you are liable to pay a minimum amount due - generally 5% of the billed amount and carry forward the balance. Alternatively, if you pay the entire amount due, you save on the interest that would be otherwise charged. You also have the option of paying any amount, as long as it is higher than the minimum amount due. Unlike credit cards, a charge card requires full payment of the charge by the due date, failing which you cannot use the card. The American Express charge card and the Diner's Club card are examples of charge cards. A debit card gives the bank that issued your card direct access to your bank account for payment. A purchase made on an online debit card hits your bank account instantly and in the case of offline debit cards 24 to 72 after you have made a purchase. 15. What is the PIN? This is your Personal Identification Number and is unique to every card. You typically get two PINs - one for using the ATM, and one for using the bank's telephone help lines. The PIN is used to validate your identity for transactions on the ATM and phone, respectively. Guard these numbers zealously; have no written evidence of them that can get into wrong hands, or better still, memorize them and destroy the confidential slips sent to you by the bank

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PLASTIC MONEY-THE FUTURE CURRENCY 16. What's the purpose of that black stripe that runs across the back of my credit cards? Virtually all credits cards now have a black magnetic stripe on their back that has a variety of information coded into it. Although your credit cards probably only have one stripe, there are probably two "information tracks" on it. The first track includes information such as your name, the card's expiration date, your credit limit and your personal identification number. The second track is the one with your individual account number, the date you opened the account, and other discretionary data.

TYPES OF CARDS 1 .Charge card Charge Cards - Charged with a charm all their own!

The Charge card is similar to the Credit card in most of its features but unlike a credit card it requires you to make a full payment of the charge by the due date. So, why invest in a Charge card? Because Charge cards entitle you to high credit limits, sometimes even unlimited credit! Salient features 1. Charge Cards have a high or no credit limit. 2. Unlike Credit cards, Charge cards do not allow you to carry forward your dues.

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PLASTIC MONEY-THE FUTURE CURRENCY Benefits 1. Having no credit limit has prestige attached to it! 2. Also, if you're the kind of person who uses cards for convenience, rather than credit, and can spend responsibly; this is just the thing for you. Drawbacks 1. No carry forward of dues beyond due date.

2. Debit cards Debit Cards - How never to be in debt! A Debit card is a card that has direct access to your bank account. Your bank issues the card. Whenever you use your debit card, your bank account is debited immediately. Unlike credit cards, you don't enjoy any credit period and therefore the debit card does not have minimum income eligibility criteria. Two types of debit card transactions 1. A ‘Direct’ debit card allows only "on-line" transactions. An immediate electronic transfer of money from your bank account to the merchant's account. This requires you to enter your PIN or Personal Identification Number at the store's terminal. The system then checks your account for sufficient funds to cover the purchase. These are typically the cards that come with the "Maestro" logo, from MasterCard. Example 1) .Suvidha debit card issued by Citibank in select cities. 2) A 'Deferred' debit card looks similar to a credit card, but is not a credit card. It bears a Visa or MasterCard logo, and can be used wherever your card's brand name is displayed. This card allows "off-line" and "on-line" transactions. Off-line purchases are where the shopkeeper's terminal scans your card and creates a debit against your account. You are not required to enter your PIN at the store's terminal. Most off-line transactions are verified immediately to see whether there is enough money in your account. Off-line debit cards usually carry the 'Electron' logo, from Visa.

26

PLASTIC MONEY-THE FUTURE CURRENCY Example HDFC Bank issues Electron debit cards in more than 15 cities around the country.

Salient features  It is a combination of a Cheque an ATM card. Therefore, there are no fees for using the ATM for cash withdrawal, or as a debit card for purchase.  A Debit card is more affordable than a credit card. You just use your bank account for all your transactions.  Currently, there are only two issuers in India - Citibank and HDFC bank.  No credit period. Your bank account is debited immediately.  No credit check is required to get a Debit card.  Spending is limited to your bank balance.

Benefits  Free with your Bank Account: Obtaining a debit card is easy. If you qualify to open a bank account, you usually get a debit card, if your bank offers the service.

 No background check: When you are applying for a debit card, the bank does not need to look into your credit history. All you need is the documentation to open a bank account, and money in your bank when you use your debit card.

 Convenience: A Debit card frees you from carrying a lot of cash or a chequebook. In case, you are an international traveller, you don't need to stock up on Traveller's Cheque or cash. You can use your debit card to withdraw cash from over 500,000 ATMs around the world in over 100 countries. You can withdraw in the local currency of the country

27

PLASTIC MONEY-THE FUTURE CURRENCY you are in; limited only by the money you have back home in your account, and your Business Travel Quota (BTQ) limit availability.

 Fair Exchange:

If you return merchandise or cancel services paid for with a Debit card, the transaction is treated as if it were made with cash or a check. Customers usually get cash back for off-line purchases; for on-line transactions, the amount is credited to your account. Drawback  Unlike a credit card, debit card transactions are on a "pay now" basis.

3. International Card International Credit Cards - Worldwide recognition! If you've noticed, most cards have "Valid only in India and Nepal" printed on them. An International card is valid in India as well as anywhere in the world. Which means that you spend in foreign currency on the card but pay back in Indian Rupees on your return.

28

PLASTIC MONEY-THE FUTURE CURRENCY Salient features 1.As an Indian resident, you can buy foreign exchange using your International Credit card from an authorized dealer or moneychanger against your Basic Travel Quota (BTQ). To find out your entitlement to foreign exchange for business or other trips abroad, you should contact any bank authorized to deal in foreign exchange in India. 2.You can incur expenses on your International Credit card mainly for personal spending. You cannot use your card for expenditure that is not permissible by the Reserve Bank of India. Example 1. Under the existing regulations, you are not permitted to buy lottery tickets abroad. By regulation, all cases of unauthorized utilization are required to be reported to the Reserve Bank. 2. You can use your International Credit card to make an advance payment for personal imports. The amount should not exceed US$15,000 or its equivalent. Subsequently, the physical import of the goods or services should be settled as per the EXIM policy and procedures. 3. International Credit cards can be used on the Internet only for obtaining information or databases for which release of exchange is permissible under the existing exchange control regulations. You are required to produce documents to the authorized dealer at the time of settling your dues arising out of such expenditure. Example If you have used your International Credit card to pay for downloading of a database, you have to submit details of the database downloaded and provide a declaration that you have received the data at the time of settling the bill. 4.Virtual Cards Realizing the Internet dream! In a world that's turning to the net for all its needs, it is only natural that you should own a card that is for the internet alone. The virtual card from Citibank is just that. The answer to all your questions on the safety of transacting online. Salient Features The virtual card, or the Citibank e-Card is the first ever web card only in India. Now you don't need a Credit Card to shop online. Accepted wherever MasterCard is, the Citibank eCard offers 29

PLASTIC MONEY-THE FUTURE CURRENCY you a safe and easy way to shop on the Internet. On approval, you get your card number, valid dates and a card verification number. Benefits

1. Citibank eCard works exactly like a credit card. Which means, you can spend now, pay later.

2. The eCard comes with a very low annual fee. 3. Citibank's 100% Online Guarantee ensures that

you are protected against fraudulent purchases on your Citibank ecard. You are insured for unauthorized purchases on the Net on this card up to a limit of Rs. 12,000 per claim.

4. Citibank's Internet price protection ensures that you get the best-advertised price on all webstore purchases charged to the Citibank ecard. You are insured for the difference in price for the same item purchased on the Net on this card up to a limit of Rs. 1,000 per claim and Rs. 5,000 per customer per year of membership.

5. Where a manufacturer's warranty exists,

you are insured for a further period of six months or the warranty period itself (whichever is lower) up to the amount billed on the card. Purchase Protection: Where items purchased on this card are lost/stolen or destroyed in a fire within 90 days of the date of transaction, Citibank will reimburse you to the extent of the purchase made on the card upto a maximum of Rs. 12,000.

Drawbacks 1. Unlike with other credit cards, you don't get a physical plastic card. All you get is a card number and expiry date. Therefore, this Card cannot be used for transactions that require in person presentation of a physical MasterCard card. The Citibank eCard cannot be used for 'dualmode' transactions i.e. it cannot be used to purchase an item over the Internet that subsequently requires a presentation of a physical MasterCard Card to obtain that item.

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PLASTIC MONEY-THE FUTURE CURRENCY 5. MasterCard’s

Origin MasterCard started in the late 1940's when banks in US issued special paper that could be used like cash. In 1951 The Franklin National Bank in New York formalized the practice by introducing the first real credit card. Several franchisees evolved over the next decade. Interbank Card Association (ICA) to be renamed as MasterCard as it is known today was born on August 16th 1966. Member committees were established to run the association. These committees established rules for authorization, clearing and settlement, handled marketing, security and legal aspects of running the organization. Association of Membership In 1968, the erstwhile ICA began what is a huge global network by forming an association with Banco Nacional in Mexico. They also formed an alliance in Europe with Eurocard. The first Japanese members also joined that year. The eighties saw the Africa, Australia, Asia, and Latin America joining the ICA. ICA was renamed MasterCard to reflect the global commitment. Firsts card from MasterCard In the past 20 years alone, MasterCard has achieved an impressive list of "firsts." 1981

MasterCard introduced the industry's first gold card program.

1983

MasterCard was the first to use the laser hologram as an antifraud device.

1987

A MasterCard® card became the first payment card issued in the People's Republic of China.

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PLASTIC MONEY-THE FUTURE CURRENCY 1989

MasterCard introduced the first bankcard with a tamper-resistant signature panel.

1990

MasterCard unveiled a co-branding strategy and became the industry's co-branding leader.

1991

MasterCard, in partnership with Europay International, launched Maestro®, the world's first truly global online debit program.

1992

Maestro completed the first-ever coast-to-coast national online debit transaction in the United States.

1996

MasterCard Global Service® became the first program to provide cardholders with telephone access to core emergency and special services in 21 languages, from 130 countries (today, in 196 countries and 46 languages).

1996

MasterCard contracted with AT&T to replace its transaction network infrastructure with the industry's first virtual private network design, which delivers faster response time and lower costs. (In 2010, alone, the VPN reduced cumulative payment processing time by nearly half a century.)

1997

MasterCard acquired a 51% stake in Mondex International, which offers the only electronic-cash product that is globally interoperable, with a multi currency capability.

1997

MasterCard was the first payments organization to cap uniform liability limits for unauthorized use at US$50 for all U.S.-issued MasterCard-branded consumer cards-both credit and debit.

1999

MasterCard and MYCAL Card Co. of Japan implemented the world's first migration from traditional credit cards to multiapplication chip cards using the MULTOS operating system.

1999

Mondex e-cash became the first commercial product ever to receive the highest possible ITSEC (Information Technology Security Evaluation Criteria) security rating.

1999

The first online purchase of a U.S. Treasury Bond was made with a MasterCard card.

2000

MasterCard became the first in the industry to establish a U.S. rule of no liability for the consumer from the unauthorized use of payment cards.

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PLASTIC MONEY-THE FUTURE CURRENCY

6. VISA card

The Leader Thirty years ago people paid for their purchases by cheque or cash. They did not have an alternative until payment cards entered the market. Payment cards over these 3 decades have become an integral part of our lives. The possibilities are amazing, you can use them for travel, food and commodities or simply cash. Today owning a payment card opens up a whole new world of opportunities. Visa International has over 21,000 member financial institutions that have propelled it to the top. Visa International is the world's leading full-service payment network. Visa has a range of cards namely Visa Classic, Visa Gold, Visa debit, Visa commercial cards and the Visa global ATM network in over 300 countries and territories that gives the consumer choice.

The way the world pays Visa cards are the world's most widely used and accepted form of plastic payment. Nearly $ 1.4 trillion in product and services are purchased using Visa Cards. Visa's market share, at 55% is greater than of all other major payment cards combined. There are 800 million Visa, Interlink, Plus and Visa Cash cards in the market today. Visa branded cards are accepted at more than 16 million locations in 300 countries and territories. This makes them the closest thing there is to a universal currency.

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PLASTIC MONEY-THE FUTURE CURRENCY Visa operates the largest and the most sophisticated consumer payments processing system. The Visa network, known as VisaNet processes over 2700 transactions every second in its peak season and is capable of handling transactions denominated in 160 countries. Association Of membership More than 21,000 financial institutions are members of the Visa across the globe. Their missionto enhance the competitiveness and profitability of their members. Visa plays a pivotal role in advancing new products and technologies for payments on behalf of its members though Visa itself does not offer cards or financial services directly to consumers and merchants. Visa member institutions offer the industry's widest range of payment products and services, including credit, debit and stored value cards. Apart form this there is also corporate, purchasing and business cards, travelers cheque, the Travel Money card as well as the multi-function smart cards.

VISA vision Visa' vision is to continue to be the "The World's Best Way to Pay and Be Paid " for consumers and business. Looking ahead Visa is working with and on behalf of its member institutions to leverage best-of-breed technology to enable members' cardholders to enjoy new levels of convenience, safety and flexibility. Visa is in working with more than 170 banks across the globe and has 23 million chip cards in the market today. Till date 38 countries have secure Internet shopping programs utilizing the SET co-developed by Visa. This covers about 150 Visa members Transaction process Before understanding the transaction process we need to understand few terminologies which will be used further. Terminologies Issuer A bank or financial institution that issues debit / credit card e.g. Citibank

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PLASTIC MONEY-THE FUTURE CURRENCY Merchant A retailer, or any person, firm, or corporation that, according to a merchant agreement, agrees to accept credit cards, debit cards or both, when properly presented e.g. Pantaloons Acquirer A licensed member of MasterCard or VISA, which maintains Merchant relationship, receives all bank transaction from the merchant and initiates that data into an interchange system e.g. ICICI bank] Acquiring processing/service provider The processor provides credit card processing, billing, reporting and settlement and operational services to the acquirer. Many financial instuitions hire a third party for more cost – effective bankcard processing e.g. master or VISA. POS An electronic system that accepts financial data at or near retail selling location and transmits the data to a computer or authorization network for reporting activity, authorization and transaction logging. POS terminal A device in a merchant location that is connected to a bank’s system or authorization service provider via telephone lines and is designed to autho rize, record and forward data by electronic means for each sale e.g. ICICI terminal Let us understand process 1. Purchase amount is calculated by the merchant. The buyer is asked for the payment. 2. The buyer then offers to pay by credit card 3. The merchant now swipes the credit card through point of sale unit. Here , the total amount of the sale is either keyed in by the hand on the keypad or transmitted by the cash register. 4. The complete credit card data and sales amount is now transmitter by the merchant. This is done along with a request for authorization of the sales to their acquiring bank. 5. The authorization request is now sent by the acquiring, which process the deal, to the card-issuing bank. Here the credit card number is used to identify the type card, the issuing bank and the cardholder’s account.

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PLASTIC MONEY-THE FUTURE CURRENCY 6. A sale draft, or slip, is printed out by the POS unit or cash register. The buyer is then asked to sign the sale draft by the merchant, this makes sure that the buyer reimburses the card – issuing bank for the amount of the sale. 7. Next, the aquiring bank processing the transaction sends the approval or denial code to the merchant POS unit. To enable data routing to a particular unit possible, each of the POS unit sports a discrete terminal ID for credit card processors. 8. An acceptable credit in the cardholders account will render the transaction authorized by the issuing bank and an authorization code is generated, the piece of code is then sent back to the acquiring bank. What has to be kept in ming is that the issuing bank puts a hold on the cardholder’s account for the amount of the sale and the cardholder would not be charged as of now. 9. Later when the store closes, all the authorizations stored in the POS unit are scrutinized by the merchant. They are checked with the signed sale drafts. 10. The merchant will transmit the data on each authorized credit card transaction to the acquiring bank for deposit after all the credit card authorization have been verified. This is in lieu of depositing the actual signed paper drafts with the bank. 11. Now the acquiring bank performs an interchange for each sales draft, with the relevant card – issuing bank. The card – issuing bank then transfers the amount of the sales draft, subtracting an interchange fee to the acquiring bank. 12. Finally the aquiring bank deposits the amount of all the sales draft submitted by the merchant, less a discount fee, into the merchant’s bank account. Let us understand it more practically The Transaction MR. X has got a Citibank card and goes to pantaloons for a shopping. He makes a purchase of Rs. 100, for example and produces his Citibank credit card for billing. The person at the billing counter swipes the card at the ICICI POS terminal for the billing. Now, MR. X is the cardholder of Citibank card, which as the issuer had issued the card and pantaloons is the merchant that according to the merchants agreement accepts the Citibank credit card. But since it’s using ICICI terminal for transaction, ICICI is the acquirer or the acquiring bank and is into a terminal for the transaction, ICICI is the acquirer or the acquiring bank and is into a contract with the processor or the service provider such as Masters/VISA/Amex/Diners etc. As the credit card is swiped a 24 bit data transfer happens which actually informs the Acquirer (ICICI bank) about transaction. If the acquirer has any pending issue with the merchant (pantaloons) then the transaction might not be allowed. If the transaction is permitted further permission is seeked from the service provider or processor (master/VISA), which will give the

36

PLASTIC MONEY-THE FUTURE CURRENCY final permission for the transaction, provided it has got no pending issue with the Acquirer. This entire process generally takes within duration 15 seconds and any extra time taken is actually a signal of some party involved in the process being penalized. For every transaction of Rs. 100, 2 % i.e. Rs. 2 is being deducted out of which 70 % (Rs. 1.4) goes to the processor and the remaining 30 % goes to acquirer. The issuer generates it revenues through issuing charges, interest accrual and annual subscription fees.

Customer A

P A N T A L O O N S

Citibank

POS

ICICI bank

Issuer

Master / VISA

Processor / service Provider

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt. 6 GROWTH OF PLASTIC MONEY IN INDIA The number of credit and debit card users in India is climbing fast, and rising affluence is likely to erode Indians’ lingering reluctance to spend on credit Indians have traditionally valued thrift and frugality. But the spread of affluence in the wake of rapid economic growth is challenging these values, at least for many middle-class and highincome families. One sign of this is the phenomenal growth in the number of credit and debit cards in India—in the past three years, the number of credit cards has more than doubled and the number of debit cards has almost quadrupled. However, despite these impressive rates of growth, the Indian market for financial cards is only beginning to show its enormous potential. Future growth will be driven by rising consumerism, intensifying competition among card issuers and an expanding financial architecture—although a culture of credit-based purchasing may take some time to develop. 6.1 Plastic Trends By January 2007 there were 22m credit cards in India. The number of debit cards was much larger, at 70m. However, the difference is potentially misleading, as it does not accurately reveal the relative importance of credit and debit cards as payment mechanisms. Although there are fewer credit than debit cards in circulation, the total volume and value of credit card transactions is much higher. During the first ten months of fiscal 2006/07, for instance, the value of credit card transactions reached Rs335bn (around US$7.4bn)—nearly five times higher than for debit cards. Along with growth in the number of cards issued, the value of credit card transactions has risen rapidly. The total value of such transactions almost doubled between 2003/04 and 2005/06, to around Rs339bn. In the case of debit cards, the number of cards has risen fourfold since 2003/04, but growth in the value of transactions has been much more modest, rising by 21% to reach Rs59bn in 2005/06. The latest available data, which covers the first ten months of 2006/07, indicate continued robust growth, with the number of credit and debit cards rising by 28% and 41% respectively in yearon-year terms. Over the same period, the value of credit card transactions grew by 20% and that of debit card transactions increased by 38%. Drivers of growth Several factors have combined to fuel the astonishing growth in the use of credit and debit cards in India. Apart from the convenience offered by cards, these factors include the following: 38

PLASTIC MONEY-THE FUTURE CURRENCY 





Rising consumerism. The process of economic liberalisation that began in the 1990s has resulted in the availability of a huge variety of foreign and domestic consumer goods. Such goods have also become more affordable for upper- and middle-class Indians, who have benefited the most from economic reforms, high economic growth and globalisation. The rise in consumerism generated by these trends has sparked robust demand for financial cards, especially credit cards. Improved payment infrastructure. Demand for credit and debit cards has also been fuelled by improvements in payment infrastructure across the country that have greatly enhanced their utility for cardholders. Most Indian banks have been widening their networks of automated teller machines (ATMs) in order to expand their business. There were over 21,000 ATMs across the country in March 2006—more than seven times the figure five years earlier in March 2010. Banks have also been installing increasing numbers of point of sale (POS) terminals (electronic data-capture swipe machines for accepting debit and credit card payments) at merchant establishments. In 2006 there were an estimated 300,000 merchant establishments with POS terminals, about ten times the number in 2010. Competition and lower costs. With so many banks offering credit and debit cards, the competition among them to attract potential customers to apply for new cards or to switch their loyalties has intensified. In fact, the Reserve Bank of India (the central bank) has had to intervene to protect customers from aggressive marketers by requiring banks to allow customers to register their contact details on a “do not call” list. Banks have also stopped the practice of sending credit cards to potential customers that have not applied for them.

Competition has also produced a number of benefits for the customer. For many types of credit cards, banks no longer charge an annual fee. Credit card holders who make large purchases can pay for these over a period of time through equated monthly instalments (EMIs) offered by the card-issuing banks. The interest rate on such EMIs is kept lower than the normal credit card interest rate. In addition, most banks now offer free debit cards to customers that open personal banking accounts. These debit cards also double up as ATM cards. 

Co-branding. Co-branded credit cards, which involve tie-ups between the issuing banks and companies selling products and services, are becoming increasingly popular in the Indian market. In addition to the standard facilities conferred by a credit card, the specific advantages relating to the product or service of the partnering company have proved an attractive bait. Citibank’s co-branded card with Jet Airways, India’s leading airline, allows cardholders to accumulate air miles that can be redeemed in the form of free flights, discounts on tickets and seat upgrades. Similarly, ICICI Bank’s co-branded card with Indiatimes, an internet retailer, entitles the cardholder to discounts and reward points for the purchase of various products and services through the site.

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PLASTIC MONEY-THE FUTURE CURRENCY Constraints Although the number of cardholders in India has been growing rapidly, banks seeking to expand their card businesses face several constraints. Most significantly, many Indians continue to harbour a value-based aversion to the lifestyle of credit-fuelled consumption. As a result, average expenditure per card is relatively low in India. In the first ten months of 2006/07, the average monthly expenditure per card was a mere Rs1,679 (US$37). Similarly, most Indians use debit cards mainly to withdraw cash from ATMs rather than to make purchases. Another limitation for banks is that a large proportion of Indians pay their full credit card balance on a monthly basis, depriving the card issuers of interest earnings from revolving credit. This is one reason for the high interest rate (currently about 24% per year) on credit; banks need to earn income from a small proportion of credit card holders. Credit and debit cards in India: usage trends Credit cards

Debit cards

Outstanding Transactions Value ofOutstanding Transactions Value of cards, end-(m) transactions cards, end-(m) transactions March (m) (Rs bn) March (m) (Rs bn) 2003/04 10.1

100.2

176.6

18.1

37.8

48.7

2006/05 14.1

129.5

256.9

34.9

41.5

53.6

2005/06 17.3

156.1

338.9

49.8

45.7

59.0

April 2006January 2007

155.7

334.7

70.3

22.1

Source: Reserve Bank of India, Venture Infotek Research

40

PLASTIC MONEY-THE FUTURE CURRENCY 6.2 THE DARK SECRETS Why do banks push debit cards for every purchase you make? Because they stand to make millions--largely at your expense (lifting of the co-operate wheel) Quietly but surely, a revolution is under way in how we pay for everything from a cup of coffee to our monthly electric bill. Continuing a climb that started a decade ago, debit cards are now preferred over credit cards by those American consumers who use plastic for their in-store purchases. Spending on these cards, which directly tap your checking account, topped $1 trillion for the first time in 2006, when the total number of transactions outnumbered those on credit cards by more than 2 billion. With check writing in decline and little if any growth in ATM cash withdrawals, debit cards are becoming the dominant form of payment for consumers, according to a 2006 Federal Reserve Board research report. Debit cards are especially popular among women and among people between the ages of 18 and 25, who card issuers label Generation P, for plastic. The convenience of not having to carry cash and a desire to avoid credit-card finance charges are among the many reasons consumers cite when asked in surveys why they prefer using debit cards. But banks are also accelerating this trend by aggressively promoting perks such as air mileage and other reward programs to entice cardholders to use debit cards more often. (For more information on those reward programs, see "Debit rewards deceptive.") Of course, the card issuers have their own motives for encouraging you to reach for your debit card more often, some of which can hit you in your wallet. If you pay off your balance in full each month, a no-fee credit card is a better choice than a debit card because it allows you to keep your cash in an interest-bearing account until the card bill is due. Moreover, the cash-back, mileage, and other rewards that accompany credit cards tend to be much more generous than debit-card perks. Plus, credit cards provide more leverage if you get into a dispute with a merchant over something you've bought.

A LOOK AT DEBIT CARD USAGE

The has announced results of recent research concluding that "the shift to debit card usage creates opportunities for banks to increase customer loyalty and deepen their wallet share with their existing customers." As debit card use increases, banks are seeing more of their deposit account customers' transactional activity return back to their banks. According to Ken Kerr, Phoenix Vice

41

PLASTIC MONEY-THE FUTURE CURRENCY President, "Debit cardholders are not nearly as likely to switch entire banking relationships to take advantage of a competitors' offer as many consumers do with their credit cards. Banks can use increases in debit card usage to drive customer loyalty and increase wallet share with their existing account holder base." Almost by definition, consumers' primary debit cards are tied to their primary financial institution. Many young consumers only use debit cards when making a card payment, unlike their parents who began card spending with credit. Many older consumers are now shifting some daily transactional activity to debit. Unlike most credit transactions, these debit card transactions are with the primary bank. By several measures, consumers report that they intend to increase their use of debit cards over the next several years. The percentage of consumers that agrees that they will use their debit cards more and their credit cards less over the next three years exceeds the percentage that strongly disagrees by a two-to-one ratio. This increase in debit card usage comes at the expense of all other major forms of payment - cash, checks and credit cards. Credit card usage continues to increase, but at a slow rate, a rate which is slowed by the uptake of debit cards for more day-to-day transactional activity. Security issues stand as a threat to the continued use of debit cards in all payment environments. Older consumers in particular are hesitant to use debit cards on the internet, since they are tied directly to consumers' bank accounts. Actual security threats are trumped by consumers' perceptions of security risks in determining consumer payment type selection. Reports of illegal use of credit card numbers on the internet increases concerns about their theft online. This translates into a hesitancy to use a debit card online, where a security breach can quickly empty a consumer's bank account. If given the option to pay bills using cards, consumers prefer to use debit cards over credit cards by a wide margin. Historically, most bills have been paid by check. Substituting debit cards for checks changes the payment mechanism, but not the source of funds. Switching to credit cards means consumers are 'borrowing' funds to pay basic bills. Many consumers want to avoid this, even if it means by-passing credit card rewards that could be gained by using their credit cards. Only a small minority of cardholders are opposed to using either card type to pay bills. Phoenix Payments Systems Practice interviews more than 2,000 consumers in its annual Consumer Payments Usage and Preferences study. Results are analyzed along with other survey results from banks, billers, and merchants.

42

PLASTIC MONEY-THE FUTURE CURRENCY 6.3 FUTURE TRENDS Spending pattern through plastic money will change drastically. Traveling, dining and jewellery are the top three purchases that Indians make through credit cards. Two years ago, it was jewellery and apparel purchases that formed the largest chunk of purchases through plastic money. Fuel accounts for a very small portion of credit card purchases as these are largely paid through debit cards. The credit card companies say that consumers spend Rs 50,000 crore annually which is expected to grow at 50% over the next 4-5 years. Travel has definitely become much larger a segment than what it was two years ago. Airline tickets, both domestic and international, are now bought through credit cards making it the largest category for credit card purchases. With air travel becoming affordable and eating out a regular feature in Indian households, the trend will only gain momentum in future feels experts. Travel and dining corner about one-fourth of the total credit card purchases which signifies the shift in Indian spending habits. Earlier, purchases of both consumer durables and jewellery items were larger than the hospitality segment. Going forward, this trend should continue. Jewellery, consumer durables, fuel purchases, apparel are a much smaller segment than travel and dining which comprise the largest chunk of credit card purchases. Eating out has in fact become a big concept now. Experts say, while travel and hotel bills along with dining, account for about 25-35 % of the total value of purchases through credit cards, purchase of jewellery accounts for 10-11 % of the purchases . Apparel purchases account for 8-10 % and consumer durables like TV and mobile phones account for nearly 6-7 % of the purchases through plastic money. Two years ago, the figures were largely skewed in favour of jewellery and apparel purchases while travel and hospitality was a small component. With 87% of all transactions in plastic money happening through credit cards, debit cards in India continue to be used largely for cash withdrawals. There are about 65 million debit cards in India of which State Bank of India alone accounts for 25 million debit cards. ICICI Bank is said to have 11 million cards. This is largely in line with the fact that both the players are the biggest banks in India and will have the highest number of savings accounts. Utility payments are another segment where more payments are being made through plastic money in the last two years. In the last two years, the number of customers paying their electricity and water bills through credit cards has risen though the overall customer base is still small. Credit card is one of the fastest growing businesses in financial services in India. There are currently 25 million credit cards in India and ICICI Bank is the largest player with 8.5

43

PLASTIC MONEY-THE FUTURE CURRENCY million cards issued. Citibank, SBI-GE Card and HDFC Bank are the other prominent players in the sector.

AROUND THE WORLD (CASE STUDY) Comparative study of Japan and USA The widespread use of cards is one of the most salient features of consumer retail payment systems in the United States. U.S. Consumers use those cards to pay for about one-fourth of their retail purchases each year. And this is not a static phenomenon; among other things, the use of debit cards, though still relatively small, is rising rapidly. That pattern of use is not, however, typical of other countries. Even in some highly industrialized nations, consumers use cards to pay for purchases much less frequently. Statistics from the Bank for International Settlements, for example, suggest about 60 card-based payment transactions per person per year in the United States, but only four such transactions per person per year in Japan. Transaction per year

60

USA

Japan 4

But the differences go far beyond a simple willingness to use cards to make retail payments. The average transaction for which a card is used in Japan is much larger Than the average card-paid transaction in the United States.

At the same time, Japanese cardholders are much more likely to pay their entire bills each month than U.S. cardholders: borrowing beyond the first statement period appears in only about onetenth of Japanese credit-card transactions, while about half of U.S. cardholders borrow each month.

44

PLASTIC MONEY-THE FUTURE CURRENCY The reasons for the differing patterns of use (or disuse) of cards have several important policy ramifications. 1. In the countries in which cards are used frequently, their success suggests that they generally provide payment more cheaply and effectively than competing retail payment systems. By lowering the transaction costs of retail transactions, those systems generally bolster the efficiency of the economy’s retail sector. 2. At least in the United States, leading scholars associate the credit card with an embarrassingly high rate of consumer bankruptcy—generally the highest of any industrialized country. 3. There is good reason to believe that wide use of credit cards is inversely related to a nation’s savings rate. If, as some scholars argue, credit-card usage causes the decline in savings, then policies that foster credit-card usage are relevant to those aspects of macroeconomic planning that are affected by savings rates. Thus, concerned policymakers should welcome an enhanced understanding of the institutional factors that motivate the use of cards in general or the use of cards as a borrowing device in particular. At the outset, it is natural to wonder whether the pattern is dominated more by factors of economics than by those of social construction. For example, perhaps there is something about payment cards that is uniquely attractive to certain types of consumer personalities and perspectives. Thinking in that vein, one might suppose that card-based payment systems are more attractive to the relatively profligate and confident consumers of the United States and less attractive to the more prudent and cautious consumers in countries such as Japan. One also might think that the risk of street crime could explain much of the pattern. Focusing on that problem, one might suppose that Americans carry cards because of a reluctance to carry cash that might be stolen from them; Japanese have a lower incentive to carry cards because their relatively crimefree society makes it safer to carry large quantities of cash. The Japanese retail sector has become much more hospitable to credit cards, both because of new legal rules regarding the types of credit cards that bank-affiliated companies can issue and because of the appearance of the very large retailers common in the United States. Historical patterns The credit-card market as it exists in the United States today developed in the late 1960s and 1970s out of a relatively small earlier market for payment cards exemplified by American Express, Diners Club, and Carte Blanche. As the name “payment” card suggests, those cards did

45

PLASTIC MONEY-THE FUTURE CURRENCY not contemplate an extension of credit; they provided only a payment function—facilitating transactions at distant merchants that would be reluctant to accept checks from the cardholder. The general-purpose credit card—and the high rate of borrowing that makes that card profitable—did not develop until the 1970s and 1980s, and when it did develop it came largely from efforts by U.S. banks (primarily Bank of America in California). Notwithstanding the firstmover advantage of its initially dominant payment card, American Express—an experienced, sophisticated, and well-capitalized player in the financial marketplace—was unable to develop a successful credit-card product. Indeed, its repeated, unsuccessful efforts to develop a viable credit-card product have lost staggering sums of money. A similar pattern appears in Japan, which has a long history of regulatory limitations on the participation of banks and their affiliates in the credit-card market. Although the precise reason for the exclusion is not clear, it was 1992 before bank-affiliated issuers were permitted to issue cards that allowed revolving credit. Thus, at least as to borrowing transactions, the pre-1992 credit-card market was dominated by shimpan kaisha and other non-bank lenders. And not until 2010 were companies affiliated with Japanese banks permitted to issue cards that include all of the other borrowing options typical of the Japanese card industry.

Conclusion 1. For decades after its introduction in Japan, the credit card was not successful either in gaining a significant market share as a matter of transaction volume or, even more surprising, in luring consumers into borrowing with the cards when they did use them. 2. During the nine years since bank affiliates have been able to issue cards with substantial borrowing options, the usages in Japan have begun to move (albeit slowly) to bring Japanese usage closer to the U.S. pattern. The movement of Japanese usage to resemble the U.S. experience shortly after those institutional changes at least suggests the significance of untrammeled bank participation in credit-card markets. Merchant size Looking at the network from the merchant side, the typical size of merchants that accept the cards also could affect the deployment and growth of payment-card networks. That is true because there are nontrivial fixed costs incurred when a merchant decides to accept credit cards. For example, in the modern era, a merchant that accepts a major credit card must acquire an authorization terminal, which can swipe the card (to obtain data from the magnetic stripe or chip on the card) and contact the credit-card network to determine if the card issuer will authorize the transaction.

46

PLASTIC MONEY-THE FUTURE CURRENCY

Credit Cards in the United States and Japan Usage in the United States and Japan

Describing the transactions In the market for retail purchases in the United States, the credit card is a massive success: it was used in 1999 for 14 billion transactions worth almost US$1.1 trillion Dollars, about US$76 per transaction. Department of Commerce statistics indicate that in the same year credit cards were used in about 18 percent of all transactions, for about 23 percent of the value paid in all U.S. consumer payment transactions. For the most part, those transactions were conducted as revolving-credit transactions. Under U.S. practices, that means that the cardholder decides each month what share of the total account balance he/she will pay back; the cardholder is required to make only a tiny minimal payment, in an amount that often would not amortize the entire balance for several years. In practice, somewhat more than half of U.S. cardholders take advantage of that option to defer payment of some or all of their credit-card account balance each month. The payments that they do make are made for the most part by writing a check and mailing it to the issuer. The contrast with Japan is considerable. 1. Japanese consumers plainly do not use cards as frequently as U.S. consumers: one recent study, for example, indicated that even excluding cash transactions (by all accounts the dominant method of point-of-sale payment in Japan), credit cards accounted for only 10 percent of the value of payment transactions. Industry statistics indicate only ¥21.58 trillion (US$194 billion at an exchange rate of ¥111/US$1) in credit-card transactions in 2000, about 6 percent of Japanese consumer spending that year. That reflects purchases of about US$1,650 per capita, compared to about US$3,500 per capita in the United States. The data also show that the average credit-card transaction is about three times as large in Japan as it is in the United States, in the range of ¥25,000 (US$225). Perhaps the most striking feature of the Japanese transactions is the limited extent to which they involve credit. The overwhelming majority—about 85 percent—of Japanese credit-card transactions are settled by ikkai barai (repayment in one installment). Under ikkai barai, the consumer agrees that the transaction will be paid to the issuer in full on the next monthly payment date. Also different from U.S. practice is the timing of the payment decision 2. U.S. cardholders typically decide their repayment schedule when they receive their monthly bills, the Japanese cardholder typically makes that decision at the cash register at

47

PLASTIC MONEY-THE FUTURE CURRENCY the time of the sale. The full implications of ikkai barai for the credit-card system come from its interaction with the general absence of the check from the Japanese consumer payment system. The ordinary Japanese consumer pays bills by a credit transfer or a prearranged debit transfer. Thus, in the credit-card transaction, the customer’s consent to ikkai barai amounts not only to a general commitment to pay in one month; it also includes an authorization for a transfer out of the customer’s account to pay the transaction shortly after the last day of the payment cycle. Because the cardholder at the point of purchase already has given the issuer access to a specified amount of funds in a specified account, the transaction resembles much more closely a U.S. debit-card transaction than a U.S. credit-card transaction. After the end of each payment cycle, the issuer sends the cardholder a statement summarizing the charges. Absent an affirmative and timely objection by the cardholder, the issuer causes the funds to be transferred from the cardholder’s bank account to the issuer’s account on the designated date. When the cardholder uses ikkai barai, there typically is no interest or other charge for the deferral of payment from the date of the transaction to the monthly payment date. Thus, the roughly 85 percent share of transactions processed by ikkai barai involves no significant extension of credit by the issuer.

Explaining the differences There are three salient differences between Japanese and U.S. use of credit cards 1. The transactions in Japan are less common, larger, and less often involve significant borrowing (by which mean borrowing that results in the payment of interest to the card) 2. Japan’s retail economy, is significantly smaller than that of the United States. Thus, any economies of scale in the deployment of IT would render the Japanese system marginally less effective than the U.S. system. 3. It is widely recognized that Japan’s telecommunications costs are among the highest of any developed nation. Both of those precursors contribute to higher costs that should make the systems less competitive than their counterparts in the United States. Merchant size The casual visitor to Japan finds that credit cards are readily acceptable at many of the places where they are accepted in the United States—department stores, book stores, and other large retailers. But it does seem clear that the credit card has a much less complete

48

PLASTIC MONEY-THE FUTURE CURRENCY penetration into the Japanese retail market than it does in the United States. A consumer in the United States with relatively little difficulty could incur almost all ordinary living expenses on a credit card. In contrast, my impression is that it would be quite difficult to subsist in Japan for any significant period of time without a source of cash.

Cautious consumers The most obvious alternate explanation is the simplest, but also the least satisfying. Japanese cardholders by nature are more cautious and averse to borrowing than U.S. consumers. Thus, one might think that it is natural that they should use credit less. That habit could be connected to the substantial literature attempting to explain what seems to be the higher predilection to save of the individual Japanese Consumer. From that perspective, the other side of a higher predilection for savings Would be a lower tendency to use consumer credit. That tendency also might be supported by the historically ungenerous provisions of the Japanese consumer bankruptcy system (which might deter consumer borrowing) or by the relatively undeveloped credit-bureau system (which might deter consumer lending). That theory has several salient empirical difficulties. The first is the empirical fact that the size of the Japanese consumer-credit market does not in fact suggest that Japanese consumers have a higher aversion to borrowing than U.S. consumers. Indeed, if anything, the Japanese market is slightly larger per capita than the U.S. consumer-credit market. This market (excluding home mortgages) is now in the range of US$1.2 trillion (about US$4,400 per capita). The Japanese market (again excluding home mortgages) seems to be about ¥73 trillion (about US$5,300 per person). Thus, although it seems plausible that there are distinctively Japanese cultural constraints on consumer borrowing, it is difficult to believe that those constraints are more powerful than the analogous U.S. constraints. More generally, the basic problem in postulating a cultural connection between a predilection to save and an aversion to borrow is that statistics about the savings rate—the ratio of overall savings to overall consumption—have no necessary relation to the number of people who borrow or to the amount that they borrow. Thus, it would be entirely possible for Japan to have a higher savings rate than the United States because a higher percentage of its people save more, but at the same time to have a similar (or greater) amount of consumer credit per capita. For example, that could be true if either a higher percentage of Japanese non-savers than U.S. Non-savers use consumer credit or those Japanese non-savers who do use consumer credit use (on the average) more than the borrowers in the United States. Fraud rates Surely one of the most important metrics of the effectiveness of a payment system is Reliability: how well does it prevent fraud (transactions that are on stolen cards or

49

PLASTIC MONEY-THE FUTURE CURRENCY Otherwise not authorized by the cardholder)? On that point, the raw data suggest that Japan has a problem. Specifically, the raud rate in the United States is in the range of 0.06 percent to 0.07 percent (six or seven cents per US$100). In Japan, by contrast, the fraud rate is much higher, about 0.14 percent. Looking specifically to losses from forged cards, the Japanese rate of about 6.2 basis points is about five times the U.S. rate of 1.3 basis points. One possibility that initially seemed attractive was that the high fraud is associated with the diminished statutory incentive for Japanese card issuers to prevent unauthorized transactions. Among other things, the U.S. Truth-in-Lending Act also prevents U.S. issuers from shifting the risk of unauthorized transactions to their cardholders; Japanese law includes no such rule. At first glance, then, one might think that the difference in formal legal treatment could lead to a lower level of care by the card issuer. On reflection, however, that explanation does not seem plausible. For one thing, Japanese issuers in practice retain the risk of unauthorized transactions, because they purchase insurance for much of that risk and voluntarily cover most of the losses that the insurance does not cover. Because they purchase that insurance from third-party insurers, it is fair to expect that the rates that they pay in the long run are affected substantially by their performance. Thus, it is at least plausible to think that Japanese card-issuers have a significant incentive to reduce fraud losses. Moreover, it is clear that the fraud rates in both countries are not stable, as one would expect if the rates were associated with long-standing differences in the legal framework. In the United States, for example, the fraud rate has fallen by more than half in the last decade. Similarly, the fraud problem in Japan is relatively recent; fraud losses in 2000 were 43 percent higher than they were just two years earlier in 2010, with 64 percent of the increase attributable to losses from forged cards.

Discount rates and cardholder fees Although the issuer nominally bears the losses from unauthorized transactions in ordinary retail credit-card transactions, the amount of those losses ineluctably affects the costs that the cardholders and merchants pay, because they affect the prices which the system must charge in the form of cardholder fees and discount fees to remain profitable. Hence, it is natural to expect that the higher losses from fraud discussed in the previous subsection would lead to higher charges to merchants and cardholders. These are particularly important to the success of the system, because they directly influence the willingness of consumers to obtain the cards and of merchants to accept the cards. Thus, it is no surprise that the objective costs of the Japanese system seem to be significantly higher than those in the United States. First, the charges to cardholders, although no more uniform than in the United States, seem to be substantially higher.

50

PLASTIC MONEY-THE FUTURE CURRENCY The U.S. charges are relatively low both because cards with no annual fees are quite common and because the frequent use of the card makes the fee per transaction very low (probably only a few pennies at most). In Japan, by contrast, the fees seem to be much higher—cards with no annual fee seem to be particularly uncommon—and the lower number of transactions per card makes the cost per transaction even higher. Because of the wide variations in cardholder fees, my information on that topic is not particularly firm. The differences in the charges to merchants, however, are obvious and widely known within the industry. For the Visa and MasterCard credit-card systems that dominate the U.S. market, the discount fee varies widely depending on the type of merchant, but normally ranges between 1.5 to 5 percent, with most merchants seeming to pay something less than 2 percent. The discount fee for American Express (the largest competitor) is quite a bit higher, about 2.75 percent. Although it is difficult to get specific information, the discount rates in Japan seem to be somewhat higher. Published sources suggest that rates often are above 5 percent, but in fact rates seem to be quite a bit lower. Based on my interviews, my impression is that a typical rate is more commonly in the vicinity of 3 to 3.5 percent. That difference seems much too large to be explained solely by the difference in fraud rates: the rate of fraud losses in Japan exceeds the U.S. rate by less than 0.1 percent of the gross amount of transactions, which hardly could justify a discount rate more than 1 percent higher. A much more persuasive explanation for the higher discount fees is the paucity of credit transactions. In the United States, credit-card issuers rely heavily on revenue from interest that their cardholders pay on borrowed funds. Thus, they can operate profitably with a relatively smaller reliance on revenue from the merchant. For example, credit-card issuers in the United States derive 88 percent of their revenues from finance charges (including late fees), and only 10 percent from interchange fees. In Japan, revenues from interest are a relatively small portion of the revenues of the card issuer, about 23 percent over the industry as a whole, but only 14 percent of the revenues of bank-affiliated card issuers that have only recently been permitted to extend revolving credit. Thus, the issuer’s operations can be profitable only if it obtains a relatively higher share of revenue from the merchant and the cardholder. In Japan, those fees amount to 77 percent of all industry revenues, but 86 percent of the revenues of bank-affiliated issuers. And in fact, the apparent discount rates of 3 to 4 percent are not out of line if they are compared to the rates that American Express charges for its payment card rather than the rates Visa and MasterCard charge for their credit cards. Because American Express faces the same lack of interest income that Japanese issuers do, its discount rates provide a more appropriate benchmark for comparison. To be sure, the discount rates do appear to be perceptibly higher than those that American Express charges in the United States. But several structural explanations make that slight difference readily understandable. Most obviously, a merchant’s selection of an acquirer in the United States occurs in a relatively competitive market characterized by a small number of clearing networks with a large number of potential acquirers in each network. Thus, in

51

PLASTIC MONEY-THE FUTURE CURRENCY the United States, a typical merchant can gain access to the Visa and MasterCard systems from any of literally dozens of banks, as well as a large number of sophisticated third-party acquirers. There is extensive intra-brand competition notwithstanding the limited inter-brand competition. And even if American Express is the sole way for a merchant to get access to its cardholders, history shows that the rates that American Express can charge are affected by the rates that the larger Visa and MasterCard systems charge. In Japan, by contrast, a merchant that wishes to accept credit cards is confronted with a market featuring a large number of clearance networks with a relatively small number of potential acquirers in each market. Most merchants that accept credit cards find it necessary to make arrangements with several of the large Japanese systems, because most of those systems clear and process their own transactions: a typical merchant might accept a dozen or more different cards and some accept as many as 25. Thus, for each of those systems, the merchant faces a single system. One last explanation for the higher discount rates is the relatively small size of the Japanese system. If discount rates were affected by economies of scale in the development and use of IT, then it would be natural for the Japanese system—in which fewer consumers use their cards less frequently—to be somewhat more expensive per transaction than the U.S. system. That explanation does not necessarily suggest a long-term difference, but it does support a pattern in which Japanese rates tended to lag above slowly decreasing U.S. rates. Although the information I have is sketchy, that seems to be the case: industry observers and executives believe that the rates have been dropping already during the last few years as Japanese patterns of usage drift toward U.S. patterns. Thus, although the fraud problems discussed above suggest that the rates should never be precisely equal, it seems unlikely that they will be substantially higher in the long term.

Conclusion To sum up, the credit-card systems of the two countries operate quite differently, in Markets of different sizes, with different lineups of potential card-issuing institutions and cardreceiving merchants, facing a customer base that arguably has a significantly different taste for the credit card.

52

PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.7 GRAPHICAL DATA ANLYSIS Q1 Cards is the most convenient way of paying? Statistics Q1 N

Valid Missing

100 0

Mean

3.19

Std. Deviation

.419

Q1 Frequency Percent Valid Disagree 1 1.0 Agree 79 79.0 Strongly 20 20.0 Agree Total 100 100.0

Valid Cumulative Percent Percent 1.0 1.0 79.0 80.0 20.0 100.0 100.0

53

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.19, Standard Deviation is 0.419 which states that majority of the sample agrees with card as the most convenient way of paying. 20% of the sample strongly agrees that card is the most convenient way of paying.

54

PLASTIC MONEY-THE FUTURE CURRENCY Q2 Do you have any type of Card?

Statistics Q2 N

Valid Missing

Mean

100 0 2.87

Std. Deviation

.418

Q2

Valid

Disagree Agree Strongly Agree Total

Frequency 16

Percent 16.0

Valid Percent 16.0

81

81.0

81.0

97.0

3

3.0

3.0

100.0

100

100.0

100.0

55

Cumulative Percent 16.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 2.87, Standard Deviation is 0.418 which states that majority of the sample agrees that they are using plastic money. 16% of the sample strongly agrees that they are using plastic money. This sample states that majority of the sample are using plastic money and in future plastic money’s consumption will rise.

56

PLASTIC MONEY-THE FUTURE CURRENCY Q3 Card is the most convenient way to pay?

Statistics Q3 N

Valid Missing

100 0

Mean

3.01

Std. Deviation

.333

Q3

Valid

Disagree Agree Strongly Agree Total

Frequency 5

Percent 5.0

Valid Percent 5.0

89

89.0

89.0

94.0

6

6.0

6.0

100.0

100

100.0

100.0

57

Cumulative Percent 5.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.01, Standard Deviation is 0.333 which states that majority of the sample agrees and feels that card is the most convenient way to pay. 89% of the sample agrees that card is the most convenient way to pay. This sample study states that majority of the sample feels card is the most convenient way to pay and in turn in future plastic money’s consumption will rise.

58

PLASTIC MONEY-THE FUTURE CURRENCY

Q4 Card is the most prefer way to pay your utilities Bills?

Statistics Q4 N

Valid

100

Missing

0

Mean

2.21

Std. Deviation

.624

Q4

Valid

Frequency 11

Percent 11.0

Valid Percent 11.0

Disagree

57

57.0

57.0

68.0

Agree

32

32.0

32.0

100.0

Total

100

100.0

100.0

Strongly Disagree

59

Cumulative Percent 11.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 2.21, Standard Deviation is 0.64, which states that majority of the sample disagrees and feels that card is not the most prefer way to pay your utilities bills. 57% of the sample disagrees that card is the most prefer way to pay your utilities Bills.

60

PLASTIC MONEY-THE FUTURE CURRENCY Q5 While travelling, card is the preferred way of payment?

Statistics Q5 N

Valid

100

Missing

0

Mean

3.02

Std. Deviation

.402

Q5

Valid

Disagree Agree Strongly Agree Total

Frequency 7

Percent 7.0

Valid Percent 7.0

84

84.0

84.0

91.0

9

9.0

9.0

100.0

100

100.0

100.0

61

Cumulative Percent 7.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.02, Standard Deviation is 0.402, which states that majority of the sample agrees and feels that while travelling, card is the preferred way of payment. 84% of the sample agrees that card is the most preferred way while travelling.

62

PLASTIC MONEY-THE FUTURE CURRENCY Q6 Use of credit card/Plastic money is safest modes of transaction.

Statistics Q6

N

Valid

100

Missing

0

Mean

2.68

Std. Deviation

.469

Q6

Valid

Valid Cumulative Frequency Percent Percent Percent Disagree 32 32.0 32.0 32.0 Agree

68

68.0

68.0

Total

100

100.0

100.0

63

100.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 2.68, Standard Deviation is 0.469, which states that majority of the sample agrees and feels use of credit card/Plastic money is safest modes of transaction. 68% of the sample agrees that use of credit card/Plastic money is safest modes of transaction.

64

PLASTIC MONEY-THE FUTURE CURRENCY Q7 Misuse of Cards is the reason you don’t opt for plastic money?

Statistics Q7 N

Valid

100

Missing

0

Mean

2.97

Std. Deviation

.413

Q7

Frequency Valid Disagree 10 Agree Strongly Agree Total

Percent 10.0

Valid Cumulative Percent Percent 10.0 10.0

83

83.0

83.0

93.0

7

7.0

7.0

100.0

100

100.0

100.0

65

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 2.97, Standard Deviation is 0.413, which states that majority of the sample agrees and feels misuse of cards is the reason you don’t opt for plastic money. 83% of the sample agrees that cards is the reason you don’t opt for plastic money.

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PLASTIC MONEY-THE FUTURE CURRENCY Q 8 Credit Card to be expensive as many other charges are charged on it

Statistics Q8 N

Valid

100

Missing

0

Mean

1.43

Std. Deviation

.498

Q8

Valid

Strongly Disagree Disagree Total

Frequency 57

Percent 57.0

Valid Percent 57.0

43

43.0

43.0

100

100.0

100.0

67

Cumulative Percent 57.0

100.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 1.43, Standard Deviation is 0.498, which states that majority of the sample disagrees and feels Credit Card is expensive as many other charges are charged on it. 57% of the sample disagrees that cards is the reason they don’t opt for plastic money.

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PLASTIC MONEY-THE FUTURE CURRENCY Q9 Do you find it cheaper and Beneficial?

Statistics Q9 N

Valid

100

Missing

0

Mean

3.03

Std. Deviation

.332

Q9

Valid

Disagree Agree Strongly Agree Total

Valid Frequency Percent Percent 4 4.0 4.0

Cumulative Percent 4.0

89

89.0

89.0

93.0

7

7.0

7.0

100.0

100

100.0

100.0

69

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.03, Standard Deviation is 0.332, which states that majority of the sample agrees and feels find it cheaper and beneficial. 89% of the sample agrees and find it cheaper and beneficial. This response can be computed as many of the respondents will later or future opt for plastic cards.

70

PLASTIC MONEY-THE FUTURE CURRENCY Q10 Card is consider as more reliable and secured?

Statistics Q10 N

Valid

100

Missing

0

Mean

3.01

Std. Deviation

.301

Q10

Valid Disagree Agree Strongly Agree Total

Valid Cumulative Percent Percent 4.0 4.0

Frequency 4

Percent 4.0

91

91.0

91.0

95.0

5

5.0

5.0

100.0

100

100.0

100.0

71

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.01, Standard Deviation is 0.301, which states that majority of the sample agrees and feels Card is more reliable and secured. 91% of the sample agrees and find it Card is more reliable and secured.

72

PLASTIC MONEY-THE FUTURE CURRENCY Q11 Due to Duplicity of Paper money are you shifting to Plastic money.

Statistics Q11 N

Valid

100

Missing

0

Mean

3.03

Std. Deviation

.300

Q11

Valid

Disagree Agree Strongly Agree Total

Frequency 3

Percent 3.0

Valid Percent 3.0

91

91.0

91.0

94.0

6

6.0

6.0

100.0

100

100.0

100.0

73

Cumulative Percent 3.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.03, Standard Deviation is 0.300, which states that majority of the sample agrees Due to Duplicity of Paper money are you shifting to Plastic money. 91% of the sample agrees due to Duplicity of Paper money they shifting to Plastic money.

74

PLASTIC MONEY-THE FUTURE CURRENCY Q12 Plastic money will penetrate in society more in future.

Statistics Q12 N

Valid

100

Missing

0

Mean

3.00

Std. Deviation

.284

Q12

4

Percent 4.0

Valid Percent 4.0

Cumulative Percent 4.0

92

92.0

92.0

96.0

4

4.0

4.0

100.0

100

100.0

100.0

Frequency Valid

Disagree Agree Strongly Agree Total

75

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 3.00, Standard Deviation is 0.284, which states that majority of the sample agrees Plastic money will penetrate in society more in future. 92% of the sample agrees that Plastic money will penetrate in society more in future.

76

PLASTIC MONEY-THE FUTURE CURRENCY Q13 Do you think that more credit card/Debit card transaction in country over cash transaction will help to crab black money circulation in economy?

Statistics Q13 N

Valid

100

Missing

0

Mean

1.87

Std. Deviation

.338

Q13

Valid

Strongly Disagree Disagree Total

Frequency 13

Percent 13.0

Valid Percent 13.0

87

87.0

87.0

100

100.0

100.0

77

Cumulative Percent 13.0

100.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 1.87, Standard Deviation is 0.338, which states that majority of the sample disagrees that more credit card/Debit card transaction in country over cash transaction will help to crab black money circulation in economy. 87% of the sample disagrees that more credit card/Debit card transaction in country over cash transaction will help to crab black money circulation in economy.

78

PLASTIC MONEY-THE FUTURE CURRENCY Q14 If you are financial minister of the country, will the country see increase use of plastic money?

Statistics Q14 N

Valid

100

Missing

0

Mean

2.87

Std. Deviation

.338

Q14

Valid

Frequency 13

Percent 13.0

Valid Percent 13.0

Agree

87

87.0

87.0

Total

100

100.0

100.0

Disagree

79

Cumulative Percent 13.0 100.0

PLASTIC MONEY-THE FUTURE CURRENCY

Interpretation: Mean is 2.87, Standard Deviation is 0.338, which states that majority of the sample agrees that when they will be financial minister of the country, the country see increase use of plastic money. 87% of the sample agrees that majority of the sample agrees that when they will be financial minister of the country, the country see increase use of plastic money.

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt8. CONCLUSION There is no doubt that the plastic money is rising up in the market. The day will come when all the transaction will be done through plastic money, yet there are more further technologies which have been implemented in Japan and US but India is still growing in its first phase. The day will come when all the train tickets would be purchased by credit cards. People will start keeping bunch of cards in their pockets instead of currencies. The day will come when the cinema tickets will be purchased through credit cards. Thus in these growing phenomenon there doesn’t seems any declination instead it growing at a higher rate..THIS END WILL ONLY INCREASE In the last two years, spending pattern through plastic money has changed drastically. Travelling, dining and jewellery are the top three purchases that Indians make through credit cards. Two years ago, it was jewellery and apparel purchases that formed the largest chunk of purchases through plastic money. Fuel accounts for a very small portion of credit card purchases as these are largely paid through debit cards. Consumers were not only more open to the possibility of owning a financial card, but were also more than willing to use their cards to settle dues. The status symbol aspect of owning and using cards, too, played its part in bringing about such robust growth over the space of a single year. Debit cards, in particular, proved immensely popular. According to projections for the 2003-2008 period, the number of financial cards in circulation will register a compounded annual growth rate of nearly 51 per cent so the satisfaction of consumers has also increased. There are many ethical issues and challenges for plastic money issuing banks/companies. Security relating to card should be first priority for each bank/company. Consumers are preferring these cards mostly for shopping online E-commerce has given a better way to use the plastic money. At last it is concluded that plastic money has a very bright future in the coming years because of the increasing trend of ecommerce. 21ST Century banking has become wholly customer-driven & technology driven by challenges of competition, rising customer expectations & shrinking margins, banks have been using technology to reduce cost & enhance efficiency, productivity & customer convenienence. Technology intensive delivery channels like net banking, mobile banking, etc have created a win-win situation by extending great convenienence. & multiple options for customer. From educating customers about credit cards there is a need to educate them about the differentiating factors of the cards. Because visa and master card are advertising regularly and thereby increases awareness. The strategy should be to emphasize on its differentiating characteristics. They also need to identify potential customers and target those using mailers. As internet is growing at a fast rate the net users can be targeted by having interactive sites. The prospective company’s card personality could also be used in the home page to solve customer queries in the ‘Best Possible Manner’.

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.9 FINDINGS AND RECOMMENDATIONS The use of plastic money in India is at its high altitude due to increased disposable income and the growth of IT and retail sector. The Young Indians with the increased level of income has taken plastic money as a tech savvy and smart way of spending. Some of them has multiple cards. Apart from regular shopping,they pay the electricity bill and all other sundry expenses using the cards. However, the plastic money charges the highest rate of interest in the organised loan market. And the repayment of plastic money debt is not as easier as it seems. This article focuses on how to play safe with plastic money and avail free credit. When you have multiple credit cards, you can transfer the balance due on one card to the other. In simple terms, the amount due on one card can be transferred onto other card without affecting your financial condition. For this balance transfer, you will have to pay a minimum amount due (in general 5% plus processing fee) to the concerned bank offering you the facility. This price is not that much hefty when you are in need of urgent cash for high end expenses like purchase of jeweleries, costly electronic goods or financing the cost of wedding. By the method of balance transfer, you can easily avail interest free period for next three months. The total time you can avail as the interest free credit in case of balance transfer is five months( including the general grace period). This saves a lot of money and and offers you the peace of mind. The second way to get rid of credit card debt piling is to repay the amount within the grace period. At the time of purchase, you should cut your coat according to your cloth. Thoroughly analyse your monthly incomings before performing any plastic money purchase. If you can repay the whole amount without disturbing your budget, try to pay it with in the grace period. This makes your payment interest free. Credit card companies always look for a default on the user's side. This default is the unwritten source of profit for the financial organisations dealing with plastic money. If there is default, the rate of interest and the payable amount compounds. Another thing associated with the credit card bill payment is the minimum monthly installment. If you can not repay the whole amount with in the grace period, never forget to pay the minimum monthly amount. By following these above three steps, you can easily and smartly handle your plastic money expenditure.

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PLASTIC MONEY-THE FUTURE CURRENCY

Chpt.10 ANNEXTURE Questionnaire Q1 Cards is the most convenient way of paying?  Strongly Agree  Agree  Disagree

 Strongly Disagree Q2 Do you have any type of Card?  Strongly Agree  Agree  Disagree

 Strongly Disagree Q3 Card is the most convenient way to pay?  Strongly Agree  Agree  Disagree

 Strongly Disagree Q4 Card is the most prefer to pay your utilities Bills?  Strongly Agree  Agree  Disagree

 Strongly Disagree Q5 While travelling, card is the preferred way of payment?  Strongly Agree  Agree  Disagree  Strongly Disagree

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PLASTIC MONEY-THE FUTURE CURRENCY Q6 Use of credit card/Plastic money is safest modes of transaction.  Strongly Agree  Agree  Disagree  Strongly Disagree Q7 Misuse of Cards is the reason you don’t opt for plastic money?  Strongly Agree  Agree  Disagree  Strongly Disagree Q 8 Credit Card to be expensive as many other charges are charged on it  Strongly Agree  Agree  Disagree  Strongly Disagree Q9 Do you find it cheaper and Beneficial?  Strongly Agree  Agree  Disagree  Strongly Disagree Q10 Card is consider as more reliable and secured?  Strongly Agree  Agree  Disagree  Strongly Disagree Q11 Due to Duplicity of Paper money are you shifting to Plastic money.  Strongly Agree  Agree  Disagree  Strongly Disagree Q12 Plastic money will penetrate in society more in future.  Strongly Agree  Agree  Disagree  Strongly Disagree

84

PLASTIC MONEY-THE FUTURE CURRENCY Q13 Do you think that more credit card/Debit card transaction in country over cash transaction will help to crab black money circulation in economy?  Strongly Agree  Agree  Disagree  Strongly Disagree Q14 If you are financial minister of the country, will the country see increase use of plastic money?  Strongly Agree  Agree  Disagree  Strongly Disagree

85

PLASTIC MONEY-THE FUTURE CURRENCY

BIBLIOGRAPHY Magazines Financial Magazine Global Educator Business Economy Outlook Business world AcNielsen ORG –

2nd Jan Pg 24 IMS Publication December issue Edition: June, July, August issue. August issue June issue MARG Report

Internet Indiainfoline.com/pdf 5paisa.com/ ind.af / credit / debit.asp Indiainfoline.com/b-school/biz.asp Webliography  Journal of Post Keynesian Economics Winter 2010–11, Vol. 33, No. 2255 © 2011 M.E. Sharpe, Inc.  Alvares, Cliford, Business Today; 3/8/2009, Vol. 18 Issue 5, p24-24, 1/3p, 1 Chart  Popular Plastics & Packaging; Sep2012, Vol. 57 Issue 9, p68-69, 2p  U.S. Banker; Dec99, Vol. 109 Issue 12, p14, 1/3p, 1 Color Photograph  Popular Plastics & Packaging; Oct2009, Vol. 54 Issue 10, p65-65, 1/7p  Mudd, Douglas A, Credit Control; 2007, Vol. 28 Issue 3, p48-53, 5p  Goldwasser, Joan, Kiplinger's Personal Finance; Jun2006, Vol. 60 Issue 6, p94-94, 1p, 1 Color Photograph, 1 Chart  Futurist; May/Jun91, Vol. 25 Issue 3, p56-56, 1/2p  Martin, Edward, Business North Carolina, Dec2008, Vol. 28 Issue 12, p5-5, 1p  Stone, Daniel, Newsweek; 12/1/2008, Vol. 152 Issue 22, p50-50, 1/3p, 1 Color Photograph D'Silva, ViJay, Stephenson, Jack, Waitman, Robert M, McKinsey Quarterly; 2000, Issue 3, p42-49, 8p, 1 Chart, 1 Graph  Hoffman, Michael J. R., McKenzie, Karen S.2, Paris, Susan3, CPA Journal; Sep2008, Vol. 78 Issue 9, p16-20, 5p  Hoffman, Michael J. R., McKenzie, Karen S.2, Paris, Susan3, CPA Journal; Sep2008, Vol. 78 Issue 9, p16-20, 5p  Burt, Erin, Kiplinger's Personal Finance; Vol. 55 Issue 10, p28, 1/2p, 1 Color Photograph  Prince, C. J., Entrepreneur; Jan2005, Vol. 33 Issue 1, p49-50, 2p  Bongiorni, Sara,Greater Baton Rouge Business Report, 12/9/2003, Vol. 22 Issue 7, p3738, 2p

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Goldwasser, Joan, Kiplinger's Personal Finance; Jun2006, Vol. 60 Issue 6, p94-94, 1p, 1 Color Photograph, 1 Chart Futurist; May/Jun91, Vol. 25 Issue 3, p56-56, 1/2p SHEPHERD, LEAH CARLSON, Employee Benefit News; Oct2009, Vol. 23 Issue 13, p1-23, 3p Khurana, Sunayna1,Singh, S. P.IUP Journal of Bank Management; Feb2011, Vol. 10 Issue 1, p71-87, 17p, 31 Charts Chain Store Age; May2007, Vol. 83 Issue 5, p252-252, 1/4p Olson, Elizabeth New York Times, 6/17/2007, Vol. 156 Issue 53978, BRIDGEFORD, LYDELL C., Employee Benefit News; Dec2009, Vol. 23 Issue 15, p2122, 2p Bruno, Mark, U.S. Banker; Dec2002, Vol. 112 Issue 12, p28, 1/2p Management Services; Aug1985, Vol. 29 Issue 8, p25-26, 2 Pulp & Paper; Jul98, Vol. 72 Issue 7, p27, 1/3p

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