Credit Cards

Credit Cards - L-11: Credit Cards (IBFS) Prof. C. Anand...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
1 L-11: Credit Cards (IBFS) Prof. C. Anand Faculty – IBS, Hyderabad
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Contents This lesson deals with:- The Concept of Credit Cards Parties to Credit Cards Features of Credit Cards (Credit/Charge/Debit Cards) Operational Aspects of Credit Cards Credit Cards Business in India: Emerging Scenario Issues/Problems of Credit Cards
Background image of page 2
3 1. The Concept of Credit Cards Credit Cards/Plastic Money refers to substitution of usage of currency at the time when transaction of buy/sell is taking place by using a plastic card representing such substitution, which may be due to postponement of payment through the card that is issued. Plastic money protects the user from risks of carrying cash. It is exclusive property of cardholder. Thus Credit Card is a ‘Pay Later Product” along the dimension of time for settlement/payment. These cards are a form of consumer loans, revolving credit account that has a credit line of a specific amount that can be borrowed in part or full. As the outstanding balance is paid, the available credit line is restored for use again.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 2. Parties to Credit Cards : 1. Card Issuers: Mainly Banks like Citi, HSBC, HDFC, SBI, Standard Chartered, ANZ Grindlays, etc., who generally offer a credit period of 30-45 days at 2.5% on outstanding amount remaining unpaid on expiry of credit period; 2. Cardholders : These are individuals and business organizations based on gross and net income levels;
Background image of page 4
5 2. Parties to Credit Cards (contd.) 3. Member Establishments (MEs) : These are the well established and reputed establishments with standing and reputation enlisted by the Card Issuer who accepts valid credit cards towards payment for the goods sold or services rendered by them to the cardholders in lieu of cash. They are retail outlets, departmental stores, restaurants, railways, airlines, hotels, travel agencies, gas stations, etc. MEs will have to pay to the Card Issuers a certain percentage of discounts on the credit card transactions;
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 2. Parties to Credit Cards (contd.) 4. Member Affiliates (MAs) : The Card Issuers may sometimes enter into a tie-up of credit card with MAs - for interbank tie ups, both Foreign and Indian Banks - whose names and logos would be printed on the cards, which arrangement enlarges the scope and operations of plastic cards (e.g. Master Card International, Visa International, American Express, etc). 5. Clearing Agencies : A card issuer affiliates itself with Master Card International or Visa International which act as clearing agencies, enabling cardholder of one affiliate to use his card at MEs of another affiliate.
Background image of page 6
7 3. Features of Credit Cards (Credit/Charge /Debit Cards) A credit card is a payment mechanism which enables the holder of the card to purchase goods or services without
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/28/2011 for the course FIN 315 taught by Professor Welker during the Spring '09 term at IUP.

Page1 / 19

Credit Cards - L-11: Credit Cards (IBFS) Prof. C. Anand...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online