Credit Card Industry Presentation - Unitedworld School of Business

7/28/2019 Credit Card Industry Presentation - Unitedworld School of Business

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Credit Card I ndustry I n I ndia


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The credit card business of India is booming with just over 24

million credit cards in circulation.

They are still not accepted with only about 28% of the Indian

population possessing one.

But even so between 2008 and 2009 the incidence of nonpayment

on those India credit cards rose via 20%.

Most likely just being aware of a few accepted mistakes would

lower this incidence by a considerable amount.


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This process involves the following parties:

Cardholder: the owner of the card used to make a purchase

Merchant: the business accepting credit card payments for

products or services sold to the cardholder

Acquirer: the financial institution or other organization thatprovides card processing services to the merchant

Card association: a network such as VISA, MasterCard,

Discover (and others) that acts as a gateway between the

acquirer and issuer for authorizing and funding transactions

Issuer: the financial institution or other organization that

issued the credit card to the cardholder


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The flow of information and money between these parties

always through the card associationsis known as the

interchange, and it consists of a few steps:

1.Authorization

The cardholder pays for the purchase and the merchant submits

the transaction to the acquirer. The acquirer verifies with the

issueralmost instantlythat the card number and transaction

amount are both valid, and then processes the transaction for the

cardholder.

2.BatchingAfter the transaction is authorized it is then stored in a batch,

which the merchant sends to the acquirer later to receive

payment (usually at the end of the day).
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The entire process, from authorization to funding, usually takes about 3

days. However, Bank of America Merchant Services offers next-day

deposits to customers with a Bank of America business checking

account.1

2.Clearing and settlement

The acquirer sends the transactions in the batch through the cardassociation, which debits the issuers for payment and credits the

acquirer. In effect, the issuers pay the acquirer for the transactions.

3.FundingOnce the acquirer has been paid, the merchant receives payment.

The amount the merchant receives is equal to the transaction

amount minus the discount rate, which is the fee the merchant pays

the acquirer for processing the transaction.
http://www.bankofamerica.com/small_business/merchant_card_processing/index.cfm?template=card_processing_basicshttp://www.bankofamerica.com/small_business/merchant_card_processing/index.cfm?template=card_processing_basics


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How card processing benefits your business

Regardless of your business's size or industry, there are manybenefits in having the ability to process credit card transactions.

By accepting multiple forms of payment, you give your customers

options and improve their experiences. You also introduce a new

audience of customers to grow your business organically.In addition, card processing is an efficient, convenient payment

solution that helps you improve cash flow by ensuring timely,

automatic deposits to your account.

Value-added services

like gift card and prepaid card programs

can provide a new channel for generating profits and increasing

your revenue. Check protection services can help you limit your

risk from bad checks.


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1. Merchant calculates the amount of purchase and asks buyer for

payment2. Buyer presents merchant with a credit card.

3. Merchant runs credit card through the point of sale unit. The

amount of the sale is either hand-entered or transmitted by the cash

register.

4. Merchant transmits the credit card data and sales amount with a

request for authorization of the sale to their acquiring bank.

5. Point of sale units are usually set to request authorization at thetime of sale, and then actually capture the sales draft at a later time.


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6. The acquiring bank that processes the transaction, routes the

authorization request to the card-issuing bank. The credit cardnumber identifies type of card, issuing bank, and the cardholder's

account.

7. If the cardholder has enough credit in their account to cover the

sale, the issuing bank authorizes the transaction and generates an

authorization code. This code is sent back to the acquiring bank.

8. The issuing bank puts a hold on the cardholder's account for the

amount of the sale. Note that the cardholder's account has not been

actually charged yet


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9. At a later time, probably that night when the store is closing up, the

merchant reviews all the authorizations stored in the point of sale unit

against the signed sales drafts. When all the credit card authorizationshave been verified to match the actual sales drafts, the merchant will

capture, or transmit, the data on each authorized credit card transaction to

the acquiring bank for deposit. This is in lieu of depositing the actual

signed paper drafts the with the bank.

10. The acquiring bank performs what is called an interchange for each

sales draft, with the appropriate card-issuing bank. The card-issuing bank

transfers the amount of the sales draft, minus an interchange fee to the

acquiring bank [Baughn, 88] .

11. The acquiring bank then deposits the amount of the all the sales

drafts submitted by the merchant, less a discount fee, into the merchant's

bank account.


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* Premium Credit Cards

* Cash Back Credit Cards

* Gold Credit Cards

* Airline Credit Cards* Silver Credit Cards

* Business Credit Cards

* Balance Transfer Credit Cards

* Co-branded Credit Cards

* Low Interest Credit Cards

* Lifetime Free Credit Cards

* Rewards

Types of Credit Cards


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Cash back offers are a type of rewards program where the

cardholder receives a cash rebate equal to a specified percentage of

the amount charged to the card on an annual basis.

Cash back reward programs started appearing in 1990 when theDiscover Card made their industry-shattering 1% cash back offer.

Cash back programs typically come with higher interest rates than

cards that do not offer a cash back incentive. If the cardholder does

not pay their balance in full every month, that higher interest ratecan offset the value of the cash back incentive.

Cash Back Credit Cards


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Premium Credit Cards

These cards offer incentives and benefits beyond that of aregular credit card. Examples of premium credit cards are

Gold and Platinum cards that offer cash back, reward

points, travel upgrades, and other rewards to cardholders.

Premium cards can have higher fees and usually haveminimum income and credit score requirements.

Both standard credit cards and premium credit cards have

specific types of credit cards. Student credit cards, zeropercent interest cards, and travel cards are just a few types

available.


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There are 25 major airline credit cards available in India. These cards provide a

number of travel related benefits to cardholders.

Diners Club British Airways Credit Card

Following are some interesting facts about Diners Club British Airways Credit

Card:

* First year is free.

* Renewal fee is INR 3000.

* Cardholders can earn 2.5 BA miles. This offer is applicable for every INR

100 spent by cardholders with the card.

* Regular interest rate is 2.75% per month.

* Cardholders get access to international standard business centers and

lounges.

Airline Credit Card


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* Cash advance fee is 3% per month. Minimum cash advance

fee is INR 100.

* Cardholders receive priority booking facilities in busy

flights. They receive meal and seat preferences as well.* Issuer is Diners Club.

* There are no joining fees.

* Co-brand of this card is British Air


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A charge card is a credit card without a credit limit. On a chargecard, the balance must be paid in full at the end of each month.

Charge cards typically do not have a finance charge or minimum

payment since the balance is to be paid in full. Some charge cards

don't have a preset spending limit, giving you the flexibility tocharge as much as you want as long as you repay the balance by the

due date.

Charge cards typically have more qualification requirements

including a high credit score and income level.

Late payments may have stricter penalties on a charge card. You

may receive a late fee, charge restrictions, or card cancellation

depending on your card agreement.

Charge Credit Cards


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Lifetime free Credit Cards

Lifetime free credit cards come to you absolutely free with no

annual fee. Free for life credit cards may require a minimum

spend per year in order provide the card free of cost. Please

refer to the terms and conditions of these offers with therespective banks. Compare, Choose and Apply for your

Lifetime Free Credit Card.


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Business credit cards are designed specifically for business use.

They provide business owners with an easy method of keeping

business and personal transactions separate. There are standardbusiness credit and charge cards available.

Business Credit Cards


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Secured credit cards are an option for those without a

credit history or those with blemished credit. Secured

cards require a security deposit to be placed on the card.The credit limit on a secured credit card is equal to the

amount of the deposit made. Secured credit cards have

revolving balances depending on the purchases and

payments made.

Secured Credit Cards


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Limited purpose credit cards can only be used at

specific locations. Limited purpose cards are used like

credit cards with a minimum payment and finance

charge. Store credit cards and gas credit cards are

examples of limited purpose credit cards.

Limited Purpose Cards

C O i


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Campus Overview

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Ahmedabad Kolkata

Infinity Benchmark,

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Mumbai

Goldline Business

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Thank You

Documents

Credit Card Industry Presentation - Unitedworld School of Business