PLASTIC MONEY

Presented By:

Ramandeep Kaur &

MBA 4th Sem.

90512234158

PLASTIC MONEY OR POLYMER MONEY

Made out of Plastic.

A form a ready money which reduces the risk of handling a huge amount of cash.

It includes Debit Cards, ATMs, Smart Cards, Debit Cards, etc.

Plastic notes are same as paper but the only difference is that they are made of plastic & more secured.

Types of Plastic Money

Credit Card

Debit Card

Charge Card

Amex Card

Master Card & Visa World Wide

Smart Card

Dinner Club Card

Photo Card

Global Card

Co-branded Card

Affinity Card

Add-on Card

Credit Card

A credit card is plastic money that is used to pay for products and services at over 20 million locations around the world. All you need to do is produce the card and sign a charge slip to pay for your purchases.

The institution which issues the card makes the payment to the outlet on your behalf; you will pay this 'loan' back to the institution at a later date

Debit Card

Debit cards are substitutes for cash or check payments, much the same way that credit cards are. However, banks only issue them to you if you hold an account with them. When a debit card is used to make a payment, the total amount charged is instantly reduced from your bank balance.

A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance online.

Charge Card

A charge card carries all the features of credit cards. However, after using a charge card you will have to pay off the entire amount billed, by the due date. If you fail to do so, you are likely to be considered a defaulter and will usually have to pay up a steep late payment charge.

When you use a credit card you are not declared a defaulter even if you miss your due date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied in your next billing statement.

Amex card

Amex stands for American Express and is one of the well-known charge cards. This card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa. 

MasterCard and Visa

MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. They have built a vast network of merchant establishments so that customers world-wide may use their respective credit cards to make various purchases.

Smart Card

A smart card contains an electronic chip which is used to store cash. This is most useful when you have to pay for small purchases, for example bus fares and coffee.

No identification, signature or payment authorization is required for using this card. 

The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. No change is given.

Diners Club card

Diners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club cardholder. For instance, as a cardholder you can set your own spending limit. Besides, the card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa.

Photo Card

If customer’s photograph is imprinted on a card, the card is known as a photo card. Doing this helps identify the user of the credit card and is therefore considered safer. Besides, in many cases, your photo card can function as your identity card as well.

Global Card

Global cards allow you the flexibility and convenience of using a credit card rather than cash or travelers checks while travelling abroad for either business or personal reasons.

Co-branded Card

Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer.

For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to Times Music events, etc.

Affinity Card

The card issuer ties up with popular organizations/ institutions which are often non-profit organizations (Citi-WWF card)to offer an affinity card. When the card is used, a certain percentage is contributed to the organization /institution by the card issuer.

Add-on CardAn add-on card allows you to apply for an additional credit card within the overall credit limit. You can apply for this card in the name of family members. Your billing statement would reflect the details of purchases made using the add-on card. You are liable to make good all the payments for the purchases made using the add-on card(s).

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

Some credit card issuing companies do set a limit for each transaction, as well as for the total value of transactions allowed on a particular add-on card every month.

Factors affecting utilization of Plastic Money in India

Interest Rate

Reward Programs

Annual Fees

Member Benefits

Advantages of Plastic MoneyOffer free use of funds, provided you always pay your balance in full, on time.

Be more convenient to carry than cash.

Help you establish a good credit history. 

Provide a convenient payment method for purchases made on the Internet and over the telephone.

Give you incentives, such as reward points, that you can redeem.

Disadvantages of Plastic Money

Cost much more than other forms of credit, such as a line of credit or a personal loan, if you don't pay on time.

Damage your credit rating if your payments are late.

Allow you to build up more debt than you can handle. 

Have complicated terms and conditions.

CREDIT CARDS

A plastic card bearing an account number.

Pay later approach.

A credit system of retail transaction settlement & to obtain cash.

CREDIT PROCESSCustomer pays for goods & services with a credit card

Card Information is recorded

Verified so that merchant can receive the payment for transaction

How Payment Processing Works

Parties involved in processCardholder-Owner of card (used to make payments)

Merchant-Business accepting credit card payments for products or services sold to the cardholder.

Acquirer-Financial institution or organization that provides card processing services to the merchant.

Issuer-Financial institution or organization that issued the card to the cardholder.

Card Association-A network that acts as a gateway between the acquirer and issuer for authorizing & funding the transactions.

Steps in Credit ProcessAuthorization

Batching

Clearing & Settlement

Funding

AuthorizationThe cardholder pays for the purchase & the merchant submits the transaction to the acquirer.

The acquirer verifies with the issuer-almost instantly-that the card number & transaction amount both are valid, & then processes the transaction to the cardholder.

Batching

After the transaction is authorized it is then recorded in a batch, which the merchant sends to the acquirer later to receive the payment (usually at the end of the day)

Clearing & Settlement

The acquirer sends the transaction in the batch through the card association, which debits the issuers for payment & credits the acquirer.

The issuer pay the acquirer for the transaction.

Funding

Once the acquirer has been paid , the merchant receives the 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.

The entire process, from authorization to funding usually takes about 3 days.

Advantages of CCMoney credited into supplier’s account within 2-4 days.

No cash involved.

Enable customers to buy expensive products immediately.

Enable customers to make a payment over the telephone or over the internet.

Once transaction confirmed, payment to supplier guaranteed.

Used to obtain cash from the cash machine.

Additional protection if goods are faulty.

Disadvantages of CCRisk of fraud , through the use of stolen cards. Normally borne by the credit card company if the owner has card protection insurance.

Cost of installing & paying for an electronic terminal.

Cardholders spend more than they afford.

Cost of processing the transactions.

Interest can be high if card is not paid-off in each month & cash withdrawals are expensive.

Method of calculating is complicated & the people may find the interest charges higher than they expected.

THANKS A LOT ANY QUESTIONS