Plastic money or polymer money, made out of plastic, is a new and easier way of paying for goods and services. Plastic money was introduced in the 1950s and is now an essential form of ready money which reduces the risk of handlings a huge amount of cash. It includes Debit cards, ATMs, smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for currency.
Plastic money refers to credit cards, we use them whenever we want and pay later (with interest, of course).
It makes it too easy for us to buy things we normally could not afford, which makes it easier to get into debt.
A slang phrase for credit cards, especially when such cards used to make purchases. The “plastic” portion of this term refers to the plastic construction of credit cards, as opposed to paper and metal of currency. The ―money” portion is an erroneous reference to credit cards as a form of money, which they are not.
Although credit cards do facilitate transactions, because they are a liability rather than an asset, they are not money and not part of the economy’s money supply.
Credit cards have evolved into a safe and secure manner to purchase goods and services. The Internet has given credit card users additional purchasing power. Banks have options like cash-back rewards, savings plans and other incentives to entice people to use their cards. Debit cards allow people the convenience of cards without the worry of racking up debt.
The convenience, security and rewards offered by credit and debit cards keep shoppers using their cards as opposed to checks or cash.
The first credit cards were issued by individual stores and merchants. These cards were issued in limited locations and only accepted by the businesses that issued them. While the cards were convenient for the customers, they also provided a customer loyalty and customer service benefit, which was good for both customer and merchant. It was not until1950 that the Dinner’s Club card was created by a restaurant patron who forgot his wallet and realized there needed to be an alternative to cash only. This started the first credit card specifically for widespread use, even though it was primarily used for entertainment and travel expenses. Plastic Becomes the Standard
The first Diner’s Club cards were made out of cardboard or celluloid. In 1959 American Express changed all that with the first card made of plastic. American Express created a system of making an impression of the card presented at the register for payment. Then that impression was billed to the customer and due in full each month. Several American Express cards still operate like this as of 2010. It was not until the late 1980s that American Express began allowing people to pay their balance over time with additional card options.
In 1966, Bank of America created a card that was a general purpose card or “open loop” card. These “closed loop” agreements limited cards like Diners Club and American Express to certain merchants, unlike the new” open loop” cards. The new general purpose system required interbank cooperation and additional regulations. This created additional safety features and began building the credit card system of today. Two systems emerged as the leaders–Visa and Master Card. However, today there is little difference between the two and most merchants accept both card associations.
The Visa association of cards took credit cards to a new level in 1989 when they introduced debit cards. These cards linked consumers to their checking accounts. Money was now drawn from a checking account at the point of sale with these new cards and replaced check writing. This helped the merchants check that money was available and made it easier to track the customer if the funds could not be obtained. Consumers liked the convenience of not having to write checks at the point of sale, which made debit cards a safe alternative to cash and checks.
There were almost 29 million debit card users as of 2006, with a projected 34.4 million users by 2016. However, online services like Pay Pal are emerging as a way for people to pay their debts in new, secure and convenient ways. Technology also exists to have devices implanted into phones, keys and other everyday devices so that the ability to pay at the point of sale is even more convenient.
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.
Most well-known credit cards: American Express, MasterCard, Visa
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. Don’t borrow on your credit card! Here’s why A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance online. In short …………..
Most well-known debit cards: Maestro, Postcard
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. In short
Most well-known charge cards: American Express, Diners Club
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. Credit cards: Remember these dos and don’ts. This card is typically meant for high-income group categories and companies and may not be acceptable at many outlets. There are a wide variety of special privileges offered to Amex cardholders.
Diners Club is a branded charge card. There are a wide variety of special privileges offered to the Diners Club card holder. 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. However, since this card is typically meant for high-income group categories, it may not be acceptable at many outlets. It would be agood idea to check whether a member establishment does accept thecard or not in advance.
Global cards allow you the flexibility and convenience of using a credit card rather than cash or travelers cheque while traveling abroad for either business or personal reasons.
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. A debit card with a difference 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.
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 worldwide may use their respective credit cards to make various purchases.
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. Currently this product is available only in very developed countries like the United States and is being used only sporadically in India.
If your photograph is imprinted on a card, then you have what 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.
Card with payment and credit function can only be used at specific retailers Well-known customer cards: my One, Globus, Media Markt. Prepaid card/gift card
Card is topped up with credit before use No credit or installment facility Open system (American Express, Visa, MasterCard) or closed system (can only be used at specific retailers)
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder’s promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Usage of the term “credit card” to imply a credit card account is a metonym. When a purchase is made the user would indicate consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid. Issuer agrees to pay the merchant and the credit card user agrees to pay the card issuer.
The credit card can be defined as “A small plastic card that allows its holder to buy goods and services on credit and to pay at fixed intervals through the card issuing agency. A credit card is a card or mechanism which enables card holder to purchase goods, travels and dine in a hotel without making immediate payments. The holders can use the cards to get credit from banks up to 45days.The credit card relieves the consumers from the botheration of carrying cash and ensures safety. It is a convenience of extended credit without formality. Thus credit card is a passport to, “safety, convenience, prestige and credit.
The principal benefits to a card holder are:
The principal benefits offer credit card to the retailer is
The following are the common disadvantages of the credit card:
Cardholders: The holder of the card used to make a purchase, the consumers. Card-issuing Bank: The financial intuition or others organisations that issued the credit card to the cardholder. Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. Merchant Accounts: This could refer to the acquiring bank or the independent sales organization, but in general is organization that the merchants deal with. Credit Card Association: An association of card-issuing banks such as Discover, Visa, MasterCard, American Express, etc. that set transaction terms for merchants, card –issuing banks, and acquiring banks Transaction network: The system that implements the mechanics of electronics transaction. May be operated by an independent company, and one company may operate multiple networks. Affinity Partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Insurance Providers: Insurers underwriting various insurance protections offered as credit card perks.
Authorization: The cardholder presents the card as payment to the merchant and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing back) and reserves that amount of the cardholders credit limit for the merchant. An authorization will generate an approval code, which the merchant stores with the transaction. Batching: Authorized transactions are stored in “batches”, which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will say valid for a period determined by the issuer, after which the held amount will be returned to the cardholders available credit. Clearing and Settlement: The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credited the acquirer.
Essentially, the issuer pays the acquirer for the transaction. Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totalling the funds in the batch minus the “discount rate”, “mid-qualified rate”, or “non-qualified rate” which are tiers of fees the merchant pays the acquirer for processing the transactions. Charge backs: A Chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Charge backs are typically initiated by the cardholder. In the event of charge backs, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. Costs
Credit card issuers (banks) have several types of costs:
Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called over limit fees Returned cheques fees or payment processing fees (e.g. phone payment fee) Cash advances and convenience cheques
Transactions in a foreign currency. A few financial institutions do not charge a fee for this. Membership fees (annual or monthly), sometimes a percentage of the credit limit. Exchange rate loading fees.
Plastic is very useful in the building and construction, electronics (laptops wouldn’t work well if they were made from glass), packaging (glad wrap), transportation industries. Very easy to make – water bottles, plastic bags, pens, cups etc. The main advantages of plastic materials are also the reason why plastic is such a problem. It lasts forever and it is very cheap to make. When I say it last forever, I mean it does not biodegrade. There is a flotilla of plastic the size of Texas in the Pacific Ocean. It gradually photo-degrades into tiny pieces that enter the marine food chain. Plastic is good, light, strong and cheap to produce. There are many advantages to using plastic. It does not decompose but it can instead be recycled. This is done more easily than producing more plastic. Unlike aluminum cans, plastic bottles can be re-used and stored over and over again. Plastic is usually not breakable and it is see-through. It’s light-weight and odourless. Plastic comes from a natural resource (oil) but CAN’T be re-made into bottles (but they can be re-made into other items- WEIRD!) It takes a long time to break down… Customer having poor credit worthiness can opt for debit card. Instant finalization of accounts less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. A debit card may be used to obtain cash from an ATM or a PIN-based transaction atnoextracharge.
It is a compound that is indestructible, even when it is melted the compound gas that is gives off is very harmful to our heath and environment; it weakens the ozone layer. Most plastic is produced from oil. The world is gradually running out of oil. Scientists are now developing plastics that
are made from vegetable oil and other organic matter. This means that the plastic is more likely to be degradable, so it will be less of a problem in future. Another Disadvantage is pollution
Plastic accumulation in the environment is a looming catastrophe. It is cheap but it is not easily disposable so it is in a lot of landfills. plastic bags can kill the marine animals and destroy the soil Limited to the existing funds in the account to which it is linkedÊ Banks charging over-limit fees or non-sufficient funds fees based upon pre-authorizations, and even attempted but refused transactions by the merchantÊ Lower levels of security protection than credit cardsÊ More prone to frauds. Plastic Fraud
State-of-the-art thieves are concentrating on plastic cards. In the past,this type of fraud was not very common. Today, it is a big business for criminals. Plastic cards bring new convenience to your shopping and banking, but they can turn into nightmares in the wrong hands. This pamphlet describes credit and debit cards and some common schemesinvolving card fraud with tips to help you avoid them. The following are the types of frauds
One of the most important features that Plastic Money offers is thetechnology associated with this business. Credit card businesses rely on very reliable and secure technology anddemands very Strong connectivity backbone. Although a third world country, with lot of insecurities and almost noinfrastructure,
Pakistanhas no exception when it comes to credit card business. There is approximately 3000 Point of Sale Terminals (POST) presenton merchant’s sites connected with bank host system. Inter-city connectivity is accomplished through X.25 networks. Perhaps, it is the most important time in the history of Pakistan as the parameters of its Infrastructures are coming into existence. There is an immense need of reliable wide area connectivity and thismarket is so huge and lucrative that it can accommodate many moreindustry giant
A variety of crimes constitute credit card fraud. The term candescribe a person using a stolen credit card to purchase goods or services posing as the person named on the card. It can also describe illegally andfraudulently withdrawing funds from an account that is not yours. Identitytheft, which is the act of posing as an individual to make purchases, is oftenclassified together with credit card fraud. A victim of credit card fraud cansometimes see bank accounts emptied of all their funds or negative marksgoing on her credit report for things she had nothing to do with. Many banks will monitor transactions made with a credit card and alert the personnamed on the account of any potentially suspicious activity. This is to protect the bank or Credit Card Company just as much as it is to protect thecustomer.
Exactly what happens during a credit card fraud case depends a great deal on the actions of the Credit Card Company or bank involved. If fraudulent transactions are proven to have been made on a person’s account but the amount of the transactions is lower than the cost of an investigate on the company can credit the money back to a person and then close the account to protect from further farm. If the amounts of fraudulent charges are so great that an investigation is warranted, the police will be notified. The credit card company can look at a list of the fraudulent charges and determine where they were made. At that point an officer can question witnesses and review security camera footage in an attempt to identify suspects. If a suspect isarrested he can be tried in a court of law.
Credit card fraud is considered a felony by the courts of the United States. As a result a person convicted of credit card fraud could face jail time (the exact amount of which depends on the extent of the crime). A felony conviction stays on a person’s record and can prevent the person from getting hired for a job. Having a felony on a criminal record will also take away a person’s eligibility in terms of running for public office. If a person who is not a natural- born citizen of the United States commits credit card51 fraud and is convicted of a felony the result could be being deported to their country of origin
21STCentury 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