credit card industry

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…………… practice a better financial control

Project Report

Compiled by:

Miss. Samata.S.Rembalkar

College:T.Y.BMS

ST. ANDREW’S COLLEGESt. Dominic Road

Bandra (West)Mumbai-50

Date of Submission: September 8,2004.



I Miss.Samata. S. Rembalkar of St. Andrew’s College, St.Dominic road,

Bandra (West), hereby declare that I have completed this project on The Card

Industry in the academic year 2004-2005 . The information submitted is true

original to the Best My knowledge.

Signature of the Student



CERTIFICATE

I Mr. Professor Raj , hereby certify that Samata. S. Rembalkar of St.Andrews

college, Bandra (West), has completed the project on The Card Industry in the

academic year 2004-2005. The information submitted is true and original to the

best of my knowledge.

Signature of the Signature of the

Project Co-Ordinator Principal of the college



I would like to acknowledge Mrs.Prerna Mathur, Assistant Vice President,

CitiBank N.A for her expert guidance and also professor Raj on the report and

for providing inspiration, encouragement and assistance in this endeavor.

I also wish to thank the entire faculty of BMS, St.Andrew’s particularly Mr.

Stephen D’silva for the guidance and creating a stimulating and supportive

work environment.



TABLE OF CONTENTS

DESCRIPTION Pg.No1) Objectives of the report 8

2) Executive Summary 9

3) Credit card Overview 10

4) Characteristic of credit card 12

5) Types of credit card 13

6) Credit card history 19

7) Development in the credit card industry 23

8) Credit card looking for an Ace 26

9) Indian scenario 31

10) Customer Analysis 37

11) Potential Strategy Harmonisation 41

12) Competitors Analysis 42

13) Competitive Landscape in India 46

14) Recent events in the industry 50

15) Advantages of credit card transaction 54

16) The selection process-Credit card company 56

17) Marketing of credit card 57

18) Types of credit card usage 58

19) Advertising and promotion 59

20) Credit card fraud on rise in india 61

21) Ways of reducing credit card abuse 63

22) Smart cards-A window to future 64

23) Action taken by credit card giants 72

24) Quantitative market research 73

25) Smart card in India 75

26) Smart card application for prospective companies 78

27) Summary of proposed future strategy 79



List of Illustrations: Pg.No

Individual player positioned 27 1) EDC terminal cost 30

2) Estimate based on NCAER study 32 3) Survey conducted by org marg and business today 34

4) Reason for purchase of credit card 35

5) Information source about credit card 366) Customer segment 38

7) Credit card Indices 40

8) Competitors Charges 449) Market size of various players 47

10) Card purchase process Designed 53

11) Comparative survey of different cards technology 65 12) Uses of smart card in todays world 67

13) Industry Update 76



"Credit Cards are going to emerge as the best form of consumer lending with regard to growth rate and profitability".

Reuters

The slogan of the Citibank ‘The Citi Neversleeps’ conveys the idea of the bank always being

present to service the customer.

"The role of credit cards is know known to the cardholders and is increasingly emerging as an

alternative to hire-purchase or loan on consumer goods".The Economic Times

"Credit Cards a r e the most versatile f o r m of Retail Lending".Business India

"The domestic market can see both the hare and the tortoise compete and can both win the race.

There is room for everybody in Credit Cards".The Times of India

“The Customer is the King. One of the most effective marketing strategies t o promote the Plastic culture in India has been to load the credit card with a host of attractive benefits”.

Business World

Reflection: “Spending money one doesn’t have is like living the years yet to come"Everyday we hear environmentalists yelling at top of their lungs "Say No to Plastic". It certainly

doesn't seem to affect one industry; the card industry. An appetite for cards does exist as people

are increasingly experiencing the cash-free culture. The proliferation of cards has made the process of choosing rather difficult



OBJECTIVES OF THE REPORT

“To Study the Credit Card Industry in terms of its characteristics, factors affecting the market and trends visible in the market and future prospects”

“Portrayal of an unbiased view of the industry for Potential Issuers"

"Recommendations to enter the market"

"Strategies to enable a new entrant, to capitalize the opportunity prevailing in the market,

establish itself and gain a market share"



EXECUTIVE SUMMARY

These days, plastic comes in more flavors Baskin Robbins ice cream: No annual fee, low

rates with a grace period, frequent flier miles free air time for your cell phone free fuel for your car, even cash back. And even if you can stop the mail, it is hard to miss all the ads in the

newspapers, magazines and web sites.

Credit Cards today have become a way of life for most of us. It is no longer the

privilege of the few. It having wide acceptance beyond the five star hotels and airline offices.

Today one can buy groceries or Petrol or Train tickets through Credit Cards. At times of medical emergencies, hospital bills can be paid out o f Credit Cards. As a tool of convenience, Cards are

an essential part of our wallet.

Today, there are several types of credit cards in India, which are usually offered by banks who

are members of a payment system like Visa International & MasterCard International Members in association with Visa and MasterCard, issue their own cards and handle all accounts,

processing and billing to their respective cardholders. Members also have contracts with hotels,

restaurants, retailers and other merchants to accept all Visa / MasterCard cards, irrespective of the card-issuing bank, as payment for goods and services. This ensures a wide acceptance of

credit cards across the country, notwithstanding the bank that has issued your card. Accordingly,

services offered by credit cards vary from one bank to another, catering to a variety income groups and consumer preferences.

Most of the banks in India national or foreign; are franchises members of either of the

two international card organization; Visa or MasterCard. Worldwide Visa has taken a leadership role in pioneering emerging payment card technology that supports debit cards and chip cards

and its many applications including stored value cards. The Visa family is rapidly evolving into

the ‘relationship’ card. The relationship card is an umbrella strategy for a number of card related services. Which eventually offer consumers access to funds through domestic and

international credit and debit function payments. ATM access, a stored value function for small

cash transactions and secure access to electronic commerce on the information highway.



Without the mention of Internet an introduction to the Cards business cannot be complete. Most of this business is through the established credit/debit card systems. Credit cards are the imperative aspect of e-commerce, as the banks are not yet geared to handle the transaction directly on a public network like the Internet. Every 2 seconds a new consumer enters the web market place... and while fortunes have been made in web access and web hosting, these industries have really just “laid the foundation" for the next major growth phase: the rise of E-commerce.

The report throws light on various aspects of the credit card industry. From the types of cards to the actual process involved in a credit card transaction it traces the history of credit cards from the start to what it is today, who are the leaders and how they operate.

From the global scenario we move closer home to what the Indian scenario is all about, the players today and the share of the market that they dictate today...

The advantages that all the three parties, the issuer, the acquirer and the customer, involved enjoy has also been taken into consideration. The customer decision-making process has been mapped out in addition to the Issuers mode selection of the customer.

The report also offers a Marketing insight including the advertising and promotion strategies for

the Industry. The credit cards, however in India today, are not as popular as they were presumed to be given to their International counterparts. Hence, to do away with this problem, ways to

reduce its abuse and fraud related incidents have also been mentioned.

The next logical step in today's world of high technology in the CC Industry is Smart Cards. A Very exhaustive description of its functionality and all other aspects related to it has been given importance.

Credit Card Overview.

Credit cards, like Visa, MasterCard, Discover, American Express or others, are basically lines of

credit that once established, depending on the specific terms, allow an individual to spend up to a set amount of money and pay back these amounts either in monthly payments or all at one time.

In purchasing terms, these lines of credit can be spent like cash in most cases. In credit terms,

there are many variances among different types of cards.

Credit card terms differ on annual fees, percentage rates, payback terms and creditworthiness restrictions. There are some cards that are impossible to receive without having excellent,



established credit. There are others that are specifically marketed to those just establishing a

credit history—and almost every scenario in-between. It is important to know that applying for a credit card shows up on your credit report—thus, multiple applications can be detrimental to your

credit rating.

When choosing a card, it is important to know all the details of how your card will work. Be

very familiar with all of its terms and costs before accepting in. Important things to consider are whether or not there are annual fees you will be expected to pay, what the APR is—or annual

percentage rate—which is the interest you will pay on any balance you accrue, and what your

repayment options will be. Other considerations such as air miles or other perks should also be taken into consideration.

Credit cards can be very convenient, but it is very easy to get into financial difficulty by misusing

them. It is always important to know your limits when using credit cards and to carefully weigh all factors when choosing your cards.

Each credit card has the following characteristics:

a) Credit limit.All banks have different limits set for customers depending upon the type of card in therePossession. Even within a particular type of card, limits may vary depending upon the

Credit worthiness of the individual. This depends, among other things, on the grossIncome of the individual and the period for which he/she is using the card. However,

Some banks like Citibank and American Express have cards, which have no set, credit

Limit. Amex, for eg, has a charge card which has no upper limit and allows one to spendAs much as one likes (provided the holder repays the amount at one go).



b) Interest ChargesThis is the biggest source of revenue for the issuing banks. The interest rates generally

Range from 1.99 % to 3 % per month. This is equivalent to 24 % to more than 35% per

Year. Also the interest charges are applicable on the interest itself. Since in case of anyPayment, the interest is paid first, and then the principle is repaid, therefore a customer

Can end paying up heavily for the credit taken.

c) Annual chargeThis is a fixed amount, which has to be paid every year irrespective of the extent ofUsage. Over the past few years, with increase in competition a general decline in these

Charges can be observed

d) Grace periodThis is the grace period, which is offered to the consumer for repaying the credit. In the

Indian scenario, the first warning is given at the end of three months, and a black mark isPut against the customer in case of non-payment for more than seven months. Further

Grace period is decided on a case-to-case basis.

e) Lost card liability.If one is traveling and has lost his/her credit card then reporting the loss will not be much

of a problem. HSBC, Citibank, Stanchart and Amex can be reached from any corner ofthe world for information on one’s card as well as for reporting the loss. However, except

for Amex, all others will mail a replacement card to the holder’s mailing address. Amex

will replace the card within 48 hours free of cost. Liability for a lost card is nil forCitibank, HSBC, Amex (once the bank is informed about the loss) and the Stanchart

photo card. However, the non-photo card carries a liability of Rs 1, 000.

f) Value added benefitsThese include airline ticket booking and insurance benefits on lost luggage and accidentaldeaths. HSBC, for e.g., offers discounts of 3.5% on domestic airfares and 6.5% on

International ones if tickets are charged to their cards. The latest in line of value added

features are the rewards programs. Here a cardholder earns a certain number of points by



spending a particular sum of money. Stanchart, for e.g., uses a conversion of Rs125 (spent

in India) or Rs80 (spent abroad) for one point. HSBC, on the other hand, only allowspoints collected to be squared against a discount on the annual fees. A minimum of 350

points is needed to get a discount on the annual fee. Citibank awards one point onspending

Rs100.e to case basis.

TYPES OF CARDS:

With the advent of the MNCs and liberalization of the economy, the Indian Consumer is flooded with a variety of choices. The financial services industry is no exception. Credit card

Credit cards are plastic cards with scannable magnetic strips issued by a bank or a business, which allow the cardholder to purchase goods or services on credit. They are also

sometimes called charge cards, though this term usually refers to cards issued by a retailer for use

in that retailer’s stores only. Common credit cards include Visa, MasterCard, American Express, Discover, and

Diner’s Club. In recent years, most banks have begun offering their customers Debit Cards,

which bear a MasterCard or Visa logo and are processed like those cards but which withdraw funds directly from the cardholder’s checking account rather than extending credit to the

cardholder

Charge Card

It's similar to a Credit Card, except that on the due date for payment, you have to pay the whole outstanding amount. You can't part settle the amount and pay the rest later.

A charge card is one where the purchases made out on the card are to be fully paid for at the

end of every cycle normally 30 days. There is no provision to carry over the payment. Diners

and American Express are significant examples of this type of card. These cards are for convenience and not credit. Charge cards were first product to be offered by Card companies

across the world.

Charge cards are a1so called trave1and entertainment cards.



Debit cards

As it is popularly known, it is an ATM card on the move. The Debit Card gives you the freedom

to access your Savings or Current Account at merchant locations and ATMs. Whenever you make payments, the amount will be instantly debited to your account. There are around more

than 5.3 lakh Visa/PLUS ATMs and equally strong Mastercard/ Cirrus ATMs in over 140

countries worldwide. All your purchases and cash withdrawals will be in the currency of the country you are in, while your account will be debited in rupees. So you needn't carry traveller's

cheques or foreign exchange the next time you travel. people prefer debit cards to cheques for

two reasons:

You don't have to carry your chequebook and present identification, but are still able to make purchases directly from your checking account.You pay your bills immediately, unlike when you use a credit card and get the bill later.Debit cards are basically "plastic cheques". One can use them to buy things in the same way as a credit card but they work like a cheque. Cheques take money directly from one' s bank account and put the amount written on the cheque into the bank account of the person or organization that the cheque is made out to. Debit cards simply transfer money without the need to write out a cheque. When debit card is used the details are recorded electronically as the card is swiped through a terminal on a paper voucher printout. The money is taken directly from the bank account within a day or two of the purchase. A record of what one has bought with his debit card appears on his normal bank statement each month.One may keep a copy for his records to compare against the statement either by writing on the

cheque stub or keeping the copy of the transaction slips on which he has signed.

Affinity cards

Cards that have an emotive factor that attract and retain customers. These cards may or may not have special offer or package to differentiate the offer. A examples of this kind of a card would be freedom cad issued during the 5 0 year of independence or a special world cup card. Affinity cards address the needs of a highly niche marketplace and can be fairly successful, if the target audience is well researched. MasterCard along with member banks are most aggressive in affinity cards and are presently putting together an affinity card for India E. g. Shoppers Stop in India - First Citizens Club Card.CO-Branded Cards

When two brand names jointly put together a value-based package for the customer it results in a co-branded card. One of the leading issuers in the world is a called MBNA who have 4000 co-branded cards issued with Visa and MasterCard all over the world. Citibank in India has approximately 40 co-branded cards including Times cards, Citibank Maruti Card and Army, Air force and Navy Card.



Citibank and Shoppers' Stop recently launched a co-branded credit card with Mastercard International. Citibank also unveiled a Citibank Financial Centre at Shoppers' Stop in order to provide financial services to First Citizen Citibank members

ATM CARD

ATM or automated teller machine, also known as Any- Time-Money (Registered by HSBC) has been the significant factor for exponential growth of the debit card business. An

issuer can own a network or can hire one depending on the networking capability of the issuer

and the ability to invest in ATM technology. In India the number of ATMs has risen from 80 in 1994 to 1000 in 1998.This is set to touch a figure of 5000 by the year 2002. However these are

still concentrated in the top '7 cities in India. This is a critical weapon in the Card marketing

initiatives and packaging available today.

These cards are typically used at ATMs to withdraw cash, make deposits, or transfer funds between accounts. To use an ATM card one has to insert the card into an automatic te1ler machine and enter a personal identification number, or PIN, for security. The system checks the person's account for adequate funds before permitting any transaction. The transaction fees may vary depending on which automatic teller machine one uses. Some institutions may give a limit of free electronic transactions and charge a per transaction fee above the limit.

In-Store Cards

These are very popular in the US where retail chains offer credit cards to shop in their stores across the country. They were the first to offer this facility at the turn of the century. Some of the popular in store cards, which have also become a credit card, are Harrods card, Macy’s card, and Safeway and Wal-Mart card.

Banks but even NBFCs usually issue cards like TATA Finance may issue them. But however all cards have to belong to an Acquirer organization. American Express is the only exception where it is the issuer as well as an acquirer.The following will explain the above terms.

Issuing organizationHas approximately 40 co-branded cards including Times cards, Citibank Maruti Card and Army, Air force and Navy Card.

The issuer as it is commonly known is the organization that markets and se11s the card to the customer. The issuers also maintain the account of the customer and provide credit or debit facilities and bears the transaction and credit risk. Bank Cards - are issued by MasterCard and Visa member banks.



They must comply with MasterCard and Visa guidelines and specifications. They are revolvingcharge accounts and interest is charged on unpaid balances. The name of the issuing bank is prominently displayed on the card. Many credit unions also issue MasterCard and Visa cards. Citibank, Standard Chartered, HSBC and ANZ Grind lays are examples of issuers. The principal revenue inflows are the yearly subscription fees and the interest and service charges

Travel and Entertainment T & E Cards - are issued by American Express, Diner's Club. (Diner's has merged with Carte Blanche in the U.S. These card account balances must be paid upon billing and no interest is charged to the cardholders. Travelers and business people mainly use T &E" cards.

Another function of the bank is Card Personalization.

Once cards are manufactured they must be personalized with the cardholder name, account information and expiration date. The magnetic stripe also must be properly encoded with that information. The cards then get mailed to the cardholders and the cardholder must call the issuer to activate the card.

Card personalization systems are typically large PC based systems with multiple modules that emboss and type characters on the plastic card, encode the magnetic stripe print and even print a photo of the cardholders Typical a file is created on the issuers systems of all new cards to be issued or replaced. This file is formatted with the special characters that te1l the personalization system, what data to put on the cards. The machines have a modules that will affix an activation sticker on the card, address a carrier document and attach the card(s) to it and even insert the resulting folio into a window envelope.

The envelopes are sealed metered and mailed. When the cardholder receives the envelope he / s h e must call-the number on the activation label and answer a few questions.

The card is then ready for use. Personalization systems cost hundreds of thousands of dollars and

are not economically feasible for many issuers.

Acquiring Organization

The acquirer is an entity that discounts the charge incurred at the merchant establishments. It need not be issuer that is acquiring the charge. The acquirer can be any entity approved and connected to the network being used. However in case of Amex the network is proprietary and the acquirer and the issuer is the same. But with MasterCard and Visa there can be any bank that can acquire the charge

Merchant Establishments

The, merchant agreeing to accept the issuer card is a Merchant establishment. The issuer and the acquirer have separate agreements with the merchant establishments. The merchant establishments and their geographical spread decide where a card can be used and customers are sourced only after the merchant establishments have been tied up. Maintaining a Merchant establishment is expensive for the issuer/acquirer. A departmental store in a Metro can cost up to Rs.5, 00,000 per annum for the bare minimum services.



Electronic Fund Transfer at Point of sale (EFTPOS)

The forces driving the EFTPOS have been social i.e. Customer demand, competitive

and technological. The growth of EFTPOS system has been given a boost by changes in the credit card market. To provide EFTPOS customers the acquirer usually installs and provides a

POS machine also known as swipe machine. This is connected to the acquirer’s network and it

relays the transaction to the associations (AMEX Visa MasterCard) networks where the transactions is approved or declined depending on the card status with the issuer. This normally

costs Rs. 30000 and approx.s Rs. 3000-5000 per annum in maintenance. This borne by the acquirer rather than the merchant establishment. The other costs borne by the acquirer are the

stationery costs and postage and handling costs of related material.

CREDIT CARD HISTORY

Credit cards were first issued by department stores and other retai1operators. They were essentially an extension of the revolving credit accounts provided to many customers. As the

popularity of revolving credit grew the amount of data entry increased and a solution was needed

to reduce the time it took to record sales transactions and improve accuracy. A metal plate much like a dog tag was embossed with the name, address and account number of the customer. A

company by the name of Addressograph provided these plates and ink roll equipped imprinters

that would imprint the customer information on the "charge plate" to the sales documents. This solved the immediate problem of recording data. This took place in the nineteen fifties and early

sixties.

Later as the popularity of charging grew, a way to machine read this information from the sales documents was needed. OCR technology was developed and the OCR 7B font was adopted for the account number. A standard form was designed to record the imprinted data in a consistent location. Machines that could rapidly scan the information on these forms were developed and the credit card was on its way. Plastic cards were later used and embossers that could personalize large numbers of cards were introduced. There were two sizes of cards and a variety of form Configurations but they all worked basically the same way. The charges were posted directly to the cardholder's at account at the store. Bills were sent out monthly.



With the improvement of the automated processes and the acceptance of credit purchasing by

consumers and retailers the credit card concept spread to the retai1 petroleum market and credit cards became a familiar and popular payment alternative to cash and cheque.

The next big development was the entry of banks into the business. After all the banks were in the business to lend money. The retailers were not only making large profits from increased sales that credit provided; they were earning significant revenue on the interest their credit counts generated. Banks began issuing cards and soon the banks formed associations to act as clearinghouses for transactions and to promote their own card brands. BankAmerica, Bank Mark, Master Charge were a few of these. They are now consolidated into just two associations of card issuers Visa and MasterCard.

At the same time Diner’s Club came on the scene and began to offer a credit card for use in

participating restaurant. Their services became very popular with raveling business people and

their card was accepted at hotels, airlines and car rentals. American Express jumped in, as did Carte Blanche. This segment of the credit card world became known as T&E, or Travel &

Entertainment. These accounts were credit required to be paid in full billing cycle. These

companies did not charge interest but earned their revenue by charging the merchants a fee to accept the cards and optimizing the float potential with their huge cash flows.

We are now in the 60’s and early 70's. Plastic cards have pretty much standardized to the CR80 or present day size. A new service becomes available from the credit bureaus. TRW has a terminal made by a company called Verifone that allows the merchant to key the card number into the keyboard of a small data terminal. It dials out to the service and verifies that the card is valid and authorizes the transaction. This proves to be a very popular concept. Fraud is reduced and soon competing companies are guaranteeing sales paid for with cards they have authorized.

Merchants' credit card sales continue to soar and the system is inundated with imprinted paper receipts. Companies are being formed to manufacture card personalization equipment (Data Card and NBS), to manufacture OCR readers and sorting/posting systems (IBM, Banktec, Recognition Equipment, Burroughs). Addressograph, NBS and Bartizon are selling imprinters by the thousands. Form vendors are flourishing and innovating; carbonless forms are the high-tech solution. Services were needed to process all the data and work with the banks and merchant to properly sett1e and bi1l all these credit card accounts. First Data Services, NDC, Total Systems, Buy pass, and a host of other companies emerged to fill this need.

The next step in the evolution of the credit card business was the addition of the magnetic stripe to cards and the expansion of the verification systems into transaction Point of Sale data collection. Encoding the account number on the magnetic stripe allowed the merchants to rapidly and to accurately enter the account, number into the verification terminals. The next logical step was to enter the amount through a keypad and send the entire transaction electronically to the processor. This eliminated the cumbersome paper handling and rapidly improved the systems' ability to handle increased transactions and greatly reduce costs. This in turn helped even more



to promote credit card acceptance by merchants and weed out inefficient processors. The credit card system was entering adulthood. Verifone was growing fast and furiously.

Now we are in the seventies and early eighties. Credit cards and merchants who accept them are commonplace. Visa, MasterCard, American Express and Diner’s are the survivors and are all prospering. Sears introduces Discover Card and promotes it by offering an annual rebate on total card purchase. Competition among credit card issuers has really heated up. On the other side, a new type of company is growing rapidly and making big profits. The ISO or Independent Sales Organizations are in their golden era. ISO's sell merchant processing and POS terminals to the merchants. They typically are sponsored by a bank or banks and are responsible for signing up merchants and training them on the procedures to accept credit transactions. They are compensated by the bank and usually mark up equipment and earn revenue form the merchant also. As these organizations expanded and looked for new markets competition created downward pressure on fees and discount rates. Innovative POS solutions were sought to differentiate the various ISO' s and merchant banks from their competitors. New pricing structures based on "rules" from the bankcard associations and needs of certain merchants such as hotels and petroleum retailers. New POS vendors appeared, NBS, Datatrol, Hypercom all tried to fill these niche markets as well as a share of Verifone's- growing retail market.

The next big development was the ATM machine. Systems were designed to provide automated teller services at remote locations. ATM machines were engineered and produced by Die bold, NCR and several other large manufacturers. They quickly gained popularity and several regional networks of ATM transaction processors appeared. IAC, NYCE, EDS, ACS and others provided these network services and gobbled up smaller local companies the become the more predominate players. The next logical move was to allow POS merchants to accept these ATM cards for purchases. Se0ure PIN pads were developed to accept the Cardholders' PIN numbers and the debit card business was underway. This was called on -1ine debit. Soon off - Line debit or cheque cards were brought to the market and became very popular with consumers. Check cards are processed via the credit card networks but automatically debit the amount from the cardholders' bank accounts. This also insured the participation of Visa and MasterCard in the card issuing side of the debit card market. They did participate through their transaction networks, Cirrus for MasterCard and Interlink for Visa. ATM system makers have grown and today ATMs are located everywhere there is a need for them.

We are now in the 1990's.The credit card industry has continued to consolidate. There are fewer but much bigger processors, issuers and merchant acquirers.

The coming of age of Internet commerce has opened new opportunities for on-line merchants to accept credit cards and new challenges for banks and processors to provide secure and compliant transaction services.

Transaction terminals have become more sophisticated with graphic displays, integrated thermal printers and increased processing power.Foreign manufacturers of cards and equipment have moved to the US and taken over large US card companies to establish a presence. Schlumberger and Gem plus two smart card innovators have taken the lead but others such as Orga, Bull, and G&D are expanding to share in the lucrative US market for smart cards and POS terminals. New standards for transaction handling such as PS2000 and the Y2K problem have created new terminal requirements for many merchants using now obsolete, equipment. This and the



popularity of card based loyalty and frequency programs present challenges and opportunities for transaction processing equipment and services.

The following gives the entire synopsis of the credit card history:The major bank credit cards are MasterCard and VISA in the USA and Access and Barclaycard in the Western Europe1950's - T&E cards were introduced in the UK USA, e.g. Diner's Club, AMEX and Carte Blanche

1950- Diner's Club introduced in USA

1951- Diner's Club introduced in UK

1963- Amex introduced into Western Europe

1966 - Barclays Bank along with Bank Americard introduced the Barclaycard in England

1969 - main growth year of bank credit card

Between September 1967 and January 1972 there was an increase of 680% in the number of banks with credit card faci1ities

1972-Lloyds, Midland Bank, National Westminster, Williams & Glyn's and the

Royal Bank o f Scotland launched the access credit card 1975- Access became a member of the interbank card association (now MasterCard

Credit cards first introduced in USA

1979-credit card purchasing power in the USA exceeded $262billion

The three main types of credit cards are Bank credit cards, Travel and Entertainment cards, and In-store cards

Of the US families surveyed using a card, 50% used in-store card

33% used gasoline cards, 16% used bank cards & 9% used T&E cards



DEVELOPMENTS IN THE CREDIT CARD INDUSTRY

Over here the acquirer wise in more segregation will help us understand the developments in more comprehensive manner.

MasterCard International

Headquarters: Purchase, New York

Business Locations: The US, Latin American countries, Canada, Europe, Japan, Korea, Taiwan & Australia

95% of all their card payments are from 20 countries

They have 14 million establishments worldwide to their credit

Their Strategy is: Centralized decision making

Their Staff is Dedicated to serving big issuers globally

They have 18 Member Banks in India

They have a Present Card Base of 1.7 million in India

Their Brand Recognition Increased with 'Priceless" Ad campaign

The general perception however is that MasterCard products are superior to Visa, though Visa is the leader

Their Focus is to make Payment business more successful for members and merchants & life simpler for customer

Their Future Plans include establishing 'Multose'-a debit, credit & store value card all

in one

American Express

Headquarters are in New York

Business Locations: Spread in 75 offices in 56 cities across 38 countries

Major operations: The US, India, China, Germany, Taiwan, Greece and the UK

They dominates the Travel & Entertainment (T & E) Market



7 0 % of Fortune 500 Co are their corporate service clients

They also dominate 80%of Traveler's Cheques Market

They have a Near monopoly in Charge Card Market

Their Present Card Base in India isO.5 million

Their Aim is the Creation of the market in the so called as the 'me too' market

'Best Value Card

Pro consumer, not anti-competition strategy

Their Strategy is that o f Exc1usive Membership i.e. Credit Card for the Elite

Their Approval rate is 20%, which is considered to be very low.

Their market Positioning is Premium

Their Annual Fee is 33% higher than that of the competitors.

Their Target Customers are Financially Prudent from upper and upper middle class strata of society

Their Pricing Strategy is charging of 1owest interest rates in the Industry

American Express is perceived to be card for Hi-Fi individual

Charges exceptionally high rates from Merchants

Payment lead time is very high by Industry Standards

Visa International

Headquarters: San Francisco Business Locations: 200 countries

It was founded in 1976

They have 16 million establishments worldwide

They have already issued over 600 million cards.

50% (volume) of all card charges are Affinity/co-Branded Cards

Their promotions include Sweepstakes, Charitable Programmes & Event & Sports Marketing

Increase ME base to 250,000 by turn of the Century They have 23 member Banks in India

They have a present Card Base of 1.2 million in India

They have a Brand Recognition for World's #1 payment system

Their focus is on Infrastructure development.



They follow the strategy of Usage Activation & Branded Promotion

Visa and MasterCard Services Worldwide

They are mutual trading non-profit organizations.

Their inflow depends on franchise fees charges to the issuer and acquirerThey invest their surplus in developing new products or technologyThey act as enablers and catalysts for issuers in new markets. They provide Marketing support to the issuersThey also provide uniform compliance and code of conduct for their regulations.

CREDIT CARDS LOOKING FOR AN ACE

On January 1, a full-page advertisement in Mumbai newspapers informed readers that ICICI

Bank has issued two million credit cards -- "the first bank to reach this milestone". Obviously,

the term "first bank" was not used in a global context. But does this mean ICICI Bank has overtaken Citibank in the Indian credit card market?

If you ask ICICI Bank, you won't get an answer. Strangely, Citibank, too, will not give you a

clear reply. Both players are confident of their own numbers but don't claim that one has overtaken the other. Of course, who has overtaken whom is anybody's guess.

This is symptomatic of the Indian credit card industry that has been growing at a 31 per cent

compounded annual rate. In fact, the growth in the past three years has been higher than what the

industry saw between 1990 (when Citibank issued the first credit card) and 2000.

Naturally, the growth comes with its problems. Bad loans or non-performing assets are one of them. In October 2003, the default rate was 8.75 per cent. Two years ago, it was pegged much

lower at 6.5 per cent. One reason for the rise in NPAs could be the aggressiveness with which

some players are distributing cards without checking customer credentials adequately.

Now, ask any individual player in the credit card business about the NPA level in its portfolio. Be it Citi, ICICI Bank, Standard Chartered or anybody else, the answer is: "Our NPA level is

three to four percentage points below the industry level." If that's the case, which player has the

maximum NPAs? Again, mum's the word. The players are ready to talk about only their portfolio, not others'.



However, it must be said that under no stretch of imagination can current NPA levels be termed

alarming. This is because the Rs 12,000-crore (Rs 120 billion) credit card portfolio of the banking sector is a minuscule portion of the industry's over-Rs 7.5 lakh crore outstanding loan

book.

But the players are too shy to talk about several things: from the total spend by credit card

customers to the percentage of rollover of credit (on which the banks earn interest) to the actual amount of NPAs in individual banks' portfolios. They tend to hide more than they reveal.

Why? Before answering this, take a look at the industry figures. The total number of credit cards

in force in India was between 8.75 and 9 million in December last year. But that does not mean

that there are 9 million card holders, because in urban India, particularly in major cities, multiple cards usage is a way of life. By a liberal estimate, the actual number of card holders could be

around 5 million. This is against the 22 million mobile telephone subscribers, 50 million cable connections and 250 million bank account holders.

How does this compare with the Asia-Pacific card market? The Visa and MasterCard data

available for 2002 shows that Japan has 1.12 billion cards, followed by China (1.1 billion) and

South Korea (64 million). However, these numbers are inclusive of credit and debit cards. In India, the comparable number in 2002 was 12.86 million. Now, it could be around 24 million as

debit cards have overtaken credit cards. What's more, ATM cards are also being converted into

debit cards by most banks.

Individual Players Card Base

Citi and ICICI Bank 2 million

State Bank Of India 1.4 million

Standard Chartered Bank 1.5 million

HSBC 700,000

HDFC 400,000

ABN-Amro 300,000

How are individual players positioned in the credit card space in India? Both Citi and ICICI Bank

claim to be number one with a card base of over 2 million. State Bank of India has a card base of



around 1.4 million. Standard Chartered Bank may have a slight edge over SBI with a 1.5 million-

card base, while HSBC issued around 700,000 cards. These five collectively account for about 71 per cent of the market. Among the rest, HDFC Bank, the latest entrant, has acquired a card base

of over 400,000 and ABN-Amro, around 300,000.

Aggressive Players Customer Base More co- Branded

cards

Affinity Cards

ICICI 67 cities Six Eight

SBI 40 cities Two --------

HDFC 25 cities Two ----------

Standard Chartered 18 cities -------- ---------

Citibank 30 cities 29 29

The aggressive players are adopting a two-pronged approach: increasing the customer base and

treading new zones by expanding the coverage area beyond metros and big towns. ICICI Bank

has taken its product to 67 cities, SBI Cards is present in over 40 cities and HDFC Bank plans to cover 25 cities soon. Among the foreign banks, Standard Chartered is present in 18 cities and

Citibank, 30 cities.

Another strategy is to launch more and more co-branded cards. For instance, ICICI Bank has six

co-branded cards and eight affinity cards. HDFC Bank and SBI Cards have two co-branded cards each and Citibank has 29 co-branded and affinity cards. Public sector oil companies, mobile

telephone players, retail chains and even airlines are joining hands with banks to float co-branded

cards.

Despite this, the total card spend is only around Rs 12,000 crore (Rs 120 billion). On an average,

a credit card holder spends between Rs 1,500 and Rs 2,000 on a card in one month. (On this issue



too, individual banks claim the spend by their customers is much higher than the industry

average.)

And remember, banks do not earn interest on the total spend. Interest is earned only when a customer rolls over the credit (that is, he chooses to pay only the minimum amount required to

carry forward the credit). At best, 25 to 30 per cent of the total credit is rolled over.

Overall, about 0.6 per cent of personal consumption expenditure in India is through credit cards.

This means that for every Rs 100 spent on consumption, only 60 paise is routed through credit cards. The comparable figure in the US is 16 per cent. The Asia-Pacific region also shows higher

usage of credit cards in terms of PCE.

One way of increasing the credit card use could be by making all utility payments through cards. One can use credit cards for paying petrol bills, mobile phone bills, insurance premiums, airline

and railway tickets, besides other consumer goods. But there are many other payments that

cannot be made through credit cards even now. For instance, school tuition fees, water tax and other municipal taxes, electricity bills and fees for doctors and clinics, although some hospitals

have now started accepting cards.

At least two state governments in south India have initiated steps to make all utility payments

through cards. Chandrababu Naidu has started a concept -- e-seva -- in Andhra Pradesh, that ensures all utility bill payments at one point through cards. Kerala has launched a project called

"Friends" that works on the same model. Incidentally, the southern states are far ahead of the rest

of India in the use of credit cards. Bangalore, for instance, sees more credit card use than Mumbai.

How can the players increase credit card usage? One way could be increasing the distribution of

terminals. Now, there are less than a lakh electronic data capture terminals used by merchant

establishments that accept credit cards. These terminals, which process credit and debit card payments, are put up by the card-issuing banks. HDFC Bank has set up about 27,000 EDC

terminals, ICICI Bank about 25,000 and Citibank about 24,000.



27 25 24

05

101520253035404550

In thosands

HDFC Bank ICICI Bank Citibank

EDC terminals

An imported EDC terminal costs between Rs 18,000 and Rs 25,000, depending on the bulk of the

order. The cost has come down from Rs 32,000 over the past year because banks are aggressively placing orders for them.

However, the Hyderabad-based Linkwell Telesystems has recently started manufacturing these

terminals and brought down the cost to less than Rs 10,000. This will help increase the number of

terminals manifold. The banks can now afford to put up EDC terminals even in provision stores as the break-even point for these terminals has come down to less than Rs 50,000 worth of

transactions a day from Rs 100,000.

The convergence in the telecom sector, with greater use of mobile telephones and the Internet,

will bring down the transaction cost further. Some players have already tied up with CDMA operators and replaced the landlines of EDC terminals to bring down processing costs.

The government too can do its bit by waiving the tax on credit cards -- a big disincentive for card

users. Currently, an 8 per cent service tax is imposed on credit card transactions. Some countries

in Asia-Pacific actually offer tax incentives to encourage credit card use. This is to bring down cash transactions and bring in at least a part of the parallel economy into the mainstream

economy.

Once the volume of business transacted through credit cards grows and consumers start rolling

over a higher percentage of credit instead of clearing the bill instantly, banks will be in a position to cut interest rates on credit cards, provided NPA levels are kept low.



To bring down the default rate, banks must set up a credit bureau. A credit bureau exists, but it

only provides data identifying defaulters so that banks are in a position to stop entertaining customers written off by other players.

The need of the hour is a positive credit bureau that can store neutral data on customers' spending patterns, total liability and so on. This will enable banks to detect the first sign of default in advance and sound a red alert so that prospective defaulters can be weeded out.

THE INDIAN SCENARIO

Market Analysis

A) Characteristics of the Indian Market

The credit card market in India is about 3 million CIF1 with a value turnover of aroundRs. 2500 crores. The market is expected to grow by 30% p.a. to reach a figure of 10

Million by the year 2002. This would still be a very low penetration of a potential market

of 60 million cardholders. The credit card business is a low-margin, high volumebusiness. An issuer bank gets a commission of the order of 1%-3% on the transactions

and a 2%-3% p.m. interest on the amount it finances as per the revolving credit facility.At the same time, the business is characterized by high initial investment for building a

large ME and cards issuance base, investment in technology such as ATMs and down

payments to the franchisers such as MasterCard/Visa. Thus, given the low income percard and the high initial investments by the bank, large volumes in terms of cards issued

and the transactions financed are required to make the operations profitable. Hence, for

most issuers, the credit card business has a long gestation period. In addition, easyduplication of product features and innovations makes differentiation an unsustainable

competitive advantage.

B) Actual and potential market size and growth



The following graph gives the estimates based on NCAER study.

Some Key points

India is one of the fastest growing markets in the world In 1993, there were 1.6 million cards in force and 40,000 card acceptance centres.

This increased to 2.6 million and 90,000 in 1996 respectively.

The total card spend was around $ 1,500 million US. The Reserve Bank of India (the central bank) is taking special measures to promote

the use of alternate payment systems like credit cards, debit cards, etc., to ease the

pressure on currency printing and the use of cheques

PARAMETER 1995 1998 2000

No. Of credit cards 1.5M 5M 10M

No. Of Point - of - sale 1000 10000 50000

Total credit card spend US $ 1 B US $ 2.5 B US $ 8 B

No. Of ATM cards 0.2M 2M 20M

No. Of computerized bank branches 100 4000 20000

No. Of ATM 80 1000 5000

No. Of debit cards Nil 0.5M 10M

No. Of debit Point of Sale Nil 10000 20000

Estimates

Active e cards in April 1999: - The 1994 estimates of the market predicted a total of 10 million cards by 2000. But the actual are lower. However the estimate about computerized bank branches and the number of ATM's is almost on target.

A survey of the Credit Card Management Consultancy (CCMC) of l0, 000 people who hold

either credit or charge cards in 15 cities across India reveals the following facts:

16 %considered ATM connectivity to be of value

78 %were unaware of the difference between a charge card and a credit card.

67 % were unaware of the financial loss to be borne if they lost the card and that they would have to bear all expenses incurred on the card until the loss is reported70 % were unaware of the action to pursue in case of loss of the card.

8 4 % believe they are entit1ed to 30 days of free credit or more in all situations. In reality this is applicable only in those cases where monthly bills are settled in full.



70 % are unaware of a charge on outstation chouse

.35 % were unaware that the banks charged an annual fee. Nearly 60% were unhappy with the credit limits offered on their cards

65 % were unaware of the high interest rates charged on outstanding balances

70 % were unaware that outstanding balances are waived on the death of the cardholders.

Year Monthly Supply * # Bank Deposit * # Bank Credit * #1990-91 265,828 199,643 125,575

1996-97 700,183 505,599 278,401

1997-98 825,389 601,348 321,813

*End of period# In Rs crores

According to a survey conducted by Org Marg and Business Today,

The features that are considered most important in the case of credit cards in India are convenience, acceptability, credit limit and the quality of service in that order. Other features that

are considered important are also given in following table.

Table: What features are most important?

Factor Importance

Convenience and acceptability 66 %

Cash Advance and Credit Limit 58 %

Quality of Service 52 %



Fees 42 %

Interest rate 25 %

Non Account Holder 30 %

Medical 27 %

Insurance 25 %

Special privileges at Business Centre

19 %

At the same time the important reasons for purchase of a credit card are travel &

entertainment followed by cash advance. (Details in Table given below)

Table: Reason for Purchase of credit card

Reason Importance

Travel and Entertainment 56 %

Cash Advance/ Credit Limit 49 %

Credit Period 38 %

Emergency Services 25 %



Insurance 20 %

Status 15 %

The various occasions where cards are used in India naturally flow from the reasons forPurchase of cards. Still the majority of card spending was on Travel, Hotels and

Restaurants. Other occasions of credit card use -

a) Travel - Hotel, Tickets, etc.b) Restaurants

c) ATM Cashd) Clothes Store

e) Provisions Store

f) Consumer Durable - TV, Refrigerator, etc.g) Petrol Pump.

h) Others

As has been mentioned earlier the ‘Very Rich’ credit card holders have at an average3.4 credit card each. The reasons cited for multiple cards are –

Wider acceptability, say by having Master, Visa and Amex cards.

Increasing the credit limit. Flexibility in making payments - using the card with the higher credit limit, with

highest time to billing date and often a different card for different occasions (e.g.

unlimited credit ‘Gourmet’ card for the bigger hotel and travel bills). Maintaining different cards for personal and official purposes.

Nationalized bank cards were found to be attractive in their local regions, e.g. Bank

of Maharashtra card in Pune, as the MEs are more receptive to these owing to fasterrecoveries.

Nationalized bank cards were maintained as their billing recovery was erratic,

resulting in enhanced credit periods for the holder.

Most people claimed to have no fixed criteria to decide which card would be used for aParticular purchase. Lastly the existence of multiple card holding among consumers



has the implication that spending volumes enjoyed by an operator are reduced,

because the same client would then utilize multiple cards for his credit needs. Thus

the need to generate as well as sustain consumers interest in the card is essential.The most common mode of acquiring the card had been the issuer bank’s Direct Selling

Agents (DSAs). However, awareness about the card came from other sources as well -

friends, advertisements, mailers, etc. Relevant results of the Business Today survey arepresented in the following table.

Table: Information source about credit cards

Source Reach

Advertising 54 %

Word of Mouth Referrals 35 %

Direct Mail 7 %

Bank Personnel 4 %

The above analysis has been based upon the surveys conducted by Business Today – Org

Marg and Credit Card Management Consultancy.

Customer Analysis

a) Customer Segments:The segmentation of the card industry can be done on the basis of income. The Indian

market reflects considerable diversities in income levels and lifestyles. A World Bankestimate places average annual household incomes (in terms of purchasing power) at US

$6452. But there are large segments of people, whose income levels are significantly

higher, growing faster and spurring a consumer revolution. It is difficult to obtain correctestimates of this group, as there is a very small percentage of India’s ‘rich’ who pay

income tax and their income levels are correctly reported. Therefore to conduct thissegmentation, we have made use of National Council of Applied Economic Research



(NCAER) data and not the estimates from the income tax department. A 1998 study by

NCAER projects India's middle class will expand to cover nearly half the population (orabout 500 million consumers) in the next 8 years.

The segment which have been identified are as follows:

Segment Income Group (Rs.)Very Rich 2,15,000+

Consuming Class 45,000 – 2,15,000

Climbers 22,000 – 45,000

Aspirants 16,000 – 22,000

Destitute < 16,000

According to the report:

The Very Rich (annual income over Rs 215,000) will increase form 1 million to 6.2million households by 2006-7.

The Consuming Class (annual income of Rs 45,000-215,000) will grow from 28.6million to 90.9 million households by 2006-7.

The number of households in the Aspirants (Rs 16,000-22,000/year) and Destitute

(less than Rs 16,000/year) groups will decrease significantly.

The opening up of the economy coupled with the entry of the MNCs, the income levels

of the middle class has gone up significantly. The figure below illustrates the same.It is important to note the increase in consuming class, and the following decrease in

destitute.



020406080

100120140

very

rich

consu

ming clas

s

climbers

aspira

nts

destitu

te

mill

ion

hous

ehol

d

1997-982006-07

Segments Comments

Very Rich

Maximum credit card holders are from

this

segment. Each holder has at an average 3.4

credit cards.

Consuming Class

Few Credit card holders. Holds maximum

potential, as there is distinct change in

consumption habits of this segment in the

past few years.

Climbers Segment represents potential growth



Aspirants N A

Destitute N A

Some Key points

India is one of the fastest growing markets in the world

In 1993, there were 1.6 million cards in force and 40,000 card acceptance centres.

This increased to 2.6 million and 90,000 in 1996 respectively.

The total card spend was around $ 1,500 million US.

The Reserve Bank of India (the central bank) is taking special measures to promote

the use of alternate payment systems like credit cards, debit cards, etc., to ease the

pressure on currency printing and the use of cheques.

CREDIT CARD INDICES

STATESEducation indexIncome indexUrbanization indexOver all index

Delhi1.041.983.55.3

Maharashtra1.081.491.511.94

Gujarat1.05



1.51.341.71

West Bengal1.031.161.071.17

Tamil Nadu1.070.641.351.15

Karnataka1.020.861.211.14

Punjab0.891.31.021.12

Harayana1.011.090.961

Madhya Pradesh0.970.840.90.81

Kerala1.260.311.030.8

Assam0.85



2.160.510.77

Andhra Pradesh0.910.541.050.76

Rajasthan0.890.770.890.74

Uttar Pradesh0.830.720.770.6

Orissa0.980.60.520.41

Bihar0.930.670.510.41

Index of Literacy:

Justification: Literacy, irrespective of levels/ grade creates an awareness of the financial services

available and the urge to use them.

Calculation: Ratio of State’s % of literate population as the numerator and the nation’s percentage of the literate population as a denominator.



Index of Income:

Justification: The number of I income assesses in a state is a better estimate of the spread of the

high-income population.

Calculation: Ratio of State’s % of population filing income-tax returns (return from individual) as the numerator and the % of the population filing return as the denominator.

Index for Urbanization:

Justification: Urbanization instills both consumption and credit cultures and exposes people to new financial services to satisfy their demand for goods and service

Calculation: Ratio of State’s % urban population as the numerator and the nation's % of urban

population as the denominator.

Overall Index:

Justification: Joint-effects of education and income are multiplied by the degree of urbanization

of a state in determining the overall marketing potential.

Calculation: average of the literacy and the income index in turn multiplied by that for urbanization.

POTENTIAL STRATEGY HARMONISATION:

In terms of marketing potential the states can be classified into four categories: -

1. Low Literacy and low income

States: Madhya Pradesh, A. Pradesh, Rajasthan, Uttar Pradesh, Orissa, and BiharMarket: is unattractive and needs requires high efforts in order to achieve even moderate

results.Marketing strategy: Meticulously worked out and aimed directly at relatively small target groups

in these states

2. High literacy and low income



States: Karnataka, Kerala and Tamil Nadu.

Market: Literacy and income in most cases are positively correlated. Low income often constricts market size. Marketing strategy: Right targeting in terms of income criterion is likely

to bring good results with relative ease. Task of marketing is facilitated by the high literacy

factor.

3. Low literacy and high incomeStates: Punjab, Assam.

Market: High urbanization can mitigate the difficulties caused due to low literacy factor.Marketing strategy: Hidden potential can be exploited using big promotions.

Including awareness campaigns and customer education measures.

4.High literacy and high-incomeStates: Delhi, Maharashtra, Gujarat, and West Bengal (to some extent)Market: Potential for Credit card business. Population has both the awareness and the

appreciation for the modern financial services coupled with high spending power.

Marketing strategy: Opportunities for both horizontal and vertical growth.

Appropriate strategies will see how uneven stimulus brings in even response. Few states may have high potential but due to a set of attitudes, values and cultural factors, people may be held back from going in a big way for credit cards.

COMPETITORS ANALYSIS

a) Competitor Identification

The table below gives an indication of the various value-added services on offer fromvarious banks.

Value added features

Citibank Stanchart HSBC Amex

Hotel discounts ------- ------ ------- Yes



Travel fare

discounts

Yes Yes Yes Yes

Free global

calling card

Yes ------ Yes Yes

Lost baggage

insurance

Yes Yes Yes ------

Accident

insurance

Yes Yes Yes ------

Insurance on goods purchased

Yes Yes Yes ------

Waiver of

payment in case of

accidental death

------------ ---------- Yes* -------

Household

insurance

Yes (G) ------------ ----------- --------------

Table: competitor charges are as follows:



Issuing Bank Cardholders(in lakhs)

Joining Fees(Rs.)

Annual Fees(Rs.)

Monthly feesInterest

Citibank 10.0 ------ 750 2.95

Stanchart 4.5 100 700 2.95

ANZ Grindlays 2.7 100 700 2.5

Bank of India 2.1 200 250 2.5

Bank of Baroda 2.75 ------ 750 3.0

HSBC 1.2 300 500 2.75

SBI -------- 250 500 2.5

Table: Competitor Analysis



Bank Consumerbase

Discounts Targetsegment(focus)

Advertising Acceptance Hiddencosts

Innovativestrategies

Citibank High Average All Very good Very good Average Good

HSBC Average Poor All Poor Average High Poor

Stanchart AboveAverage

High All Average Good Average Average

ANZGrindlays

Average Average All Very Good Average Low Average

BOB

Card

Above

Average

Average All Average Very good Average Poor

SBI Above Average All Above

Avg.

Very good Low Average

Diners Low Poor High Average Average High Good

COMPETITIVE LANSCAPE IN INDIA



The competition in the credit card industry in India is fierce. Competitive battles are moving to

the consumer front. Others seem to be well armed for the battle. The figures given below give

below give us a picture of the current Scenario- products, association and the number of cards issue.

a) We have identified two kinds of competitors:

Direct Competitors ANZ Grindlays HSBC

Stanchart

SBI-GE caps BOB card

Cancard ICICI

Amex and many others.

There are approximately two dozen credit card operators in the Indian market. Presently,of these only about a dozen are active. The list above doesn’t include operators like Dena

Bank etc., since these are not major competitors to Citibank.

Indirect Competitors

The biggest indirect competition probably comes from Citibank itself, in the form of‘Suvidha’ Card (Debit Card from Citibank).

The next source of indirect competition comes from the use of E-Cash for internet

transactions. However, this is limited only to the Internet transaction, but considering the

Growth rates of the net users, this may achieve a high level of importance.

b) Strategic groups



Strategic group Major Players chart

Large diversified covering all segments Stanchart , SBI-GE , HSBC , ANZ

Covering middle income groups (only) Dena bank card

Covering high income groups (only) Diners

Farmers (only) (‘Kisan Cards’) Punjab and Sindh bank, BOB , SBI, Dena

Professionals &others (through affinity

Cards)

Stanchart, SBI, HSBC, ANZ

c) Major Competitors

O thers30%

ANZ G rindlays

8%

citibank30%

stanshart14%Bank of

India6%

Hong Kong Bank

4%Bank of Baroda

8%

citibank ANZ G rindlays Bank of IndiaBank of Baroda Hong Kong Bank Others

stanshart

Figure: Market Size of various players

Stanchart Bank has the second largest card base of 4.5 lacs CIF. It was the pioneer in

launching photocards in the country, and in developing systems to track defaulters. The

bank offers three types of cards - Classic, Executive, and Gold in the lower, middle andpremium segments respectively. It is the only ISO certified credit card in Asia.



The generic strategy followed by the bank has been one of differentiation based on

innovations in technology and efficient servicing. The focus is on the middlemanagement segment, defined by a consumer in the age group 33-37, having worked for

7-10 years, travelling frequently within the country and often abroad.

In terms of product features, Stanchart offers free subscription for a year to its new cardholders, teledraft facilities, travelling facilities (like airports lounges, hotel discounts,

emergency assistance etc.), and cash management consultancy to its gold card holders.

Stanchart has launched a co-branded card with Indus-Ind Bank, which shall allow them toshare Indus-Ind’s ATM support. In the past two years, it has entered into co-branded

cards with marketing companies like Chain Reaction, Amway etc. Stanchart has alsostarted using LIC agents as its Direct Selling Agents (DSAs).

SBI- GE is the most recent entrant in the credit card market. GE Caps provides theRequired technical support. The main strength is SBI’s retail network of 8000 odd

branches, which reach practically every small town and city in the country. They are

aiming at 2 million CIF in the first three years, and a CIF of 6 million in five yearshoping to leverage on the existing accountholder base of 17 million for NBI.

SBI cards have also introduced CashPoint, which allows its cardholders to withdraw 40

percent of the credit limit from over 200 branches in 57 cities.SBI has a card base of around 50,000, with an average spend on the card of Rs 1,513 per

month.

Bank of Baroda (BoB) is the second largest Indian bank in terms of credit cards,

marginally ahead of the Cancan Bank and the Andhra Bank, with around 2.75 lac credit

cards. The bank has floated a subsidiary BOBCARDS Limited, exclusively for the card-related businesses. BoB has recently announced its plans to launch its debit cards.

Credit card holders are able to pay for fuel with their cards at BPCL (Bharat Petroleum

Corporation Ltd.) outlets in the country. Bobcards Ltd. has installed Electronic DataCapture (EDC) terminals at major BPCL outlets in eight cities across the country. The

facility, currently available at over 350 BPCL outlets, will be extended to more outletsshortly. BPCL and Bobcards had jointly launched the first co-branded petroleum card in

the country - the Bharat Bobcard couple of years ago.

ANZ Bank, a minor player with 70,000 CIF in the beginning of the year has increased its



CIF to 2.7 lacs owing to massive advertisement expenditure and improvement in services.

They plan to double their CIF each year for the next three years. Till the beginning of theyear, ANZ was facing a very grim situation on its bad debts. They had bad debts as high

as 12% of total debts at one point of time. But, now, with restructured processes and a

New thrust to keep tabs on the DSAs, their bad debts have reduced to a more manageablelevel of ~ 4%.

HSBC Bank has been able to increase their CIF from 25,000 in 1994 to only 40,000 in1996. At present, their CIF is only about 1.4 lac. Their major problem is low awareness

level among consumers caused by their low key advertising, very stringent creditpolicies, and absence of direct selling. Lately, they have tried to venture into co-branded

(with Shopper’s Shop) and affinity cards (with Top Gun Club) also. They have alliances

with Thomas Cook, DBS lounges, DHL tele-express services, Oberoi Hotels and SitaTravels. The bank primarily draws upon its strength from a strong ATM network of 56

ATMs.

Other playersApart from these major players, a lot of other foreign as well as nationalized banks are

also planning to launch credit cards. Prominent among these are ABN AMRO, HDFC,UTI, Global Trust Bank etc.

Kisan CardsThis is a generic competitor, coming into existence only a couple of months ago. We

have identified this as a single competitor, though there are many banks offering such

cards on the basis of services offered and target segment (which is different fromCitibank segment). The major issuing banks are: Dena Bank, Punjab National Bank, State

Bank of India (Benegal Circle), State Bank of Indore, Vijaya Bank.

The Dena bank Kisan card launched in Gandhinagar enables the farmers purchaseagricultural implements as per the limits fixed for them. The Punjab National bank

scheme will facilitate credit on simple terms and do away with procedural delays usuallyfaced by farmers.

State Bank of India Bengal circle, launched its credit card scheme. Under the scheme,



credit would be offered in the nature of revolving cash credit for any number of

withdrawals and repayments within a pre-fixed limit. The limit will be decided based onthe farmer's operational land holding, his cropping pattern, and scale of finance.

State Bank of Indore, whose card would be valid for three years, is aiming the card at the

farmer whose need for a loan would exceed Rs. 5,000. The loan limit would be revised

annually, and a passbook maintained to record the transactions.

RECENT EVENTS IN THE INDUSTRY

MANHATTAN Hey! Shake things up

Bound for life or break free.

Tied down by high annual fees and interest rates? Cut loose. Get MANHATTAN. The first credit card ever to offer zero annual fee for life. The first to let you fix down your own interest rate, to as low as 1.99% p.m. And the first to uncork the best in entertainment, gourmet, adventure and

fitness experiences. The Times Of India, August 30, 2004.

The bank offers five types of credit cards - Visa,MasterCard, Citibank Preferred, Citibank

International Gold Card, and Citibank GourmetClub. Within these, the bank offers co-

branded (such as Philips, IOC, Times Bank etc.),and affinity cards (such as Modern School,

WWF, Indian Army/Airforce etc.). It has alsotied up with Vyasa Bank and Oriental Bank of

Commerce to increase its reach to 200 oddcities in the country. Citibank has launched a debit

card also. Citibank.

Indian Oil and Citibank have announced the launch of India's first co-branded debit card.

The debit card will be available to both existing and new Citibank Suvidha and banking customers.



For every Rs 100 spent at IndianOil outlets using the IndianOil Citibank debit card, the customer will be awarded with 2 points. A similar purchase at other locations earns the cardholder 1 reward point. These reward points can then be accumulated and redeemed for free petrol and Servo engine oils at IndianOil retail outlets. The economic times

ICICI Bank announced the launch of ‘drivesmart’ a credit card package for the fleet owners

running goods and passenger transport vehicles, reports The Financial Express.

At present, ‘drivesmart’ services are available at more than 35 outlets on the Mumbai-

Ahmedabad highway.

ICICI Bank has tied up with Hindustan Petroleum Corporation petrol pumps for enabling payments for fuel and food through the card. The bank is in talks with other petrol pumps to

increase its reach, said ICICI Bank’s executive director, Chanda Kochhar. The Financial

Express.

CITIBANK Launches Prepaid Dollar Card. Citibank kicked off its World money card in India on 15 Nov in India .It will issue prepaid cards for amounts ranging from $500 to $10000, subject to Reserve Bank of India norms. Apart from withdrawals of cash from eight lakhs Visa ATM’s, Citibank world money enables the customer to purchase goods and service by swiping the card at POS. The Business Age

ABN Amro are trying to address the fears of the debt-averse Indian by introducing new concepts, which allows a user to fix spending limits. Also, banks are bringing down the interest rate on credit to around 1.75% from the 3-4% charged a year ago. www.money.com.

IDBI Bank has taken over the retail portfolio of merchant acquiring business from Frenchbank BNP Paribas, as part of efforts to foray into the credit card business in a big way, reports PTI. With the deal, IDBI Bank has acquired a live portfolio of 2,500 merchants across the country and a foray into the Rs 10,000 crore (Rs 100 billion) merchant acquiring business . The bank now plans to issue a Visa Electron debit card to over 6,40,000 customers and also intends to open offices in two more towns. . www.money.com.

Tata Finance Ltd (TFL) has launched India's first credit card Portal. Tata Finance credit

cards are embarking on an ambitious Internet initiative that will integrate various parts of its operations. The financial Express

A BANK puts up ATMs to serve its customers better, right? Not necessarily. Sometimes banks

also put up ATMs to get more customers.

http://www.money.com/



That's what happened in the case of the IDBI Bank. The Southern Region of the bank,

comprising the four southern States, increased the number of its ATMs from 20 to 45 this year. As a result, the customer base has increased from around 28,000 at the beginning of the year to

over 75,000 now.

The IDBI Bank is also expected to come out with its debit card in the first quarterMastercard-Europay merger soonIN the first-ever major merger in payment industry, plastic money leader in Asia-Pacific region, Mastercard, on Thursday announced its plans to combine with private shareholding company Europay to become a unified shareholder-owned corporation.The Indian Express

Card Purchase Process “Designed” to answer Consumer Questions

Awareness of need

Information gathering

Comparison shopping

Selection Negotiation Delivery After sales

QUESTIONDo I need a card?

What are the kinds of cards available?

What kind of card do I need?

Which card is best for me?

What I am I willing to pay in return for what?

How does it fit into my life?

What needs to be done? When? Where? Why? By



whom

SOURCES OF ANSWERS

Attractive promotion,Friends/family recommend,Income convenience,Life style change,Better AlternativeAdd to card portfolio.

TV/Print/other media,Word of mouth,Mailing,Brochures,Sales person,inquiries

Word of mouth,Balanced/Conservative/Spend thriftRelationship with issuers,Pocket Ability to repay loans

Spending habits,IncomeMonitor benefits,Bank with the issuer

Fees/Interest rates,FeaturesSignificant to you,Card accessibility factor, Reward programme,ATM access

Life style,Travel,ConveniencePaymentPattern/Cycle,

Shop around,Before initiating buying process.At all potential sources.Choose the one that suits needs & financially best.Potential user.

Product Characteristics translating into need gaps (as told by consumers)

a) Low Credit limit

b) High Interest Charges (& interest charges applicable on the interest itself)

c) High Annual charge d) Grace period (mentioned, but not much importance given)

e) Lost card liability of Rs 1, 000 on non-photo card (eg. Stanchart) as opposed to nil on photo

card f) Low Value added benefits and inadequate information updates



ADVANTAGES OF CREDIT CARD TRANSACTIONS

Advantage to the debtor:

The debtor is able to purchase goods and services without prior saving

The credit card reduces the need to carry around large sums of cash

Where a card is used instead of chouse it is cheaper than if that person were paying.

Payments for purchases can be spread over any period, which gives the debtor greater purchases flexibility and enables him to arrange his affairs more conveniently.

The card can be used to obtain goods, services and cash and the bank-issued credit cards have international arrangements.

Telephone purchases can be made by simply quoting the card number and in the case of mail order purchases prior authorization signed by the debtor is required but

production of card is unnecessary.

The interest rates vary depending on whether the transaction is cash or goods and services. If a person chooses to use the card as a monthly account card and avoids

cash transactions, no charge will be made at all.

In order to obtain a bank credit card a person need no-, be a member of the issuing bank or any bank; the arrangement is quite independent from any current bank account.

Advantages to the creditor

One for the reasons for the increased number of in-house (store cards is recognition by those suppliers that a two-fold profit is available to them:

a) A profit on the sale of the goods themselvesb) A profit on the credit agreement

The creditor derives his income from two sources, the debtor and the supplier. Interest is charged to debtor on transactions. In addition the creditor charges the

supplier a participation fee

(Or subscription, membership fee) and a commission.



Advantages to the supplier

The supplier when entering into a credit card arrangement with the creditor will be hoping for an increase in his trade.

The supplier can appear competitive as against other supplier in the market without having to be a creditor himself.

The supplier may prefer payment by credit card because there is no cash-handling problem, payment on va1id vouchers is guaranteed and the sales vouchers provide a full record of each

individual transaction.

The Selection Process - Credit Card Company

A few of the parameters looked at by the credit card company before approving the cards to the customers are listed below.

Place of residence: Factors like owning a flat would carry a higher weight age than a rented one.

However, the longer the customer has stayed in the rented accommodation, the better are the chances.

Telephone: This implies that the customer can be tracked down to their residence.

Profession: Card Issuers keep Professors, Lawyers, Journalists and School Teachers away as it is

difficult to



make them pay up. Even whiz kids from the IT sector are not exact1y favorites as they are prone

to migrate to greener pastures overseas.

Place of work: Card Issuers will normally check the reputation of the company where the concerned person works, the number of years they have put up their and their designation.

Age: One has to be above 18 years of age if they want to have a credit card.

Other than these broad sets of factors, issuers will also like to check the number of dependents of the applicant, whether he/she is servicing a loan and whether the applicant has another credit card. If a person possesses more than one credit card, one's credit history, can easily be verified and depending on the record issuers will think of giving you another card or not.

MARKETING OF CREDIT CARDS

Profiles Of credit Cardholders

A cardholder profile is an outline of the cardholder's background in terms of education, income,

residence, family and ages. It also includes frequency of card usage, types of purchases made by the cardholder and the number of cards a cardholder possesses.

Who uses credit cards?

The determinants of card use are: -

(a) Income: -credit card usage was found to be positively correlated to high income. Moreover, luxury goods can be purchased by credit cards, which are more likely to be bought by those with higher incomes.



(b) Education: - many US credit card companies use education as an indicator for soliciting preferred, customers. In India, the credit card companies give the students from top business schools credit cards, as the future earning power of this segment is very attractive.

(c) Age of family head and family life cycle: - families that are in an age range that typically makes many expenditures, especially families with children are more likely to use credit cards than any other group. Also credit card usage is expected to be more where the family head is in middle age and in a managerial position. Double income fami1ies are another target segment.

TYPES OF CREDIT CARD USAGE

Mathews and Slocum found that for the USA, different social classes exhibit different credit card use patterns. Members of the lower socioeconomic classes tend to use their cards for installment financing. Lower classes are characteristic of more impulse purchasing and being less sales resistant than the middle classes who feel they should save money and postpone purchases. On the other hand, the upper classes have a greater tendency towards convenience use. Of course in India, the lower socioeconomic classes cannot afford to use credit cards while the middle class is considered as the target market.

Data obtained from a US study suggest that l@ e majority of card users favour purchasing goods like appliances, furniture, clothing and gifts on credit. Convenience users felt petrol, meals, entertainment, luggage; groceries, etc. are more acceptable to charge than installment users.

Determinants of active or inactive card

A bank or other credit institution can affect use by its own marketing policy. The following

factors affect card use: -

(a) Attitude: - attitude towards bank credit cards is an important f actor that distinguishes active from inactive cardholders.

(b) Age: - certain studies have shown that increased age reduces the likelihood of an individual being active cardholders. Though there is a tendency to treat; ‘the old' as a single homogenous market, however polarization among the older age groups is greater than among any other age group. Silman and Poustie identify five attitudinal segments among the fifty-to-seventy-five-year-olds; Astute Cosmopolitans, Thrifty Traditionals, Temperate Xenophobes,



Apathetic Spenders, Outgoing Fun lovers. From thee viewpoint of credit card services, the Astute Cosmopolitans are the most attractive.

c) Socio–economic standing: an individual with a relatively high social standing is more likely

to be a user of a bank charge card than is a person of a relatively lower social standing.

d) Attitude towards credit generally.

e) Education.

f) Income: high income families often have high financial commitments for housing costs, school fees and support for dependents, that they have little discretionary income to spend.

ADVERTISING AND PROMOTION

Advertising and promotion are the means by which the credit card organization can provide

information about itself, the service, pricing service and delivery channels to a variety to a variety of audience, including existing and potential customers, intermediate, employees and the media.

Advertising by the credit card sector must contend with the following industry specific traits: Consumer apathy

High riskPlethora of information sourcesMinority of consumers in the marketCommodity purchase

FORMS OF PROMOTION

1) Advertising: A number of advertising guidelines have been developed. They are summarized

as follows:

· Intangibility and concreteness· Inseparability/ perishability and reputation· Heterogeneity and documentation· Characterization as a sequence of events

2) Personal selling: Personal selling offers immense benefits for the marketing of credit cards and contribute to a range of objectives, for example:



· Gaining acceptance of the new credit card by existing customers· Attracting new customers for the new credit card· Maintaining customer loyalty towards the Prospective Companies Card· Facilitating future sales by the provision of advice to prospects or influencers· Getting market information from salesmen directly connected with the customers

3) Public information: Public relations can use a variety of tools to create and enhance a positive image of the credit card organization and its services, for example:· Annual reports/survey . Speeches. Seminars· Charitable donations - Times Card's donations for CRY· In - house magazines - Utkarsh· Press releases

In addition to customers PR may include other interested parties such as employees, intermediaries, the financial community and the government. This involves the corporate image. The development of a clear corporate image is increasingly viewed as an important element of competitive strategy and represents a valuable marketing asset, especially for a credit card service organization.

4) Sales promotion: I t can be used predominantly to encourage trial and generate brand switching, although without support from other media it is unlikely to develop brand loyalty.

Offer of gifts from a catalogue based on points generated through spending on the Prospective

Companies Card is an example of sales promotion. This approach may also create an element of loyalty if customers are tied into saving for goods, which will require high point scores. The use

of competitions to encourage the sales force to increase their level of activity can be an effective

method of sales promotion.

5) Direct marketing: Direct marketing aims to create and exploit a dialogue between the service provider and the customer and offers several potential benefits:

· Testing (markets, services)· Measurable and accountable· Provision of distribution channels· Advertising cost effectiveness· More effective segmentation and targetingInvisible to competitors6). Sponsorship: Sponsorship can also contribute to a wide range of objectives at both corporate and brand level.

Adding Value Through Sponsorship



COMMUNICATION

Credit card fraud on rise in India

New Delhi: Credit card frauds are on the rise in India growing at the rate of 35 per cent to 45 per

cent per annum. According to a research, the average loss through credit card fraud in India to a

customer is Rs 60,000 while the average amount on an ATM fraud is Rs 30,000.

The Credit Card and Management Consultancy (CCMC) highlighted that the average time taken by a credit card holder to realise that fraud has taken place is about four to five days and in the

case of an ATM card holder this is two to three days. As the realisation is not immediate,

tracking the fraudster becomes more difficult.

''With a total of five million credit, debit and ATM cardholders in India it is relatively easier and

more profitable to steal with plastic money than any weapon'', CCMC's, Chief Consultant Vijay Mehta aid.

Plastic money frauds have already reached an epidemic stage in countries such as the US which sees around one billion dollar frauds per annum and, UK which had frauds of about 73 million

dollars in 1998. CCMC which is a card consultancy service for banks and card companies as well

SponsorshipCredibility - provides validity for credit card

claimsImitation - relates good credentials of event/athlete to prospects/customersImage Transference - links credit card withset of positive image qualities, i.e. fast access to credit caring, safe credit card company a caring, safe credit card companyBonding - gains involvement of prospects/ customers, i.e. their feedback as to what thy

liked/dislikedRetention- eduringawareness and exposure

ADVERTISING



as the card holders has launched a guide which aims at making customers aware and informing

banks about the responsibility they have towards educating their customers about possible card frauds.

The guide explains ten major types of card crimes and provides over 70 tips on protection from card frauds, including internet fraud prevention for cardholders and merchants.

(UNI)news,sawal.com

Ways of Reducing Credit Card Abuse:

a) Safer cards

The designs of credit cards have become increasingly ornate to reduce the risk of copying them. The introduction of holograms has added to the complexities of the design making theft of cards more attractive to the thief than manufacturing his own.

Most cards display the debtor's signature, making it relatively easy for it to be copied and so some card issuers are introducing invisible signature strips where the signature can only be seen by a machine which may then reject or accept the particular card.

Some cards now have start dates as well as expiry dates and then at least the debtor can alert the creditor if he has not received a renewal card at the appropriate time.

b) Shop limits

Increasing use is being made of a technology where there is a direct link with the card issuer or a central organization, which maintains computerized lists including details of stolen or lost cards. In UK these machines are being installed at a rate of 100 a month. Many of these machines can process all types of transactions- credit cards, charge cards and debit cards.

c) Personal training

Another anti-fraud measure is to concentrate on staff training. However a particular problem faced by a number of assistants is the fear of refusing to accept a card, because of the insult to the computer if the card is genuine. Increased staff training way be necessary to deal with such situations with tact. Particular instructions to the staff re1ate to checking signature, date of expiry of card, whether there has been any obvious tampering, e.g. new signature slip where the



card is quite old, suspicious behavior including inquiries regarding shop floor limit or large number of small purchases.

d) General Advertising

Via publicity, the issuer can entreat the debtor to keep the card in a safe place, to sign a

new or replacement card immediately it is received, to keep this PIN secret and not to write it down, and to notify the credit as soon as the holder notices it is missing. Advertising can

heighten the awareness of these factors.

SMART CARDS - A WINDOW TO THE FUTURE

INTRODUCTION TO SMART CARDS

First generation credit cards were just paper cards. They evolved into plastic cards with embossed numbers. This was the first level of automation. The use of a magnetic stripe on the cards allowed the electronic capture of card information, which increased the level of automation and security. The addition of the chip, making the cards a smart card, is the next logical step in today's world of high technology.

The smart card is the size of a standard plastic credit card with an imbedded computer chip. The chip holds various types of information in electronic form with sophisticated security measures. Hence a smart card is a prepaid card with a memory chip. A sum of virtual money is loaded in the form of digital data on to it and the user can give it to a retailer to take off the sum he owes.

There are two types of smart cards. Contact smart cards, which require insertion into a smart card reader. Contact less smart cards are those, which require only close proximity to an antenna, e.g. BEST bus cards. The CombiCard is a single card that functions both as a contact and contact less card.



54mm

(2.13 inches)

85mm(3.35 inchess)

Advantages Of Smart Cards

Proven to be more reliable than the magnetic stripe card.

Can store up to 100 or more times the information than the magnetic stripe card.

Reduces tampering and counterfeiting through high security mechanisms.

Can be disposable or reusable.

Has wide range of allocations (e.g., banking, transportation, and healthcare...)

Compatible with portable electronics (e.g., PCs, telephones... ).

Applies rapidly evolving semi-conductor technology, i.e. it requires smart card reader hardware.

Comparative survey of different card technologies

Failure Rate 2% N/A 0.03%

Technology Magnetic Optical Smart

Maintenance costs

No. of Intervention 400 400 100

No. of Failure p.m 1000 800 100

No. of machines

maintained by one technician

20 15 100

Cost of spare parts 400 500 100

Thickness

0.8 mm(0.032 inches)



Disadvantages Smart Cards

In the future if everything is condensed onto a -smart card for each person, which would be used wherever someone goes, their activities could be tracked by the government or

anyone who gains access to a computer database that holds the information.

Personal data can be stored on smart cards, which open the possibility of merchants retrieving personal information when making a financial transaction, a n d then selling it to advertising agencies.

Loss of privacy.

The technology is significantly more expensive than magnetic stripe card, and includes the cost of adapting the ATM's to recognize the new cards.

VITAL STATISTICS OF SMART CARDS

According to market estimates, 113.4 million smart cards were shipped worldwide in 1991, doubling to 256 million in 1992, with shipments exceeding 1.2 billion in 1995In 1995, 3.5 digital mobile phone subscribers around the world began initiating calls with smart cards.In the US in 1996, over 3 million stored value cards were issued for use in Atlanta during the Centennial Olympic games.The majority of smart cards are used in Europe.In France, leading banks have already issued 20 million smart cards to function as credit and debit vehicles. In Germany the entire population of more than 80 million people is being issued smart cards containing health insurance eligibility information.Though the majority of smart cards are used in Europe, the French and the German smart cards markets are reaching a saturation and will have to adapt to the relatively small changes to adapt the market. 2 billion smart cards are predicted to be circulation by the year 2000. About 440 million

smart cards are in use around the world, with 3.8 billion smart cards expected by 2001.

There are predictions that the new multifunction smart card will be worth $1.8 billion by 2004.. According to sources, if the banking sector were to convert to the new generation of smart cards, it would have to recall one billion cards in 150 countries and alter 14 million points of sale locations and 500,00 ATM'S.Security solution provider SC2 has launched a new contactless smart card system based on Infineon's microcontroller platform. Hitachi Ltd. has produced the smallest RFID (Radio Frequency Identification) chip in the world

USES OF SMART CARDS IN TODAY’S WORLD

Streamlining Healthcare services



Smart cards are useful in a wide range of situation in the medical field.

Medical cardsAdvantages

Health Insurance cardReduces routine paper workEliminates errors and FraudSpeeds up payment and claim processesInexpensive equipments set up

Medical File Access CardPatient controls doctor’s access to informationPatient’s medical history readily available using a single processPharmacists has access to prescription information onlyAllows automatic check for medical incompatibility

In the United States, Oklahoma City has smart card system called MediCard since 1994. Smart card readers are installed at hospitals, pharmacies, and ambulance service, physician’s offices and with the fire department, allowing the MediCard to be used in both ordinary and emergency circumstances.

Making Payphone Convenient

The response to the lack of security and high costs of the public phone system France Telecom implemented the prepaid smart phone card in the early 1980’s. The smart card is purchased in various denominations. When inserted in the telephone, the cost of the phone call is displayed and deducted from the total balance remaining on the smart card

Prospective Companies Teleservices Ltd. (TTL) has established the country's first smart card payphone service network in Andhra Pradesh based on Schlumberger's state-of-the- art smart card technology. In Bombay, the MTNL virtual phone card is not a smart card, but a personal identification phone number; i.e. there is no physical card. SIM cards, which provide subscriber identification through top-level PIN code verification and active second-level identification using sophisticated encryption algorithms before granting access to the network, are a rapid growth area. Based on its expertise, Frost and Sullivan estimates the current market in India at around 1.3 million cards, predominantly as SIM cards.

Currently about 80 countries throughout the world use smart cards in payphones. The world market for smart phone cards is expected to be well over 1 billion cards in the year 2000. Installations of smart card- based payphones are expected to quadruple by the end of the century. Phone cards are also used as an advertising tool and as a collector's item, just like stamps.

Before The Smart cardWith the smart card



Hassle of having exact change on change No need to carry coins & Faster Transaction

Public phone booth vandalismReduces theft and phone maintenance

The same benefits can be found that in many other applications where coin- operated machines have suffered from the increased costs and 1oss of service from vandalism, coin collection, and low reliability.

Smart cards are already being used at: Toll booths

Parking lots

Gas stations

Vending machines

Arcade games, etc.

Securing Mobile TelephonesThe GSM radiotelephone system (Global System f or Mobile Communication), which originated in Europe, uses a smart

The facility allows each national operator to keep control of security and payment aspects, but at

the same time cross border use of the mobile phones (known as Roaming).

The smart card is inserted into any GSM phone and bills be charged to the subscriber's personal account. A secret code (PIN) protects the subscriber from misuse and fraud.

Replacing Cash

In Singapore the Cash Card is a smart card, which as an electronic purse, i.e. it holds electronic money. In fact it is replacing coins and bank notes for everyday purchases.

Why Electronic Money?It is more convenient than looking for change.



It reduces the cost of handling cashIt fights fraud (both payment fraud and counterfeit money) with a well-designed security system.

Automating Transportation Services

A few of the numerous examples of Smart cards in transportation are:

Mass transit ticketing- using contact less smart cards passenger can ride several buses and trains for daily, commuting. BEST and the Railways are looking into this although a BEST smart card is already through trial operations.Urban Parking.Electronic tool collection- as the person drives through the tollgate of a bridge a smart card is inserted into an RF transponder within the car, which electronically pays the toll, without having to stop the car.Airline application- frequent flyer miles are added onto the airline smart card as the passenger' s -ticket removed from it at the gate, eliminating paperwork.

Smart Card Driving Licenses

From the month of May Gujarat State has launched into a massive exercise for issuing its citizens microchip embedded “Smart Driving Licenses”. With a million of new licenses issued

every year and 10 m old licenses to be converted into smart cards over the next two years, it has

been ranked as one of the largest smart card application in the world

The Ahmedabad RTO has so far issued around 3000 smart card licenses and in the coming

months, the city’s traffic police will be equipped with hand – held card readers. These are

essentially miniature computer terminals, capable of reading past offences on the 1- K microchip embedded in the licenses and recording fresh ones.

Gujarat transport commissioner P.Panirvel plans to extend the new system to every

major city in Gujarat over the next year, connecting them through V-SAT to a central data processing center. In the planning to introduce computerized weight bridges at the ten road entry

points in Gujarat. In the next stage they are also planning to introduce computerized weight

bridges at the ten road entry they are also Gujarat over the next year, connecting them through V-SAT to a central data processing center. In the next stage,



Electronic Purse: A worldwide Phenomenon

Further possibilities for smart cards include an electronic wallet that puts credit ,

bank and debit cards plus a user’s financial record on a single smart card and an ‘everything’ card

that combines financial, medical and personal data.

The electronic purse technology is available. Consumer acceptance has been

demonstrated during several pilot schemes and real life application. The benefits to consumers are beginning to be understood. In India, the BEST smart card can be used as an electronic purse.

Smart Payment System are used in Canada, Ireland, UK, USA, Sweden, Finland, Portugal,

Netherlands, Belgium, Spain, Brazil, Argentina, Latvia, Germany, Austria, Czech Republic, Lebanon, UAE,

Smart Card Fraud Protection

One of the main advantages smart cards have over traditional credit cards is their strong encryption of the data. During a transaction, communications between the chip and terminal can use a sophisticated security encryption algorithm and a secret and a highly protected key. Cracking the key and the algorithm is very difficult, while replicating the key requires access to a silicon chip foundry, rendering the system inviolable for all practical purposes.

One form of protection is ciphering, which is like translating the information into some unknown foreign language. Some smart cards are capable of ciphering and deciphering, so the stored information can be transmitted without compromising confidentiality. This authentication process makes eavesdropping virtually impossible.

In addition, the plastic cards can be graphically personalized with the holder's name and photograph. There are different degrees of security mechanisms for memory only cards and microprocessor cards.

Smart Cards And The Internet

The role of the Internet has developed to include the support of electronic commerce. The smart card is the ideal support for payment over the Internet, whether in cash or as credit. Smart card readers are inexpensive, low- power devices, which can be easily added to the existing computers. The additional cost of building them into future computers or peripherals is extremely low. In 1996, the first combined modem and smart card reader was introduced.



In May 1996, five major companies in the computing industry (IBM, Apple, 0rac1e, Netscape, and Sun) have proposed a standard for a new form of computer called the Network Computer. The Network Computers are designed to interface directly with the Internet and have the ability to use smart cards. Also in 1996, the Alliance between Hewlett Packard, Informix and Gem plus was launched to develop and promote the use of smart cards for payment and security on all open networks.

Besides using smart cards for payment over the Internet, the possibilities are endless such as:

Carrying your favorite addresses from your own personal computer to your friend's Network Computer.

Downloading your airline ticket and boarding pass.

ACTIONS TAKEN BY THE CREDIT CARD GIANTS

Key to the evolution will be the action of card consortium giants MasterCard and VISA. The big question is who owns these cards and the power of the new PC. The reality is that the number of potential smart card suppliers is as large as the number of businesses with a substantial and loyal customer base. Perhaps the on1y certainty is that banks will see their authority as card issuing bodies undermined for those who are prepared to invest in the production, distribution and marketing of smart cards.

In 1996, MasterCard, Visa and other international players in the US, Canada, Australia, UK, Spain and many other countries around the world, are introducing SVC Pilot programs. VISA, in conjunction with MasterCard and Europay, recently created new standards for credit/debit financia1 transactions laying the foundation for worldwide use of smart cards technology.

According to American Express, more than a dozen companies including MasterCard and technology giant IBM Corp. have licensed its technology to define, locate and access data stored on a smart card. Amex also announced the formation of an independent body to govern the technology standard. The American Express smart card framework now supports personal and corporate profiles, airline, car rental, and charge and credit access.

QUANTITATIVE MARKET RESEARCH

1. The bank may offer more than one type of credit card based on the segmentation and the

conclusions arrived at as a result of the research. Research needs to identify the profitability of targeting the respective segments and the efficacy of the suggested positioning statements to

these segments.



2. The bank should be able, on the basis of the research, to ascertain the profitability of adopting a generic strategy of differentiation, based on the wide range of cards and services it

may offer. The bank may then effectively target most segments of the society.

3. A clear cut cost-benefit relationship is desired with respect to the potential customers relative weightage of the provision of various services such as schemes to pay MTNL bills, customs duties, dial-a-draft facility, frequent filer program with Indian Airlines and Air India etc.

4. The ad spend will also be ascertained after testing the effectiveness of various advertising and promotion options in order to increase market share. Consideration should also be taken to

the medium of advertisement and promotions so that the bank may decide upon a strategy after

weighing the costs and benefits. 5. Qualitative research has indicated that HSBC has an image of non-exclusive membership, but

exclusive service and has the largest number of ATMs. Positioning opportunities in this line

suggested the card should be targeted at middle to senior business professionals and businessmen, positioning the card on friendly service. Attention must be paid to verify the

effectiveness of the same through quantitative research.

6. Test possible Key Success factors that have come up in qualitative research

Present:i. Brand recognition

ii. Access to major channels

iii. Marketing program iv. Reach (target market)

Future:i. Level of Service ii. Acceptability

iii. Safety of use over the Internet.

iv. Value Added Benefits

7. Test Feasibility of recommended innovations and improvements in the product line.



Quantitative Research Methods

Concept Testing

Multiple concepts "screened" among a general audience of target consumers.

In depth evaluation of single concepts using standard, projectible measures.

Objective: Use a cost effective approach to identify which new ideas have the most potential and

are worthy of further development Use the results in combination with product testing results in a

sales forecasting model to predict:

Likely sales take-off in year one

Repeat purchasing levels (Multiple credit card users)

The profile of likely buyers (verify qualitative and secondary research)

SMART CARDS IN INDIA

Telecom industry, perhaps was the pioneer in using smart cards, most prominent being subscriber identity module (SIM) cards in the GSM digital cellular network. And going by the market indications, car-operated payphones are on the anvil. In fact, there is greater potential in the telecom market, although applications in the financial markets are more eye-catching. Despite the depression in the cellular telecom markets from about last year, at least 500,000 SIM cards are expected to be in circulation by the end of the year. At least two million payphone cards are expected to be absorbed within a year of the launch. At the same time, about I million banking cards are expected to be absorbed in the first year of the launch.

Savant, general manager, Phillips Semiconductors feels that India is a burgeoning market for smart card applications especially in transport and banking, for which Phillips is actively developing systems and solutions. The market potential explains the presence of manufacturers and solution providers such as Phillips, Aplab, Groupe Bull (represented by PSI Data Systems ltd.), Ascom, Gemplus, ORGA, Schlumberger and Verifone. Universal popularity, and competition, is limited by the presence of multiple patents that require royalty payments.

Indian smart card initiatives have focused on closed user groups, standalone, and non- banking applications. smart cards solutions are being used in BEST buses, Gujarat driving licenses and Prospective Companies Teleservices payphones in Andhra Pradesh. BPCL are implementing smart card driven loyalty programs



The banking industry has seen initiatives from Federal Bank, IDBI, Escorts, and Dena Bank, some of which are awaiting RBI clearance. Some of the application on anvil is access

control, octroi payments and Internet access. Since all these applications are standalone,

consumers have to use multiple cards, which is likely to change with banks launching smart card-based services. Most ATM and debit cards applications are likely to shift to smart card- based

solutions by 2002.

Further by 2006, a fourth of savings account holders are likely to shift completely to smart card-based personal banking- Frost and Sullivan expect non-banking applications to reach around 3 million units by 2001.

INDUSTRY UPDATEINDUjkjjjjjj

Asia Pacific accounts for approximately 30% of worldwide smart card sales, making it the second-largest market after Europe.

In Asia, India represents a great deal of potential and a very strong market is developing here

after China and Japan.

Presently India has got approximately 50 million smart cards users with around 30%

usage in Cell phone SIM cards. Indian smart card industry is growing @ 45% per annum.

The smart card business potential of India is expected to reach US $ 6 billion by the year

2010. Presently, India has got around 3 million mobile phone users and it is expected to reach 8

million users by year 2003.

The requirement of smart cards as identity cards, the combined municipal card and the welfare sector is expected to be 600 million by the year 2005.

The demand for smart cards in Health care & Transportation sectors is expected to reach 350 million by the year 2005. dustry Update Industry UpdateIndustndustry Update ry UpdateInternational Interest

10 Member consortium consisting of Compaq, ProtonWorld, ACI, Gemplus,

Schlumberger, Infineon, Datacard, Alittleworld, CMS, FSS, Mixtorf are planning to launch a multi-application smart card based payment infrastructure project in India.



Orga is planning to provide 50 million cards (GSM Phone Cards and Banking Cards) in

the Indian market by the year 2005. Intel is introducing research in chip development designing in India after Japan

Domestic pharma biggies throng ThinkGen Smart Card plans for India

India

India's first credit card manufacturing Versatile Cards Pvt. Ltd a part of $60 millionVersatile Cards Technology Inc. was unveiled recently. Association for security of Information Systems (ASIS) to evolve security norms & standards for Information Technology systems and also to provide certification to the hardware and software security products as well as technical

Notable Smart Cards projects in India

Employee's Provident Fund to issue smart cards soon for its 2.6 crore subscribers which

would be accessed through its 267 offices.

Smart Cards for Government employees & Labour in Goa will be issued soon.

ICICI Bank plans to launch smart cards with real time online integration for facilitating transactions, payments to utilities and services etc.

Gujarat State Smart Card Driving licence - the biggest project of its kind in World. Delhi's traffic police is planning to introduce smart card driving licence.

Rajasthan milk card project - the world's first milk collection point based on smart card

technology in India run exclusively by women. Indian government & UNICEF have launched the village Watsan information system,

which ensures the construction and maintenance of the wells..

Metro railway, Kolkota is going to issue smart season tickets instead of magnetic strip cards shortly.

Petro cards - BPCL

Prepaid cards used in cyber cafes of HPCL and many more Smart Loyalty Programme as in the case of Snowhite Apparels,HomeSaaz etc

Smart dealership loyalty programme in the case of Hewlett-Packard India Ltd

Smart Employee Management as in the case of LML Ltd, TVS Electronics, TVS Suzuki etc.



Another important project is the Reserve Bank of India (RBI) sponsored SMARS (Smart

Rupee) project. The project was launched in 1997 at the Indian Institute of Technology; the consortium includes banks such as the State Bank of India, Canara Bank and Citi

Bank, terminal manufacturers like VeriFone India Pvt Ltd, systems integrators like,

Aplab Limited, Ascom India Pvt Ltd, CMS Computers Ltd, and card manufacturers like Gemplus and Schlumberger.

Mumbai Campus Scheme…… the SMARS (smart rupees) project involves the issue of

smart cards to students and staff for use in around 150 on-campus merchants and retailers.

Smart Health Management as in the case of Wockhardt Hospitals, Bhopal Gas Relief Project etc.

Brihanmumbai Electric Supply and Transport (BEST) has now decided to introduce

contactless cards for ticketing across its entire network etc.

SMART CARD APPLICATIONS FOR PROSPECTIVE COMPANIES

Smart cards can be used in financial applications in the following five fields:

Banking

E-Purse

E-Commerce

Internet Banking

Electronic Banking

PROSPECTIVE COMPANIES can use smart cards is via the loyalty programs. If PROSPECTIVE COMPANIES joins up with a major hotel chain such as Taj, there can be a Loyalty Card to facilitate the customer to go in for speedy reservation of rooms in the Taj chain of hotels. The holders of the PROSPECTIVE COMPANIES- Taj smart card would be given first priority. PROSPECTIVE COMPANIES can also tie up with international airlines for speedy check-ins, reservation of tickets, etc.

Taking the area of car finance, a customer taking finance from PROSPECTIVE COMPANIES would be given this card. This card would contain information about the customer as well as about the car, the finance taken and other relevant details. It could also be loaded with loyalty points in the form of a stored value card. The customer can avail of various



perks using this card such as using it for foodstuff from vending machines, for services at the authorized showrooms, dealers and garages.

The concept of issuing PROSPECTIVE COMPANIES smart to travelers (similar to the VISA travelers cheques) is a1so considered to be a strong area for building up clients and revenue generation.

SUMMARY OF PROPOSED FUTURE STRATEGY

Marketing Objectives:

Credit cards (CIF)Acquiring bank: Create an extensive ME base

Debit cards:

Increase the issuance and usage of debit cards.Capture the Lucrative E-business market.

1) Achieving Objectives:

Recommended Product Line-

1. Net Card : Launch a new virtual card with existing features and giving consumers the

option of international acceptance as a value added feature

2. Attempt to aggressively tap Alumni associations of premier engineering colleges and

Management institutions for Affinity Cards. Other banks are differentiating the

market on the basis of affinity, corporate and co-branded cards.

Target Segment

1) The potential segment in India is the postgraduate/professional/ technical courses student population, i.e. the young adults who are about to the workplace in the white-collar jobs. If these potential customers can be attracted when they are students, then Prospective Companies can ensure that they turn into loyal Prospective Companies Card members when they start earning.2) The rural areas have a percentage of population with high income, which is not taxed. However due to logistic difficulties involved in serving this sector, these areas are largely ignored. If Prospective Companies and VISA/MASTERCARD set up card readers in rural and semi urban shops, they could obtain a captive segment. Perhaps large departmental stores socking a wide variety of consumer durables/ non-durables goods could be set up in selected areas to serve this segment. These stores would only accept the Prospective Companies Card its use and spread in popularity.



3) Prospective companies could also consider providing a prospective companies “kissan”

credit card to the prospective farmers to buy agricultural equipment, seeds fertilizers, etc. this card could have the facility of allowing the holders to use it in the cities as well.

The work force of the entire Prospective Companies Group of Industries could also be a good

market segment for the Prospective Companies Card.

People using the Internet as a mode of payment for B2B and B2C

transactions. (for net card) Growing Indian middle class

Premium segment (Value added benefits) Alumni association members.

Affluent residents of midsize towns.

Positioning

Positioning Objectives:1). The positioning should be so that it removes the ‘elite’ image. The positioning should be done so as to give an image that Credit cards can be acquired by people from not only the upper class,

but also the middle-income categories. This is essentially to counter the strategy of SBI-GE. In

other words, it should give a mass appeal to the cards while reinforcing the ‘clean’, and ‘dependable’ image of the bank at the same time.

2. The positioning should be such as to imply that credit cards are a part of theCustomer’s everyday life. It should lead the customer to keep the card with him

whenever he goes out. This in turn, shall lead to more card usage as the card would be

handy for the customer to use whenever he wants to make purchases or withdrawcash.

3. It should try to leverage credit cards strong ATM network.

Alternatives for positioning, and their evaluation:

Current strategy:

On quality of service: After convenience and acceptability of credit cards, the most



important thing for customers is quality of service. This can be defined as prompt

response in issuing the card, 24 hour customer service and quick complaint andgrievance redressal. A positioning based on superior quality of service would actually

create a favorable image in the mind of the consumer leading him to not only buy the

card but use also use it more often.

Future:

Positioning based on benefits: Such a positioning is not recommended asdifferentiation among credit cards fails to provide sustainable competitive advantage,as benefits offered on cards are easy to copy.

Positioning as a low cost card: This is not feasible as the costs involved are higher than its competitors and also in this industry one cannot gain an SCA bycompeting on price and advantages can be gained only on the basis of service and

innovative product features.

Positioning on use: Credit cards in India are most often used while travelling. Thiscan be the main positioning plank because it would increase the credit card usage and has a good

brand image it won’t be thought of as a card exclusively meant for travel.

Positioning on acceptability: Acceptability is the most important factor in the mindsof the consumer and so positioning on this factor will add new consumers in the Citi

family.

Positioning as a card for transactions on the net: With the impending boom in e –commerce in India, Credit cards should position itself as the best and safest medium for

payment purposes..

Recommended Positioning:

Positioning on use will help increase card usage and Positioning on acceptability will add

new customers which will satisfy the dual objective of increased revenues and Increased



market share.

In addition positioning as a card for transactions on the net will help tap the ever-growingnumber of netizens in India. So positioning should be a judicious mix of the above

options.

PriceThe pricing for the cards shall be done on the basis of perceived value the customer

attaches to the various products, and considering the fact that shall try to address products to the

mass market. Since the competition is not on price but on innovationand value added benefits. Exceptions can be made for corporate, affinity cards as a

goodwill gesture.

DistributionThe distribution is mainly through existing branches of the Bank in the metros and othercities. The distribution is also done through Direct Sales Agents (DSA’s). For other

towns/ cities without bank branches cannot to be targeted as, in these places, setting up a

distribution network by opening new branches is restricted by licenses and Govt. policy.

Strategy:1) To counter this Banks should go in for more tie ups with local banks to rapidly

increase the reach for its credit cards. It should also identify Cities with high potential

and direct the bank efforts towards them.

2) Agencies should be hired to oversee the operations of the DSA’s in demarcated areas sothat there is regular and constant contact with them.

3) Objective credit rating systems should be formulated and clearly explained to the DSA’s

to reduce the losses due to bad credit.4) Collection centers should be setup in all major cities so as to enable better customer

service in line Citi’s customer satisfaction policy.

Promotion and Advertising

1) The Launch of the card could be done in the following steps:



Advertisements in major newspaper in the target cities, for a few days the launch in order to build up suspense/ curiosity in the minds of the preceding.

Actual launch card of the with a concert (classical/ pop) and famous dignitaries readers could be invited. This could be combined with a well-publicized fundraiser, he proceeds of which could go to the social cause adopted for the affinity card.

2) In order to attract the students population Prospective Companies could sponsor event/seminars / case studies for professional courses at the inter-institute level, e.g., the “Amul

Cheese Slice Case Study” organized by the Gujarat Co-operative Milk Marketing Federation.

Ltd. and Chetna Institute of Management s studies. At these, venues, awareness about the Prospective Companies card can be created.

Perhaps students could be encourage to sign a contract with Prospective Companies whereby they avail of a Prospective Companies Card once they start earning and in return the membership

fees are waived and other perks given.

3) The Social cause – topic of wide concern to the people could be well publicized, e.g. greening

of Mumbai. Also, efforts towards plantation and care of trees in Mumbai would atomically result

in new articles on it. This would increase the awareness and popularity of the Prospective Companies Card.

Advertising strategy:From educating customers about credit cards there is a need to educate them about thedifferentiating factors of the cards. Because visa and master card are advertising regularly

and thereby increase awareness. The strategy should be to emphasize on its

differentiating characteristics.

They should go in for major print campaign because the card has been positioned for a

mass market. The media plan should consist of magazines like India Today, Outlook

Secondly they also need to advertise in national newspapers because in a category like credit cards you are trying to differentiate your card from others on the basis of certain

attributes and so advertising in TV may not be able to bringing the differentiation.

They also need to identify potential customers and target hem using



mailers. As internet is growing at a fast rate the net users can be targeted by having

interactive sites.

The Prospective companies Card personality could also be used in the home page to solve customer queries in the ‘Best Possible Manner’

3) Specific of the Potential credit card

1) Prospective companies can tie with VISA/MASTERCARD, which have a larger

distribution network. The advantage of tying with Amex is its ‘Prestige ‘ value, but at the same time, this could be a disadvantage because the Prospective Companies brand name

may get overshadowed.

2) Lower interest rate for the first year plus no membership fee to attract people to take the Prospective Companies Card, 24-hour card replacement, etc.

3) Different levels/ types of the Prospective Companies Card, e.g. a student card to be used

by the earning students as well as middle class customer for whom the higher levels of the card would not be feasible.

RESEARCH METHODOLOGY

A). Secondary data collection

Business Periodicals

Business Today

Business Week

Business world

The Business Age

Business chartered

Newspaper

The Economic Times

Business Standard



Times of India

The Finance Express

The Indian Express

Brochures

SBI GE Credit Cards

HSBC Credit Cards

Standard Chartered Cards ( & other credit cards)

Brochures (Citibank)

Web Sites

www.citibank.comwww.sbicards.com

www.btstrategist.comwww.plasticmoney.com

www.cardsindustry.com

www.myiris.comwww.exhibitionindia.com

www.responseservice.com

www.money.comwww.newssawal.com

www.thehindubusinessline.com

Studies / Surveys

Business Today & ORG-Marg survey on credit cards (June 22 - July 6, 1996).

NCAER study: Expanding Demand in the Consumer Market

Study by Credit Card Management Consultancy

A & M Survey (May 1997)

Advertising & Marketing

Related literature

http://www.plasticmoney.com/

http://www.cardsindustry.com/

http://www.myiris.com/

http://www.exhibitionindia.com/

http://www.responseservice.com/

http://www.money.com/

http://www.newssawal.com/

http://www.thehindubusinessline.com/



B) Primary Data Collection

Interview with:

Prerna Mathur, Assistant Vice President, CitiBank, N. A.

credit card industry

Documents