PROJECT TITLE : “A STUDY ON EVALUATION BUYING BEHAVIOR OF CONSUMERS WHILE CHOOSING A CREDIT CARD”

IBS 2010

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A

REPORT

ON

EVALUATION BUYING BEHAVIOUR OF CONSUMERS WHILE CHOOSING A CREDIT CARD

BY:

Prakash Kumar

(2008-2010)

Enrollment No.: 08BSDDU0079

A report submitted on fulfillment of the Requirements for

MBA Program

of

ICFAI BUSINESS SCHOOL, DEHRADUN

Distribution List:

Faculty Guide

Prof. RAGHVENDRA SHARMA

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ACKNOWLEDGEMENT

In Indian culture a task is said to be incomplete without the blessings of the Almighty and elders. Also acknowledging the work and help of all those who have guided me for the completion of this project on time. The comple t i on o f a p ro j ec t i s neve r a un i l a t e r a l e f fo r t . I take this opportunity to express my profound sense of gratitude to all those who encouraged, assisted and co-operated in the successful completion of this project.

The completion of the project is a milestone in a student’s life and its execution is inevitable in hands of our guides. I extend my sincere thanks to Prof. Raghvendra Sharma, my faculty guide for his support and guidance throughout this project and providing me with structure and for pointing out my ideas that needed more thought. Without his help, this project would not have been successful.

I would also like to thank Prof. Vinay Pratap, my mentor and faculty of Consumer Behavior at ICFAI Business School, Dehradun for extending me the valuable guidance and assistance from time to time in preparation of this project.

Finally, I thank all my friends who provided me with extremely important information regarding the literature related to this project and also informed me about websites that would help me with relevant topics.

I once again express my heartfelt indebtedness to all aforesaid. Any omission or error in acknowledgement is inadvertent. For such oversights and lapses, I tender unconditional apology. The amount of value addition and learning that I have had will definitely stand in good stern in my student life and in my future corporate endeavors.

Prakash Kumar

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TABLE OF CONTENTS

Particulars Page

no.

Acknowledgement 3

Abstract 5

Chapter I Introduction 7

Objectives of the Study 8

Scope of the Study 8

Proposed Methodology 9

Analysis of Data 9

Limitations of the Study 9

Chapter II Industry Profile 11

Credit Card – An Overview 12

History 17

Types of Credit Cards 21

Transaction Process 30

Merits and Demerits 35

Credit Cards in India 42

Credit Card Frauds 47

Chapter III Literature Review 52

What is Consumer Buying Behavior..? 53

Stages in Consumer Buying Process 53

Types of Consumer Buying Behavior 55

Factors affecting Consumer Buying Decision Process 56

Theory of Planned Behavior (TpB model) 61

Bank Credit Cards and Consumer Behavior 62

Factors affecting Credit 72

Factors to consider while selecting a Credit Card 73

Chapter IV Data Analysis, Interpretation, Findings and Implications 75 – 90

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Recommendations 91

ABSTRACT

With the advent of technology myriad facilities and products are coming in the market to

facilitate the need of the customer. Credit card, usually known as plastic money have become the

blazing issue and has its substantial impact on the banking industry. Credit cards are widely used

source of convenient credit for restaurants, hotels, mail-order, on-line shopping, gasoline stations

(petrol pumps), grocery stores, dental and medical care, church bazaars, as well as telephone and

television advertised products. There are many advantages of using credits cards, but the

consequences of misuse can be drastic and painful. It has provided an effortless means to carry

out transaction. Different individuals hold different notions related to the credit cards so it

becomes very interesting to study the different dimension of the credit card industry and its

related areas. The whole project revolves around the credit card business in India, its customer

base, potential customers and the consumer behavior pertaining to the credit card. The credit

card market in India is about 3 million with a value turnover of around Rs.2500 crores. The

market is expected to grow by 30% p.a. 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 volume

business. Thus, given the low income per card 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. The project tries to drive into the minds of customers of credit cards &

tries to know what they actually expect from a credit card service. The target population for this

study is the population of Dehradun. The study involves survey through self administered

questionnaire to the consumer’s. Data was examined, analyzed and presented in the tabular form.

ANOVA is carried out to study the significant difference between the overall satisfaction levels

of services provided by the various credit card issuers. Findings also suggest that how an

attribute plays an important role in changing the attitude and buying behavior of consumers.

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CHAPTER - 1

INTRODUCTION

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INTRODUCTION

Customer increasingly expects higher quality, service and some customization. They perceive

fewer real products’ differences and show fewer brands loyalty. They can obtain extensive credit

card information from the internet and other sources which permits them to shop more

intelligently. When the buyer of credit card gets satisfied after purchase, it depends on the

performance of credit card in relation to buyer’s expectations in general. Satisfaction is a person

feeling of pleasure or disappointment resulting from comparing a credit card performance in

relation to his expectations. If the performance falls short of expectations, the customer is

dissatisfied. If performance matches expectations, the customer is satisfied. If the performance

exceeds expectations the customer is highly satisfied or delighted.

The project tries to cover the main objective of finding out the consumer buying behavior as

well as their satisfaction criteria for credit card. This lead to certain implications for credit card

issuers as to how they can formulate their future strategies in order to increase their sales. The

research tries to go in details and study the purchase of credit card from different angles, so as to

analyze the issue from 360 degree. The research tries to develop an understanding on the

following aspects too which on the whole will help us in understanding the consumer behavior

for a credit card in a holistic view.

The general awareness level of credit cards. What are the advantages and disadvantages of credit cards? The consumer behavior in credit cards and decision making process. What are the uses of credit card? What are the things that a consumer needs to look for in a credit card before deciding to

purchase it? What role does brand play?

Other related issues.

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1.1) Objectives of the study

Primary objectives: - To find out the current trends in the credit card business.

To identify factors influencing the adoption and usage of credit cards.

To identify the differences in the expectation and deliverance.

Customer attitude and behavioral pattern toward credits card.

To investigate the stages involved in the behavior of the consumers during

credit card purchasing.

Secondary objectives: - To get familiarity with aspects pertaining to the credit card.

To analyze the customers’ expectations from credit cards facilitator.

1.2) Scope of the study

As this report is being prepared by taking into account the current services available

and the trends prevalent in the Credit card industries, the different tests and observations

was conducted with the data generated with the help of the current users of the services

and the market specialists who are managing this vast industry since years ,which gives

an implication that the results and finding of this report is realistic to an extent which can

become a basis for major decision that company managers and advisors can take to add

value to their companies and utilize the same for their betterment. With the help of the

given Project, it can be identified that what is the competitive environment for the

companies into consideration, what are the services the major credit card companies are

providing in the market to their clients, to secure an edge over others. This report can be

used as an opportunity to work in those areas where the other companies are not

performing.

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1.3) Proposed Methodology

A Comprehensive methodology is proposed for the project which shall cover the aspects of

primary and secondary data analysis. The research work being done here is exploratory in nature

hence more of a field work is demanded.

Data Collection Design:-

The data required for the project is obtained from various secondary sources. Descriptive

design has been used because a large number of respondents were studied based upon the

various factors. The research is being adopted to know what is happening in the market with

respect to products, the customers and their attitude.

The key features of the methodology are:-

1) Primary data: - For the purpose of above stated project a survey through structured

questionnaire is being conducted. It includes both open ended and close ended questions.

2) Secondary data sources: - To keep abreast with the dynamic Indian market, I seek to

consult various existing data also in the related areas so that a comparative study is

formulated. The source used includes books, Journals, Magazines, Newspapers, Internet

and even academicians in the related areas.

1.4) Analysis of data

The data collected by conducting the above survey was analyzed with the help of some

statistical tools like regression analysis, factor analysis, discriminant analysis, ANOVAs

etc…..

1.5) Limitations of the study

As applied to every research work here also there are certain limitations to the study which must

be mentioned beforehand so that the reader might perceive it in those regards.

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Geographical: - The study is relevant only under the geographical inbounds of

Dehradun as the data is collected from the respondents of the users in Dehradun.

Lack of cooperation from respondents: - Faced problems in reaching the target

respondents due to reluctance from the company people where the sample has been

targeted while gathering information for research purpose. Also low awareness level of

products and services in the market comes as a big hurdle in collecting data.

Resources: - Study is also constrained by the lack of resources because of which

sophisticated methodology couldn’t be used.

Time Constraints: - Time is another crucial factor which critically entombs the study.

As the study is being conducted single handedly, time remains the major constraint.

Money: - Money is a constraint since the project is self financed.

Use of secondary data:- During the preparation of this project report, assistance has

been taken from secondary data such as data from internet websites and other references

like books, magazines, company’s brochures, and other circulars etc. any

misrepresentation in those data sources may fall impact on the results of the research.

The conclusion is totally based on the truthfulness of information provided by the

respondents. So it may lead to wrong conclusion due to some unavoidable errors faced

during survey as lack of time to respond, no response, inaccuracy in response etc.

Other limitations: - Other limitations in this research could be the biased nature of the

respondents.

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CHAPTER – 2

INDUSTRY PROFILE

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CREDIT CARDS

2.1) Credit Card- An overview

Credit is a method of selling goods or services without the buyer having cash in hand. A credit card is only an automatic way of offering credit to a consumer. A credit card is basically a plastic card with a magnetic strip invented with the intention to simplify the complicated banking process for an individual in case he/she is short of cash, be it something casual like shopping or something severe like an emergency situation.

The dictionary defines a credit card as 'A card which can be used to obtain cash, goods or services up to a stipulated credit limit. The supplier is later paid by the credit card company which in due course is reimbursed by the credit card holder who will be charged interest at the end of the credit period if money is still owing.'

The word credit comes from Latin, meaning "trust. This means that using a credit card is effectively like taking-out a loan. That loan must be re-paid to the credit card company (the lender) within the credit cycle (billing is usually every 30 days and thus the credit period can vary from 7 days to 45 days depending on when the purchase was made). If the money is not repaid within this time an interest charge is levied (applied) to the remaining balance. A credit card generally works by giving its holder an immediate authority to purchase services and goods such as travel and hotel reservations as well as shopping for merchandise in and outside country.

All the credit card comes with a credit limit, a predetermined amount of money which its lender is offering as credit to a credit card holder to spend wherever he wants to. Before issuing a credit card to an individual, the bank or the financial institution has a look at his/her credit rating alongside verifying his/her credit history.

After receiving the needful information about the applicant, the lender company issues the credit card to him. Now if the credit card holder goes shopping with his credit card, he pays the vendor through the card which is actually reimbursed to the vendor through the bank or the lender company. And finally, the cardholder then repays the bank for the entire credit amount that he has used, by paying it back through regular monthly payments.

It is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. Credit card works differently from the debit card. It is issued after a credit card application has been made to the issuer. The issuer then lends money to the credit card holder generally on

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different rates of interest. And if a consumer is using credit cards then it means he can reconcile his balance at the cost of charging interest and it would make his payment period longer than before. Most credit cards are having almost the same shape and size around the globe.

Credit cards work in a very simple way, a consumer is issued a credit card after his application for credit card has been approved by concerning authorities and a credit company shows its consent to issue the applicant a credit card. Now the customer who has purchased the credit card will be able to buy things on credit up to the limit of credit which was agreed upon by both parties in terms and conditions.

A consumer can also use credit card online facilities to get benefit from his credit card. This online credit card facility is easy to use and it is faster than the actual procedures of cash transactions. A customer can apply credit card on different outlets and he can also make purchase online by using his credit card in a case he does not have liquid cash.

Every credit card is supported by a credit card companies. Some of credit cards companies are best and they offer very user-friendly credit cards. In these cards the widely known cards are Visa Credit Cards & Master Credit Cards they are used all over the world.

Different credit card companies and credit banks also maintain a system of credit check to get their credit in times. So a consumer will not be able to deceive them by using their credit cards. This credit check is maintained regularly and if a credit card holder is not able to pay his payments in the assigned time of payment then he will be given a grace period and in a case he would not be able to pay his credit. His credit card would be blocked. And he will not be able to make any further purchases from his credit card.

Most credit cards are issued by local banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1.

When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal Identification Number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction.

Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card.

Other variations of verification systems are used by ecommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder

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providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.Interest charges

Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.

The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the Annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance (ADB) divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or Residual Retail Finance Charge. Thus after an amount has revolved and a payment has been made, the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid...i.e. when the balance stopped revolving).

The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue.

Benefits to customers

Because of intense competition in the credit card industry, credit card providers often offer incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1 percent based on total purchases) to try to attract customers to their programs. However it should be noted that the incentive is insignificant to the interest charged for carrying a balance.

Low interest credit cards or even 0% interest credit cards are available. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.

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Detriments to customers

Credit cards with low introductory rates are limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. As all credit cards assess fees and interest, some customers become so encumbered with their credit debt service that they are driven to bankruptcy. Credit cards will often stipulate a default rate of 20 to 30 percent in the event a payment is missed, i.e., if a consumer misses a payment the rate will automatically increase to a very burdensome level. This can lead to a snowball effect in which the consumer is drowned by unexpectedly high interest rates. Further most card holder agreements enable the issuer to arbitrarily raise the interest rate for any reason they see fit.

Grace period

A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 40 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.

Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement, i.e. interest is applied on both the previous balance and new transactions. However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

Benefits to merchants

For merchants, a credit card transaction is often more secure than other forms of payment, such as cheques, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment. In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees and reduce the amount of cash on the premises. Prior to credit cards, each merchant had to evaluate each customer's credit history before extending credit. That task is now performed by the banks which assume the credit risk.

For each purchase, the bank charges the merchant a commission (discount fee) for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee. In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount to compensate for the transaction costs, though this is strictly prohibited by credit card companies and must be reported to the consumer's credit card issuer.

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In some countries, for example the Nordic countries, banks guarantee payment on stolen cards only if an ID card is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN for identification, and in that case showing an ID card is not necessary.

Costs to merchants

Merchants are charged many fees for the privilege of accepting credit cards. The merchant may be charged a discount rate of 1%-3%+ of each transaction obtained through a credit card. Thus in some instances of very low value transactions, use of credit cards may actually cause the merchant to lose money on the transaction. Merchants choose to pay these costs in exchange for the increased profitable sales they can create. Thus, they are considering part of the overall cost of marketing. Merchants with very low average transaction prices or very high average transaction prices are more averse to accepting credit cards. But rates are often reduced in an attempt to include more of these types of merchants.

Parties involved

Cardholder: The holder of the card used to make a purchase; the consumer. Card-issuing bank: The financial institution or other organization that issued the credit

card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. Cards issued by banks to cardholders in a different country are known as offshore credit cards.

Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder

Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.

Independent sales organization: Resellers (to merchants) of the services of the acquiring bank.

Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.

Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.

Transaction network: The system that implements the mechanics of the electronic transactions. Transaction processing networks include: Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, TSYS, Concord EFSnet, and VisaNet.

Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities, charities, professional organizations, and major retailers.

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2.2) History

As far back as the late 1800s, consumers and merchants exchanged goods through the concept of credit, using credit coins and charge plates as currency. It wasn't until about half a century ago that plastic payments as we know them today became a way of life.

Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange - the forerunner of banknotes - was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century. The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly.

Early Beginning:

According to Encyclopedia Britannica, "the use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers." However, references to credit cards have been made as far back as 1890 in Europe. Early credit cards involved sales directly between the merchant offering the credit and credit card, and that merchant's customer. Around 1938, companies started to accept each other's cards. Researchers also say that credit cards back in those days were not made of plastic but most probably from metal coins, metal plates, celluloid, metal, fiber or paper.

In the early 1900s, oil companies and department stories issued their own proprietary cards, according to Stan Sienkiewicz, in a paper for the Philadelphia Federal Reserve entitled "Credit Cards and Payment Efficiency." Such cards were accepted only at the business that issued the card and in limited locations. While modern credit cards are mainly used for convenience, these predecessor cards were developed as a means of creating customer loyalty and improving customer service.

In 1946, John Biggins of the Flatbush National Bank of Brooklyn in New York invented the first bank credit card. Biggins invented the "Charge-it" program between bank customers and local merchants where merchants deposited sales slips in the bank after which the bank billed the customer. When a customer used it for a purchase, the bill was forwarded to Biggins' bank. The bank reimbursed the merchant and obtained payment from the customer. The catches: Purchases Credit Cards could only be made locally, and Charge-It cardholders had to have an account at Biggins' bank. In 1951, the first bank credit card appeared in New York's Franklin National Bank for loan customers. It also could be used only by the bank's account holders.

The Diners Club Card was the next step in credit cards. According to a representative from Diners Club, the story began in 1949 when a man named Frank McNamara had a business dinner in New York's Major's Cabin Grill. When the bill arrived, Frank realized he'd forgotten his wallet. He managed to find his way out of the pickle, but he decided there should be an

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alternative to cash. McNamara and his partner, Ralph Schneider, returned to Major's Cabin Grill in February of 1950 and paid the bill with a small, cardboard card. Coined the Diners Club Card and used mainly for travel and entertainment purposes, it claims the title of the first credit card in widespread use.

Plastic Debuts:

In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age.

By 1951, there were 20,000 Diners Club cardholders. A decade later, the card was replaced with plastic. Diners Club Card purchases were made on credit, but it was technically a charge card, meaning the bill had to be paid in full at the end of each month.

According to its archivist, American Express formed in 1850. It specialized in deliveries as a competitor to the U.S. Postal Service, money orders (1882) and traveler's checks, which the company invented in 1891. The company discussed creating a travel charge card as early as 1946, but it was the launch of the rival Diners Club card that put things in motion.

In 1958 the company emerged into the credit card industry with its own product, a purple charge card for travel and entertainment expenses. In 1959, American Express introduced the first card made of plastic (previous cards were made of cardboard or celluloid).

American Express soon introduced local currency credit cards in other countries. One million cards were being used at about 85,000 establishments within the first five years, both in and out of the U.S. In the 1990s, the company expanded into an all-purpose card.

Closed Loop System:

The Diners Club and American Express cards functioned in what is known as a 'closed-loop' system, made up of the consumer, the merchant and the issuer of the card. In this structure, the issuer both authorizes and handles all aspects of the transaction and settles directly with both the consumer and the merchant.

In 1959, the option of maintaining a revolving balance was introduced, according to MasterCard. This meant cardholders no longer had to pay off their full bills at the end of each cycle. While this carried the risk of accumulating finance charges, it gave customers greater flexibility in managing their money.

Bank Card Associations:

The general-purpose credit card was born in 1966, when the Bank of America established the BankAmerica Service Corporation that franchised the BankAmerica brand (later to be known as Visa) to banks nationwide.

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In 1966, a national credit card system was formed when a group of credit-issuing banks joined together and created the Interbank Card Association, according to MasterCard. The ICA is now known as MasterCard Worldwide, though it was temporarily known as Master Charge. This organization competes directly with a similar Visa program.

The new bank card associations were different from their predecessors in that an 'open-loop' system was now created, requiring interbank cooperation and funds transfers. Visa and MasterCard still maintain "open-loop" systems, whereas American Express, Diners Club and Discover Card remain "closed-loop."

Visa and MasterCard's organizations both issue credit cards through member banks and set and maintain the rules for processing. They are both run by board members who are mostly high-level executives from their member banking organizations.

As the bank card industry grew, banks interested in issuing cards became members of either the Visa association or MasterCard association. Their members shared card program costs, making the bank card program available to even small financial institutions. Later, changes to the association bylaws allowed banks to belong to both associations and issue both types of cards to their customers.

Credit Card Processing Evolves:

As credit card processing became more complicated, outside service companies began to sell processing services to Visa and MasterCard association members. This reduced the cost of programs for banks to issue cards, pay merchants and settle accounts with cardholders, thus allowing greater expansion of the payments industry.

Visa and MasterCard developed rules and standardized procedures for handling the bank card paper flow in order to reduce fraud and misuse of cards. The two associations also created international processing systems to handle the exchange of money and information and established an arbitration procedure to settle disputes between members.

Other Issuers Join The Party:

Although American Express was among the first companies to issue a charge card, it wasn't until 1987 that it issued a credit card allowing customers to pay over time rather than at the end of every month. Its original business model focused on the travel and entertainment charges made by business people, which involved significant revenue from merchants and annual membership fees from customers. While these products are still in its tool chest, the company has developed numerous no-annual fee credit cards offering low introductory rates and reward programs, similar to as traditional bank cards.

Another relatively recent entry into the card business is Discover Card, originally part of the Sears Corporation. According to Discover, its first card was unveiled at the 1986 Super Bowl. Discover Card Services sought to create a new brand with its own merchant network, and the company has been successful at developing merchant acceptance. A 2004 antitrust court ruling

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against Visa and MasterCard -- initiated by the U.S. government and the Department of Justice -- changed the exclusive relationship that Visa and MasterCard enjoyed with banks. It allows banks and other card issuers to provide customers with American Express or Discover cards, in addition to a Visa or MasterCard.

History of the Shape of Credit Cards:

Credit cards were not always been made of plastic. There have been credit tokens made from metal coins, metal plates, and celluloid, metal, fiber, paper, and now mostly plastic cards.

First Bank Credit Card:

The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York. In 1946, Biggins invented the "Charge-It" program between bank customers and local merchants. Merchants could deposit sales slips into the bank and the bank billed the customer who used the card.

The Popularity of Credit Cards:

Credit cards were first promoted to traveling salesmen (more common in that era) for use on the road. By the early 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and MasterCard became huge successes overnight.

The first use of magnetic stripes on cards was in the early 1960's, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960’s.

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2.3) Types of Credit Cards

There are many types of credit cards which are used by different types of customers and account holders. Mostly business personnel use credit cards which are convenient in their use and which suit businessmen. Similarly students would use student credit cards and a layman will use general purpose cards. There are some most used types of credit cards. For example Interest Credit Cards are mostly used by businessmen and company CEOs because there is a charge of interest if credit card payment has not been annulled in time.

Another important and commonly used type of credit cards is those in which 0 APR (Annual Percentage Rate) is charged as its introductory price similarly cash cards are also used which are just like cash but in the form of plastic card. It is because the cash card holder has paid the cash price of that card and he can use it as cash now. In this card the annual percentage rate is always zero and it is used by millions of people around the globe.

There is another kind of credit cards which are called Payments Card. A payment card is one with which a person can make the payment of something and they are also widely used in the business field and in different areas of financing. American Express Credit Cards is another type of credit cards these American cards are used almost all over the world due to their world wide acceptability. And they are acceptable almost in every area of the world. In some types of credit card the interest rate is very low as compared to general interest rate applied in normal credit cards and these types of cards are called Low Credit Cards. Low rate credit card is mostly used by those who can't bear the price of interest charge so it is a facility for them to use the low rate card for their convenience.

These are some major types of Credit Cards:-

Secured Credit Cards

Travel Credit Cards

Rewards Credit Cards

Bad Credit Credit Cards

Airline Credit Cards

Business Credit Cards

Cash Back Credit Cards

Instant Approval Credit Cards

Low Interest Credit Cards

Student Credit Cards

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Secured Credit Cards:

Secured Card or Secured Credit Card is a sort of credit card in which the card is secured with some deposit by the card holder. In a general sense the credit card holder must deposit between the 100% to 200% amount of desired credit and in this way the credit card is secured. It is because after depositing an amount the chances of bad credit history become low as compared to unsecured credit cards hence credit card secured by using the deposit from the credit card holder.

These secured cards are used and provided by the card issuers due to the fact that if the credit card holder has a bad credit history or he makes an intentional attempt to delinquent credit cards secured against his fraud. The secured credit card holder is expected to make the regular payment of its usage of cards and in most circumstances the card holders make the regular payments. So these secured credit cards help the credit card issuers and banks to get the payment in time as compared to the payments of unsecured credit card.

An account holder in some bank can make an application for the secured credit card and after the secured credit card application has been approved he can use his bank secured credit card now for different modes of payment up to the secured deposit which he has deposited in the bank. Similarly an application can also be submitted for unsecured credit card and after the approval of unsecured credit card application a person can use his unsecured credit card.

If a person does not make his due payments within 180 days then usually the rules of secured credit card apply and the bank or credit card issuer can freeze the account of the card holder. There is another type in which the card is not secured with any deposit but a guarantee has been given for the payment and that is called Guaranteed Unsecured Credit Cards and it is mostly used by the companies for their employees. These cards are also useful for those people who can't make regular payments by using unsecured credit cards or unsecured credit card debt. In this way these cards are very helpful for these people also.

Most terms and conditions are described in the form at the time of issuing the secured credit card in the application form. And an account is opened after the signature on the agreement by the applicant. Secured cards are less expensive to those card holders who have bad credit history than unsecured cards.

Travel Credit Cards:

A travel card is like having cash with us everywhere and that cash is acceptable almost every part of world. And we don't need to convert the cash after going to conventional money exchange centers. And travel credit cards are offered for this purpose to the travelers and tourists. They are easy to use and the tourist and traveler can also earn

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different types of points and rewards on these cards on every purchase. And afterwards he can use these travel rewards in his tour or he can take back these rewards in the shape of cash.

Hence a travel credit card also serves as travel reward card and a tourist or traveler can use this travel reward which he gets from different ways in his shopping and in air mile discounts. The best travel credit card which has travel credit is either travel MasterCard or Travel Visa cards because of the fact that American Express Travel credit card is not acceptable everywhere in the world.

Most ATM machines have the MasterCard and Visa Card logos so it is easy for the traveler to use these cards and get rewards if he's using travel reward credit card. He can simply use these rewards later on in his journey to get points or to get discount.

There is another type of travel credit cards which are available for business personnel and executives of different companies to use them in their travel. And these cards have special features for such prestigious people around the world. These cards are well known by their name Travel Business Cards. And traveling while someone has these travel credit cards in his pocket is the best credit card travel or at least if not best than it is one of the best ways to use these cards.

Though express card which is backed by American Express Card system is not acceptable all over the world but it is acceptable in major parts of the world and in almost all free countries so it is not a bad choice even to use this card. But its acceptability is not as wide as Visa or Master Cards.

Many travel credit card providers also offer credit card travel insurance to their credit card holder however this insurance doesn't apply to their cardholder when he has reached his destination but some credit card providers also give this facility and a travel credit card holder can find these types of card providers for a safer journey.

In this way travel credit cards work and there is another plus points in these travel credit cards and that is their acceptability in some major and famous money exchangers. This can help the traveler if he needs to have cash in liquid form. Then it is another opportunity for him to use his travel credit card because they are acceptable to currency exchangers so a traveler does not need to look around for the ATM machine in this case.

Rewards Credit Cards:

Different rewards are given on different types of credit cards which are provided by either credit card companies or banks. These types of reward cards are called reward credit cards. In the past not every company of credit card provider was offering this types of credit cards but now almost all credit card companies and banks offers credit cards with rewards. Though there is a classification for each type of credit card.

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A reward credit card functions in the same way as other type of credit cards perform their functions but on a reward card different types of bonus and honorariums are given which are called reward and these credit rewards can be used in getting discount or getting some cash back or in some other ways. Reward cards are being offered now by almost every major credit card provider and bank. And these cards work in very simple way. Whenever the card holder makes a transaction by using a reward credit card he would get some points and this will be called credit card reward which is given to him on the usage of reward credit card. On each transaction credit card reward is given in most cases. Later on these rewards can be used in getting some discount or some cash back on purchases.

After some transactions has been taken place through reward credit cards now a card holder can use his credit card rewards which he has earned by using his credit card in different ways. He can get some discount from shopping, or he can also get some cash back or he can win some gifts and prizes through these rewards as well. Wherever the rules of reward credit card apply, credit card holder can use his credit card rewards there.

For example if someone is using American Express Reward Credit Card then he can earn some American Rewards by using this card. Almost every reward card is good in its usage. But some reward credit cards have really earned the reputation in the minds of customers. And these are Visa Reward Credit Cards, MasterCard Reward Credit Cards, & American Express Reward Credit Cards. In these brands many types of reward credit cards available, depending upon the status and income group of the card holder. And a person can choose the best reward credit card from these brands which is suitable to him and his pocket.

Having these reward credit cards is not only helpful but it is also a good source of enjoyment. And it provides a sensation of security and conformability in the mind of the card holder.

Bad Credit Credit Cards:

Credit cards come in different types and for different class of people. So there is a type of credit card which is available for those people who have bad credit repute. And these cards are called Bad Credit Credit Cards these are credit cards for bad credit people.

Almost every famous group of credit card provider offers such cards to its bad credit card holders. And these people can use bad credit cards in their transactions. So a person can use credit card with bad credit and he can get a credit card from credit card providers. But he just needs to apply for that type of credit card.

People apply for bad credit cards because of the fact that their credit rating has been decreased from the required level. And they face credit cards bad credit so the credit card providers restrict them and they cannot use their credit so frequently because of having defaulting behavior. So many companies offer cards for bad credit people and these cards are offered to the different income-groups and different types of people.

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People can come out from the situation of credit cards with bad credit after they focus and determined to come out from such situations. Following factors are most important which makes a person and compel it to use credit cards with bad credit. These are failure to make payments in time, failure to pay house hold bills, rents and another important reason is their postal location. Hence they can use these types of cards to make their necessary payments and they can use credit cards for bad credit.

They just have to apply for these cards and bank or credit card providers will consider his case before issuing him a bad credit credit card. Bad credit credit card can be used up to the limit which is specified in the agreement which has been signed by the credit card holder. If a person has increased his credit rating then he can use his credit card bad credit to gain a secured credit card and he can also make bad credit consolidation while he's doing this thing.

In this way he can use his bad credit card and it will help him to regain his repute and his credit history would be better than before provided he must use these cards with a realistic approach. He can also get rid from the credit card for bad credit people in this way if he would manage his bad credit credit card very well. It does not need a specialization to do so but the card holder must use his bad credit credit card with common sense and he must not indulge himself in useless activities and purchases.

There is another type of bad credit credit card available that can also help the card holder and he can obtain that type of card if it is a right selection for him and this type is called Unsecured Bad Credit Card. And by using this card he can improve his credit history.

Airline Credit Cards:

Air line credit card or air line card is a type of credit card which is used by those people who travel frequently through different air line services. These cards give them different opportunities. Airline cards are not only useful in traveling through air but they also give different facilities in shopping and purchasing to the traveler.

Every credit card provider company and different types of financial services providers and banks as well offer a wide range of credit cards and in those cards one can choose a card from the best air line credit cards which is most appropriate to him in his traveling. Airlines credit card can be used in different ways, a card holder can get free air miles by using the card and these miles are called credit card airline miles which the card holder earned by using the airline card.

Different airline services also offer their own cards with the cooperation of credit card providers. e.g. Alaska airline provides airline card with the corporation of different credit card providers and this type of card is called Alaska Airlines Credit Card.

There is another type of airlines credit cards and these cards are used to get some miles by using the credit card. They are specially designed for those who travel frequently and

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upon using these cards they get free air miles and on air miles card a card holder can get up to the 5000 free air miles. Some cards are solely offered as air miles cards and they are typically for those people who travel too much in a single week. Almost all companies offer airline miles credit card but 2 international brands are most famous they are Visa and MasterCard airline credit cards. When a person uses these brands of cards he not only get free mileage but he also get a bonus upon crossing a specific limit and there are also free miles upon approval of the card. Hence he can use credit card airline miles in his journey later on.

The packages for airline miles card vary from card to card depending upon the nature and class of card, e.g. some air miles cards have low annual percentage rate while on the other hand some other cards have higher annual percentage rate as compared to first type of cards.

Similarly the annual program fee for each card is different depending upon the credit line of the card. And almost all air miles credit cards can be accessed online easily by the card holder.

Business Credit Cards:

Among all types of credit cards the business credit cards are those cards which are used by most of the people after the general purpose cards. Anyone can make a business credit card application by person or online to get a business credit card. After the approval of application different terms and conditions can be finalized by the applicant about his business credit line on which he gives his signature. As soon as this agreement has been finalized the credit card issuer registers the card holder in their data.

Business credit cards are not only good for business personnel but they also help them to get some other facilities which a lay businessman doesn't have.

Credit card business is done by almost all the major credit card providers in the world. And MasterCard and Visa are 2 brands which are leader in this business. Citi Business Credit Card is also one of these brands which are running most successful business in credit cards. If an individual or the company goes into the state of business bad credit then in this case grace period is also offered to that company of individual for a certain time so that he can come out from the crisis.

Business credit cards are not offered only to giant business entities but these cards also come in other dimensions and for small business these are small business credit cards. And an account holder of business credit card can check his business credit report online 24 hours in a day. This is one of the most entertaining facilities given by the credit card providers.

Credit card small business type is one of the most successful industries in the small business and in the banking sector because there are not many giants group but there are lots of people who have small businesses. Many banks make a business credit card offer

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to their regular customers who already have businesses and using credit cards. And these banks also give the facility of using business credit card online. These offers gave a boost of small business cards. A person who is looking for a small business credit card can search for search card online and he can also make a proper analysis of each card to select a card which is most suitable to meet his business needs. After selecting the small business card of his choice he can correspond with the concerned credit card provider online and he can also apply for getting that card at the spot. The processing of small business card is fast and he would get cards with in the minimum possible time. This is the fastest way to get a small business credit card. In fact, in this way the applicant can also save his time by making an application for small business credit card online. Many companies offer zero APR as an introductory price on small business cards. So an applicant can take this benefit easily.

Cash Back Credit Cards:

A cash back credit card users have to deposit some amount of cash in their credit account in order to get a certain amount of cash discount. The typical obligation that these cash back credit cards put on their card holders is to make use of the card to buy or make payments for the objects that are sold by related organizations or companies. When a credit card is used to buy items of these partners then the cash back points or discounts are awarded to card holders. Several cash back credit cards do not offer cash but they hand out gift certificates that can be exercised to get objects from partner organizations.

When patrons need extra advantages from credit cards they will seek for the best cash back credit card available in the market. Out of all the rewards presented by different company's credit cards to the customers, cash rewards are the most attractive one like cash back reward credit card. Many individuals think that the best cash back credit cards one would get is %5 cash back credit cards. These cash back cards generally have set rules and standards. The 5% cash back credit card offer the cash back reward which is normally valid for certain elected commodities. Customers can also go for 2% cash back credit card which doesn't enforce too much limitation. The business credit card with cash back can work in similar way. Different reward can be given to different sorts of credit.

The cash back business credit card provides the cash back rewards that are very appealing. Cash back credit cards will pay back a percentage of the cash used for office purchases of a small business. Through a business credit card, cash back can be introduced after doing purchases for business, depending on the policies placed by the credit card provider. There are numerous business credit cards with cash back potential, but users have to discover which ones are appropriate for their business.

Instant Approval Credit Card:

Almost the major companies of the world in credit card fields provide instant approval of their credit card but there are still some flaws in the credit card instant approval process. Credit cards instant approval is not a problem in developed countries but problem lies with under develop countries or developing countries. In general terms as soon as a card

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holder uses his credit card he gets instant credit card approval from the credit card machine after his credit card has been processed. Generally the ATM machines and credit card machines apply credit card instant approval method within seconds but there are some machines which really make the card holder worry because their timing of processing of card is longer than normal and they also reject the card sometimes. Such functions of instant credit cards make them easy and user-friendly to their customers and card holders. On the other hand if an instant credit card shows some problems then it is really irritating for the card holder and he wants to slam his head into a wall.

Due to these facts mentioned above the instant approval credit cards are replacing themselves against those cards which don't give fast approval so now in the recent time everyone is looking for instant approval credit card.

Now the modern development in IT and E-commerce sectors has made it possible for the credit card applications to give credit card applications instant approval, this is the great opportunity which was never offered before.

In these way instant approval credit cards help customers and card holders in many ways and make their transactions fast but there is another cost in these transactions and that is the transaction charges of using the credit card and this is considered one of the worst things in credit cards system. But if a person can make the rational use of his credit cards then he can overcome this problem.

Low Interest Credit Cards:

There are many types of credit cards available nowadays. In these credit cards on some cards the interest charges are lower than other cards this low interest credit is a facility for the card holder especially for those card holders who can't afford a higher rate of interest on their credit cards. And a person can use and obtain the low interest card if he can't afford the credit card with normal interest rates. Now many companies offer low interest credit cards. It is very simple to apply for low interest credit card and a candidate can apply for it online or he can apply in the written form after the approval of his application low interest credit card will be issued to him.

Low interest cards are helpful to customers and card holders in many ways. Their transaction charges are also low than other credit cards and credit card low interest makes it easy to pay it back thus the customer does not get a very heavy burden of the interest by using low interest rate credit cards.

Hence credit cards with low interest are in the favor of customer rather than the issuing company or bank. And a card holder does not have to pay back the high percentages of interest on his credit.

Companies offer different credit cards low interest rates on their different cards depending upon the pocket situation of the customer and upon his choice to choose a

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credit card with low interest. By making a deep analysis and different reviews a person can select a low interest rate credit card for his use. It is possible to get and apply for these cards online.

These low interest cards are helpful in using as well and when a person uses these cards he uses them with a sense of comfort and ease. They are not like other cards that when a person is thinking to use them he thinks twice before using his credit card only a single time. And these credit cards low interest goes in the favor of credit card holder but companies also take good benefit by issuing these types of cards to their customers.

Student Credit Cards:

Student Card of Student Credit Card is a new way for students to use their money. Many types of student cards are available from different credit card companies and many banks also offer student credit cards for the convenience of students and for expanding their business of student credit cards. These types' students' credit cards are available for the student of different levels. For example there are cards available for university students and college credit card is for those students who are studying in colleges.

These credit cards for students are helpful for them in getting their books in time and to use their cards whenever it becomes necessary for them as it is a best way to keep money with them without any fear of stolen because it is backed by high security and a student can freeze his credit card with just a phone call if it is stolen. Credit card for student is now in use and the first thing for which students look when they go to the new university is the option of credit card for students.

Now almost every student in develop countries is using this option and using plastic money in the shape of students credit cards. This is not only helping students but it is also expanding the business of credit card providers and due to this reasons now credit card providers are issuing students credit card with different packages, e.g. there are different ranges of cards for university and school students while college student credit card is issued to the college students.

In the present times students credit cards are mostly use because they are the most moderate credit cards among other student cards and credit cards student like to use these cards due to their moderation.

There is another benefit of using student credit cards and that is the option of making student loan consolidation or school loan consolidation by using the student credit cards of the students. And this option is very useful and it is highly supported by the students and their parents.

Normally the introductory APR in student credit cards is zero and that attracts many students to gain a student credit card.

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2.4) Transaction Process

Authorization: The cardholder pays for the purchase and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit limit for the merchant. An authorization will generate an approval code, which the merchant stores with the transaction.

Batching: Authorized transactions are stored in "batches", which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day. If a transaction is not submitted in the batch, the authorization will stay valid for a period determined by the issuer, after which the held amount will be returned back to the cardholder's available credit. Some transactions may be submitted in the batch without prior authorizations; these are either transactions falling under the merchant's floor limit or ones where the authorization was unsuccessful but the merchant still attempts to force the transaction through. Such may be the case when the cardholder is not present but owes the merchant additional money, such as extending a hotel stay or car rental.

Clearing and Settlement: The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays the acquirer for the transaction.

Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totaling the funds in the batch minus the "discount rate," which is the fee the merchant pays the acquirer for processing the transactions.

Chargebacks: A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargebacks are typically initiated by the cardholder. In the event of a chargeback, the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

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Processing flowchart

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2.5) Merits and Demerits

A credit card can be an asset to our lifestyle, but if not handled carefully it can become a liability, especially if we find it so convenient and easy to use that we lose control of our spending.

MERITS:

Are Credit cards good or bad? It depends on the ways of using them. Credit cards ensure & allow us to make large amount of payments up to as much as millions of dollars. This is so for most laws in all states do not allow persons to carry a lot of cash with them but to use cheques or other means of payment. By this way credit cards serve is used as the alternative method that facilitates to make such payments. Credit card has another advantage. Online transactions are allowed to carry out by credit cards. This is very good especially when we want to travel we can pay for services such as car rentals and hotel accommodation before leaving

for our travel destination.

When we are traveling to abroad then our credit card will allow us to make purchases in that country as the funds in our credit card can be converted into the currency of that country using facilities such as VISA. That means we will be able to carry on making our payments as if we were still in our country. This is one of the important media of global exchange.

Essentially A Credit Card Allows Us To:

Purchase products or services whenever and wherever we want, without ready cash and paying for them at a later date.

Have the option of paying only a part of the total expenses. The balance amount can be carried forward, with an interest charged.

Withdraw cash whenever, wherever we are, through ATMs and other withdrawal centers.

Enjoy a revolving credit limit without any charges for a limited period (mostly 20 to 50 days).

Transact money of more than one currency, from one country to another.

They allow us to make purchases on credit without carrying around a lot of cash. This allows us a lot of flexibility.

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They allow accurate record-keeping by consolidating purchases into a single statement.

They allow convenient remote purchasing - ordering/shopping online or by phone. They allow us to pay for large purchases in small, monthly installments.

Under certain circumstances, they allow us to withhold payment for merchandise which proves defective.

They are cheaper for short-term borrowing - interest is only paid on the remaining debt, not the full loan amount.

Other facilities afforded on a credit card include reward points on card usage, insurance cover against air and road accidents, loss of baggage, and so on. All credit cards have built-in safety features like signatures and personal identification numbers. International credit cards us financial flexibility when we travel abroad. Many cards offer additional benefits such as additional insurance cover on purchases, cash back, air miles and discounts on holidays.

Purchase Power and Ease of Purchase :

Credit cards can make it easier to buy things. If we don't like to carry large amounts of cash or if a company doesn't accept cash purchases, for example most airlines, hotels, and car rental agencies, putting purchases on a credit card can make buying things easier.

Protection of Purchases:

Credit cards may also offer additional protection if something we have bought is lost, damaged, or stolen. Both our credit card statement and the credit card company can vouch for the fact that we have made a purchase if the original receipt is lost or stolen. In addition, some credit card companies offer insurance on large purchases.

Building a Credit Line:

Having a good credit history is often important, not only when applying for credit cards, but also when applying for things such as loans, rental applications, or even some jobs. Having a credit card and using it wisely, i.e. making payments on time and in full each month will help to build a good credit history.

Emergencies:

Credit cards can also be useful in times of emergency. While we should avoid spending outside our budget, sometimes emergencies such as car breaking down or flood or fire may lead to a large purchase like the need for a rental car or a motel room for several nights?

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Credit Card Benefits:

In addition to the benefits listed above, some credit cards offer additional benefits, such as discounts from particular stores or companies, bonuses such as free airline miles or travel discounts, and special insurances like travel or life insurance.

The advantages of using a credit card include convenience, security, and even earning rewards based on our purchases. However, credit cards can tempt us to spend beyond our means which leads to paying high interest rates and possibly sinking into debt. Before opening a new credit card, take the time to understand its benefits and how to take advantage of them without getting our self in debt.

With any credit card, the best plan is to pay off the balance on time every month. If there are no annual fees, we can earn rewards while deferring our payments and keep from carrying around a wallet full of cash. Yet, if we carry a balance forward from one month to the next or pay our bill late, the interest rates and late payment penalties will quickly outweigh the advantages of using our credit card.

Convenience:

One does not have to worry about carrying around enough cash to cover purchases or take the time to write out checks. Credit cards make it easy to shop online and may speed up some transactions as we do not have to wait for the seller to receive our check or complete a PayPal transaction before sending our purchase.

Security :

Most credit cards offer some form of buyer protection. If a payment is in dispute, the charge can be often being canceled from card. In the case of identity theft, many credit card companies will flag suspicious purchases, put a hold on card and contact for confirmation before letting allowing more purchases. If credit card is stolen and we promptly contact the credit card company, the credit card can be canceled and we will not be liable for purchases made after the theft.

Reward Plans:

Many credit cards offer reward programs that earn items or even cash back based on how much we use the credit card. There are many different reward programs to choose from. Specific store credit cards may earn points toward a gift certificate to be used at the store. Some cards may offer points to use for airline tickets. Some credit cards can even be connected to college savings plans, so our purchases help save for our child's education.

Deferred Payments:

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By charging high ticket items to our credit card, we buy our self some time before having to pay for the item. During that time, our money can be earning money in our bank account. For example, if we buy a Rs. 25,000 computer with our credit card on August 5th and the credit card payment is not due until September 15th, that Rs.25,000 can stay in our bank account and earn another month's worth of interest before we pay the bill. By paying off our bill in full each month, we can enjoy these advantages of using a credit card. Additionally, using a credit card responsibly in this way will also help raise our credit rating which will come in hand when we decide to take out a loan to buy a car or a new home.

One of the major advantages is called "buy now, pay later". This opportunity is allowing people to use the grace period to purchase goods and pay much later. The incentives are another major advantage. Credit cards issuers are offering loyalty schemes, attractive point reward systems and air miles. The credit card owner can make excellent savings using its credit card often and always paying off the balance when he has a good reward scheme. Incentives are often changing, and the new reward systems are more and more attractive. No cash needed is, maybe, the main credit card advantage. The cardholder is carrying only a small plastic card in his wallet. The cardholder will not make payments in cash; he will not worry about the robbers tempted by an attractive wallet. Many transactions are made everyday using credit cards. Cash not allowed is an important condition when someone wants to rent a car or check to the hotel. Often the credit card is used as a deposit.

Credit cards are also presenting another kind of advantage: The Travel Advantages. If someone needs to travel and must change its money (from Rupees to USD, for example) he can have the unexpected surprise to get a very poor exchange rate. He will also need to pay some commissions at the bank. The credit card is making these operations more cost-effective and much simpler. Most countries accept all major credit cards, especially hotels and tourist resorts.

The conveniences of credit cards come with many advantages for credit card users. From rewards programs to introductory offers which allow card holders to make interest-free purchases during the grace period, credit cards come with many advantages.

Rewards and cash back programs; these programs are available for a variety of credit cards and many come without an annual fee. Most programs offer 1 reward point per dollar spent on the credit card, with special offers available at certain retail outlets, or for the purchase of specific products. When signing up for a credit card, search for rewards programs which offer a sign-on bonus, and get enough points for a gift certificate from our favorite store, or even points which can be used for a cash-back reward on our first monthly statement.

Interest free purchases are available to customers that pay for purchases within the grace period. For most credit card companies, the grace period lasts from twenty to twenty eight days after the item has been purchased using the credit card. Paying for items within the grace period isn’t the only way to get interest free purchases. Many credit card

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companies offer interest free rates on purchases and balance transfers through the first six to twelve months after the account has been opened. Be sure to make the minimum monthly payments on time and avoid missed payments to maintain this introductory rate.

Credit cards are a great way to establish and increase a credit rating. Credit card companies report to the three main credit agencies each month and are therefore a great way to establish and improve our credit rating. Be sure to maintain minimum monthly payments and stay well under the limit to make the most of the credit rating.

Purchase protection allows the consumer to protect their purchases for up to one to two months after the date of purchase for faulty items. Be sure to check our credit card agreement for exactly what is covered – as some companies also offer extended warranties on certain items purchased with the credit card.

Buy now, pay later. This is a great reason to use a credit card. As long as the purchase is paid within the grace period, interest won’t accumulate. When using a credit card to fund the oversight between income and expenses, it can be far less expensive than obtaining a pay-day loan. Many people use credit cards for convenience, paying off the balance when they receive their paycheck.

Advantages of credit cards:

Credit cards can work out cheaper than a short term personal loan.

Credit cards can offer a high degree of loan flexibility i.e. we can pay the minimum amount or the whole debt.

No redemption penalties for early repayment of loan.

Many credit cards offer an interest free period.

Credit cards offer online purchasing power.

The key benefit to credit cards is really the added protection we enjoy when making purchases.

Many credit cards offer enticing additional benefits such as insurance cover on purchases, cash back, air miles and discounts on holidays.

A credit card can be a great convenience and provides the safety of not dealing with cash, which is more easily lost. Credit cards are also very useful in the sense that they offer protection under the Consumer Credit Act and we can often get our money back in a fraudulent purchase that we would be unable to do with any other payment method.

Credit cards also offer “incentive” benefits such as air miles or credit toward future purchases.

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DEMERITS:

Now we will see the bad side of credit cards. Credit cards make money look as though it were virtual. That is why most people are able to make huge payments when using a credit card of which if it were cash they will be able see that the money they are using is too much. This is one of the reasons why credit card holders are usually big spenders.

All our funds can be withdrawn that is also allowed by Credit and even we can get an overdraft such that our account goes to negative. This will mean that every month end we will be having a debt. This can be a problem for some people. This becomes a cycle such that either we cannot cover the deficit

each time we pay or new funds get in they will be taken up by the negative balance so what we do is take another overdraft again. This can get so much out of hand such that such persons will start to sell some of their property just to offset some debts and in no time their lives will be ruined.

Credit cards are a relatively expensive way of obtaining credit if one doesn’t use them carefully, especially because of the high interest rates and other costs. Lost or stolen cards may result in some unwanted expense and inconvenience. The use of a large number of credit cards can get us even further into debt.

Using a credit card, especially remotely, introduces an element of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve.

Blowing Budget:

The biggest disadvantage of credit cards is that they encourage people to spend money that they don't have. Most credit cards do not require us to pay off our balance each month, so even if we only have Rs.1000, we may be able to spend up to Rs.5000 or Rs.10,000 on our credit card. While this may seem like 'free money' at the time, we will have to pay it off -- and the longer we wait, the more money we will owe since credit card companies charge us interest each month on the money we have borrowed. „

High Interest Rates and Increased Debt:

Credit card companies charge us an enormous amount of interest on each balance that we don't pay off at the end of each month. Consider this: If we have a Rs.1000 in savings, most banks will give us at the most 2.0 to 2.5% interest on our money over the course of the year. This means we earn Rs.20 – Rs.25 a year on our Rs.1000 savings. Most credit cards charge us up to 10 times that amount of interest on balances. This means that if we

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have Rs.1000 balance that we don't pay off, we will be charged 20-25% interest on that Rs.1000. This means that we owe almost Rs.300 interest (plus the original Rs.1000) at the end of the year. A good way to look at this is in comparison to what we would earn in interest from a bank or owe in interest to a bank loan: Savings accounts may pay us around 2% interest; if we have a loan from a bank we may pay them around 10% interest (5 times as much as we earn off our savings); if we owe money to a credit card company, we may pay them around 20% interest (10 times as much as we earn off our savings) .

Credit Card Fraud:

Like cash, sometimes credit cards can be stolen. They may be physically stolen or someone may steal our credit card number from a receipt, over the phone, or from a Web site and use our card to rack up debts. The good news is that, unlike cash, if we realize our credit card or number has been stolen and we report it to our credit card company immediately, we will not be charged for any purchases that someone else has made. Even if we don't realize our credit card number has been stolen, most credit card companies don't charge us or only charge a small fee, like Rs.25- 50, even if the thief has charged thousands of rupees to our card. There are several things we can do to prevent credit card fraud:

Some people have been swindled by giving their credit card numbers to dishonest salespeople over the phone.

It becomes a loan when the credit becomes due and we do not pay for it.

Adding monthly interest charges means we pay more for the goods and services.

Consumers often have more than one credit card and each one has a credit limit. When the credit limits for all cards are added up, the total can be in the thousands of dollars. Consumers can fall into the habit of using credit cards to extend their income.

Credit cards are easier to use than applying for loans even when a loan from a credit union, bank or other financial institution may provide the funds at a lower interest rate.

High Interest Charges:

One of the biggest disadvantages to using credit cards is the extremely high interest fees charges by the credit card companies. The interest fees are always significantly higher than the cost by the credit card companies. The interest fees are always significantly higher than the cost of obtaining a traditional bank loan, In fact, many credit companies charge as high as 20 percent for any purchases that aren’t paid in full at the end of each month! The high interest charges are what keep the credit card companies in business so we need to check the fees of each particular card before one apply.

Temptation to Overspend:

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Credit cards can be dangerous for individual who are not good at budgeting. The temptation is very easy to overspend because we don’t need to pay for our purchases upfront. Regardless of how much money is actually in the current account, we can charge purchases up to our maximum credit card limit. Somehow signing a piece of paper at the time of purchase doesn’t always feel like we are actually spending money.

Unpaid Balances:

By spending more than they can actually afford each month, individuals end up paying very high interest charges each month. Because we are only billed once a month, it is also very easy to forget about purchases we have made using a credit card. We may end up with a very unwelcome surprise at the end of the month once we see just how many purchases we signed for during the past 30 days! Any unpaid balances are charged very high interest rates that can quickly add up.

2.6) Credit Cards in India

Segment Performance:-- The number of credit card base in India is increasing at a slower pace. The total number of credit cards outstanding during the year ending March 2008 was 275.47 lakh with a growth of 10.32 % as compared to 39 % growth during the year ended March 2007. It is estimated that credit card growth rate may further reduce in the year 2008-09 with an increase of 6 % to 293.20 lakh cards by March 2009.

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Market Share:-- ICICI Bank tops the chart when it comes to the highest credit card issuing bank, with 90 lakh credit cards in the market during the year 2008. It covers 33% of the market share.

Both SBI and HDFC are having a market share of about 13% with a card base of 36 lakh and 35 lakh respectively.

Table 1: Market Share of Individual Players (Number of Credit Cards in Lakh)

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Sector Wise Market Share of the Banks:-- The market share of private sector banks has increased to 48% in 2008 from 44% in 2007. The private sector banks have shown an increase in their credit card base by 19 % from 109.90 lakh credit cards in the previous year to 130.77 lakh cards by March, 2009. The market share of foreign sector banks has fallen from 37% in 2007 to 34% in 2008 with 95 lakh credit cards in the market as on March, 2008. Public sector banks constitute 16 % market share, with 45.34 lakh credit cards. Other banks totaling to 4.36 lakh credit cards cover the balance 2 % of market share.

Table 2: Analysis in terms of Public, Private and Foreign Sector Players (No. of Cards in Lakh)

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Industry Spend:-- More and more Indians are using credit card for purchasing essentials as well as luxurious goods. The credit card spend has increased significantly during the

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year by 16% to Rs. 67,383 crore during the year 2009 as compared to Rs. 57,985 crore in the previous year.

Table 3: Industry Credit Card Spend at the POS Terminals (Amount Rs. In Crore)

With 90 lakh credit card issued, ICICI Bank is not only the highest credit card issuer in the country but also leads the other banks in credit card spends with Rs. 19,944/- crore spent through its credit cards during the year 2008.

ICICI Bank occupies 34% market share, followed by SBI and HDFC bank with 13% market share each.

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Credit Card Spending Pattern:-- The Indian Credit Card Industry is still at a nascent stage, when compared to economies in West Asia. Only 14% of Indians currently own a credit card. 73% of Indians spend less than $ 35/- on an average each month, while 25% spend between $ 35/- and $ 300/-. Only 2% of Indians spend over $ 300/- on the credit card during a month. 72% of Indians use their credit cards 1-2 times a month, while 23% of Indians use their cards between 3-5 times and remaining 5% use their cards 6 times or more every month.

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Source: The Hindu Business Line- December 27, 2007

The pie chart shows that 44% of Indians use their credit card most often for purchases of clothing, 14% for supermarket/grocery shopping, 9% at hotels and 6% at restaurants.

The usage of credit cards at retail outlets has nearly doubled from 30-35% two years ago to 50-60% currently. (Source-The TOI, New Delhi – March 22, 2008)

2.7) Credit Card Frauds

Today plastic is the convenient, easy and fashionable alternative to wads of paper. With one swipe, credit cards have changed the way we live. Unfortunately, along with the convenience has come related crime. Credit card fraud involves withdrawal of funds and obtaining of goods and services by using an unauthorized account. Otherwise inaccessible personal information stored on computers is stolen in order to use a card. Due to the virtual explosion of credit card business throughout the world, security has become critical in the entire process. There were about 60 million credit card holders in the sixties and according to an estimate, the number has gone up to more than a trillion now.

In India, credit card companies make a provision in their contract with the client that they, the company, would not be liable for the fraudulent transaction unless the client loses his/her card

and reports the loss immediately. Sometimes the banks and credit card companies try to save their skin by inserting a clause in the relevant contract. This is purported to absolve the company in case a fraud occurs on the stolen card and the client fails to notify the loss in time. This unilateral provision however has not stood the test of legal scrutiny. The courts have placed the burden of loss on the issuers.

In India, the Mail Order Telephone Order (MOTO) type account for the bulk of credit card frauds. This occurs when the card is not actually presented, but the details are given on the application form to buy goods or services or

when the transaction is done on the telephone.

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Some common Credit Card Frauds are listed below:

Stolen Cards:

When a credit card is lost or stolen, it remains usable until the holder notifies the issuer that the card is lost. Most issuers have free 24-hour telephone numbers to encourage prompt reporting. Still, it is possible for a thief to make unauthorized purchases on a card until it is canceled. Without other security measures, a thief could potentially purchase thousands of dollars in merchandise or services before the cardholder or the card issuer realize that the card is in the wrong hands.

The only common security measure on all cards is a signature panel, but signatures are relatively easy to forge. Some merchants will demand to see a picture ID, such as a driver's license, to verify the identity of the purchaser, and some credit cards include the holder's picture on the card itself. However, the card holder has a right to refuse to show additional verification, and asking for such verification is usually a violation of the merchant's agreement with the credit card companies. Self-serve payment systems such as gas stations, kiosks, etc. are common targets for stolen cards, as there is no way to verify the card holder's identity. A common countermeasure is to require the user to key in some identifying information, such as the user's ZIP or postal code. This method may deter casual theft of a card found alone, but if the card holder's wallet is stolen, it may be trivial for the thief to deduce the information by looking at other items in the wallet.

Card issuers have several countermeasures, including sophisticated software that can, before a transaction is authorized, estimate the probability of fraud. For example, a large transaction occurring a great distance from the cardholder's home might seem suspicious. The merchant may be instructed to call the card issuer for verification, or to decline the transaction, or even to hold the card and refuse to return it to the customer. The customer must contact the issuer and prove who they are to get their card back if it is not fraud and they are actually buying a product.

Compromised Accounts:

Card account information is stored in a number of formats. Account numbers are often embossed or imprinted on the card, and a magnetic stripe on the back contains the data in machine readable format. Fields can vary, but the most common include:

Name Of Card Holder

Account Number

Expiration Date

Verification/CVV Code

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Card not Present:

The mail and the Internet are major routes for fraud against merchants who sell and ship products, and impacts legitimate mail-order and Internet merchants. If the card is not physically present called CNP Card Not Present, the merchant must rely on the holder or someone purporting to be so presenting the information indirectly, whether by mail, telephone or over the Internet.

While there are safeguards to this, it is still more risky than presenting in person, and indeed card issuers tend to charge a greater transaction rate for CNP, because of the greater risk. To many people's surprise, telephone ordering is the most risky, far more risky than the Internet.

It is difficult for a merchant to verify that the actual cardholder is indeed authorizing the purchase. Shipping companies can guarantee delivery to a location, but they are not required to check identification and they are usually not involved in processing payments for the merchandise. A common recent preventive measure for merchants is to allow shipment only to an address approved by the cardholder, and merchant banking systems offer simple methods of verifying this information. Before this and similar methods were introduced, mail order carding was rampant as early as 1992, using a method in which the carder obtains the credit card information for a local resident and intercepts expensive computer equipment he ordered using the stolen card and shipped to the address, often by staking out the porch of the residence.

Small transactions generally undergo less scrutiny, and are less likely to be investigated by either the card issuer or the merchant. CNP merchants must take extra precaution against fraud exposure and associated losses, and they pay higher rates for the privilege of accepting cards. Fraudsters bet on the fact that many fraud prevention features are not used for small transactions.

Merchant associations have developed some prevention measures, such as single use card numbers, but these have not met with much success. Customers expect to be able to use their credit card without any hassles, and have little incentive to pursue additional security due to laws limiting customer liability in the event of fraud. Merchants can implement these prevention measures but risk losing business if the customer chooses not to use the measures.

Identity theft:

Identity theft can be divided into two broad categories: Application fraud and account takeover.

Application fraud:- Application fraud happens when a criminal uses stolen or fake documents to open an account in someone else's name. Criminals may try to steal documents such as utility bills and bank statements to build up useful personal information. Or they may create counterfeit documents.

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Account takeover:- Account takeover happens when a criminal tries to take over another person's account, first by gathering information about the intended victim, then contacting their card issuer masquerading as the genuine cardholder, and asking for mail to be redirected to a new address. The criminal then reports the card lost and asks for a replacement to be sent. Some merchants added a new practice to protect their consumers and their own reputation, where they ask the buyer to send a photocopy of the physical card and statement to ensure the legitimate usage of a card.

Carding:

Carding is a term used for a process to verify the validity of stolen card data. The thief presents the card information on a website that has real-time transaction processing. If the card is processed successfully, the thief knows that the card is still good. The specific item purchased is immaterial, and the thief does not need to purchase an actual product; a Web site subscription or charitable donation would be sufficient.

The purchase is usually for a small monetary amount, both to avoid using the card's credit limit, and also to avoid attracting the card issuer's attention. A website known to be susceptible to carding is known as a cardable website.

In the past, carders used computer programs called "generators" to produce a sequence of credit card numbers, and then test them to see which valid accounts were. Another variation would be to take false card numbers to a location that does not immediately process card numbers, such as a trade show or special event.

However, this process is no longer viable due to widespread requirement by internet credit card processing systems for additional data such as the billing address, the 3 to 4 digit Card Security Code and/or the card's expiration date, as well as the more prevalent use of wireless card scanners that can process transactions right away. Nowadays, carding is more typically used to verify credit card data obtained directly from the victims by skimming or phishing.

A set of credit card details that has been verified in this way is known in fraud circles as a phish. A carder will typically sell data files of the phish to other individuals who will carry out the actual fraud.

Profits, losses and punishment:

Credit card companies like Visa and MasterCard receive revenue from every transaction, typically 2% to 4% depending on the payment method. So they are motivated to increase total volume of transactions, consequently pursue policies to increase number of transactions. This creates conflict of interest for the credit card companies. On one hand they are obliged to fight credit card fraud, but on the other hand policies against credit fraud may impose certain restrictions that may negatively affect number of transactions and cumulative transaction volume. Besides fraud investigation costs tend to be higher than costs of write.

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What is Online Credit Card Fraud?

Credit card fraud has become such an issue that no precise number can truly define the global losses. To truly understand the risk and likelihood of credit card fraud, we must first make our self familiar with a brand new lingo. Terms such as "Pharming", "Skimming" and "Dumpster Diving" may not sound malicious, but these are in fact just a few of many ways that money can be thieved from our credit card.

Pharming:- This new technique is one of the most dangerous of them all. Pharming involves a malicious perpetrator tampering with the domain name resolution process on the internet. By corrupting a DNS (Domain Name System), a user can type in the URL for a legitimate financial institution and then be redirected to a compromised site without knowledge of the changes. Unaware of the background predators, the consumer types in their bank account details or credit card number, making them the latest victim of fraud.

Skimming:- Skimming refers to a process in which a special device is used to copy encoding data from the magnetic strip of a credit or debit card. This device is usually secretly mounted to an ATM machine as a card reader.

Dumpster Diving:- Dumpster Diving refers to a process in which an individual vigorously shifts through someone else's trash in search of personal and financial information. With a mere credit card approval that contains a name and address, a criminal can easily open up a credit card in our name and accumulate substantial debt in no time.

Tips for Credit Card Fraud Prevention:

To prevent credit card fraud, as a cardholder, we should protect our card and card number to the best of our ability. Some tips for fraud prevention include:

Sign the back of your credit cards

Keep an eye on your credit card every time you use it

Jot down your credit card number and keep it in a safe place

Hold on to receipts of your credit card purchases

Check your statements regularly and notify your credit card company if you see bogus charges on your bill

Call your card company immediately after your card is stolen or lost

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Refuse to give out your credit card information over the phone unless you’re dealing with a trustworthy merchant

Check that you’re on a secure website before making an online transaction

Ignore emails that ask you to provide your credit card number via email

Avoid ‘phishing’ scams by disregarding emails that require you verify your credit card information on a site

Avoid lending your credit card

CHAPTER – 3

LITERATURE REVIEW

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3.1) What is Consumer Buying Behavior ?

Buying Behavior is the decision processes and acts of people involved in buying and using products.

But, we need to understand:

Why consumers make the purchases that they make? What factors influence consumer purchases? The changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for:

Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s success. The marketing concept stresses that a firm should create a Marketing Mix (MM) that

satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy.

Marketers can better predict how consumers will respond to marketing strategies.

3.2) Stages of Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (for complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages. It is determined by the degree of complexity.

The 6 stages are:

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1. Problem Recognition (awareness of need)-- It is the difference between the desired state and the actual condition, i.e., deficit in assortment of products. In the first stage the consumer has determined that for some reason he/she is not satisfied, (i.e., consumer’s perceived actual condition) and wants to improve his/her situation (i.e., consumer’s perceived desired condition).  For instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed.  External factors can also trigger consumer’s needs.  Marketers are particularly good at this through advertising; in-store displays and even the intentional use of scent e.g., perfume counters. At this stage the decision-making process may stall if the consumer is not motivated to continue. However, if the consumer does have the internal drive to satisfy the need they will continue to the next step.

2. Information search-- Assuming consumers are motivated to satisfy his or her need, they will next undertake a search for information on possible solutions.  The sources used to acquire this information may be as simple as remembering information from past experience (i.e., memory) or the consumer may expand considerable effort to locate information from outside sources (e.g., Internet search, talk with others, etc.).  How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need, familiarity with available solutions, and the amount of time available to search.  To appeal to consumers who are at the search stage, marketers should make efforts to ensure consumers can locate information related to their product.  For example, for marketers whose customers rely on the Internet for information gathering, attaining high rankings in search engines has become a critical marketing objective. 

3. Evaluation of Alternatives-- Consumers’ search efforts may result in a set of options from which a choice can be made.  It should be noted that there may be two levels to this stage.   At level one the consumer may create a set of possible solutions to their needs (i.e., product types) while at level two the consumer may be evaluating particular products (i.e., brands) within each solution.  For example, a consumer who needs to replace a television has multiple solutions to choose from such as plasma, LCD and CRT televisions.  Within each solution type will be multiple brands from which to choose. Marketers need to understand how consumers evaluate product options and why some products are included while others are not.  Most importantly, marketers must determine which criteria consumers are using in their selection of possible options and how each criterion is evaluated.  Returning to the television example, marketing tactics will be most effective when the marketer can tailor their efforts by knowing what benefits are most important to consumers when selecting options, e.g., picture quality, brand name, screen size, etc. and then determine the order of importance of each benefit.

4. Purchase-- In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest.  However, this may change when it is actually time to make the purchase.  The “intended” purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock, a competitor offers an incentive at the point-of-purchase, (e.g., store salesperson mentions a competitor’s offer), the customer lacks the necessary funds (e.g., credit card not working), or members of the consumer’s reference group take a negative view of the purchase (e.g., friend is critical of purchase).  Marketers whose product is most

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desirable to the consumer must make sure that the transaction goes smoothly.  For example, Internet retailers have worked hard to prevent consumers from abandoning online purchase, i.e., online shopping carts by streamlining the checkout process.  For marketers whose product is not the consumer’s selected product, last chance marketing efforts may be worth exploring, such as offering incentives to store personnel to “talk up” their product at the checkout line.

5. Post-Purchase Evaluation-- Once the consumer has made the purchase they are faced with an evaluation of the decision.  If the product performs below the consumer’s expectation then he/she will re-evaluate satisfaction with the decision, which at its extreme may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product.  Such evaluations are more likely to occur in cases of expensive or highly important purchases.  To help ease the concerns consumers have with their purchase evaluation, marketers need to be receptive and even encourage consumer contact.  Customer service centers and follow-up market research are useful tools in helping to address purchasers’ concerns.

3.3) Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

Level of Involvement in purchase decision, i.e., Importance and intensity of interest in a product in a particular situation.

Buyer’s level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement.

Types of risk:

Personal risk Social risk Economic risk

The four type of consumer buying behavior are:

Routine Response/ Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc.

Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a

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moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand.

Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. You need to spend lot of time seeking information and deciding. Information from the companies MM; friends and relatives, store personnel etc.

Impulse buying means no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.

3.4) Factors Affecting Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three factors:

1. Personal 2. Psychological 3. Social

The marketer must be aware of these factors in order to develop an appropriate Marketing Mix for its target market.

Personal factors:-- It is unique to a particular person. Demographic Factors; Sex, Race, Age etc.Who in the family is responsible for the decision making? Young people purchase things for different reasons than older people.

Psychological factors :-- Psychological factors include:

Motives-- A motive is an internal energizing force that orients a person's activities toward satisfying a need or achieving a goal. Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix.MASLOW hierarchy of needs!!

o Physiological o Safety o Love and Belonging o Esteem o Self Actualization

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All the marketer need is to determine at what level of the hierarchy the consumers are to determine what motivates their purchases.

E.g. Nutrament Debunked...

Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at consumers that needed to receive additional energy from their drinks after exercise etc., a fitness drink. It was therefore targeted at consumers whose needs were for either love and Belonging or esteem. The product was not selling well, and was almost terminated. Upon extensive research it was determined that the product did sell well in inner-city convenience stores. It was determined that the consumers for the product were actually drug addicts who could not digest a regular meal. They would purchase Nutrament as a substitute for a meal. Their motivation to purchase was completely different to the motivation that B-MS had originally thought. These consumers were at the Physiological level of the hierarchy. B-MS therefore had to redesign its marketing mix to better meet the needs of this target market. Motives often operate at a subconscious level therefore are difficult to measure.

Perception-- What do you see?

Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. We choose what info we pay attention to, organize it and interpret it.Information inputs are the sensations received through sight, taste, hearing, smell and touch.

Selective Exposure- Select inputs to be exposed to our awareness. More likely if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop).

Selective Distortion- Changing/twisting current received information, inconsistent with beliefs.

Advertisers that use comparative advertisements (pitching one product against another), have to be very careful that consumers do not distort the facts and perceive that the advertisement was for the competitor.

Selective Retention- Remember inputs that support beliefs, forgets those that don't. An average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes- 60% of purchases are unplanned. Exposed to 1,500 advertisements per day. It can't be expected by him to be aware of all these inputs, and certainly will not retain many.

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Interpreting information is based on what is already familiar, on knowledge that is stored in the memory.

Ability and Knowledge-- It is the need to understand individual’s capacity to learn. Learning, changes in a person's behavior caused by information and experience. Therefore to change consumers' behavior about your product, you need to give them new information related to your product...free sample etc. .

When making buying decisions, buyers must process information. Knowledge is the familiarity with the product and expertise. Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a product.Non-alcoholic Beer example: consumers chose the most expensive six-pack, because they assume that the greater price indicates greater quality.

Learning is the process through which a relatively permanent change in behavior results from the consequences of past behavior.

Attitudes-- Knowledge and positive / negative feelings about an object or activity maybe tangible or intangible, living or non- living.....Drive perceptions.

Individual learns attitudes through experience and interaction with other people.Consumer attitudes toward a firm and its products greatly influence the success or failure of the firm's marketing strategy.

E.g. Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovered by class exercise) need to disassociate Aurora from the Oldsmobile name.

Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic oil spill.

Honda "You meet the nicest people on a Honda” dispels the unsavory image of a motorbike rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas market returning to hard core. To change this they have a new slogan "Come ride with us".

Attitudes and attitude change are influenced by consumer’s personality and lifestyle. Consumers screen information that conflicts with their attitudes. We distort information to make it consistent and selectively retain information that reinforces our attitudes. i.e., brand loyalty.

There is a difference between attitude and intention to buy (ability to buy).

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Personality-- It simply means all the internal traits and behaviors that make a person unique; uniqueness arrives from a person's heredity and personal experience. Examples include:

o Workaholism o Compulsiveness o Self confidence o Friendliness o Adaptability o Ambitiousness o Dogmatism o Authoritarianism o Introversion o Extroversion o Aggressiveness o Competitiveness.

Traits affect the way people behave. Marketers try to match the store image to the perceived image of their customers.

There is a weak association between personality and Buying Behavior; this may be due to unreliable measures. Nike ads. Consumers buy products that are consistent with their self concept.

Lifestyles-- Recent trends in lifestyles are a shift towards personal independence and individualism and a preference for a healthy, natural lifestyle.

Lifestyles are the consistent patterns people follow in their lives. For example, healthy foods for a healthy lifestyle. Sun tan was not considered fashionable in US until 1920's. But today it is an assault by the American Academy of Dermatology.

Social Factors :-- Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups, social class and culture.

Opinion leaders-- Spokespeople etc. Marketers try to attract opinion leaders...they actually use (pay) spokespeople to market their products. Michael Jordon (Nike, McDonalds, Gatorade etc.)

Can be risky...Michael Jackson...OJ Simpson...Chevy Chase

Roles and Family Influences-- Role...things you should do based on the expectations of you from your position within a group. People have many roles: husband, father, and employer/ee. Individuals role are continuing to change therefore marketers must continue to update information.

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Family is the most basic group a person belongs to. Marketers must understand:

o that many family decisions are made by the family unit o consumer behavior starts in the family unit o family roles and preferences are the model for children's future family (can

reject/alter/etc) o family buying decisions are a mixture of family interactions and individual

decision making o family acts an interpreter of social and cultural values for the individual

The Family life cycle: families go through stages; each stage creates different consumer demands:

o bachelor stageo newly married, young, no childreno full nest I, youngest child under 6 o full nest II, youngest child 6 or over o full nest III, older married couples with dependent children o empty nest I, older married couples with no children living with them, head in

labor force o empty nest II, older married couples, no children living at home, head retired o solitary survivor, in labor force o solitary survivor, retired

Reference Groups-- Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviors of the group members. Families, friends, sororities, civic and professional organizations. Any group that has a positive or negative influence on a person’s attitude and behavior. Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers get the groups to approve the product and communicate that approval to its members. Credit Cards etc.!!

Aspiration groups (want to belong to); Disassociate groups (do not want to belong to)Honda, tries to disassociate from the "biker" group.

The degree to which a reference group will affect a purchase decision depends on an individual’s susceptibility to reference group influence and the strength of his/her involvement with the group.

Social Class-- It is an open group of individuals who have similar social rank. India is not a classless society. Indian social class criteria: occupation, education, income, wealth, race, ethnic groups and possessions.

Social class influences many aspects of our lives, i.e., upper middle class prefer luxury cars Mercedes.

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Social class determines to some extent, the types, quality, quantity of products that a person buys or uses. Lower class people tend to stay close to home when shopping; do not engage in much prepurchase information gathering. Stores project definite class images.

Family, reference groups and social classes are all social influences on consumer behavior. All operate within a larger culture.

Culture and Sub-culture-- Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel. It has a big impact on international marketing.

3.5) Theory of Planned Behavior in consumer Purchase:

Theory of Planned Behavior (TpB) was introduced to the literature by Ajzen (1988, 1991). According to TpB model, human action is guided by three kinds of consideration. These are behavioral beliefs, normative beliefs and control beliefs.

Behavioral beliefs are beliefs about the likely results of the behavior and evaluations of them, normative beliefs are the beliefs about the normative expectations of other people and motivation to comply with them, and control beliefs are beliefs about the existence of factors that may affect the performance of the behavior.

According to Ajzen, behavioral beliefs create a favorable or unfavorable attitude toward the behavior (ATB), normative beliefs cause subjective norms (SN) and a rise on perceived behavioral control (PBC) is resulted from control beliefs. ATB, SN and PBC lead to the formation of a behavioral intention. In general rule, if there exist favorable attitude and subjective norm in addition to a great perceived control for a behavior, there exists a strong intention to perform the behavior in question.

One of the most important contributions of the TpB model comparing to other models designed to explain attitude-behavior relationship is that even though there is not a perfect relationship

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between behavioral intention and actual behavior, intention can be used as a proxy to measure the behavior in TpB model. Ajzen’s TpB model is shown below:

Theory of Planned Behavior (TpB) Model

3.6) B ank C redit Cards and C onsumer B ehavior

Bank credit card is one of today's most ubiquitous financial instruments (Wolters, 2000). For bank management perspectives, identifying the appropriate market for the credit card, interpreting consumers’ needs for the product and developing business strategies are crucial to cope with fierce competition in the credit card market. In addition, Bernthal, Crockett, and Rose (2005) indicated that credit cards came with important technology to help facilitate several financial transactions for consumers, but the cards have capacity to support consumers in their everyday life activities without much concerning about cash in hands. Brito and Hartley (1995) observed that another important service on credit card was about borrowing on credit cards. However, such borrowing came with high interest rates which might appear irrational, but low transactions costs can make credit cards attractive relative to bank loans. In addition, credit cards offer liquidity services by helping consumers to avoid some of the opportunity costs of holding money. Goyal (2004) stated that service products, such as credit cards, being intangible and experiential in nature are different to evaluate prior to purchase and consumption. Information regarding supplementary services can help consumers make pre-purchase evaluation of credit cards. In addition to pre-purchase evaluation, the impact of supplementary services is studied towards post-purchase evaluation of credit card services.

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Cargill and Wendel (1996) answered the question about the way credit cardholders using their credit cards and found that consumers are rational with respect to credit card usage. Understanding card usage rationality assists credit card issuers to formulate strategy to cope with competition and to provide better services for consumers. Moreover, d'Astous and Miquelon (1991) stated that for credit card users, choosing a suitable credit card requires knowledge of one's credit card usage and comparison information on credit card costs. Chebat, Laroche, and Malette (1998) conducted the credit card research on English-speaking and French-speaking Canadians in Toronto and Montreal, focusing on their attitudes toward credit cards. Both groups are satisfied with benefits from using credit cards, improving their financial situations. In addition, the English group was concerned about costs, accuracy, safety, practicality, and facilitation, while the French group is concerned about costs, accuracy, over consuming, and overspending. As for the impact of customer characteristics, income and education positively affect usage.

Stanghellini (2003) investigated that finance agencies, including banks, have started to develop new products aiming not only to increase their portfolio but also to maintain good relationships with existing customers and to prevent undesired behaviors of high-default risk customers. This suggests that understanding the behaviors of the customers is significant for financial operations, because the customers can be either profitable or unprofitable. Devlin, Worthington, and Gerrard (2007) suggest that credit card providers should always keep in mind about whether the discounts they offer, the promotions they arrange and their loyalty schemes are superior to those offered by competitors. Being responsive to competition is also an important key to succeed.

Several researchers conducted consumer behaviors and the role of credit cards. Lunt (1992) stated that it is important for banks offering credit card services to study what makes consumers who have 5 or 6 credit cards use one rather than another when making a purchase to determine marketing techniques. Among many factors affecting card adoption include high credit limit, quality customer service, fair fees, and a fair interest rate are the factors that count at the point of sale. In addition, lower interest rates, cash advance checks with low rates, and sweepstakes are some of the marketing promotions used by banks. Some other promotions were cash back bonuses and no annual fee. Moreover, Sulaiti, Ahmed, and Beldona (2006) studied the role of credit card on consumer behavior and found that credit card usage by consumers across the oil-rich Arab countries (such as Qatar, Bahrain, and Kuwait) is changing in their consumption behavior, because having credit card motivates Arab consumers to buy more often, and encourage promoting impulse buying. Carow and Staten (2002) found that convenience and rebates are the main reasons for using a bank credit card.

Furthermore, Hayhoe, Leach, Turner, Bruin, and Lawrence (2000) found that affective credit attitude (feeling about using credit cards) and gender influenced college students' credit purchasing. Affective credit attitude predicted the purchase of clothing, electronics, entertainment, travel, gasoline, and food away from home. Their results also indicated that

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gender differences in the relationship between financial practices, financial stress, affective credit attitude and the number of credit cards with a balance. Lee and Kwon (2002) found that consumers' usage of store credit cards is related to a number of variables, including the use of bank cards, credit history, and attitude toward credit, income, education, and ethnicity. It is important for banks to develop marketing strategies to attract and win competition in the industry. Devlin, Worthington, and Gerrard (2007) examined credit cardholders carrying many credit cards at the same time. In this case, there were main credit cards (most often used cards) and subsidiary cards (rarely used cards) and the respondents stated that their subsidiary cards were held for "stand-by purposes". Bielski (2001) suggested that development of loyalty programs and e-commerce programs that all add to a high quality customer experience for credit card business. Moreover, those programs can attract and retain credit card users.

Indian Credit Card Types :

In Indian credit card market, there are 12 major types of credit cards being provided by banks and financial institutions. These cards provide a wide variety of financial benefits to holders.

Following are various types of credit cards available in India:-

Premium Credit Cards Cash Back Credit Cards Gold Credit Cards Airline Credit Cards Silver Credit Cards Business Credit Cards Balance Transfer Credit Cards Co-branded Credit Cards Low Interest Credit Cards Lifetime Free Credit Cards Rewards Credit Cards

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There are some additional credit cards that are available in India as well. Rewards credit cards available in India can be subdivided into six categories – Points, Hotels and Travels, Retail, Auto and Fuel.

Premium Credit Cards : --There are 33 various premium credit cards available in India. They may be mentioned as below:

American Express Platinum Credit Card Bajaj Allianz Super Value Titanium Credit Card ICICI Bank Platinum Credit Card Standard Chartered Emirates Platinum Credit Card ICICI Signature Credit Card Standard Chartered Emirates Titanium Credit Card ICICI Bank Titanium Credit Card Axis Bank Visa Platinum Credit Card ABN AMRO Titanium One Credit Card Yatra Barclaycard Platinum Credit Card Citibank Platinum Credit Card Deutsche Bank Platinum Credit Card ICICI Bank Platinum Premiere Credit Card Deutsche Bank Miles & More Platinum Credit Card Deutsche Bank Landmark Platinum Credit Card Deutsche Bank Miles & More Signature Credit Card HDFC Bank Visa Signature Credit Card HSBC Platinum Credit Card HDFC Bank Platinum Plus Credit Card SBI (State Bank of India) Platinum Credit Card HDFC Bank Platinum Plus Credit Card Kotak Mahindra League Platinum Credit Card HDFC Bank Titanium Credit Card Kotak Mahindra Royal Signature Credit Card Jet Airways Citibank Platinum Credit Card ABN AMRO MakeMyTrip Go Credit Card American Express Kingfisher First Credit Card ABN AMRO Platinum Credit Card ICICI Bank Thomas Cook Titanium Credit Card ICICI Bank Ascent American Express Credit Card Standard Chartered Platinum Credit Card ICICI Bank Platinum Identity Credit Card Standard Chartered Super Value Titanium Credit Card

Gold Credit Cards:--There are forty gold credit cards available in India. They may be enumerated as below:

American Express Gold Credit Card

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SBI UBI (United Bank of India) Gold Credit Card American Express Gold Charge Card NEXTGEN BOBCARD Gold Credit Card ICICI Bank Travel Smart Credit Card BOBACRD Gold Visa Credit Card Axis Bank Gold Plus Credit Card BOBACRD Gold MasterCard Credit Card Axis Bank Gold Credit Card Cancard Visa International Gold Credit Card HDFC Bank Gold Credit Card ICICI Bank Orchid An Ecotel Credit Card HDFC Womans Gold Credit Card Axis Bank Secured Credit Card HDFC Bank Gold Business Credit Card Deutsche Bank Smart Gold Credit Card American Express HPCL Credit Card HSBC Gold Credit Card Deutsche Bank Landmark Gold Credit Card ICICI Bank Solid Gold (Visa) Credit Card Barclays Bank Gold Credit Card ICICI Bank Solid Gold (MasterCard) Credit Card Citibank Cash Back Credit Card ICICI Bank Gold American Express  Credit Card Jet Airways Citibank Gold Credit Card ICICI Bank HPCL Gold Credit Card Jet Airways CitiBusiness Credit Card ICICI Bank Big Bazaar Gold Credit Card Indian Oil Citibank Gold Credit Card ICICI Bank Airtel Gold Credit Card Citibank Gold Credit Card ICICI Bank Toyota Credit Card Reliance Gold Credit Card Times Card from Barclaycard and Times of Money Standard Chartered Gold Credit Card Kotak Mahindra Trump Gold Credit Card Standard Chartered Rotary Credit Card Kotak Mahindra Fortune Gold Credit Card SBI Gold and More Credit Card ABN AMRO Smart Gold Credit Card

Fees charged to customers :

The major fees are for:

Late payments or overdue payments

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Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called overlimit fees

Returned cheque fees or payment processing fees (e.g. phone payment fee) Cash advances and convenience cheques (often 3% of the amount). Transactions in a

foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this.

Membership fees (annual or monthly), sometimes a percentage of the credit limit. Exchange rate loading fees (these may sometimes not be reported on the customer's

statement, even when they are applied)

Hidden Credit Card Fees :

Credit card fees are the tricky part in handling a credit card. The fees are not actually "hidden" but they can be buried in the fine print or come about unexpectedly. These are usually stated when the credit account is first opened and are easy to forget about. The best way to stay ahead of these fees is to keep you informed and aware of everything that goes along with owning a credit card.

Being timely with your payment is a sure way to steer clear of these costly fees. Sometimes the due date for your payment can be deceiving as well. Your payment may be processed a few days after you thought it would arrive causing you to be slapped with late fees. If you are serious about keeping late fees off your bill you should send in your payment immediately after you get your bill. This will ensure that there will be no late fees on your nest one. Your payment may also be processed later if it is not sent in the preprinted envelope. Sending your payment in the designated envelope should be the easiest part of paying your bill. These late fees can add up quick and if it sends you over your limit another late fee will occur. Also in some cases the lender is allowed to increase your interest rate if you are late on a payment. It is a vicious cycle that you do not want to get caught up in.

There are some fees that you cannot avoid such as interest charges, annual percentage charges, balance transfer fees, merchant fees and cash advance fees. These bring in a lot of money but that is the reason why your lender is in the business that he is money. Unexpected charges are everywhere, even if you have a card and don’t use it. A credit card that does not have any transactions on it will be charged with a fee. The lender has to get something out of the deal too and if you are not borrowing money they are not making money.

The best way to avoid fees is to pay your bills on time or early. Finding the best card for you can also save you a substantial amount of money. Online bill paying is becoming very popular and most banks will offer it free of charge. If that is not an option putting your payment in the mail the day of or the day after you receive it will help you tremendously. Create habits with paying your bills and it will keep you out of trouble.

Following are the details of major Credit Card providers in India along with their offerings:

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ICICI Bank India is the largest private sector bank. It’s banking products and financial services are some of the superior ones. The reach and market of ICICI Bank is unmatched in India as yet. It offers a countrywide network of 950 branches and 3,500 ATM's reaching out to your doorstep.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,767.00 billion (US $96 billion) at December 31, 2007 and profit after tax of Rs. 30.08 billion for the nine months ended December 31, 2007. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization. The Bank has a network of about 955 branches and 3,687 ATMs in India and presence in 17 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management.

ICICI Bank Credit Cards give the facility of cash, convenience and a range of benefits, anywhere in the world. These benefits range from life time free cards, Insurance benefits, global emergency assistance service, discounts, utility payments, travel discounts, etc.

Among its highly accomplished banking and financial services are their credit cards. ICICI credit card is one of the top-rated ones in India. With a wide range of offers, ICICI Bank credit cards come as:

Premium Cards Classic Cards Value for Money Cards Co Branded Cards Affinity Cards EMI Cards

With a banking heritage of 150 years. The Standard Chartered Group was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa founded in 1863 and the Chartered Bank of India, Australia and China, founded in 1853.

From the early 1990s, Standard Chartered has focused on developing its strong franchises in Asia, the Middle East and Africa using its operations in the United Kingdom and North America to provide customers with a bridge between these markets. Secondly, it would focus on consumer, corporate and institutional banking and on the provision of treasury services areas in which the Group had particular strength and expertise.

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Standard Chartered has a network of over 1,400 branches in more than 50 countries across the Asia Pacific Region, South Asia, the Middle East, Africa, Europe and the Americas. One of the world's most international banks, employ over 65,000 people, representing more than 100 nationalities. This diversity lies at the heart of the values and supports the strong organic growth.

The key businesses of Standard Chartered Bank in India include consumer banking - primarily credit cards, mortgages, personal loans and wealth management and wholesale banking, where the Bank specializes in the provision of cash management, trade, finance, treasury and custody services.

Standard Chartered Credit Card is accepted in over 19 million VISA and MasterCard establishments across the globe. This makes Standard Chartered Bank Credit Cards most widely accepted cards. Along with this the Standard Chartered Credit Cards Rewards System allows you to earn reward points with more and more usage of your SCB credit card. The available SCB Credit Cards include:

Emirates Platinum Emirates Titanium Platinum Card Super Value Titanium Card Bajaj Allianz Super Value Titanium Card Gold Card Classic Card Executive Card EMI Card Rotary Card Wild Life Card Sapnay Card

SBI State Bank of India is the largest Bank in India and in the entire Indian Sub-continent with far flung Branches. In fact, in regards to its employees and branches, the State Bank of India is the largest bank in the world. Founded in 1806, SBI has evolved to be a major Bank in India to provide financial assistance, with the most extensive Networking all over the world and many leading SBI Associate Banks. Not Just the SBI Branches but also the SBI ATMs are found in the nook and corner of India. The State Bank of India has been instrumental in carrying out innovations in personal banking to make the transactions easy for its customers. The extensive reach of SBI Branches in the rural areas in India has made it touch the lives of the millions. In fact, The State Bank of India is a leading Credit Card Bank that introduced the facility of ATM Cards and Internet Banking to all its Branches in the interiors of India. In the true sense of the term, the State Bank of India has been a visionary Bank with the incorporation of all the modern and contemporary trends.

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The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All the branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. Their business is more than banking because they touch the lives of people anywhere in many ways.

SBI Credit Card or State Bank of India Credit Card offers the exclusive deals and convenience of cashless shopping with complete online payments and balance transfer solutions and all this come with redeemable reward points system.

SBI Credit Card is acceptable over 1, 05,000 merchants in India and Nepal. The SBI Credit Card is accepted to 117 cash point locations in 57 cities from Leh to Port Blair. The daily withdrawal limit is Rs. 10,000. The available SBI Credit Cards are:

SBI Silver, Gold & Platinum Card SBI partnership cards that include Go Air, Hero Honda, LG SBI Advantage Card SBI Card for Doctors Employee Card Lifestyle Card Railway Card Vishal Mega Mart Card Social Card UBI Cards Spice Jet SBI Card and more.

Citibank Being the largest financial services company in the world, it offers specialized banking and financial products for world-class customer service. Citibank is one of the leading private sector banks in India. Its counterpart in the USA is the largest bank in the country in terms of holdings. Founded in 1812 as City Bank of New York, Citibank today enjoys a clientele comprising of the biggest corporate giants.

Citibank India is since 1902. Citibank India was the first bank to lend actively to individuals. Citibank is the largest Consumer Finance lender in the world. Citibank India follows the following principles while dealing to its customers:

Truth in Lending Superior Products and Services Quick and Transparent Credit Decisions Lending is not a transaction, but a relationship Custodian of Public Funds

Citibank cards are available in a range of flexible and personalized credit. Under mentioned are few types of Citibank Credit Cards in India.

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Diners Club (Charge) Cards Diners Club (Flexi/ Revolving credit) Cards Ultima Cards Platinum Cards Citibank Classic & Preferred Cards Citibank Hutch & Maruti Cards

HDFC Bank was incorporated in August 1994, and, currently has a nationwide network of 746 Branches and 1647 ATM's in 329 Indian towns and cities. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC India deals in varieties of products like home loan, standard life insurance, mutual fund, securities, credit cards, etc. HDFC has branch offices in all major cities in India like Kolkata, Chennai, Delhi, Bangaluru, Hyderabad, and Ahmedabad apart from HDFC Mumbai.

The following are the main types of credit cards offered by HDFC Bank.

Silver Card Value plus Cards Health plus Card Idea Silver Card Gold Card Idea Gold card Women’s Gold Card

With assets over US $504 billion and an AA credit rating, ABN AMRO Bank ranks among the top 10 banks in the world in size and strength. Their international network comprises 3,568 branches and offices in over 320 cities and 76 countries and territories, with over 100,000 highly qualified staff. As a global bank, they can handle the most complicated cross-border transactions, yet they also understand the subtleties of local markets. Traditionally known as a strong diamond financing bank, ABN AMRO today offers unparalleled suite of client services in

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India. ABN AMRO Bank in India enjoys a strong image as a corporate bank with comprehensive Global Transaction Services.

It has also launched its microfinance program. The program is aimed at delivering credit to the poor women of India, especially in the rural areas, through Microfinance Institutions (MFIs). The services of ABN Amro Bank are organized globally in three business lines:

Wholesale Clients Consumer & Commercial Clients Private Clients & Asset Management

The ABN AMRO Credit Cards are specially designed for someone with discerning lifestyle. The different varieties of credit cards are below:

Smart Gold Card Wellness Card Wellness Gold Card Freedom/ Good life/ One Card Gold Card Barista/Ad labs Card Titanium One Card Platinum Card

3.7) What Factors Affect Credit ?

It is very important to maintain a good credit record but have you ever though seriously as to what are the parameters which really affects it. Well, the answer which comes to you might be a bit confusing so here are the essential know how of maintaining good credit and repairing a bad credit history and also what affects it.

The first thing that affects your credit is how often you meet your bill payments on time. If you do not pay within the timeframe or you default somewhere, you are being marked and creditors will be making note of this.

Outstanding Debt:- It is very important to calculate the amount of money which is still yet to be paid and compare with the amount of credit available. The total debt which is to be paid can include everything like credit card dues, car mortgages, home equities, etc.

New Credit Applications:- If you are careful and active in to your financial matters, you must understand that you are considered a credit risk if you currently face numerous inquiries. Inquiries which are recent actually mean that a person might have outstanding debts that are not

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accounted for in your credit report. Thus, more inquiries means more troubles if the concerned person does not act.

Length of Credit History:- The length of credit history is also significant in deciding where your credit report stands and the longer it is positive the more points it gets and vice versa. Recent activities as well as an active account also help a lot in determining the true facts of the credit report.

Stability:- Stability is what lenders like and having a permanent address as well as a job you sustain for long period of time are attractive to them. It simply means that you are not only stable but are also in some ways responsible.

Types of Accounts:- The people with mixed credit are more credit worthy to lenders as they prove to be risk free almost all the time.

Credit History:- Time as mentioned before, plays a very important role and not paying your bills on time can harm you big time. Make sure you pay all your bills on time and also that you do not default any payment. If your accounts have gone in the hands of collection agencies for them to recover the money from you, that can prove to be fatal for your credit ratings. If you have filed for bankruptcy, you have a long way to go as this makes it harder. It is very important to pay your dues on time as it contributes around 35% of the credit report.

3.8) Five factors to consider while selecting a personal Credit Card :

Nowadays many credit card companies offer perks to lure new customers ranging from introductory offers with zero percent interest for transferred balances, Reward Programs offering airline mileage and cash back, and discount programs with select merchants. While these offers may be very enticing, there are five key factors, none of which include perks that you should consider when choosing a credit card.

1. Fees:- One of the first factors to consider when selecting a credit card is the number of fees associated with using the card and the totality of all of them if incurred.  Companies can charge a variety of fees with the most common being annual, closure, over-the-limit and late fees.  Because, not all companies charge the same fees and the level of the fees can also differ, it is important to read all of the fine print and details that accompany any credit card offer. 

2. Annual Percentage Rate :- The annual percentage rate (APR) is by far one of the most important, if not the most important factor to consider when selecting a credit card.  The

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APR, which is stated as a yearly rate, is the interest rate applied to outstanding balances. Low rates are preferable since this means you will be paying less to use a credit card.  One single credit card can apply a different APR for balance transfers, cash advances and purchases.

3. Credit limit:- You should also consider the level of credit that is being offered when selecting a credit card. A credit limit is the amount of money that is available for purchases, cash advances, balance transfers, fees and finance charges.  Credit limits can start low as for department store credit cards and go into the thousands for major credit cards (Visa and MasterCard) depending on your credit rating and income. 

4. Secured Vs Unsecured Cards:- Another factor to consider when selecting a credit card is whether the card is secured or unsecured.  Users of secured credit cards pay a deposit to obtain credit.  These offers often appeal to two classes of individuals, those who are very young and are having a difficult time establishing credit and those who have blemishes on their credit reports that prevent them from obtaining unsecured credit.  The credit limit for secured credit cards is usually determined by the amount of your deposit. Unsecured credit cards are by far the most widely held cards and tend to have higher credit limits. 

5. Grace Period: - The final factor to consider, the grace period, is the length of time you have to pay your credit card balance in full without accruing interest charges.  The ideal card will have a grace period of 25 days or longer.  If you carry a balance from month to month you will pay interest regardless of how many days are in a grace period with only new purchases being exempt for 25 days.  The grace period is usually not applicable to cash advances and balance transfers. 

Perks and Rewards:- While not one of the five key factors, it is necessary to write a blurb on perks.  Many credit card companies offer perks as an incentive to lure new customers and reward loyal ones.  Perks can include a Rewards Program that awards you with airline mileage and cash back on your purchases.  Some cards also offer discounts at select merchants and credit card registration, which protects you if your card is lost or stolen. Unless you are a frequent user of credit, perks should be the last item you consider when selecting a credit card because the biggest payoffs tend to go to the biggest spenders.

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CHAPTER – 4

DATA ANALYSIS AND INTERPRETATION

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RESEARCH FINDINGS AND IMPLICATIONS

This study is focused on credit card adoption criteria of the respondents and marketing implications. Data were collected from 206 respondents in Dehradun. The results indicated that customer characteristics affecting credit card choice criteria included age, marital status, education, and income level. In addition, customer profile was developed to help bank marketers create marketing campaigns. Marketing implications from this study suggested banks to offer flexible installment plans and attractive point redemption. Furthermore, credit card issuers should enable the credit cards to be used in more domestic stores. Limitations and future research directions are discussed.

The data of 206 credit cardholders were collected in Dehradun and nearby areas for the study.

Table 1: Customer Characteristics in Percentage

Customer Characteristics Percentage (%)Gender Male

Female54.445.6

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Age (Years) 21-2526-3031-3536-4041-4546 or more

13.132.528.617.02.46.3

Marital Status SingleMarriedDivorced

57.336.46.3

Education Below Bachelor’s DegreeBachelor’s DegreeHigher than Bachelor’s degree

6.377.216.5

Income (Rs.) 20,000 or less20,001 – 40,00040,001 – 60,00060,000 or more

29.640.320.99.2

The respondents of this study were 54.4% male and 45.6% female. 61.1% of the respondents were the age between 26 – 35 years old. Most of them (57.3%) were single. The majority held Bachelor’s Degree (77.2%) with the monthly income ranging from 20,001 to 40,000 rupees.

Table 2: Descriptive Findings of Credit Card Choice Criteria

Credit Card Choice Criteria

Degree of Importance

Mean Median S.D.Very

Important

(%)

Somewhat Important

(%)

Neutral

(%)

Not Very Important

(%)

Not Important

at All

(%)

Have good interest rates

32.0 15.5 34.0 11.2 7.3 3.54 3.00 1.25

Be able to finance payments

28.6 17.0 36.4 9.2 8.7 3.48 3.00 1.24

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(having installment plan)

Be from a well known bank

44.7 28.6 20.4 4.9 1.5 4.10 4.00 0.99

Be accepted by all stores (domestically)

83.0 11.2 5.8 0.0 0.0 4.77 5.00 0.54

Have a high credit limit

51.9 33.5 31.1 1.5 0.0 4.34 5.00 0.82

Have a low annual fee

65.5 25.2 9.2 0.0 0.0 4.56 5.00 0.66

Be able to be used worldwide

72.3 18.4 9.2 0.0 0.0 4.63 5.00 0.65

Be able to collect points for amount used

61.7 23.8 13.1 1.5 0.0 4.46 5.00 0.78

For the degree of importance, being accepted by all domestic stores was the most important

criterion for adopting the credit card (x = 4.77), followed by being able to be used worldwide

(x =4.63), and having a low annual fee (x = 4.56), respectively.

The criteria having low importance for the cardholders for choosing the cards were being able to

finance payments with installment plan (x =3.48) and having good interest rates (x = 3.54). Overall, bank marketers should provide low annual fees and enable credit cards to be used nationwide and worldwide.

Table 3: ANOVA of Credit Card Choice Criteria

Credit Card Choice Criteria

Customer CharacteristicsEducation Age Marital

StatusIncome Gender

F-statistics F-statistics F-statistics F-statistics F-statisticsHave good interest rates

3.326* 2.903* 2.539 0.625 1.712

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Be able to finance payments (having installment plan)

4.849* 4.771** 2.868 4.793** 0.673

Be from a well known bank

4.878* 2.612* 0.509 1.430 0.392

Be accepted by all stores (domestically)

0.354 7.715** 22.959** 7.925** 1.984

Have a high credit limit

0.527 7.530** 1.605 3.459* 2.615

Have a low annual fee

2.849 11.007** 14.090** 0.811 0.748

Be able to be used worldwide

0.819 10.487** 10.444** 2.197 0.250

Be able to collect points for amount used

10.654** 14.333** 9.047** 0.595 0.548

Note: * represented p-value <.05;

** represented p-value <.01

The authors conducted ANOVA in order to identify differences among five customer characteristics- including education, age, marital status, income and gender- with eight credit card choice criteria.

For the first customer characteristic, the results indicated that different age groups perceived degree of importance of all eight choice criteria differently.

Having installment plan, being able to use worldwide, having point collection and providing high credit limit are more important for the respondents in the age of 21-40 than those in 41 years old or more. In addition, credit cards accepted by most stores (domestically) and with low annual fees are more important for consumers at the age of 21 – 35 than for older consumers.

According to the data collected, credit card marketing promotion may develop two different campaigns to attract different age groups. The first group, 21-40 years old, representing over 90% of the respondents clearly concerns with those benefits discussed above, while low annual fees and being accepted by all stores domestically were only more important for those in 21- 35 years old.

The second customer characteristic was education. Respondents below Bachelors degree were highly attracted to good interest rates offered and to point collection offers. For the groups of Bachelors degree and below Bachelors degree, good bank reputation and installment plan are significantly for their credit card adoption.

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Marital status was the third characteristic. Single and married respondents were considered being accepted by all domestic stores, having a low annual fee, and being able to collect points to be important choice criteria. Moreover, single respondents were regarded being able to use credit card worldwide as a crucial aspect for choosing a credit card.

Income differences also had effects on credit card choice criteria. Respondents with monthly income below 40,000 Rupees selected credit cards by concerning being accepted by all domestic stores and having a high credit limit, while those with income below 60,000 Rupees made decision on having installment plan. However, in this study gender had no statistically significant effect on credit card choice criteria. Either male or female respondents made decision on adopting credit cards indifferently.

In summary, customer characteristics lead to identifying three distinguished criteria in this study, including having installment plan, being accepted by all domestic stores, and being able to collect points for amount used. Customer characteristics which highly affected the choice criteria can lead to create customer profile of respondents.

Table 4: Customer Profile of the Respondents

Customer profileAge: 21 – 40Marital status: Single& marriedEducation: BA or belowIncome: 40,000 or below

Customer profile represented 54.37% of respondents. In order to attract this group of customers, marketing campaigns should emphasize installment plan, point collection, and domestic credit card acceptance by all stores.

DESCRIPTION OF THE FINDINGS OF THE ANALYSIS ON THE BASIS OF THE PIE-CHARTS:-

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32%

16%34%

11% 7%

have good interest rates:

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

For maximum percentage of respondents it hardly mattered whether a credit card provided them with a handsome rate of interest or not. For them other aspects are more important than having a good interest rate from a credit card.

Another 32% regarded this aspect as very important while evaluating the decision of selecting a particular credit card from others. The more the interest rate provided by a bank on any particular credit card, the more was an individual’s preference towards it.

For the next 16%, this particular aspect was important but not the only criterion for selecting a credit card from given options. They gave preference to other aspects while taking the decision of selecting a credit card like that it should be acceptable outside the domestic boundaries of the country or it should be of a reputed bank or it should be able to finance payments, etc.

For the remaining 11% and 7%, this reason was not good enough a reason to select a credit card from other.

.

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29%

17%36%

9% 9%

Be able to finance payments (having installment plan)

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

Maximum percentage of respondents was neutral on this aspect. For them it did not matter much whether a particular credit card had the ability to finance payments, like having installment plan etc., was the major criterion to be considered while selecting a particular credit card from the other available options.

But in contrast to this the second majority of the respondents having the ability to finance was one of the major criterions to be considered while evaluating ones decision of selecting a particular credit card from others.

For another 17%, this criterion was important but not the major one to be considered while selecting a credit card over the other.

For the remaining 18%, an exact half did not find it an important component at all while selecting a credit card over the other available.

45%

29%

20%5% 1%

Be from a well known bank

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

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Majority of the respondents felt that it was important for a credit card to be of a well known bank as it signified as it not only increases the faith in the policies n the offers and operations of the bank. It enhances a person's credit worthiness along with his reputation of a good creditor and ability to pay back.

For the second to the majority it was important but only till some level and not the most important one while evaluating ones decision for a credit card. For them it did not matter a lot if the bank from which the credit card comes was a reputed one or not, rather the past performance and statistics related to the card mattered more.

Around 20% were neutral and didn’t want to comment on it as they felt that it was not very essential to have a credit card from a reputed bank as its past performance reflected its superiority over the others in a much better manner. For e.g. credit card by SBI did not hold a very good reputation even after being from a very reputed bank.

For the rest 6% it hardly mattered whether credit cards they were using or wanted to use came from a reputed bank or not, as for them it was the credit card itself and not the bank which facilitated the purchase decision of a particular card.

83%

11% 6%

Be accepted by all stores (domes-tically)

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

Majority of respondents wanted to have a credit card which was acceptable within the domestic boundaries of a country at all the stores.

A very minor composition comprised of respondents feeling that being universally acceptable was either not at all important or had very little significance.

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44%

28%

26%1%

Have a high credit limit

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

For the majority of respondents it was very important to have a credit card which was providing them with a high credit limit, as that was the major reason of owning a credit card.

For another 29% it was important but only to a certain respect, whereas for another 26% it hardly mattered whether a credit card provided high credit limit or not.

66%

25%

9%

Have a low annual fee

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

For the majority of respondents a credit card having a low annual fee was more significant than any other criterion for selecting a particular credit card.

25% of the respondents felt that it had some weight age while selecting a credit card form others.

The rest 9% were neutral on this issue and did not consider it to be of much importance.

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72%

18%9%

Be able to be used worldwide

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

A majority of 72% wanted that the credit card should be acceptable beyond the geographical boundaries of a country also.

For the next 19% it was important but not the only criterion while evaluating one’s decision of buying a credit card over the other.

The remaining 9% did not feel that it was the most important or the least important criterion.

62%

24%

13%1%

Be able to collect points for amount used

Very ImportantSomewhat ImportantNeutralNot Very ImportantNot Important at All

For 62% it was very important to have a credit card which provided points for the amount used or gave cash back with every purchase made with it.

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For the rest 24% it was somewhat important but not a major factor and 13% were neutral that they wanted a credit card irrespective of the fact that it provided any such benefits.

54%

46%

Gender

MaleFemale

Majority of the respondents were male, amounting to 54%.

13%

33%

29%

17%2% 6%

Age (Years)

21-2526-3031-3536-4041-4546 or more

The respondents aged between 26-30 years were those who responded maximum to the questionnaire as they were the ones who were either on the verge of making investments or buying new things for the future on installment basis.

The respondents aging between 31-35 years were the other major percentage who were readily giving their views and details which were important for the project.

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The rest comprised of:

Age (in yrs.) Percentage21-25 13.1

36-40 17

41-45 2.4

46 and more 6.3

57%

36%

6%

Marital Status

SingleMarriedDivorced

Marital Status 

Single 57.3

Married 36.4

Divorced 6.3

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6%

77%

17%

Education

Below Bachelor’s DegreeBachelor’s DegreeHigher than Bachelor’s degree

Education

Below Bachelor’s Degree

6.3

Bachelor’s Degree

77.2

Higher than Bachelor’s degree

16.5

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30%

40%

21%

9%

Income (Rupees)

20,000 or less20,001 – 40,00040,001 – 60,00060,000 or more

Income (Rupees)

20,000 or less 29.6

20,001 – 40,000 40.3

40,001 – 60,000 20.9

60,000 or more 9.2

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FINDINGS

The robust growth in the Indian economy is also witnessed in the credit card industry. Higher disposable income by relatively younger workforce in Mid 20s has made India a perfect market for credit card companies.

Here are some statistics and projections of the Indian credit card industry.

India is currently the fastest growing Mobile Market in the world and is also among the fastest growing credit card markets in the world.

India has a total approx.75 million cards under circulation (25 million credit and 50 million debit) and a 30% year-on-year growth.

With 87% of all transactions in plastic money is done through credit cards, debit cards in India continue to be used largely for cash withdrawals.

Though Visa, which accounts for 70% of the total card industry is the market leader in India; MasterCard is fast catching up.

Every transaction involves payment of an interchange charge to MasterCard or Visa for settlement, which amounted to about $50 (Rs.2, 250) million during the year. A domestic card payment settlement company would save the outgo on commission paid to Visa and MasterCard, a senior banker said.

India is still under penetrated as far as cards are concerned. Today the country has less than 1 per cent of Personal Consumption Expenditure (PCE) happening on cards. This compares very poorly with the global average of 5 per cent PCE on cards and is miniscule when compared to the 15 per cent PCE of developed nations.

Senior bankers feel that very few Indians carry a credit card, with the penetration level being as low as over 2 per cent while that for comparable economies; it stands at 10-12 per cent.

Though the penetration level is lower, the spending pattern of Indians is more or less in synch with the international spends, with travel, entertainment, retail shopping and jewellery being the top categories where credit cards are used.

Bankers expect their credit card business to grow by over 30 per cent in 2007-08. Credit cards have seen a gradual growth from about 3.5 million in 2000 to 25 million in 2007. Internal estimates of Barclaycard have pegged the Indian market with potential to grow to at least 55 million credit cards by 2010-11.

Not just the numbers of users have increased, but also the average spending has gone up from $368 (Rs16, 560) in 2000 to approximately $450 (Rs20, 250) in 2007.

Indian credit card market is "not overcrowded" and that the market is large enough for several players.

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MARKETING IMPLICATIONS AND CONCLUSIONS

This study indicated that to satisfy credit cardholders’ needs, low annual fees, and domestic and worldwide credit card acceptance is highly necessary. However, in order to offer different services from competitors and to build long-term customer loyalty, bank marketers can initiate a marketing campaign with attractive installment plan choices and point redemption. Additionally, making credit cards to be more widely used in more domestic stores can increase credit card adoption. This requires collaboration among banks and other businesses to share higher benefits from greater numbers of card users. For installment plan, longer installment period should be provided for allowing customers to pay back in longer term with lower amount of payment, while banks can have higher profit from interest charges. Moreover, various interest rates on installment plan can be offered. For example, the customer may be able to choose the fixed interest rates or flexible interest rate on each plan. In addition, many installment plans can be developed innovatively to attract more customers in response to their diverse needs.

Bank marketers can apply more creative point collection campaigns to encourage higher card usage. The collaboration between banks and other businesses, such as gasoline companies, can contribute to benefit both the parties and the researches results help explain the growth in popularity of "co-branded" cards. Therefore, the marketers can offer point redemption methods in more convenient ways through channels, such as telephone, internet, point-of-sales, and ATMs. Moreover, banks should have a co-branded program with businesses, including retailers, dining and restaurants, gas companies, hotels, airlines, transportations, shopping malls, and hospitals.

Credit card issuers should also build inter-organizational network among business partners in various industries in order to enhance card acceptance in many domestic areas in the country. Despite high competitive credit card market, banks with stronger inter-organizational relationship can survive and succeed in the market.

There is no doubt that the rise in number of credit card providers and users have come of age. The credit card industry is likely to soar more than any industry segment. To add to that, easy and continuous payments' structures with each passing day and with every Bank poised to expand its network, the Indian credit card user community is the biggest beneficiary. The intensifying competition prevalent in the present day Indian credit card market has further fuelled the usage of credit cards in the country like never-before. In an aim to overpower the peers and to sustain and prosper themselves, the Banks and financial institutions have started cutting down the interest rates and offering lucrative deals.

In summary, credit card marketing campaigns discussed above need to concentrate the customer profile. This implies that products and services for redemption, more places accepting credit cards and flexible installment plans must match demands and expectations of the target group.

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RECOMMENDATIONS

The banks battle today is more with cash than with the other banks. Considering the huge potential of the Indian market, it is in the interest of the issuers to educate the consumers about the benefits of holding credit card. The campaigns must also be convincing enough to clear the myth that credit cards increase spending power. Focus should be on changing non-card related spending to card related spending. The issuers must recognize the importance of the billing and payment process to retain credit cardholders.

1) The credit card schemes would be successful only if they meet the customer’s requirements of wider acceptability rather than fringe benefits like non-crises credit or prestige proposition. Emphasis should be on offering a wider basket of services through credit cards enabling purchases for a wide variety of products along with ATM usage, backed by much more comprehensive merchant establishment network. The banks must also increase the number of card holders by reducing the initial-one time subscription fee.

2) The banks should step up advertising that will help to build a brand image and create a higher brand recall like that of Citibank. With more and more people willing to adapt to credit cards, banks should undertake innovative strategies to increase card spends.

Simultaneously, to cater to high net worth customers and those with niche needs, banks should provide more of premium plastic and cobranded cards that piggyback on the existing infrastructure, but provide holders with exclusive add-ons.

3) Future promotions could include: Telemarketing, direct sales, direct mail, promotional advertising through media, and common ATM services between banks to reduce cost of operations, schemes like card carnival and sales executive’s contests and excess of augmented services should be introduced to induce greater number of people to adapt plastic money.

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REFERENCES:

Credit Cards

Books:

i) India: selected issues- By Jerald Alan Schiff (pg 62-69)

ii) New concepts in banking - By S S Kaptan (pg 110-118)

iii) Financial Services In India - By G. Ramesh Babu (pg 523 - 534)

Websites:

i) http://en.wikipedia.org/wiki/Creditcard ii) http://www.rediff.com/getahead/2007/may/04card.htm

iii) www.creditcardscities.com iv) http://www.economywatch.com/credit-card/information.html v) http://www.federalreserve.gov/pubs/shop/

vi) http://credit-card-information.elliottback.com/ vii) http://www.businesstoday.org/creditcards/

History of Credit Cards

Books:

A History of Credit and Power in the Western World - By Scott B. MacDonald, Albert L.

Gastmann (pg 222 – 224)

Websites:

i) http://www.didyouknow.org/creditcards.htm ii) http://inventors.about.com/od/cstartinventions/a/credit_cards.htm

iii) http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php iv) http://www.extracreditcards.com/history/ v) http://www.time.com/time/magazine/article/0,9171,1893507,00.html

Types of credit card

i) http://www.economywatch.com/india-credit-cards/types/ ii) http://credit.about.com/od/creditcardbasics/tp/credit-card-types.htm

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iii) http://www.web-source.net/web_development/credit_card_types2.htm

Transaction Process and Processing flowchart

i) http://www.pbs.org/opb/electricmoney/teaching_guide/eMoney_Lesson_two.pdf

ii) http://www.anz.com/personal/credit-cards/existing-card-holders/

iii) http://www.uen.org/Lessonplan/preview.cgi?LPid=13858

Merits & Demerits

i) http://www.powerpayservices.com/credit-card-processing-merits-and-demerits-of-credit- cards.html

ii) http://www.articlesource.info/Article/Payday-loans---Merits-and-Demerits/76

iii) http://www.meritcreditcards.com/

iv) http://www.articlealley.com/article_32102_63.html

Credit card frauds

i) http://en.wikipedia.org/wiki/Credit_card_fraud

ii) http://www.spamlaws.com/credit-fraud-stats.html

iii) http://infotech.indiatimes.com/quickiearticleshow/msid-2247677.cms

iv) http://sbinfocanada.about.com/od/insurancelegalissues/a/creditcardfraud.html

v) http://www.spamlaws.com/credit-fraud-prevention.html

Other Sources

Articles:-

1) CREDIT CARDS: The Plastic money can do wonders: Link www.ezinearticles.com2) THE ECONOMIC TIMES3) Business Standard4) Business & Economy (Special issues)

Books referred for Marketing Research Purpose:-

1) Marketing research tools by Malhotra

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2) Business research methods (Donald R Cooper & Pamela S Schindler) 8 th edition TATA MC GRAW –HILL