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Credit card:-

Card issuers: Usually banks / NBFCs

Card holders: Individuals / businessorganizations

ME Member establishment who is enlistedwith the issuer and accepts valid card towards

payment for goods / services

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MA Member Affiliates

Issuer sometimes tie up with other entity for

issuance of card. Such entity / organization is

called MA.

It is similar in all respects in addition it carries

logo of MA

Taj hotel is MA of Bank of India

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Clearing agencies VISA , Master Card etc

The advantage is that cardholder of one issuer

can use his card with ME of another issuer.

A holder of SBI Card can use his card with ME

of Axis bank.

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Credit card is a kind of consumer loan or line

of credit that means amount may be paid in

easy installment also.

It is a PAY LATER product.

Billing Cycle usually one month

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Parameter Credit card Charge card

Issuance On the basis of financial

evaluation and

creditworthiness of cardholder

On the basis of amount in the

account designed for charge

and by financial evaluation

Payment period Revolving credit paymentnormally within 45 days

Normally within 30 days

Amount of payment Revolving credit payment

minimum 5% of purchase

amount

100% of purchase amount

Interest rate 2.5-3% per month depending

on the type of card and issuing

bank. Penalty may however be

levied in case of default

No interest charged as there is

no extension of payment

period. Penalty may however

be levied in case of default

Annual payment and

commission

Only amount payment is

charged

Both annual payment and

commission are charged

Maximum amount of spending Depending upon limit given

usually 5 times of net monthly

income

No preset spending limit

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Credit card Debit card

Pay later product Pay now product

Can avail credit for 30-45 days Instantaneously debited to customers

accountNo access to savings / current account Direct access to such account

Not essential to open a bank account Essential to have a bank account savings

/ current

Sophisticated telecom network required Point of sale terminal to be installed at

merchant establishment so capitalintensive

Holder does not require to have amount

in account to the extent of transaction

amount

Bank account must have the required

amount to the extent of the transaction

Risk of fraud is high Risk is minimized through use of PINwhich is known to account holder

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Debit card : is a plastic card connected with

electro magnetic identification.

Smart card : An integrated circuit with micro

processor chip embedded in it.

It can function as calculator, maintain record

and act as electronic purse

The card is either exhaustible or rechargeable.

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As per RBI guidelines banks should not issue

debit and smart card in tie up with non bank

entity.

No cash transaction i.e. cash deposit /

withdrawal is permitted at POS with use ofdebit / smart card without prior approval of

RBI

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Debit / smart card can be issued to customer

having good financial standing and who have

maintained account satisfactorily for at leastsix months.

However, bank can issue on line debit card toselect customer with good financial standing

even if age of account is less than 6 months.

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No bank should despatch a card to a customer

unsolicited except where the card is

replacement card already held by thecustomer

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Cardholder to be provided with a written

record of transaction.

Card holder to bear loss sustained up to the

time of notification to the bank of any loss,

thefy, copy of card etc upto the limitsanctioned.

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Each bank should provide a system whereby

customer at any time of the day or night couldnotify the loss, theft etc. i.e. for HOT LISTING

On receipt of such notification bank should

take all action open to it to stop any further

use of the card

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Relationship between card holder and bank is

contractual and subject to clearly laid downterms and conditions.

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Product Augmentation or Value addition:-

1. Personal accident insurance

2. Cash withdrawal facility

3. Temporary increase in credit limit

4. Add on card

5. Levered investment facility for purchase ofMF, Equity, Bonds etc

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6. Affinity card: Issued to a particular section whotake pride in the activity and donate someamount periodically.

7. Reward points

8. Discount on purchase / use

9. Cash back facility

10 International debit / credit card