Credit Card Market in India

8/2/2019 Credit Card Market in India

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A Study On The Recent Trends & Customers Perception RegardingCredit Card Market In Chandigarh

1. Introduction

Last few years have witnessed significant changes in the Indian financial sector.

The financial sector reforms have forced commercial banks and development

banks to adopt new face of business and go beyond their traditional activities.

The product and services innovation has been the focus of financial institutions

and banks have started offering new services and products to compete in the

emerging environment. One such activity, which banks have tried to focus on,

has been the credit card market. Last one decade has witnessed entry of large

number of banks and financial institutions to tap this marketCredit cards were introduced by individual corporations in America sometime

before the 2nd World War. Oil companies as well as Hotel chains were the first

pioneers giving their corporate cards out to individual customers, usually

personnel from firms that were their largest customers. The cards offered up to a

few months credit before the bill had to be paid.

A salesman working for Coca Cola could now travel all over the US and have his

company pick up his travel and hotel expenses, rather than in the past the

individual paying out of his own pocket and then being reimbursed. This was

good business for both sides of the transaction as it led to repeat business from

the card issuers while the cardholder's company could consolidate all its bills in

one simple payment, as well of course as enjoying at least a month's credit.

The first piece of plastic, as we know them today, was introduced by Diner's Club

with American Express soon following. In the early days they were not known as

Credit cards rather Charge Cards because they offered no credit. What you

spent that month you had to pay when the bill came due. Diners and American

Express made their money by charging their card holders a fixed monthly fee as

well as taking a small percentage fee on every transaction.

1.1 The Modern Day Credit Card Is Introduced

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In the early 1960s the modern day Credit Card was introduced which went one

step further than the Charge Card. The credit card holder when he received the

bill (usually at the end of the month) now had two choices, either payoff the

balance in full or pay a small amount (the minimum payment) and be charged

interest on the balance until the debt is paid off.

In the early 1970s two main players evolved, Visa and Mastercard, but with the

business being so lucrative for the banks and finance companies involved

competition started to grow at a steady rate. It is now estimated that in 2004

there are over 250 different financial institutions just in Europe offering Credit

Cards of all sorts.

Store Cards are another form of Credit Card and work in exactly the same

fashion (pay off the monthly balance or pay a minimum and get charged interest

on the balance) however one can only use them in the stores (or chains) that

issue them. Boots, Selfridges and Marks & Spencer are among the large stores

offering these style of cards. The advantage with Store Cards is that most of

them offer some sort of Rewards Scheme that enables you to enjoy special

offers, free gifts and air miles etc.

Just about every teenager can't wait until he or she gets their first credit card. It'sa chance to become more independent. It gives them more convenient ways to

pay for things. And they can finally start ordering things online without bugging

their parents to use their credit cards.

There's no doubt that credit cards have a lot of conveniences. If you run out of

cash when you're on a road trip with friends, you won't be stranded. And being

able to buy things online can be quite convenient. Plus they're good for big

purchases. This is just one of the benefits of having a credit card. Another is that

responsible use can lead to building good credit early so it'll be easy to secure

loans for a car or house when you graduate from college.

1.2 The Dangers of Credit

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Credit is dangerous. We hear about it all the time but we usually ignore it. So

sometimes it takes numbers to get people to pay attention. That's how much the

average college student owes on their credit card right now. 500,000. That's the

number of people under the age of 35 who have filed for bankruptcy in the last

five years.

Unfortunately, too many people who have a credit card get into the mindset of

"buy now, pay later." It usually starts out with "I get paid next week so I'll go out

and buy Rs.4000 of clothes now. I'll just pay it off when I get my paycheck." But

then some unforeseen expenses come up and next thing you know, you're

carrying a balance that's growing and growing.

When a bank or other financial institution issues you a credit card, it's not

because they like you. It's because they can charge you interest. And being

young, they can charge you a lot of interest. So when you buy something and it

takes you a while to pay it off, you can end up paying a lot more than you

thought. That Rs.1200 CD player for your car might sound like a great

investment but a couple years from now when you've paid Rs.32000-45000 for itbecause of interest, you'll really hate yourself.

The truth is, nobody ever thinks they'll have credit problems. But so many

Americans do. And it's especially a problem for college students who find

themselves out on their own for the first time in their life with no major income but

lots of major expenses (books can cost Rs.40000 per school year!). That's why

it's important to really limit yourself to your credit uses.

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1.3 Your Credit Report

Basically, the credit report is like a permanent report of how you use your credit.

Every time we apply for a credit card, finance a car, rent an apartment, buy a cell

phone, or take out a mortgage, our credit report will be examined to see if your

credit is good enough.

As we can say, it's pretty important to have good credit because it affects

whether or not you'll be able to buy a car or house in the future. So Its

recommended periodically checking out our credit report using a credit reporting

service. It can be find all over the internet.

1.4 An Alternative To Having A Credit Card

We can get a credit card when we are as young as 16 if we have a parent to sign

on our account with us. But it is not recommend getting one until 18. If we have

got a bank account, Its recommended starting out with a debit card. We still get

many of the conveniences of a credit card without any risk.

1.5 Potential Of Credit Card Market In India

As already discussed, Master card and visa are worldwide organizations that act

as a clearing agencies and lend their name and logo for a prescribed fee. Any

bank can apply to be a franchiser based on eligibility. Master card is ahead of

Visa by a big margin. Both Master and Visa are working towards the same goal

to increase Indians understanding of credit cards as a convenience product,

gain customer acceptance and broaden the still tiny user base.

The market is enormous in India, says Mr. Chander Agnihitri Visa Internationals

country Manager, South Asia.

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The whole industry is expanding. Each brand is expanding as the industry

grows. Master Card started out here a few years earlier (1981) then we did

(1995) but we are catching up. Visa estimates the potential at about 10 millions

by year 2K.but there are many hurdles to overcome before this target is reached.

The first challenge is gaining acceptance among the Indian consumers, who are

traditionally credit adverse.

Various surveys have been conducted to estimate the demand of credit

cards in Indian market. According to A & M Survey 1993 India is projected to

become the second largest credit card market in the world after U.S by the year

2000. Presently it is not true. This was the mistake, which was made of by most

of the credit card companies. India is market with a vast commercial potential,

home to a rapidly growing consumer class segment at between 100 to 300

million. But India is country, sleeped in culture, superstitions and suspicions.

Despite the ten years old economic liberalization programme, India remains a

stubborn challenging market.

1.6 Emerging Scenario

In India where cash is king and paper work is a byword for business, two or three

inch of plastic is slowly but surely making in roads. Credit card industry growth is

estimated at 30-40 percent.

The major segments covered by credit cards, travel and entertainment account to

70% of total usage, dining (restaurants) and retail (shopping) 30%. Further, out of

total foreign exchange earnings 60% of the hotels earning come from credit

cards.

Of the total hotel business, 70% is transacted through credit cards.

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Due to the expected growth to 40% from the present growth of 30% in credit card

industry, Visa thinks that the number merchant establishments accepting Visa

cards will increase four fold in a couple of years from the 1,00,000 MEs. This is

expected in the light of GE- SBI tie up. Our intention is to replace cash, says

Dennis M.Googin President & CEO of Visa International Asia Pacific. Card usage

in India is low because of low acceptance. The day will come when the people

will pay for utilities and provision with plastic.

The future of credit card market is likely to brighten up with the advent of E-

Commerce. Once people start purchasing goods online from their home by

selecting the from the various sites and have charged to their cards, that day will

be the day for the credit card companies.

However for credit cards operations, there is a need for good infrastructure. But it

is obstacle in India. The credit card industrys heavy telecommunication and

technology requirements cannot be met in India. It could be met only in urban

areas but what about rural areas? It is a question of fact. At present there is an

acute competition in the credit card market. A large number of banks are entering

in this business. Even the non- banking finance companies have also enteredinto this business like Mercard Ltd. With banks concentrating more on profitable

business, credit cards will become important factor to boost sagging bottom lines.

At the same time, banner predict that a few years down the line the inefficient &

loss making card issuer would be forced to withdraw from the arena. The only

way banks (especially nationalized) survive is by improving their overall

functioning & infrastructure system.

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1.7 Security

As merchants increasingly adopt chip and authentication technology, the smart

Visa card brings you added levels of security. For online shopping, our smart

Visa card work with Verified by Visa to authenticate your transaction. And with

the Visa Zero Liability, you'll never be responsible for unauthorized uses, online

or off.

1.8 Online Account Access

Access your smart Visa account balance any time through your card issuer's

Web site to track your spending. An easy way to earn rewards

Use your Visa card and earn points towards your chosen affiliation.

Collect frequent flyer miles

Earn hotel points

Show your school spirit

Support your favorite charity

Convenient, reliable, and safe

Have you ever stood behind someone in line at the store and watched him

shuffle through a stack of what must be at least 10 credit cards? Consumers with

this many cards are still in the minority, but experts say that the majority of U.S.

citizens have at least one credit card -- and usually two or three. It's true that

credit cards have become important sources of identification -- if you want to rent

a car, for example, you really need a major credit card. And used wisely, a credit

card can provide convenience and allow you to make purchases with nearly a

month to pay for them before finance charges kick in.

That sounds good, in theory. But in reality, many consumers are unable to take

advantage of these benefits because they carry a balance on their credit cardfrom month to month, paying finance charges that can go up to a whopping 23

percent. Many find it hard to resist using the old "plastic" for impulse purchases

or buying things they really can't afford. The numbers are striking: In 1999,

American consumers charged about Rs.48 trillion on their general-purpose credit

cards.

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In this article we'll look at the credit card -- how it works both financially and

technically -- and we'll offer tips on how to shop for a credit card. (Experts say

this should be a project on the scale of shopping for a car loan or mortgage!)

We'll also describe the different credit-card plans available, talk about your credit

history and how that might affect your card options, and discuss how to avoid

credit-card fraud -- both online and in the real world.

Let's start at the beginning. A credit card is a thin plastic card, usually 3-1/8

inches by 2-1/8 inches in size, that contains identification information such as a

signature or picture, and authorizes the person named on it to charge purchases

or services to his account -- charges for which he will be billed periodically.

Today, the information on the card is read by automated teller machines (ATMs),

store readers, and bank and Internet computers.

1.9 Timeline

According to Encyclopedia Britannica, the use of credit cards originated in the

United States during the 1920s, when individual companies, such as hotel chains

and oil companies, began issuing them to customers for purchases made at

those businesses. This use increased significantly after World War II.

The first universal credit card -- one that could be used at a variety of stores and

businesses -- was introduced by Diners Club, Inc., in 1950. With this system, the

credit-card company charged cardholders an annual fee and billed them on a

monthly or yearly basis. Another major universal card -- "Don't leave home

without it!" -- was established in 1958 by theAmerican Express company.

Later came the bank credit-card system. Under this plan, the bank credits the

account of the merchant as sales slips are received (this means merchants are

paid quickly -- something they love!) and assembles charges to be billed to the

cardholder at the end of the billing period. The cardholder, in turn, pays the bank

either the entire balance or in monthly installments with interest (sometimes

called carrying charges).

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The first national bank plan was BankAmericard, which was started on a

statewide basis in 1959 by the Bank of America in California. This system was

licensed in other states starting in 1966, and was renamed Visa in 1976.

Other major bank cards followed, including MasterCard, formerly Master Charge.

In order to offer expanded services, such as meals and lodging, many smaller

banks that earlier offered credit cards on a local or regional basis formed

relationships with large national or international banks.

Although phone companies, gas companies and department stores have their

own numbering systems, ANSI Standard X4.13-1983 is the system used by most

national credit-card systems.

Here are what some of the numbers stand for:

The first digit in your credit-card number signifies the system:

3 - travel/entertainment cards (such as American Express and Diners Club)

4 - Visa

5 - MasterCard

6 - Discover Card

The structure of the card number varies by system. For example, American

Express card numbers start with 37; Carte Blanche and Diners Club with 38.

American Express - Digits three and four are type and currency, digits fivethrough 11 are the account number, digits 12 through 14 are the card number

within the account and digit 15 is a check digit.

Visa - Digits two through six are the bank number, digits seven through 12 or

seven through 15 are the account number and digit 13 or 16 is a check digit.

MasterCard - Digits two and three, two through four, two through five or two

through six are the bank number (depending on whether digit two is a 1, 2, 3 or

other). The digits after the bank number up through digit 15 are the account

number, and digit 16 is a check digit.

The stripe on the back of a credit card is a magnetic stripe, often called a

magstripe. The magstripe is made up of tiny iron-based magnetic particles in a

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plastic-like film. Each particle is really a tiny bar magnet about 20-millionths of an

inch long.

The magstripe can be "written" because the tiny bar magnets can be magnetized

in either a north or south pole direction. The magstripe on the back of the card is

very similar to a piece of cassette tape

A magstripe reader (you may have seen one hooked to someone's PC at a

bazaar or fair) can understand the information on the three-track stripe. If the

ATM isn't accepting your card, your problem is probably either:

A dirty or scratched magstripe

An erased magstripe (The most common causes for erased magstripes are

exposure to magnets, like the small ones used to hold notes and pictures on the

refrigerator, and exposure to a store's electronic article surveillance (EAS) tag

demagnetizer.)

1.10 Information On The Stripe

There are three tracks on the magstripe. Each track is about one-tenth of an inch

wide. The ISO/IEC standard 7811, which is used by banks, specifies:

Track one is 210 bits per inch (bpi), and holds 79 6-bit plus parity bit read-only

characters.

Track two is 75 bpi, and holds 40 4-bit plus parity bit characters.

Track three is 210 bpi, and holds 107 4-bit plus parity bit characters.

Our credit card typically uses only tracks one and two. Track three is a read/write

track (which includes an encrypted PIN, country code, currency units and amount

authorized), but its usage is not standardized among banks.

The information on track one is contained in two formats: A, which is reserved for

proprietary use of the card issuer, and B, which includes the following:

Start sentinel - one character

Format code="B" - one character (alpha only)

Primary account number - up to 19 characters

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Separator - one character

Country code - three characters

Name - two to 26 characters


Expiration date or separator - four characters or one character

Discretionary data - enough characters to fill out maximum record length (79

characters total)

End sentinel - one character

Longitudinal redundancy check (LRC) - one character

LRC is a form of computed check character.

The format for track two, developed by the banking industry, is as follows:

Start sentinel - one character

Primary account number - up to 19 characters


Country code - three characters

Expiration date or separator - four characters or one character

Discretionary data - enough characters to fill out maximum record length (40

characters total)LRC - one character

1.10.1 Authentication

There are three basic methods for determining whether your credit card will pay

for what you're charging:

Merchants with few transactions each month do voice authentication using a

touch-tone phone.

Electronic data capture (EDC) magstripe-card swipe terminals are becoming

more common -- so is swiping your own card at the checkout.

Virtual terminals on the Internet

This is how it works: After you or the cashier swipes your credit card through a

reader, the EDC software at the point-of-sale (POS) terminal dials a stored

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telephone number (using a modem) to call an acquirer. An acquirer is an

organization that collects credit-authentication requests from merchants and

provides the merchants with a payment guarantee.

When the acquirer company gets the credit-card authentication request, it checks

the transaction for validity and the record on the magstripe for:

Merchant ID

Valid card number

Expiration date

Credit-card limit

Card usage

Single dial-up transactions are processed at 1,200 to 2,400 bits per second

(bps), while direct Internet attachment uses much higher speeds via this protocol.

In this system, the cardholder enters a personal identification number (PIN) using

a keypad.

The PIN is not on the card -- it is encrypted (hidden in code) in a database. (For

example, before you get cash from an ATM, the ATM encrypts the PIN and

sends it to the database to see if there is a match.) The PIN can be either in the

bank's computers in an encrypted form (as a cipher) or encrypted on the card

itself. The transformation used in this type of cryptography is called one-way.This means that it's easy to compute a cipher given the bank's key and the

customer's PIN, but not computationally feasible to obtain the plain-text PIN from

the cipher, even if the key is known. This feature was designed to protect the

cardholder from being impersonated by someone who has access to the bank's

computer files.

Likewise, the communications between the ATM and the bank's central computer

are encrypted to prevent would-be thieves from tapping into the phone lines,

recording the signals sent to the ATM to authorize the dispensing of cash and

then feeding the same signals to the ATM to trick it into unauthorized dispensing

of cash.

If this isn't enough protection to ease your mind, there are now cards that utilize

even more security measures than your conventional credit card: Smart Cards.

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1.11 Smart Cards

The "smart" credit card is an innovative application that involves all aspects of

cryptography (secret codes), not just the authentication we described in the last

section. A smart card has a microprocessor built into the card itself.

Cryptography is essential to the functioning of these cards in several ways:

The user must corroborate his identity to the card each time a transaction is

made, in much the same way that a PIN is used with an ATM.

The card and the card reader execute a sequence of encrypted sign/countersign-

like exchanges to verify that each is dealing with a legitimate counterpart.

Once this has been established, the transaction itself is carried out in encrypted

form to prevent anyone, including the cardholder or the merchant whose card

reader is involved, from "eavesdropping" on the exchange and later

impersonating either party to defraud the system.

This elaborate protocol is conducted in such a way that it is invisible to the user,

except for the necessity of entering a PIN to begin the transaction.

Smart cards first saw general use in France in 1984. They are now hot

commodities that are expected to replace the simple plastic cards most of us use

now. Visa and MasterCard are leading the way in the United States with their

smart card technologies.The chips in these cards are capable of many kinds of transactions. For example,

you could make purchases from your credit account, debit account or from a

stored account value that's reloadable. The enhanced memory and processing

capacity of the smart card is many times that of traditional magnetic-stripe cards

and can accommodate several different applications on a single card. It can also

hold identification information, keep track of your participation in an affinity

(loyalty) program orprovide access to your office. This means no more shuffling

through cards in your wallet to find the right one -- the smart card will be the only

one you need!

Experts say that internationally accepted smart cards will be increasingly

available over the next several years. Many parts of the world already use them,

but their reach is limited. The smart card will eventually be available to anyone

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who wants one, but for now, it's available mostly to those participating in special

programs.

1.12 Online SafetyAlthough the numbers are increasing, consumers are still not using their credit

cards on the Internet nearly as much as e-tailers (electronic retailers) would like.

That's why many cyber-merchants continue to offer a toll-free order number so

that shoppers have the choice of calling their order in. Cyber-shopping may be

convenient -- and some people do all of their shopping online -- but credit-card

fraud is always a threat, both on the Internet and out in the real world. Hackers

have found ways to steal credit-card numbers from Web sites.

To illustrate the importance of tight security, a network TV reporter, tipped off

about loose security on an Internet Web-hosting site, was able to gain access to

about 1,500 customer records, which included everything from credit-card

numbers and payment records to comments about particular customers.

These are the kinds of stories that deflate consumer confidence. Some e-tailers

blame consumer reluctance on the inability in cyberspace to make the kind of

personal contact that a shopper gets when he looks into the eyes of a store

merchant. Experts say that this kind of comfort level will be boosted when online

payment methods and security measures are standardized -- much as they are in

the retail and mail-order industries.

While Internet companies have taken responsibility for security breaches and

resulting losses to credit-card users, there remains the growing problem of

people who use stolen credit cards to make purchases on the Internet. And while

unfair or fraudulent practices by credit-card companies are not commonplace,

they do happen. The good news is that consumers are protected by law -- in

case of credit-card fraud online or off, you are only liable for a maximum of

Rs.2000 of the amount stolen.

And fortunately, the Federal Trade Commission (FTC) and the media are

watching closely. In 1994, the FTC ordered TransUnion credit-reporting bureau

to stop selling "sensitive" consumer data -- data on 160 million Americans -- to

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junk-mail producers. The FTC charged that TransUnion violated the Fair Credit

Reporting Act by selling consumer information to target marketers who lack any

of the allowable purposes listed under the act. TransUnion denies that it sold

information that could affect customers' appealed the FTC's ruling, but lost.

If the mailing-list issue bothers you -- and it bothers most of us -- pay attention

when we are completing that credit-card application. Some application forms now

provide a box that you can check to allow or disallow the selling of your

information to mailing lists. We can also protect yourself by taking your name off

the credit bureaus' mailing lists.

The Direct Marketing Association (DMA) tracks consumers who prefer not to

receive solicitations by mail or phone. Check theirConsumer Assistance site for

more information. There are a lot of simple steps you can take to protect yourself

and your credit card -- starting with making sure you sign it as soon as it arrives

in the mail.

1.12.1 Other Methods of Protection

These tips are important and universal:

Sign your card -- as soon as you receive it! (Obviously, this is only as effective as

the clerk who's checking it.)

When you use your card at an ATM, enter your PIN in such a way that no one

can easily memorize your keystrokes.

Don't leave your receipt behind at the ATM.

Your PIN and account number from a discarded receipt could make you

vulnerable to credit-card fraud. Also, don't throw out your credit-card statement,

receipts or carbons without first shredding them!

Never give your credit-card number over the telephone unless you

initiated the call.

Even when you place the call to a legitimate merchant (such as a mail-order

company), never give your card number out over a cordless phone. Radio

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scanners that eavesdrop on these conversations are available for a few hundred

dollars at any electronics store, and your voice can be received by one from a far

greater distance than the maximum useful range of your cordless phone. One

common scam is when someone calls you "back" right after you place an order,

claims to be from the merchant and tells you that there was a problem with your

card number -- would you mind giving it to them again? The best thing to do is

ask for a contact name and call the merchant back at the number you used

originally.

Ignore any credit-card offer that requires you to spend money up-front or

fails to disclose the identity of the card issuer.

Make certain you get your card back after you make a purchase (one habitto observe is to leave your wallet open in your hand until you have the

card back). Also, make sure that you personally rip up any voided or

cancelled sales slips.

Always keep a list of your credit cards, credit-card numbers and toll-free

numbers in case your card is stolen or lost.

Check your monthly statement to make certain all charges are your own,

and immediately notify the card issuer of any errors or unauthorized

charges. (More on this later!)

1.13 Credit Issues

If you've had credit problems, you might have to settle for a card with a slightly

higher rate. If you have poor credit or no credit, some banks will issue you a

secured credit card. This means that you deposit money into a savings account

that acts as collateral against your credit line.

The rate may be high, but a secured card offers you the convenience of a creditcard while you work on rebuilding your credit. Secured cards are often the best

option available to those with a bankruptcy in their past. Be sure to choose a

secured card that pays you interest on your deposit!

On the other hand, if you have a very good credit rating and would like a higher

limit (Rs.200000 or more), check into applying for a gold card at the same

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1.15 CyberCash

CyberCash has been servicing credit card transactions over the Internet since

April 1995. It has strong ties to the current credit card processing infrastructure,

through Bill Melton, a founder of Verifone, as one of its fathers. The use of their

payment system has grown tremendously over a year. CyberCash claims that

they process thousands of transactions a day, they can send payment

transactions to 80% of the banks in America, and to have distributed over

400,000 copies of CyberCash Wallet software to buyers who use their system.

It is important to note that CyberCash is not a credit card processing company.

Unlike First Virtual, they do not transfer funds into the merchant's account.

CyberCash sells safe passage over the Internet for credit card transaction data.

They take the data that is sent to them from the merchant, and pass it to the

merchant's acquiring bank for processing. Except for dealing with the merchant

through CyberCash's server, the acquiring bank processes the credit card

transaction as they would process transactions received through a point of sale

(POS) terminal in a retail store.

The CyberCash payment system is centered around the CyberCash Wallet

software program, which buyers use when making a purchase. This program

must be downloaded and installed on the buyer's machine before they can makea purchase. This program handles passing payment information, encrypted,

between the buyer and the merchant.

Once a potential buyer has obtained the CyberCash Wallet and installed it, there

are still a few steps to take before it can be used. First, a buyer needs to create a

persona or wallet ID which is a string of characters which identify the wallet, and

a password. These are then registered with CyberCash. Buyers are allowed to

create more than one wallet ID, each with its own password. Secondly, they must

bind at least one credit card to the wallet. Binding a credit card entails entering

pertinent credit card processing information such as credit card number,

expiration date, shipping address and phone number. This information is then

registered with CyberCash. Buyers can bind multiple credit cards to the wallet.

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Once the wallet ID is established, and at least one card has been bound, the

buyer is ready to start purchasing.

To be able to accept payment using the CyberCash system, merchants must do

two things. First, the merchants must install the CyberCash Internet Payment

Software (SMPS). This software allows the merchant to interface with both the

CyberCash buyer, or Wallet software, and CyberCash's servers. Secondly, the

merchant must establish a merchant account with an acquiring bank that

supports Internet transactions using CyberCash's Secure Internet Payment

System. CyberCash can only communicate with banks they have an agreement

with. The requirements for accepting payments through CyberCash are provided

in detail in CyberCash's How to become a CyberCash Merchant document.

1.16 SET (Master Card/ Visa)

SET stands for Secure Electronic Transactions and is a proposed standard for

performing credit card transactions over the Internet. It is being developed jointly

by Visa and MasterCard, with technical assistance from various Internet,

information systems, and cryptology companies such as Netscape, IBM and

VeriSign. With these names behind it, in the future SET may very well become

the dominant method for paying by credit card over the Internet.

MasterCard and Visa are developing SET as a license-free protocol for credit

card transactions over the Internet. Even though it is being developed by

MasterCard and Visa, the protocol can be used by any type of credit card such

as American Express or Discover. It is important to note that SET is still a work in

progress. Visa and MasterCard have released drafts of both the business and

technical specifications of SET for public comment. MasterCard states that

testing of SET should start in the second quarter of 1996, and it should be

available for use by the fourth quarter.

There are several goals they want to achieve by creating this protocol. First, they

want to create a simple, inexpensive way for merchants to conduct credit card

sales over the Internet. Second, they want to produce a protocol for processing

credit card transactions that would have little impact on the existing financial

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infrastructure. Third, the SET protocol will allow software vendors to produce

credit card payment software that will interoperate. Also, by being an open,

license-free standard, SET will create a level playing field and insure competition

among software vendors. This should keep costs down for merchants and

financial institutions interested in processing credit card payments over the

Internet.

On the surface, the SET protocol looks very similar to the CyberCash payment

system. Merchants and buyers will both need software which follows the SET

protocol in order to use SET for credit card transactions. Also, acquiring banks

process credit card transaction requests delivered to them through SET in much

the same way as the process requests coming through a point of sale terminal.

Merchants can request the same type of transactions (authorize, authorize and

capture, etc..) as they can through CyberCash.

There are differences between CyberCash and SET. CyberCash takes an active

role in processing each credit card transaction that flows through their system..

CyberCash's server sits in between the merchant and the acquiring bank. It

verifies the identity of the buyer and the merchant involved in the transaction.

The server also handles the translation from a CyberCash format for transaction

data to the format used by the acquiring banks. With SET, There is no singlecompany which will be responsible for processing the transactions. The task of

translation from SET request format to the format used by acquiring banks is

done by the SET payment gateway. These gateways will either be run by

companies contracted by the acquiring banks to do so on their behalf (most

likely), or by the acquiring banks themselves. Identity verification of buyers,

merchants, and acquiring banks is not handled by a centralized server. SET uses

a system of certificates for party verification. Certificates are like the stamp a

notary public places on a document to confirm the signatures on it. Certificates

are issued by a trusted entity or "certificate authority" that can vouch that the

party presenting a digital signature is who they say they are. The certificate

shows that the signature has been proven to belong to the party in question.

These certificates are passed between the buyer's, merchant's, and acquirer's

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payment gateway software to prove that each entity involved in the transaction is

who they claim to be. For a fairly understandable and detailed explanation of how

certificates work within the SET protocol, I advise the reader to download a copy

of the SET business specifications.

1.17 E-Cash

E-cash or electronic cash is digital money that you use to make online

purchases. Consumers interested in shopping with e-cash have special software

on their system that allows them to download money from their bank account into

their cash wallet on their computer. When making a purchase, they exchange

this downloaded money with the merchant for the product they want to buy. The

merchant then redeems this money at a bank that accepts e-cash deposits.

There are many companies looking into providing e-cash payment systems. In

fact CyberCash states on their home page that they are developing a digital cash

system. However, only one company that I know of has an actual electronic cash

product out on the market: DigiCash. DigiCash does not actually sell e-cash

products to consumers. Their business model for e-cash is to license the

technology to banks, which will host e-cash accounts for merchants and

consumers.Two banks currently offer e-cash accounts to consumers and merchants. The

first bank to offer e-cash accounts was the Mark Twain bank of St. Louis

Missouri. As of March 1996, EUNet of Finland has also started offering e-cash

accounts (warning - their home page is mostly in Finnish).

1.18 Micropayments

One of the latest buzzwords on the Internet is micropayments. Currently, the waymany WWW sites make money is from advertising. The content on their pages is

free. The prevailing wisdom in the Internet community is that net-surfers are

unwilling to pay for content. The concept behind micropayments is that if the fee

for content was low enough, people would not mind paying for it. Current

payment systems are not set up for handling these types of transactions. The

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fees associated with processing credit card sales are higher than the actual

payment under these circumstances.

Carnegie-Mellon University is currently testing a new payment they developed

called NetBill. NetBill is an Internet payment system designed to deal with low-

cost item transactions; i.e. micropayments.

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2. REVIEW OF LITERATURE

2.1 P.S.EASWARAN (2005) NEED FOR DISCPLINE IN CREDIT

CARD WORKING SYSTEM

The RBI has finally woken up to the need to bring some semblance of discipline

into the working of credit card issuers. This measure is long awaited as over the

years finding it an attractive proposition, banks have virtually been trusting credit/

debit cards on unwary customers. Interest rates have fallen considerably over the

last few years but the rates labeled by the card issuers do not reflect this. On the

contrary, in many cases, the bill gets loaded in such a way that the customer isthe net loser. There is little rational for pegging their interest charges high, always

in double digit when they in reality ought to be in single digit only. Fortunately,

customers have of late realized that carrying the card is a burden. It is a high

time central bank got into action to some how regulate the whole business of

credit cards. A good beginning can be to force such issuers to slash their interest

rates to some reasonable level of say 10 to 12% p.a. and do not the 30 to 40%

they merrily charge now.

Secondly, withdrawal limits must have relevance to the cardholders capacity to

repay which in turn will depend upon his income. Though this linkage does

remain on paper, in there eagerness to retain the existing customers and to

enroll new ones, often these checks and balances are cast to the winds. In short,

it will be a nice idea for the reserve bank to keep a tight vigil on all the credit

issuers, whether they be Indian or foreign public or private sector banks.

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2.2 TANVI VERMA (2005) PLASTICS FANTASTICS

A study was done in which the objective of the study was to study the trouble

starts when you dont pick a card and its give to you anyway! An unsolicited

credit card can often be a prelude to harassment.

Pooja received an unsolicited credit card, pre- activated and free for the first

year. It made sense to use the card for a year. She received the bill late, with

interest charges added on. On her refusal to pay interest, a debt collection

agency started hounding her.

There are innumerable Poojas with similar complaints. The litany includes

harassment by the card issuers call centers, wrong billing, inadequate

information on interest charged, terms and conditions and credit limits.

Ultimately, theres no grievance redressal.

Luckily the Reserve Bank of India has just issued stringent guidelines to prevent

such abuse. Most card issuers are already following the procedures and

guidelines prescribed by RBI. These guidelines will effect the few who dont,

says Puneet Chadha, head, cards and retail assets, HSBC.

2.3 DR. S. RAMALINGA CHOODAMBIGAI (2005) EXTENT OF

USAGE OF CREDIT CARDS IN COIMBATORE

The introduction to the project is money lending is probably one of the oldest

professions in the world. In India money lending has its origin in the Vedic period

and there are evidences of activities such as acceptance of deposits and lending

of money states Manikandan (1997). The credit cards are largely preferred

because they are simple to operate and easy to carry. The holders are relived

from the risk of carrying cash or chequebook with them; owing to revolving nature

of credit, the customers can take advantage of it, when he pleases, within the

overall limit; the purchasing power of the card holder increases to the extent of

credit limit given in the card.

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The methodology used was the urban area R.S.Puram in Coimbatore was

chosen for the current study considering the fact that among the residents of

R.S.Puram there were as many job going people as business men who were

expected to hold cards, pertaining to their income. Secondly most of the

merchant stores of this locality accept credit cards from their customers owing to

their convenience. 150, respondents who posses credit cards were interviewed.

The findings were, it was found that 42 percent of the cardholders possessed the

card in the past four years. The study exhibited that 27 percent of the

cardholders possessed ICICI cards followed by SBI cards (24 per cent).

2.4 NARAYAN KRISHNAMURTHY (2004) JUST ONE TOO MANY

A study was done eight years ago; Shine E.T. was 22 and had just started

earning. As a software geek, his salary was terrific and he was spending it like

water. Soon, just spending his salary was not enough. He wanted more. So

Shine got himself a credit card and went on spending spree. Soon, Shine

realized he could spend twice as much with two cards; then he got three, then

six. The consequence? His out standings on just one card came to Rs. 1.28 lakh;

and he had to pay hefty amounts on the other five as well. Shine realized that it

would take a good part of his working li9fe to repay the dues on all his cards, so

he looked for a way out.

Credit cards work best for cardholders who pay back on time and in full, says

Shayam Srivasan, general manager and head, credit cards and personal loans,

Standard Chartered Bank. So, should you limit yourself to just one card? Theres

much to be said in favour of the one person, one card norm, but there are strong

arguments for using two-three cards.

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2.5 CLIFFORD ALVARES (2003) THE COST OF FREE CREDIT

Buy now, pay later. Credit card companies all over the world use this bait to

seduce any number of customers. And, in theory, its a great idea. Used wisely, a

credit card can be hugely convenient- you have up to a month to pay, and its

handy when you go impulse shopping. But ask Joseph Fernando about credit

cards, and hell tell you the other side of the story. This 34- year- old Mumbai-

based contractor took his first credit card seven years ago- and hes still paying

off his debts. As his purchases increased, Fernando fell into the classic trap of

rolling over payments; he paid little over the minimum 5 per cent on out

standings. He says: It made paying a lot easier and I thought I would always

square off the balance later, but that never happened. What happened instead

was that Fernando found himself crossing the credit limit.

Fernando is just one of the growing tribe of credit card users who manage to

successfully delude themselves that credit card debt can be easily handled.

Some people are convinced that they can pay off the balance whenever they

need to- not realizing that the credit card company is charging interest on that

amount.

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3. RESEARCH METHODOLOGY

3.1 Need Of The Study

In 1990s due to the liberalization of the economy many changes occurred in the

economy. In almost all the sectors of the economy changes happened. Whether

talk of primary sector or secondary sector, a lot of technological progress had

been made. E-Commerce, M-Commerce, Internet is the recent developments.

Moreover the Govt. has also declared the 2001-2002 as an E-Goverenvce. What

will be the impact of this technology on the credit card industry? What will be the

trend of the industry? This project has been carried out to answer these

questions.

Liberalization has also affected the service sector. Near 40% of countrys GNP

comes from this sector. This includes sector like power, insurance,

transportation, communication, Banking, hotels, hospitals & courier services. The

credit card industry in the banking sector of financial services is one of the main

industries. The research project has been undertaken to keep in mind the future

of financial services.

3.2 Objectives Of The Study

1. To study the trend of credit card market in Chandigarh.

2. To examine the factors influencing the customer purchase behavior

regarding credit cards.

3. To study the customer satisfaction level regarding the credit card.

4. To examine the potential of credit card market in the future in Chandigarh.

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3.3 Sample Size

For the study, the sample size of the 100 respondents has been taken. For this

purposes various banks and MEs has been approached for the list of the credit

cardholders. To select the samples convenience sampling method of non-

probability sampling method has been adopted.

3.4 Scope

The area of study for the project undertaken is the Chandigarh city. This city is

the industrial city having huge development. There is a huge potential for credit

card market. Till Feb, the market share of different credit card players in the

Chandigarh city was as follows.

Table No.1

S.

No.

Bank No. Of credit

card holders

1. SBI 44,000

2. Citibank 17,000

3. Stan Chart 3,000

4. American Express 1,5005. ICICI 1,000

6. Others 2,500Source: - DMA of ICICI Bank, Chd.

3.5 Method Of Data Collection

Due to the lack of complete secondary data, the study includes the primary data

collected through the survey. For the purposes of theoretical framework with

regard to the credit card industry, the secondary data has been collected from

the various magazines, newspapers and books. For the purpose of evaluating

the marketing strategies of the various banks both primary as well as secondary

data has been collected. The primary data has also been collected for the

purpose of meeting the objective of To study the purchase behavior and

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satisfaction level of the credit card holders. The primary data has been collected

through personal interview with structured questionnaire. . Secondary data has

been collected through the various pamphlets, brochures, and circulars,

application forms and with the personal interview with the official of various banks

& DMAs of the banks.

3.6 Tools Of Analysis

After the data was collected, it was complied, classified and tabulated manually

and with the help of the computer. Then the task of drawing inferences was

accomplished with the help of percentage and graphic methods. Chi- Square

Test has been applied to establish the relationship between the various

attributes. Finally, the results and suggestions are given.

3.7 Limitations Of The Study

The various limitations of the study are as follows: -

Certain respondents were not part with the information due to certain

apprehensions. The non-response and partial response is one of the

major drawbacks of the study.

The size of sample is also restricted. Therefore, the limitation of restricted

sample size is applicable to the study.

The Duration of the study is also in accordance with the academic

objectives of the course curriculum. So, obviously in present of academic

exercise, the restrictions of time have brought into the study some

limitations. Due to the lack of transparency in the banks the information provided by

them may not be reliable.

A general limitation of the study relate to the inadequacy and

incompleteness of the secondary data about the credit cards.

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3.8 Analysis And Interpretation

The main objective of the drafting of the questionnaire was to know thesatisfaction level of customer and to evaluate the purchase behavior of the

customer regarding credit cards. The whole questionnaire has been divided into

the four parts. In the first part, questions related to the demographic features of

the customers are included. In the second part, attempt has been made to

evaluate the factors affecting the purchase behavior of the customers regarding

the credit cards. In this part questions like rank the factors Influence you to buy

the credit cards, from which source do you come to know about the credit cards?

Have been asked. In the third part efforts have been made to study the

satisfaction level of customers regarding the credit cards. Firstly attempt has

been made to relate the satisfaction level with the usage and then various

reasons that cause dissatisfaction among the customers have been studied. In

the fourth & last part, basically suggestions have been seeked out from the

customers to make the credit card services better and attempt has been made to

know the customer perception towards the future of credit card market with

special reference to the E-Commerce. Analysis has been made with the help of

percentages, graphs. Then inferences have been drawn. The Analysis &

interpretation part has been divided into two phases. In the first part, the various

percentages have been counted and customer purchase behavior has been

studied. In the second part, the satisfaction level of the customer has been

evaluated and association between the various factors has been established.

4. DISCUSSION AND ANALYSIS

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4.1 Sex wise composition of credit card holders

Table No.2

Sex No of respondents Percentage

Male 68 89.47

Female 8 10.53

Total 76 100

Table 2 shows that the males are using credit cards more as

compared to the female. Out of the total respondents of 100 nearly 89 percent are

male. However one fact about the female respondents is that the whole of the

female respondents are owning the credit card for status symbol.

4.2 Age wise composition

Table No. 3

Age No. Of respondents Percentages

10-20 4 5.26

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20-30 19 25

30-40 43 56.58

Above 40 10 13.16

Total 76 100

Figure No. 1

Percentages

5.26

25

56.58

13.16

0

10

2030

40

50

60

10to20 20-30 30-40 Above 40

Percentages

Majority of the credit card holders (57%) are in the age group of

30 to 40 years followed by 25 percent in the age group of 20 to 30.This shows

that comparatively younger generation is more inclined towards using this facility.

Most of the respondents falling in this category are settled in life having a job or

profession or business of their own. These people require the credit card

services as they travel around mostly and require cash for personal as well as

business purposes.

4.3 Educational level wise composition of credit card holders

Table No.4

Education level No. Of respondents Percentages

Matric 10 13.15

U. Graduate 7 9.21

Graduate 26 34.21

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Post graduate 18 23.68

Higher 15 19.73Total 76 100

Figure No. 2

Percentages

13.15

9.21

34.21

23.68

19.73

0 10 20 30 40

Matric

U. Graduate

Graduate

Post graduate

Higher

Percentages

About 34.21 percent of the total respondents are the graduates, 23.68

percent are the postgraduate and 19.73 percent are higher. Mostly the users of

the credit cards are graduate or higher. These are the persons who are in job,

profession or business. One fact about the customer having a higher education

level is that these all are the lectures, professors or readers of the PU. Matric and

undergraduate are the persons who are doing business. So, overall conclusion is

that the customers of the credit cards are educated.

4.4 Occupation wise composition

Table No.5

Occupation Percentages No of

respondents

Service 30.26 23

Business 28.96 22

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Professional 34.21 26

Student 6.57 5

Total 100 76

Figure No. 3

30.26

28.96

34.21

6.57

23

22

26

5

0 20 40 60 80ServiceB

usin

ess

Profe

ssio

nalS

tude

nt

Percentages

No of

respondents

Nearly 30.26 percent of the respondents are salaried employees,

28.96 percent of the respondents are those who have their own business and

34.21percent are professionals. This is because due to the quota sampling

method is employed. However only 6.57 percent of the customers are students

but with additional card only.

4.5 Income wise composition

Table No.6

Income Percentages

No. of respondents

Nil 5.26 4

0-10000 7.89 6

10000-15000 10.53 8

15000-20000 26.31 20

20000-25000 35.53 27

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Above 25000 14.48 11Total 100 76

Figure No. 4

5.26

7.89

10.53

26.31

35.53

14.48

4

6

8

20

27

11

0 20 40 60 80

Nil

0-10000

10000-15000

15000-20000

20000-25000

Above 25000

Percentages

No. of

respondents

Most of the respondents who have taken credit cards are

those whose income is greater than Rs. 15000 Per month. To be precise nearly

35.53 percent of the respondents belong to the category of Rs. 20000-25000,

26.31 percent to Rs. 15000-20000, 10.53 percent to Rs. 10000-15000, 7.89

percent to the Rs. 0-10000 and the 14.48 percent to the above Rs. 25000, rest

5.26 percent are the respondents having no income I.e. the additional card. It can

be concluded that income is an including factor which is considered for credit card

services. Those with higher income are willing to avail for better type of services.

4.6 Market Share Of Credit Card Players In Chandigarh City

Table No. 7

Bank No of respondents Market Share

in Percentages

SBI 36 47.37

ICICI 16 21.05

Citibank 13 17.10

PNB/ HSBC 3 3.95

American Express 4 5.26

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Stanchart 2 2.63

Bank Of Baroda 1 1.32

Canara 1 1.32

Total 76 100

Market Share in Percentages

47.37

21.05

17.1

3.95

5.26

2.63

1.32

1.32SBI

ICICI

Citibank

PNB/ HSBC

AmericanExpress

Stanchart

Bank Of

BarodaCanara

Figure No.5

The above table shows that SBI is the market leader having 47.37 percent

of the market share. ICICI is with 21.05 percent of the market share and Citibank

with 17.10 percent of the market share. The above result can also be supportedby the data provided by DMA of ICICI bank. Although the three banks are

operating through the DMAs in Chandigarh city i.e. starlight (SBI), Walia & Walila

(Citibank) and Direct marketing (ICICI) But there is the difference in the

reputation of the banks. Moreover for SBI cards particularly, customers come to

know from friends about the cards particularly in the customers of PU.

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4.7 Source of awareness

Table No.8

Source of

awareness

Percentage of

Respondents

No. Of

respondents

Bankers agent 28.95 22

Friends 28.95 22

Bank Customers 10.53 8

Advertisement 31.57 24

Total 100 76

.

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Percentage

28.95

28.9510.53

31.57Bankers agent

Friends

Bank Customers

Advertisement

Figure No. 6

The above table shows that nearly 31.57 percent of the

respondents came to know about the credit cards by the way of advertisement,

28.95 percent by way of bankers agent and friends and rest 10.53 percent by

way of bank customers.

We can conclude that since advertisement is an effective media for

influencing customer to purchase credit cards. This shows the supremacy ofpromotional policy as compared to distribution policy and also the effect of

opinion leaders in purchase of credit card for the customers.

4.8 Relation between occupation and source of knowledge

Table No. 9

OccupationSource of

knowledge

Business Student Service Professional Total

Banker Agent 5 1 6 10 22

Friends 6 2 9 5 22

Bank

Customers

2 1 1 4 8

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Advertisement 9 1 7 7 24

Total 22 5 23 26 76

The above table shows the customer source of knowledge about the creditcard occupational pattern wise. This shows that the professional and business

class are influenced by the bankers agent and advertisement. However for the

service class the effective source of knowledge is the friends.

4.9 Duration Of Possessing The Credit Card.

Table No.10

Duration (in Years) Percentag

e

No. of respondents

0-2 77.64 59

2-4 14.47 11

4-6 7.89 6

More than 6 Nil NilTotal 100 76

Figure No. 7

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Percentage

77.64

14.477.89

0-2

2 to 4

4 to 6

Nearly 77.64 percent of the respondents are those who are owning credit

cards from last two years, 14.47 percent from the period of 2-4 years back and 7.89

percent from the period of 4 to 6 years.

From this we can conclude that the credit card market has been booted

just up. There is an enough scope of growth of this market.

4.10 Factors motivating for buying the credit cards

Table No.11

FactoFactors No. of respondents Percentage

Convenience 19 25

Status symbol 29 38.15

Credit extension 21 27.63

Incentives 7 9.21Total 76 100

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19

29

21

7

25

38.15

27.63

9.21

0 50 100Convenience

C

redit

ex

tension

No. of

respondentsPercentage

Figure No. 8

From the above table it is clear that mostly the customer buy the credit

card for status symbol i.e. 38.15, only 25 percent of the customer buy credit

card for convenience. People are also influenced by factor like credit

extension i.e. 27.63 percent and rest 9.21 percent of the customers are

influenced by the incentives. These are mostly business class people.

4.11 Association between motivational factors and purchase behavior

Null Hypothesis: -The null hypothesis is that no factor will motivate

customer in buying credit card.

However, calculated value of Chi- Square I.e. 13.05 is higher than the

table value at degree of freedom 3 at 0.05 percent level of significance i.e. 7.81.

The result is that the motivational factors (convenience, credit extension, status

symbol and incentives) have impact on the buying of credit cards. People are

mostly motivated to purchase the credit card by the factors like the status

symbol and convenience.

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Association between motivational factors and occupation

Table No.12

Occupation/

Motivation

Business Student Service Professional Total

Convenience 7 0 8 4 19

Status symbol 8 5 6 10 29

Credit extension 7 0 5 9 21

Incentives 0 0 4 3 7

Total 22 5 23 26 76

Null Hypothesis: - let us take the hypothesis that there is significant

association between motivational factor and the occupation.

The tabulated value of the Chi Square is 3.21 than the table value at 9

degree of freedom at 0.05 percent level of significance I.e. 16.9. So the result

is that there is Close association between occupation and motivational factor.

Professionals and students are influenced by the status symbol and the

services one are mostly influenced by the convenience. The behavior of the

business people and the professional seems to somewhat closely related as

these two are only influenced by the motivational factor incentives.

4.12 Factors influencing the purchase of credit cards.

Table No.13

S. No. Factors Business Service Professiona

l

Student Total

1. Acceptance

6.5

1 2 1 1

2. Interestcharges

3 6.5 3 5.5 3

3. More Credit 4 3 1 2 24. Joining fee 6.5 4 7 8 8

5. Additional

Card

5 5 8 9 7

6. Card Image 8 2 4 3 4

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7. Cost 1 6.5 5 4 58. Incentives 2 8 6 7 69. Fulfill

Eligibility

9 9 9 5.5 9

10. Liability in

case of card

lost

10 10 10 10 10

11. Liability in

case of Death

11 11 11 11 11

The table shows the overall ranking of factors in totality as well as

occupation wise. Acceptance is the most important factor in totality & more

credit is at No. 2. However People consider very little while purchase from a

particular bank factors like, Fulfill Eligibility, card lost liability & liability in case

of card lost.

The Method, which I have employed to calculate the ranks, is

weighted average method. I have assigned weights to the factor for e.g.

Rank 1 multiplied by 11, rank 2 by 10, rank 3 by 9 and so on then divide the

sum by the total of sum of numbers.

The table shows that the most influencing factor for the business

class for the purchase of the credit card is the cost. However for the service

class & professional it is at No. 6.5 & 5 respectively. This shows the trend of

purchase behavior of the business class. The business class goes for

evaluating the credit card by cost because of the frequent use of the credit

cards.

Incentive is at No. 2 for the business class it again reflects the costconsciousness of the business people. From the table it is clear that the

purchase behavior of the service, professional & student are somewhat

same. They prefer acceptance as it in at No. 1,2 and 1 respectively. They

are influenced by the other factors like card image and more credit very

much. One thing that is common is that Fulfill eligibility, Liability in case of

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card lost and liability in case of death are not so important factors in

influencing the purchase behavior of all classes as most of the classes are

giving these factors as the rank 9,10 and 11 respectively. To evaluate the

similarity in the purchase behavior of different classes & to judge the

purchase behavior of the different classes deeply, we can apply the

correlation analysis.

The association between the purchase behavior andoccupation.

The rank correlation between different occupations is.

1.

R1

(Business) and R2

(service) 0.2812. R1 (Business) and R3 (professional) 0.645

3. R1 (Business) and R4 (Student) 0.386

4. R2 (Service) and R3 (Professional) 0.790

5. R2 (Service) and R4 (Student) 0.729

6. R3 (Professional) and R4 (Student) 0.88

This shows the association between the purchase behavior of service&

student and Service & Professional i.e. 0.790 &0.729. So the purchase

behavior of service, student and professional are similar to some extent.

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Analysis And Interpretation II

As already discussed the whole of the analysis part has

been divided into two parts for the convenience of the study. The first part

deals with the customer purchase behavior regarding the credit cards and

the objective to study the customer satisfaction level with regard to the

credit cards has been tried to be met in the next part under the head

Analysis and Interpretation II in this part efforts have been made to

study the customer satisfaction level with regard to the credit cards.

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4.13 Usage Composition

Table No. 14

Usage Respondents Percentage

Rarely 32 42.10

0-5 times 25 32.895-10 times 7 9.21

10-15 times 9 11.84

More than 15 times 3 3.95Total 76 100

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Percentage of respondents

42.1

32.89

9.21 11.843.95

0

10

2030

40

50

Rarely

5-10

times

More

than

Percentage ofrespondents

Figure No. 9

The above table and graph show the usage of the credit cards by

the respondents as the usage of the credit card is very low nearly 42.10% of

the customers are such who has used the card rarely in the month, nearly

32.89% of the customers uses the credit cards for 0 to 5 times in a month

however 9.21% uses for 5 to 10 times in a month and 11.84 % uses the card

between 10to 15 times in a month. There are only 3.95% of the customers

who use credit card for more than15 times in a month. On the average the use

of the credit card is very low. But we should not jump to the conclusion, as the

usage of the credit card may have direct relation with the other factors. So wemay have to establish the relation between the usage and the other factors.

4.14 Relation between usage and income

Table No.-15

Usage Nil 0-

10000

10000-

15000

15000-

20000

20000-

25000

Above

25000

Total

Rarely 4 6 6 12 3 1 32

0-5 times 0 0 2 7 13 3 25

5-10

times

0 0 0 1 4 2 7

10-15

times

0 0 0 0 5 4 9

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More

than

15

times

0 0 0 0 2 1 3

Total 4 6 8 20 27 11 76

The above table shows that there is direct relation between the usage and

the income level. With the increase in the income level the usage rate increases

and vice versa. The people with the low income are using credit cards less times

in a month than those who are having the high income. The person who are

having the income slab of Rs. 0-10000 per month are using credit card rarely as

compared to the persons who are having monthly income of Rs 15000-20000 as

7 respondents are also using the credit card 0-5 times in a month and 1

respondent is also using for 5-10 times in a month. However the person within

the income slab of 20000-25000 and above 25000 is also using the credit card

more than 15 times also.

4.15 Relation between occupation and usage

Table No. 16

Occupation

Usage Business Student Service Professional Total

Rarely 6 5 14 7 32

0-5 times 6 0 9 10 255-10 times 2 0 0 5 7

10-15

times

6 0 0 3 9

More than

15 times

2 0 0 1 3

Total 22 5 23 26 76

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In this table the relation between occupation pattern and the usage has been

established. This table gives very significant results about the usage of the

credit cards. This shows that the usage of credit cards is more in business class

as compared to the student and service class. This seems to be very high in

case of professional also. However in the case of student it is almost nil as they

are almost with additional card only. The above result can also be supported by

the fact that in case of students the respondents are possessing the credit cards

only for the sake of status symbol.

4.16 Satisfaction level

Table No. 17Satisfaction level Respondents Percentage

Highly satisfied 16 21.05

Moderate satisfied 25 32.89Neutral 21 27.63Moderate

dissatisfied

9 11.84

Highly dissatisfied 5 6.57

Total 76 100

The above table shows the satisfaction level of customer

regarding the credit cards. This shows that on the whole the customers are

satisfied.

Figure No. 10

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Percentageof repondents

21.0532.89

27.63

11.84 6.57

010203040

Highly

satisfied

Neutral

Highly

dissatisfied

Percentageofrepondents

The above graph shows the satisfaction level of the respondents. It showsthat only 6.57% of the respondents are highly dissatisfied, 11.84% of the

respondents are moderately dissatisfied. On the whole the credit card holders in

the market are satisfied.

4.17 Relation between satisfaction level and the usage

Table NO. 18

Satisfaction level

Usage Highly

satisfied

Moderat

e

Satisfied

Neutral Moderate

Dissatisfied

Highly

Dissatisfied

Total

Rarely 3 14 11 4 0 32

0-5

times

4 9 6 2 4 25

5-10

times

1 1 2 1 1 7

10-15

time

s

5 1 1 2 0 9

More

than 15

2 0 1 0 0 3

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timesTotal 16 25 21 9 5 76

The above table shows the relation between the usage and thesatisfaction level. It shows that there is a direct relation between the usage and

the satisfaction level. The respondents who are using more than 15 times are

highly satisfied and neutral. Similar the respondents who are using the credit

cards 10 to 15 times and 5- 10 times are almost in the satisfaction level. The

respondents who are using credit cards between 10-15 times in a month are

moderate dissatisfied, so it proves that the respondents are satisfied or

dissatisfied only because of the usage not because of other mental or

psychological factors. This can be further supported by the cause of

dissatisfaction.

Regarding the causes of dissatisfaction the person complains of the

delayed statements, one of the extra charges, one of the no complaint

handling, four for less acceptance and four foe the expensive.

Table no.19

Causes of dissatisfaction No. of RespondentsDelayed statements 1

Expensive 4

Extra charges 1

No complaint handling 1

Less acceptance 4

Only 5 respondents among the total of 76 respondents who are highly

dissatisfied wants to shift to the another card in the future among these 3respondents (60%) says that they will shift to the SBI and the rest 2

respondents (40%) will shift to the ICICI card.

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4.18 Future trend in credit card market

Table No. 20

Trend Percentage No. of respondents

Grow Fast 25 19Moderately grow 38.15 29

Constant 26.32 20Decline 10.53 8

Total 100 76

The above table shows the customers perception of trends in the creditcard market in India in future with special reference to the E-Commerce.

Nearly 25 percent of the customers are of the view that it will grow very fast.

Figure No. 11

Percentage

25

38.15

26.32

10.53 Grow Fast

Moderately grow

Constant

Decline

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38.15 percent are of the view that it will moderately grow. According to

them for the credit card operations in India the infrastructure should be sound,

which will take time particularly in the Indian economy.26.32 percent are of

the perception that the credit card market in India will remain constant. And

nearly 10.53 percent are of the view that the credit card market will decline.

On the whole we can say that the credit card market in India will grow. Still

there is a direct relation between credit card and E-Commerce. So we can

say that the credit card market in India will boost up.

4.19 Better Media for the advertisement of the credit cards

Table No. 21

Media Percentage No. of respondents

Print 26.32 20

Internet 18.42 14DMA 34.21 26

Television 21.05 16

Total 100 76

Percentage

26.32

18.4234.21

21.05 Print

Internet

DMA

Television

Figure No. 12

The above table and the graph show the customer perception regarding

the better advertisement of the credit cards. According to the survey DMAs and

the Print media are the best media for the advertisement of the credit cards.

34.21% prefer that the DMAs are the best media for the advertisement of the

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credit cards and nearly 26.32 percent prefer print media. 21.05percent opts. for

the Television and rest 18.42 percent favors the Internet. Internet being the

costlier mode is less preferred by the credit card holders and the general public.

5. FINDINGS, SUGGESTION AND CONCLUSION

5.1 Findings Of The Study

The main findings of the study are as follows: -

SBI is the market leader in the Chandigarh city.

Bankers Agent and opinion leaders are effective source of

communication in credit card market. There is very less influence of

Bank customers. In advertisement, particularly print media is

effective in influencing the credit card customers.

Credit cards have direct relation with the income. People with high

income are keeping it and using it very much. That is why; thecompanies like Am -Ex are using this as a basis for the market

segmentation.

The numbers of males having the credit cards are more as

compared to the females. Females cardholders are keeping it just

for the status symbol or they are the cardholders with the Additional

card facility.

People are having the cards between 0-2 years ago. It means that

there is a greater scope of growth of the credit card market.

Occupation wise the main users of the credit cards are

professionals and business people. The use of credit cards by the

service people is very low.

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Cost is the most effective factor for the business people. However

for student & service people acceptance is the most important

factor. The professional class goes for purchasing the credit card of

a particular bank keeping in view the more credit facility.

Most of the people are keeping the credit card for the status

symbol. So, they are using it rarely. However those persons who

have taken the credit card for convenience and status symbol are

using it, but very less number of times.

Usage has only little relation with the income. Even the business

people with the low income are using it more. Most of the users of

the credit cards are business people and professionals.

The main causes for the dissatisfaction among the credit

cardholders are fewer acceptances, no complaint handling and

expensive one.

Almost, the people are satisfied with their cards and services. They

do not want to shift to the other card. However only few dissatisfied

people want to shift to other card. SBI and ICICI are getting popular

and people want to shift towards these cards.

The credit card market will grow in near future. There is a lack of

infrastructure and if this infrastructure is developed then the credit

card market will rise up rapidly.

People are mostly influenced by the type of media, which is easily

available to them. DMAs are the effective way to advertise the

credit cards. Besides these people also respond to the TV and Print

media.

5.2 Suggestions

On the basis of the of the findings and the problems faced by the credit card

holders the suggestions for making the marketing of credit card better are as

follows:

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The one of the main problem faced by the credit card holders is

the low acceptance of the credit card. So the bank should spread the acceptance

of their card. For this purpose the bank should tie up with the more member

establishments.

It is found in the survey that cardholder doesnt use their card

frequently it is mostly seen in the cases of the respondents who belong to service

class. The bank should try to increase the frequency of use by offering discount

and rebate on certain items in a specific period of time. Regarding the factor that

most influence the credit card holde

Documents

Credit Card Market in India