INTRODUCTION

 Nothing has come to represent cash the

way plastic cards have. The idea of using a
card to make purchases was first drawn by
EDWARD BELLEMY in 1887.The US was
the first country to launch it in the early
1990s .It was Diners Club
International ,the first independent credit
card company in the world and the
American Express which have changed
the way cards were used. They developed
it into tangible business phenomenon. In
India, the concept of plastic money caught
on in the late1980s only after private
sector banking came into practice.
•
 Debit card
Debit cards are upgraded atm
cards branded with Visa,
Mastercard,or other familiar
credit cards company logo.
They look exactly like credit
cards except directly tap your
checking account every time
when you make a purchase or
withdrawl.

They are easier, more

convenient ,less burdensome
and offer greater access to
your money than do checks
,ATMs, or credit cards. They
are descendents of ATM cards
that came in early 1980.
 Debit cards can be used almost
everywhere –retail stores, gasoline stores,
restaurants etc in the either of the
following ways:
 Today banks are pushing hard to
replace the ATM card with a debit
card without asking customers if
they want one. There are more
customers with debit card readers
than PIN based readers. Banks also
make more money through off line
debit cards in percentage fees or
discount from the merchants.
CREDIT CARDS
 A credit card 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 holders
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 accounts are a pre-approved line of unsecured credit offered
to the holder.
STEPS FOLLOWED IN CREDIT CARD
TRANSACTION:
 Authorization
 For Internet Merchants, the shopping cart is connected to or
integrated with a Payment Gateway. For Retail Merchants, the card
is swiped through a magnetic reader on the Point of Sale (POS)
Terminal. The authorization is transmitted to the appropriate Card
Issuer (Amex, Discover, Diners, JCB) for approval. The Issuing Bank
or Card Issuer authenticates the Cardholder and approves or
declines the transaction amount.
 It is important to note that no money changes hands during the
Authorization. Merchants must re-present the transaction to receive
payment.

 Merchant Balancing
 This is also known as Batching Out. Most POS Terminals and all
Payment Gateways perform an auto close function at the end of the
day and batch out automatically.
 Capture
 The Front-End Processor matches the
Authorization data to the settlement data
and transmits the card capture file to a Back-
End Processor for V/MC transactions or to the
appropriate Card Issuer for other card types.

 Clearing
 During this stage the Back-End Processor
performs compliance checks and risk
management procedures and transmits the
transaction to V/MC or to the appropriate
Card Issuer for other card types.
 Interchange (VS/MC Only)
 During this stage the V/MC Associations sort the transactions by
Issuing Bank and transmit them to the appropriate Issuing Banks
for settlement.

 Settlement
 During this stage the Issuing Bank calculates fees and deductions
(i.e., chargebacks) and routs the net funds to the appropriate Card
Issuer which determines the daily deposit for the merchant.

 Merchant ACH
 During this stage the Acquiring Bank or Card Issuer transmits the
merchant deposit to the merchant’s checking account.
 Advantages of credit cards:

 Compact
 Safe to carry
 Convenient
 Easy loan
 Attractive Schemes
 Universality
Limitations of credit cards:

 Security
 Identifiable

 Expensive

 Verification phase
 Credit Card Laundering
Credit card laundering is also referred to as “factoring”.

Tie up for providing CC facility

Company A Company B
(no merchant account) (has merchant account)

Order Tieup for commission Payment is

goods made to
and Company B
makes who sends it to
payment Payment Co. A for a
is made commission
to the CC
customer Company Credit card company
through
Company
B
Smart Card
Meaning
 Smart Card is a plastic card the size of a
credit card with an integrated circuit built into
it. This integrated circuit may consist only of
EEPROM in the case of a memory card, or it
may also contain ROM, RAM and even a CPU.
 Smart cards contain an operating system just
like personal computers.
 Smart cards can store and process
information and are fully interactive.
 Advanced smart cards also contain a file
structure with secret keys and encryption
algorithms. Due to the encrypted file system,
data can be stored in separated files with full
security.
uses
 The uses of smart cards are as versatile as any mini-
computer. At a hospital emergency room, for example,
the card could identify the person's health-insurance
carrier and transfer all necessary information from the
microchip to an admittance sheet. Tests, treatment,
billing and prescriptions could be processed more
quickly using the card. Major clinical findings could be
added to the medical information section within the
microchip.
Technological Difference Betweem
Smart Card and Dr and Cr Card
 The technological difference between the Credit
Card and Smart card is, that the latter contains
a computer chip that actually processes
information and has the potential to store
identification information including driving
license, citizenship, and emergency contact
information, whereas magnetic chip on the
Credit or Debit Card is simply electronic
encoding of the name, number and expiration
date already embossed on the card.
Benefits of Smart Card
 Smart cards can be used for
identification, authentication, and data
storage.
 Smart cards provide a means of effecting
business transactions in a flexible,
secure, standard way with minimal
human intervention.
 Smart card can provide strong
authentication for single sign-on or
enterprise single sign-on to computers,
laptops, data with encryption,
enterprise resource planning platforms
such as SAP, etc.
Problem of
Smart Card
 Another problem of smart
cards may be the failure
rate. The plastic card in
which the chip is
embedded is fairly flexible,
and the larger the chip, the
higher the probability of
breaking. Smart cards are
often carried in wallets or
pockets — a fairly harsh
environment for a chip.
However, for large banking
systems, the failure-
management cost can be
more than offset by the
fraud reduction.
Potential of Smart Card
 Today, there are fewer than one billion smart cards in
use. Smart card activities are growing at 30 percent a
year, predominately outside the U.S. Over the next five
years, the industry will experience steady growth,
particularly in cards and devices to conduct electronic
commerce and to enable secure access to computer
networks. Within the same time frame, smart cards are
expected to be used in 95 percent of the digital wireless
phone services offered worldwide. Asia, Latin America
and North America are areas believed to be of greatest
potential in the next three years. Globally, the uses that
have emerged so far are for payphones, wireless
telephony, Internet access, banking, healthcare and pay
TV. (Smart Card Forum, 12/98)
 ELEECTRONIC FUNDS
TRANSFER(EFT)

Electronic funds transfer is a

generic term describing any
transfer of funds between parties
or financial institutions via
electronic data systems.
ELECTRONIC CHEQUES

The ‘cheque’ is a messsage that

contains all of the information that is
found on the ordinary cheque,but is
signed digitally:or endorsed.

The best known method of

electronic funds transfer.
STEPS IN A COMPLETE
ELECTRONIC
CHEQUE TRANSACTION
Phase I : Purchasing Goods
 Phase II: Depositing
Cheques At The Merchant’s
Bank
 WHAT IS ACH?
• ACH = Automated Clearing House

• Electronic Network for financial transactions

• Governed by NACHA
COMMON APPLICATIONS
How do Clients Benefit?
 HOW ARE ACH PAYMENTS USED?

• Point-of-Purchase Entries (POP)

• Prearranged Payments and Deposits (PDP)

• Internet-Initiated Entries (WEB)

• Telephone-Initiated Entries (TEL)

 BuyByText Next
generation sales & marketing
technology

01/15/10 36
 A SIMPLE 4-STEP PROCESS

STEP 1 STEP 2
TEXT TO 82540 RECEIVE INBOUND TEXT

Thank you for ordering

Jukebox Hits. Register
your details and complete
your purchase by visiting
the below URL from your
mobile by clicking on the
link or selecting ‘Go To’ in
your Message Menu.
https://secure.purchase
 “PLEASE CONTINUE YOUR
ORDER BY
ACTIVATING YOUR E-WALLET.

THIS SECURE PAGE REQUIRES

YOUR ONCE-OFF
REGISTRATION AND
STEP 3
WILL TAKE 1-2 MINUTES.
SECURE
FOR YOUR FUTURE SECURITY
REGISTRATION AND CONVENIENCE, YOUR
PAGE SENT TO LIVE
MOBILE E-WALLET WILL ENABLE YOU
PHONE TO OPEN AN TO
ACCOUNT & INSTANTLY PURCHASE OTHER
COMPLETE GOODS
THE ORDER. AND SERVICES VIA TEXT OR
EMAIL,
SIMPLY BY KEYING IN YOUR
4-DIGIT PIN NO.”
 STEP 4
ORDER COMPLETION TEXT

Thankyou for ordering Jukebox

Hits. Your order and payment
has been processed and goods
will be dispatched today.
Your Jukebox e-wallet enables
you to make future purchases
securely by simply keying your
4-digit pin into our marketing
texts, emails or website. You
can also close, amend or opt-
out at www.jbbiz.co.uk.

That is just the start of the E-Wallet potential…

REACTIVE TRADITIONAL MARKETING
VERSUS
PROACTIVE E-WALLET