A PROJECT REPORT OY

PLASTIC MONEY

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A PROJECT REPORT SUBMITTED TO

THE UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION

OF

THE DEGREE OF BACHELOR OF COMMERCE

(BANKING & INSURANCE)

UNDER THE FACULTY OF COMMERCE

SUBMITTED BY

MADHAVI ADITI NARESH

UNDER THE GUIDANCE OF

ASST. PROF. PRIYANKA GOSWAMI

KERALEEYA SAMAJAM DOMBIVALI’S

MODEL COLLEGE

KHAMBALPADA, THAKURLI (EAST)

UNIVERSITY OF MUMBAI

MARCH 2022

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 INDEX

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 DECLARATION

I, UNDERSIGNED MS. MADHAVI ADITI NARESH

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HERE BY , DECLARE BY THE WORK EMBOIDIED IN THIS

PROJECT TITLED

A PROJECT REPORT ON PLASTIC MONEY

FORMS MY OWN CONTRIBUTION TO THE RESEARCH AND CARRIED

UNDER THE GUIDANCE OF

ASST. PROF. PRIYANKA GOSWAMI

I IS A RESULT OF MY OWN RESEARCH AND HAS BEEN
PRIVIOUSLY SUBMITTED TO ANY OTHER UNIVESITY FOR ANY DEGREE/
DIPLOMA TO THIS OR ANY OTHER UNIVERSITY.

I, HERE BY FURTHER DECLARE THAT ALL THE INFORMATION OF THIS

DOCUMENT HAS BEEN OBTAINED AND PRESENTED IN ACCORDANCE WITH
ACADEMIC RULES AND ETHICAL CONDUCT.

MADHAVI ADITI NARESH

BACHLEOR OF COMMERCE

BANKING & INSURANCE

CERTIFIED BY

ASST. PROF. PRIYANKA GOSWAMI

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 ACKNOWLEDGEMENT

I WOULD LIKE TO ACKNOWLEDGE THE FOLLOWING AS BEING

IDEALISTIC CHANNELS AND FRESH DIMENSIONS IN THE

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COMPLETION OF THIS PROJECT.

I TAKE THE OPPORTUNITY TO THANK THE UNIVERSITY OF

MUMBAI FOR GIVING ME CHANCE TO DO THIS PROJECT.

I WOULD LIKE TO THANK MY PRINCIPLE,

FOR PROVIDING THE NECESSARY FACILITIES REQUIRED FOR

COMPLETION OF THIS PROJECT.

I TAKE THE OPPORTUNITY TO THANK OUR COORDINATOR

ASST. PROF. GEETA NAIR, FOR HER MORAL SUPPORT AND

GUIDANCE.

I WOULD ALSO LIKE TO EXPRESS MY SINCERE GRATITUDE

TOWARDS MY PROJECT ASST. PROF. PRIYANKA GOSWAMI

WHOSE GUIDANCE AND CARE MADE THE PROJECT SUCCESSFUL.I

WOULD LIKE TO THANK MY COLLEGE LIBRARY, FOR

HAVING PROVIDED VARIOUS REFRENCE BOOKS AND MAGAZINES

RELATED TO MY PROJECT.

LASTLY, I WOULD LIKE TO THANK EACH AND EVERY PERSON WHO

DIRECTLY OR INDIRECTLY HELPED ME IN THE COMPLETION OF THE
PROJECT.

MADHAVI ADITI NARESH

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Page | 5
CHAPTER I
INTRODUCTION

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 A bank is basically a financial institution whose primary function is to accept

deposits and to use these deposits for lending purposes. It is basically a link between

those who have surplus capital and those who are in need of capital. India has a long
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history of financial intermediation. Banking in India originated in the last decades

of the 18th century. It is certain that the old banking system has been functioning

for centuries. Indian Banking System has evolved from a small group of merchants

banks to a huge network of commercial banks In India, as in other countries around

the world, an organized system of payment has emerged over time from the barter

system to the more convenient forms of monetary systems. The prevalent mode of

exchange across India in the 20th century has been coins, cash and cheques. As we

move ahead into the 21st century, payment through cash and cheques has been

transformed from a paper-based exchange of value to a virtual electronic one.

In the early 1990s, the government focused on licensing a small number of private

banks so as to promote liberalization this move, along with the rapid growth in the

economy of India, boomed the banking sector in India. By 2010, banking in India

was quite mature in terms of supply, range of products and reach in the rural areas.

For some private banks and foreign banks, it was still a challenge to reach to the rural

areas of the country. Till 2013 this challenge was met and the banks covered almost all

the rural areas of the country making it a main focus as they expected more operations

from the rural India. Physical as well as virtual expansion of banking through mobile

banking, internet banking, telebanking and mobile ATMs is taking place] since last

decade and has gained popularity in last few years. The development of information

technology and emerging a number of new innovations have taken place in the area of

retail payments known as electronic money

(AlLaham, 2009) or plastic money. The use of plastic money has been expanding quite

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 rapidly, and its development is a prominent trend in the area of retail payments

(BOJ, 2008). In India, like other developing economies, a slow transformation from

the use of paper-based payments medium to the electronics-based medium has been
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witnessed (RBI, 2002). While the basic features of these new instruments are some how

similar to those of old, paper-based instruments. In the Indian market, the development of

plastic money is probably the most significant phenomenon of the modern banking era.

Plastic money comes in various forms but the most predominant form that it takes is that

of credit card and debit cards. Plastic money and other forms of electronic payments are

nothing but newer and more convenient mode of payment. Even though today, cash is

still the order of the day. In fact, in the western developed world, higher value purchases

are increasingly being made through plastic and cash in relation to the world of low

value purchase.

Plastic money or polymer money, made out of plastic, is a new and easier way of

paying for goods and services.

Plastic money was introduced in the 1950s and is now an essential form of ready money

which reduces the risk of handling a huge amount of cash. It includes debit cards, ATMs,

smart cards, etc. Credit cards, variants of plastic money, are used as substitutes for

currency. This book on plastic money is divided into two sections titled Concepts and

Experiences. The former covers articles on the emergence of plastic money, different

types of plastic cards and their growth in India and other related issues. Experiences

discusses the experiences of banks like Standard Chartered, Citibank, which deal with

plastic money and their growth in the market. Over the years, money has transformed

from coins to paper cash. With the rapid expansion and exponential growth in the

technology field, the use of plastic money has evolved to a great extent. Clumsy and

expensive to handle coins and notes are replaced by efficient electronic payments

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 initiated by various types of plastic cards with a tantalizing prospect for the twenty first

century. Plastic money is a term used to represent the hard plastic cards used in day-to-

day life in place of actual banknotes. Plastic money refers to the hard plastic cards we use
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every day in place of actual bank notes. For example, ATM cards like credit card and

debit card are electronic generated card that acts as plastic money at the time of buying of

goods and services. Debit card is used to withdraw money from your bank account at the

time of payment for something and credit card is used to generate credit in the name of

your bank account for the purpose of electronic payment. Today the domestic card

industry is applied with different types of cards from gold, silver, global, smart to secure,

co-branded credit cards, etc. the list is endless. There is enormous growth potential in the

domestic card industry. The idea of using plastic money to make purchases was first

brought up by Edward Bellamy in 1887. He wrote a book named, “Looking Backward”,

which describes his idea of a utopian society? In this book, he has coined the term “credit

card.” Since that time, advancements have been made that have allowed this idea to

become a reality. All these started right from the savings leaving out a few rupees in

his local bank to the billions of rupee loans which were raised by syndicate banks and

financial institutions which were capable of financing projects in any country in the

world. Still, these banking majorities were heavily dependent upon their retail home

which is the base of borrowers and savers. Mostly all of the bankers began to consent

rate on this retail market segment as global competition intensified in late seventies and

early eighties. The debit card got generated from the shadows of its older sibling which

is the credit card. Over previous decades, plastic money has grown from accounting for

274 million transactions in 1990 to 8.15 billion transactions in the year 2002, to challenge

credit card as the preferred payment card. As it stands, the debit card industry was

always a multi-billion dollar engine which helps to drive bank profits and the point-of

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 purchase consumer sales - but it is also the beginning to redefine traditional payment

options in the business and other European Journal of Molecular & Clinical Medicine,

government sectors, such as food stamps, benefits, and payroll. For these functions the
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debit card has arrived and is here to stay. Credit cards is one of the banking products that

cater products to the needs of retail segment which has seen its number grow in GP in

recent years. This growth had been strongly supported by the development in the field of

technology, and without these technologies this could not have been possible.

Over the years, money has transformed from coins to paper cash. With the rapid

expansion and exponential growth in the technology field, the use of plastic money has

evolved to a great extent. Clumsy and expensive to handle coins and notes are replaced

by efficient electronic payments initiated by various types of plastic cards with a

tantalizing prospect for the twenty first century. Plastic money is a term used to represent

the hard plastic cards used in day-to-day life in place of actual banknotes. Plastic money

refers to the hard plastic cards we use every day in place of actual bank notes. For

example, ATM cards like credit card and debit card are electronic generated card that acts

as plastic money at the time of buying of goods and services. Debit card is used to

withdraw money from your bank account at the time of payment for something and credit

card is used to generate credit in the name of your bank account for the purpose of

electronic payment. Today the domestic card industry is applied with different types of

cards from gold, silver, global, smart to secure, co-branded credit cards, etc. the list is

endless. There is enormous growth potential in the domestic card industry.

Money is regarded as a medium of exchange and payment tool. Initially barter system

was used as the significant mode of payment. Over the years, money has changed its

form from coins to paper cash and today it is available in formless form as electronic

money or plastic card. The major change in banks which has been brought in by the

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 technology is through introduction of products which are alternative to cash or paper

money. Plastic cards are one of those types of innovations through which the customers

can make use of banking services just by owning the card issued by bank and that too
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without restricting himself in the official banking hours. Plastic cards as the component

of e - banking have been in use in the country for many years now.

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 Origin of Plastic Money

Money is the most important and useful inventions made by man. It comes in different
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forms. As we all know that earlier there was no monetary system in the economy, people

used barter system for any kind of exchange. Barter system was a system in which

people used to sell goods and services through direct exchange. Thus, it served the

purpose of the self-interest of every individual in society. It has been observed that the

barter system of exchange was usually common among the uncivilized and economically

backward communities and countries. The functioning of barter system was, however,

cumbersome and inconvenient in which people had to face the problems like: o

inconvenience of lack of double coincidence of wants o common measure of value o

mean of sub division o Store of value. The inconvenience and difficulties of the barter

system led to the evolution and growth of a common unit of account. The origin of

money came as a blessing to the society as the barter system was an outmoded way of life

for those people who were keen to grow and impatient to conduct their trade cheaply and

efficiently in many commodities. Money deserves to be the best among man’s important

inventions. According to Kutty (1979), money was introduced by people to remove the

Inconvenience and difficulties faced in the barter system. From its very invention, money

came in society in different forms. Money has been around in one form or the other with

some or all of the features and functions, since about 5000 BC. It has evolved over

thousands of years to get new characteristics and to perform new functions. Even today

money is evolving. In fact, the 20th century has seen money change form like no other.

Today, plastic form of money is common in most of the developed countries and are

gaining acceptance in many developing and under developed countries too. Plastic money

has certain advantages over traditional money just as paper money has certain

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 advantages over coins. Plastic money has all advantages of coins and paper money. It

differs from other existing forms of money in various ways. In comparison with cash,

which uses only physical security features, electronic or plastic money products use
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cryptography to authenticate transactions and to protect the confidentially of data (ECB,

1998). It has an extra function of identification. Like conventional money, plastic money

acts as a medium of exchange, a unit of account and a store of value of money. It is

meant to be used in place of coins and banknotes for the purpose of making payments.

A major drawback of plastic money as payment mode is its heavy dependence on

technology (satellites, phone lines, computer links, LANs, WANs etc.). A disturbance in

any one of these can cause a major disruption in acceptance procedures.

• Plastic Money may refer to the use of plastic cards like debit/credit cards in the form of
electronic transactions keeping in mind the need of the customer while making the large
transactions so that they don’t keep actual paper money with them. Various forms of plastic
money include debit cards, credit cards, Money access cards, client cards, key cards, and
Cash cards. The purpose of using these cards is only for the ease of customers that they can
make large transactions and also for their own safety.

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 History
With hundreds of millions of plastic cards in circulation today, these Plastic cards have
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become a way of life. India alone is home to millions of them. Initially positioned as a

status symbol these plastic cards have caught on in a big way amongst the educated

population of the country. Extending credit to their customers has always been an

extremely common practice. However, in the early 1940s, when individual retail

merchants in America found it more and more difficult to afford credit to these patrons,

financial institutions came into the picture.

1. 1900-1950’s (The Beginnings) With a history of “plastic money”, you cannot

ignore charge cards. Charge cards laid the groundwork for debit and credit cards.
Company-issued charge cards can be found as far back as the early 1900’s.
These cards mainly just kept customers loyal to the company.

2. Charge - it money: “Charge - it” was the first actual bank card and was
issued in 1946. The card was invented by a banker in Brooklyn, by the name of
John Biggins. However, only local purchases could be made.

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 3. The Diners Club Card: The concept of the credit card was initially acted
upon by Frank McNamara. After dinner with a fellow business associate, Frank
found himself short on cash after forgetting his wallet. What followed was an
Page | 14 epiphany that led him to think of a charge card. This card, later known as the
“Diners Club Card”, could be used at multiple locations. This novel idea became
the first true model of the multipurpose charge card.

4. American Express: American Express issued their first credit card in 1958.
Due to their international presence, the Green Charge Card was globally
accepted. This became the first internationally available credit card.

5. Bank Americard: In 1958 Bank of America introduced a unique card that

could be used to purchase anything at participating merchants. In other words,
it was a universal card so the cardholder did not need multiple cards for

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 specific destinations. This card also set industry standards such as 25-day grace
periods, credit limits, and floor limit.

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6. Mag Strip : Credit and debit cards would not be what they are today without
the Mag Stripe. This momentous leap in card technology arrived when the CIA
hired IBM to attach a magnetic stripe to their identity cards. The technology was
already available; however, the main problem was permanently attaching the
stripe to the card without wrinkles. While working on this problem, Forest Perry
came home from work to find his wife ironing his clothes. When he mentioned
the problem about the stripe, Forest’s wife asked to see the prototype card. Using
the iron, she managed to melt the stripe to the card wrinkle-free. This solved the
entire problem, which allowed IBM to go into full production with the Mag
Stripe on all their cards.

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 7. Automated Teller Machine (ATM): One of the most convenient aspects
of plastic money is the all-serving ATM. The ATM (Automated Teller Machine)
was brought into existence in the 1960’s by John Shepperd-Barron. After an
unfortunate and unsuccessful trip to the bank, John had to wait until the next day
Page | 16 when it opened again. That night, while reportedly taking a bath, John thought
of a self-dispensing cash machine. Along with the invention of what was soon
to be the ATM, he also invented the 4-digit international standard pin code. John
first wanted a six-digit army serial; but his wife convinced him four digits would
be easier to remember.

8. The Chicago Debacle: In the 1960s, unsolicited credit cards became a big
problem for the Chicago market. The Chicago market was untapped by credit
card companies by the mid-60s, so several companies began mailing “pre-
approved cards”. This mailing tactic proved to be nearly fatal for those credit
card companies, because they were accidentally mailing them to convicted
felons, toddlers and even dogs. Organized crime rings even took advantage by
using corrupt workers to intercept cards. Since these intercepted cards were
already pre-approved, the people residing at the mailing address were billed
thousands of dollars without even knowing about the stolen cards.

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1970s – 1990s VISA: Originally the Visa card started as the BankAmericard program
and was never intended to go national, or international for that matter. In 1965 Bank
America begin a licensing program with banks around California. After enough banks
subscribed to the program, BankAmerica was able to create a joint venture bank
association. This eventually rolled out on an international scale and Bank America changed
the name of their card to VISA International. They also created a domestic America version
named VISA U.S.A. This two-card system allowed VISA International to be more easily
accepted across other countries due to having no association with America. The acronym
VISA stands for Visa International Service Association; BankAmerica felt the name
change was appropriate since VISA would be instantly recognized in many different
languages. Their success continued and eventually they joined the Plus ATM network
becoming even more accessible to customers around the world. These strategic branding
choices allowed VISA to become one of the most recognizable and successful consumer
brands today.

1. Mastercard: While the BankAmericard was gaining precedent around

California, in Kentucky their competition was also gaining strong ground. Crocker
National Bank, Wells Fargo, and Bank of California came together and launched the
Interbank Card Association (ICA) in 1966. Three years later, Master-charge changed their
logo and came out with the iconic red and orange overlapping circle. However, it was not
until ten years later when Master-charge became the Mastercard we know today. The 80s
were also a revolutionary decade for MasterCard. They released their emergency card

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 replacement program; they entered the Pacific Rim, and acquired Cirrus which was the
largest ATM network in the world. After such a successful decade, MasterCard capitalized
on their advancements and became the other key player in the market along with VISA.

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2. Discover Card: The Discover Card was a revolutionary card in the 1980s. It
specifically presented Sears and Roebuck & Co. customers with a new credit card option.
This card was the first of its kind to have no annual fee, cash back, and high credit limits.
The only problem was that since it was associated with Sears, other retailers where weary
of accepting it, as they would be helping their competition. Eventually Discover realized
that their brand needed to completely separate from Sears and so they proceeded to do so.
Separating from Sears made Discover more attractive for other merchants to adopt the card.
By the early 1990s, Discover became incredibly successful and was a regarded as a
competitor of merit to Visa and MasterCard. 4. 1990s – Today To adapt to an ever-evolving
technological world, credit and debit cards have become more efficient and instantly
accessible across multiple mediums. With new technologies such as mobile platforms, this
presents numerous opportunities for vendors and consumers alike.

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 3. Chip and Pin card: One of the more disruptive changes to plastic money came
with the adoption of chip and pin technology. This system has become a standard with
credit and debit cards, and is preferred to the magnetic stripe. Chip and Pin technology
Page | 19 makes cards much more secure and personal information is very hard to steal because of
the encrypted chip. A cloned chip can also be immediately recognizable as a fraudulent
card, as each individual chip is specifically encrypted for each individual card. Even though
this card technology has been around since the 1990’s, it has become nationally used across
Canada, and will become mandatory in the United States by October, 1st 2015.

4. Square: Being able to accept transactions through a mobile device is a game

changer for businesses. This was largely made possible by a company called Square.
Square allowed a cell phone to be used as a point-of-sale system and accept card payments
anywhere. The device simply plugs into the headphone jack and has a card slot for the
customer to swipe their card. Introduced to the market with a 2.75% flat rate fee, mobile
card readers have definitely a significant contribution to plastic money. Square has opened
the door for many small businesses across the world that can now offer their consumers
more ways to pay.

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 5. Bling Tag: The Bling Tag makes it even faster to pay via mobile device. It is a
sticker that contains an NFC (Near Field Communication) chip. The NFC chip uses the
Page | 20 same technology that is in your traditional credit or debit card. Any Bling Tag user simply
has to tap their phone on the card accepter machine just like tapping a credit or debit card.
This is convenience at an entirely new level. Consumers can leave their wallets or purses
at home.

6. YesCard: The YesCard is a new way of accessing online loans and getting
money instantly. The old ways of taking loans in the form of a cheque or cash, having to
wait days for processing and then taking the time to deposit the money are gone! The
YesCard allows you to access and use your loans any time any place and faster than
anywhere else

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 The plastic money can be in the form of Credit cards or Debit cards. Debit and credit cards
offer more than a way to access money without having to carry around cash or a bulky
checkbook. Debit cards are like digitized versions of checkbooks; they are linked to your
bank account (usually a checking account), and money is debited (withdrawn) from the
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account as soon as the transaction occurs. Credit cards are different; they offer a line of
credit (i.e., a loan) that is interest-free if the monthly credit card bill is paid on time. Instead
of being connected to a personal bank account, a credit card is connected to the bank or
financial institution that issued the card. So, when you use a credit card, the issuer pays the
merchant and you go into debt to the card issuer. Most debit cards are free with a checking
account at a bank or credit union. They can also be used to conveniently withdraw cash
from ATMs. Credit cards have the advantage of rewards programs but such cards often
require an annual fee to use. Financial responsibility is a big factor in credit card use; it is
easy to overspend and then get buried in overwhelming credit card debt at a very high
interest rate. This comparison provides a detailed overview of what debit and \Credit cards
are, their types, associated fees, and pros and cons

Types of Debit Cards

1. PIN-only cards: PIN-only debit cards are linked to your bank account and can be
used for cash transactions and fund transfer, buy from retailers and pay bills online or
by phone. The card holder is required to enter a secure PIN for every transaction to
establish identity and maintain security

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 2. Dual-use cards: Dual-use debit cards are both signature- and PIN-enabled, and
tied directly to your bank account. You can verify your identity either by signing or
entering your PIN.
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3. EBT cards: Electronic Benefits Transfer (EBT) cards debit cards provided by a
state or government agency to users who qualify for food stamps, cash payments, or
other benefits. EBT cards can be used to make purchases at participating retailers or
to withdraw cash from an ATM, depending on the type of program.

4. Prepaid cards: Prepaid cards are not linked to a specific account, but provide
access to funds deposited directly on the card by you or a third party. In effect, they
work as a store credit or gift card. Except prepaid cards, all other types of debit cards
are linked to a bank account, typically a checking account but some savings accounts
also offer linked "convenience" cards.

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 Types of Credit Cards
1. The Standard Credit Card: These are general purpose credit cards with revolving
balance (i.e., credit is used up when purchases are made, and is open again once the bill is
Page | 23 paid). Standards cards are usually starter credit cards, usually for applicants with little or
no credit history who meets the minimum required criteria.

2. Reward Credit Cards: These cards offer several rewards programs in the form of
cash, points or discounts, and are intended to influence your spending. Reward cards
usually come with an associated annual fee and a lot of fine print; the key is to make sure
the rewards earned exceed the annual fee.

3. Secured Credit Cards: Also known as pay-as-you-go cards, their primary purpose is
to give people with bad credit history a chance to reestablish credit. The user first
deposits a "secure" amount into a savings account — that makes for the credit line. The

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 credit limit is usually a percentage (50%-100%) of this amount. These cards come with
an annual fee and a high APR.

Page | 24 4. Charge Cards: Charge cards do not have a preset spending limit and balances must be
paid in full at the end of each month.

5. International Credit Cards: If one has noticed, most cards have "Valid only in
India and Nepal" printed on them. An international card is valid in India as well as
anywhere in the world. Which means that you spend in foreign currency on the card but
pay back in Indian Rupees on your return. As an Indian resident, you can buy foreign
exchange using your International Credit card from an authorized dealer or
moneychanger against your Basic Travel Quota (BTQ). To find out your entitlement to
foreign exchange for business or other trips abroad, you should contact any bank
authorized to deal in foreign exchange in India. You can incur expenses on your
International Credit card mainly for personal spending. You cannot use your card for
expenditure that is not permissible by the Reserve Bank of India.

6. Virtual Cards: In a world that's turning to the net for all its needs, it is only natural
that you should own a card that is for the internet alone. The virtual card from Citibank is

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 just that. The answer to all your questions on the safety of transacting online. The virtual
card, or the Citibank e-Card is the first ever web card only in India. Now you don't need a
Credit Card to shop online. Accepted wherever MasterCard is, the Citibank eCard offers
you a safe and easy way to shop on the Internet. On approval, you get your card number,
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valid dates and a card verification number. Unlike with other credit cards, you don't get a

physical plastic card. All you get is a card number and expiry date. Therefore, this Card
cannot be used for transactions that require in person presentation of a physical
Mastercard. The Citibank e Card cannot be used for 'dual mode' transactions i.e., it
cannot be used to purchase an item over the Internet that subsequently requires a
presentation of a physical MasterCard Card to obtain that item.

7. MasterCard’s: MasterCard started in the late 1940's when banks in US issued special
paper that could be used like cash. In 1951 The Franklin National Bank in New York
formalized the practice by introducing the first real credit card. Several franchisees
evolved over the next decade. Interbank Card Association (ICA) to be renamed as
MasterCard as it 12 is known today was born on August 16th 1966. Member committees
were established to run the association. These committees established rules for

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 authorization, clearing and settlement, handled marketing, security and legal aspects of
running the organization.

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8. VISA card: Thirty years ago, people paid for their purchases by cheque or cash. They
did not have an alternative until payment cards entered the market. Payment cards over
these 3 decades have become an integral part of our lives. The possibilities are amazing,
you can use them for travel, food and commodities or simply cash. Today owning a
payment card opens up a whole new world of opportunities. Visa International has over
21,000-member financial institutions that have propelled it to the top. Visa International
is the world's leading full-service payment network.

Visa has a range of cards namely Visa Classic, Visa Gold, Visa debit, Visa commercial
cards and the Visa global ATM network in over 300 countries and territories that gives
the consumer choice. Visa cards are the world's most widely used and accepted form of
plastic payment. Between March 2015 and March 2016, India added some 0.38 million
credit cards and added 3.44 million debit cards. While the number of cards is increasing
slowly, people are gradually becoming more comfortable in using them as well, and
there’s an increase in their usage. The number of credit and debit cards in India is steadily

26
 rising but Indians still prefer debit cards over credit cards. In March 2016, a total of 24.51
million credit cards and 661.8 million debit cards were in operation, according to the
Reserve Bank of India. It’s not that only the card numbers have increased, but even the
types of cards on offer have seen a surge. Today the domestic card industry is flooded
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with different types of cards ranging from gold, silver, global, co-branded credit cards,
smart to secure the list is endless. Foreign banks have shouldered the major responsibility
of increasing the card base and adding value-added services to the card products in the
past. The scenario has changed dramatically in the last of couple of years with the entry
of State Bank of India (SBI), a domestic major in the banking sector. More and more
nationalized 13 banks and private sector banks like ICICI and HDFC Bank are
aggressively launching credit card with value added features. Indian consumers are also
using the plastic money for everyday spends such as petrol, hospitals, telephone services
and home furnishing. Consumers in India are also using credit cards more and more to
pay school dues for their kids. However, India is at a low 11 per cent in comparison to
other countries in the Asia-Pacific region when it comes to using plastic money for
recurring bills such as utilities, subscriptions and insurance. There is no doubt that the
domestic card industry has to yet to mature and offers significant long-term growth
potential. Most banks issue Visa or MasterCard, or both. Diners Club is a proprietary
brand of Citibank in India. American Express is also a proprietary brand, which is not
affiliated with any of the other brands. While most banks offer Visa and MasterCard,
Diners Club is offered only by Citibank and American Express cards by American
Express. Visa and Master Card are the most popular cards in India and have an almost
equal market share. An in-depth analysis of use of cashless transactions in the Indian
economy particularly in a developing new born state i.e., Chhattisgarh, is hence required
to estimate and analyze cashless transaction behavior of house hold families, because
now a days the use of plastic mode of transaction in C.G. is very much popular.
Transition from the existing cash-based retail payments to cashless payments can occur
by promoting payment through debit cards, credit cards or smart cards. This will require
rationalizing costs associated with the use of plastic money, making it more secure mode
of payment and conducting focused financial education programmes for increasing public

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 awareness. This transition would lead to saving currency management costs and generate
valuable information.

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