A Study On Frauds & Developments in Plastic Money

A STUDY OF FRAUDS AND DEVELOPMENT ON PLASTIC MONEY

A PROJECT SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR PARTIAL COMPLETION OF THE

DEGREE OF BACHLEOR IN COMMERCE
(ACCOUNTING & FINANCE)
UNDER THE FACULTY OF

COMMERCE BY
Ujala Gupta
UNDER THE GUIDANCE OF

Mr.Akash Deshmukh
THAKUR COLLEGE OF SCIENCE AND COMMERCE,

KANDIVALI (E) 400101
ACADEMIC YEAR 2022-23
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INDEX
Sr. No Particulars Pg. No.
1 INTRODUCTION 04
2 REVIEW OF LITERATURE 44
3 RESEARCH METHODOLOGY 47
4 DATA INTERPRETATION AND ANALYSIS 51
5 CONCLUSION AND SUGGESTIONS 65
6. BIBLOGRAPHY 74
7. APPENDIX 75
8. REFERENCE 79
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GANTT CHART
PROJECT WORK/TIMELINE FOR PROJECT COMPLETION
Name: Ujala Gupta Class/Div: TYBAF/D1 Roll No:8611
SR.NO Task Task Start End

Description Duration date Date
1 Chapter 1
Introduction
2 Chapter 2
Research
Methodology
3 Chapter 3
Review of
Literature
4 Chapter 4
Data
Collection and
Interpretation
5 Chapter 5
Conclusion
Suggestion
6 Chapter 6
Biblography
7 Chapter 7
Appendix
8. Chapter 8
Reference
8 First Draft
9 Second Draft
10 Final Draft
Student Project Guide Coordinator
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CHAPTER 1: INTRODUCTION
Money is regarded as a medium of exchange and payment tool. Initially, the barter system
was used as a 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 technology is through the
introduction of products that are alternatives to cash or paper money. Plastic cards are one of
those types of innovations through which customers can make use of banking services just by
owning the card issued by the bank and that too without restricting themselves in the official
banking hours. Plastic cards as the component of e-banking have been in use in the country
for many years now.
HISTORY OF PLASTIC MONEY
With hundreds of millions of plastic cards in circulation today, these Plastic cards
have 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.
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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.
1946 -The earliest plastic card was called Charge-It and was invented in 1946. It revolved
around a system of credit developed by John Biggins a credit consultant at Flatbush National
Bank, Brooklyn, New York. This "card" allowed the customers to charge local retail
purchases. The merchant deposited the same at Biggins Bank. The bank reimbursed the
merchant and collect payment from the customer.
1951 -The Franklin National Bank in Long Island New York issued the first official credit
card. In 1951, Mr. Frank McNamara had just finished dinner in a New York restaurant when,
to his acute embarrassment, he discovered that he had left his wallet in another suit. While
talking the restaurant owner into letting him pay the bill the next day, an idea for a new credit
card was already being concocted in his mind. Within a few months, he formed a company
called Diners Club and convinced 27 restaurants and 200 people to join it.
By 1951 there were 42,000 Diners club cards in circulation.
1958 - American Express saw this as direct competition to its traveler’s cheque division and
brought out its own charge card in 1958. Within three months they managed half a
million cardholders.
1960 - Bank of America introduced its own card called the Bank Amex card. Beginning with
a small group of cardholders and merchants, the bank began to license regional financial
institutes to act as Bank Amex cards for their region. Bank Amex card grew and in the next
a few years more and more communities across the US became serviced by a regional
member. 1966 -Fourteen US banks in Buffalo, New York formed Interbank - a new
association on the same guidelines.
1967- Four California banks changed their name to the Western States Bankcard Association.
They opened membership to other financial institutions in the west the product called Master
charge. Eventually, all financial institutions and banks interested in issuing credit cards
became members of either Bank Amex card or Master Charge. All parties benefited from this
system and led to rapid growth in cardholder accounts, merchant accounts and sales volumes.
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1977 – Bank Amex card became VISA and in 1979 Master Charge became MasterCard
International.
1980-With only two players in the domestic card industry, HSBC and Citibank the number
swelled to over 25 in the year 2010.
1981- Credit cards in India made their debut and are on the verge of an unprecedented boom.
1981 – 2010 - The market has virtually grown to over 4 million cards with over 25-30% of
compounded annual growth in the new cardholder’s base.
The recent growth in the use of plastic money after 2010 mainly credit and debit cards has
been phenomenal. There are hundreds of millions of credit cards in circulation today, these
little rectangular pieces of polymerized substance have become a way of life. India alone is
home to millions of them.
Spending pattern through plastic money has changed drastically. Traveling, dining and
jewellery are some of the top purchases that Indians make through credit cards. A few years
ago, it was jewellery and apparel purchases that formed the largest chunk of purchases
through plastic money. Fuel accounts for a very small portion of credit card purchases as
these are largely paid through debit cards. This growing trend will soon rise up to the point
where plastic money will completely replace the need for carrying cash. Will this change be
for good or bad only the future will decide?
The plastic Money business is definitely going big time. In a country where a decade back,
people had hardly heard the word plastic money or credit card, sit has been estimated that
there are likely to be around half a million potential card users in the near future. This
forecasting derives credibility from the fact that more and more local and international
financial institutions are exhibiting enthusiasm in this direction. This in turn reflects
prospects in the Indian market in accommodating numerous credit card competitors operating
on the circuit, ensuring healthy and competitive card business deals. However, card-based
usage has picked up only during the last few years. Payment by card is now becoming a
much-preferred mode for making retail payments in the country (Report on trend and
progress of banking in India 2006-07, RBI). Thus, plastic cards are such payment tool that
gives a customer an opportunity for noncash payment of goods and services and are designed
to facilitate small-value retail payments by offering a substitute for banknotes and coins and
thus complement traditional payment instruments.
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The recent growth in the use of plastic money mainly credit and debit cards has been
phenomenal. After the Demonetization by Prime Minister Mr. Narendra Modi and his
emphasis on Cashless Transactions, initially positioned as a status symbol these plastic cards
have caught on in a big way amongst the educated population of the country.
With the Indian economy expanding rapidly at more than 7.5 percent per annum and the
middle class budding cashless transactions in India are becoming very popular. Generally,
increasing reliance on cashless transactions is seen as a sign of a modern economy where
there is a strong synergy between ordinary consumers and financial institutions.
Plastic money in the form of cards was introduced by banks in India in 1990s. But it was not
very popular among Indian consumers at the time of its introduction. The change in
demographic features of consumers in terms of their income, marital status, education level,
etc., and up of technology and its awareness has brought relevant changes in consumers'
preferences. These changing preferences have also modified their outlook and decision
regarding the acceptance and non-acceptance of particular products and services in the
market. Thus, plastic cards are gaining popularity among bankers as well as customers and
getting accepted in the marketplace. It can be well imagined from the discussion that no
doubt, the plastic cards market is growing at a large pace in India yet it has a long way to go
as it lacks behind if compared to the usage trends of other countries. Hence, it has become
important that the payment system in India has to be modernized enough to be at par with the
systems prevalent in other countries since our domestic financial markets are increasingly
getting integrated with markets abroad. RBI is also taking important steps in order to enhance
its usage and popularity through initiatives like regulating the card market to maintain
security levels and to build up the confidence of bankers and customers. Despite the strong
advances in e-payments, an estimated 90 percent of personal consumption expenditure in
India is still made with cash, which indicates the tremendous growth potential of this
business. So, this can be considered as a mere beginning which indicates the bright future
prospects of plastic card market in India.
1.2 PROPERTIES OF PLASTIC MONEY
Plastic money is a term that has been used to a wide variety of payment systems and
technologies. Credit cards or electronic money transfer through computer network or internet
or through telecommunication links are also termed as plastic money. It is also known as
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digital cash. These cards can be either multipurpose or single purpose cards. The major
classifications of plastic cards are the debit and the credit cards. Debit cards are linked to the
account of the cardholder and they are usually issued by the bank or the financial institution.
When one uses a debit card, the money immediately gets transferred from the account. This
card cannot pay more money than what is available in one’s account. Credit cards on the
other hand are cards that enable us to take a loan from the bank or the financial institution
which issues the card. Apart from these, there are charge cards, photo cards, Global cards,
Co-Branded cards, Affinity cards, add-on cards.
A charge card is just like a credit card, The only difference is that in a charge card the entire
amount is to be paid by the due date. American Express and Amex are popular charge cards.
Photo cards are cards that have the card holders photograph imprinted on the card. This helps
to identify the user and is therefore considered a safer credit card. Global cards have the
flexibility of using the credit cards not just in one country but in any currency in any country.
Co-branded cards are usually issued by card companies that have a tie up with popular brand
for the purpose of offering some exclusive benefits for consumes. Affinity cards are issued by
the organization, which enables the organization to get some percentage at any time, the card
holder uses the card. An add-on allows you to apply for an additional card and the card holder
agrees to pay the money for the additional card as well.
FUTURE OF PLASTIC MONEY:
India is still conservative and traditional in the use of credit and debit cards to that of money.
However, the usability and use of plastic money are certainly increasing in recent years. The
use of plastic cards especially credit cards became popular only after 2004 -05. Credit cards
were used for business transactions after 2007-08 and after this acceptance of credit cards
became more common. Even smaller shops and gas stations and common commercial centres
started accepting cards and understood it’s an easy-to-use feature. This in turn leads to the
overall growth of e-commerce and consequently the e-economy.
Credit and debit cards are no doubt convenient and easy to use, but all of us must be aware
that it is as dangerous. With millions of consumers from the east in China to the west up to
Mexico filling their wallets with plastic cards, the risks are also mounting. In just about ten
years the global spending on credit and debit cards has increased almost four times. It is a
proven fact that Americans were responsible for more than 40% of the spending through the
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credit and debit cards and the future looks very promising in most eastern countries especially
China and India.8 The United States has maximum spending in credit cards with almost five
credit cards on an average and other countries like Britain and Ireland is more conservative in
credit cards and more towards the debit plastic cards.
It is very interesting that when we are talking in terms of the east and the west, United States
has five cards per person where as in Brazil every third person owns cards, in Russia every
sixth person owns card, China every thirty third person owns has one card and in India there
are sixty fifth person owns a card.
CREDIT CARDS HOLDERS IN DIFFERENT COUNTRIES
SR NO COUNTRIES PEOPLE/PER CARD

1 USA 5 card per person
2 Brazil 1 card third person
3 Russia 1 card sixth person
4 China One card thirty third person
5 India One card sixty fifth person
Developing countries like India want to expand this sector and most banking sectors are now
trying to promote the plastic card (Debit in particular). However, it is apparent that we need
to go slow in this sector since developing too fast can sink the national economy to a large
extent. There is immense growth potential in the domestic card Industry in India. Many
foreign banks, since they have an advantage of more and better technology have started
concentrating on this expansion. Especially in offering more credit cards and making their
documentation process for offering the credit cards much easier and being more liberal.
Whereas, nationalized banks, are concentrating more on Debit cards and its spread more in
the interior and rural parts of India.
At present the plastic card potential is concentrated more in the metros and the cities than in
the rural regions and if at all there are credit and debit card facilities in smaller towns they are
generally tourist spots or regions with concentration of population. Domestic banks can reach
out better to the smaller regions since they have a wider reach. The plastic world is evolving
with it not just a new system of banking but is bringing a new revolution in the market and in
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the buying capacity of people. It is resulting in the changing life styles of people and
increasing travel and a definite increase in the entertainment sector.
The major issuers of Visa Electron cards are ICICI Bank and HDFC Bank while for Maestro
the major issuers are State Bank of India and Citibank. Starting from 'Diners Club', some 50
years ago, the card industry has been growing with a rapid pace world over and so has been
the growth in the domestic card industry. With only two players in domestic card industry,
HSBC and Citibank in the early 80s, the number swelled to over 25 in the year 2001.11
Credit cards in India, made their debut in 1981, and are on the verge of an unprecedented
boom. 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 with different types of cards
ranging from gold, silver, global, co-branded credit cards, smart to secure, and 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. But 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 nationalised banks and private
sector banks like ICICI and HDFC Bank are aggressively launching credit card with value
added features.
PLASTIC MONEY SCENARIO IN INDIA:
In many daily customer payments, the credit and debit card is replacing the general
transactions in money. It was earlier only in private commercial establishments, but now
most Government transactions like Railways, Telephones, Electricity departments and
Government tax departments are advertising and giving more preference to on line payments
which can be made only through credit and debit cards. This is because credit cards are more
flexible and safe and the system has generally acquired public trust. These credit and debit
cards are more popular in e banking, e-commerce. In Europe, the Royal Bank of Scotland
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(RBS) has an elaborate departments and back hand to actually manage finance and most bills
are paid by the bank itself through a standing instruction. They even can manage excess in
cash flow and this is done completely on line through e commerce which is called excess
management. Higher compliance helps to bring down the large revenue/fiscal deficits at the
centre and state levels. Card payments for activities like tax collections and other
administrative purposes may facilitate a more effective use of public funds make government
transactions and accounts more transparent and easily traceable. Impacting credit and debit
card usage in taxation, which tends to add to the customers’ expenditure. Tax reduction
would acts as an incentive with benefits to the economy. Bankers said that a reduction or
even a waiver would be revenue positive.
This implies that revenue list on the withdrawal of the tax would be more compensated with
increased mopping up by other sectors. More merchant establishments in the country would
have to be wired into the card network for making any e-payment successful. Cardholders
enjoy the convenience of plastic money as well as the line of credit offered by it. Merchants
found that credit card customer usually spent more than what they had to pay with cash.
Accepting cards was safer for the merchant than dealing with cash (more secure from internal
and external theft and error) and less expensive than creating and maintaining a merchant
specific credit program. Wider merchant acceptance of payment cards along with more ATM
facilities could increase tourism expenditure and India’s foreign exchange earnings. A
currency conversion ranks as a major issue for incoming tourists; greater acceptance of
payments cards by merchant establishments could boost tourism. Improvements in lndia’s
card payment infrastructure - better telecommunication, connectivity at lower cost, more
advanced technology and equipment as well as wider card usage, the number of merchants
accepting cards in India has been growing rapidly. Card offers a number of benefits and
privileges. All these benefits increase the purchasing behaviour of cardholders, which in turn
increases spending and consumption pattern in the economy. To meet the high consumption,
large scale production will start which in turn will increases the employment opportunities
and wage level. High wage level increases the standard of living and social status. The
demand for better quality of goods/services automatically rises and increases the sale and
profit of business. Increased sales and profit is a sign of business growth, which is an
essential component of economic growth and development.
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CREDIT AND DEBIT CARD IN INDIA:
Credit card arrived in India about two decades ago. In the early stages its growth was very
low in terms of number and value. A credit card in India is a recent history. Recognizing the
potential of credit cards, a few banks in India have taken initiative to introduce credit cards.
ANZ Grind lays Bank came with classic cards in 1989. Citibank’s Master and Visa card
became popular in 1990. Most of the banks in India are today competing to market credit
cards. Usually, the facility of credit card is available to those persons who have a regular
monthly income, credit worthiness, etc. the issuing bank first judges the income of the
intending customer. Now, the banks issue credit cards to almost all their customers and
sometimes go up to the extent of market and thrust credit cards to customers who actually
don’t even ask for it.
The rapid expansion of credit cards in the country has made India into a more customer
consumption economy. The concept of consumerism that is common in the Unites States has
caught on very strongly in India too. Now credit card proliferation has made consumers has
accelerated transforming India to a mass consumption society. More and more banks are
encouraging their customers to go in for credit cards. More and more people perceive the
credit card as a status symbol. Apart from being a source of revenue for banks, credit cards
play an important role in the country in reducing the cost of currency management, increasing
the safety of transactions, providing for traceability of transactions etc. The progress has
taken place not only in the number of cardholders but even the type of cards offered. Today,
the domestic card industry is flooded with different types of cards ranging from gold, silver,
co-branded cards, smart cards etc. The number of nationalised and private banks issuing
credit cards has increased significantly. Credit card business in India is regulated according to
the guidelines of RBI, IBA and Central Government. Kisan Credit cards (KCC) introduced
by commercial banks provide hassle free and revolving credit to agriculturists is a major step
towards the growth of credit cards in rural areas. The convenience and reliability it confer to
the consumer and the merchant has already made the credit card as an irreplaceable mode of
payment in the cashless society. It has become a part of the norm today. Credit cards growth
is due to wider acceptance of cards by merchants because it requires only low deployment,
aggressive marketing by private and foreign banks, prompt payment by cardholders, co-
branded cards, innovative schemes and card privileges, changes in consumer behaviours etc.
Spending pattern in India is more or less similar to that of international
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standards, in travel & entertainment, retail shopping and jewellery being the top categories
where the credit cards are used.
The popularity of debit card is due to the fact that unlike in the western world, where the
culture is to live on loan, Indians are credit-shy people i.e. Indian being predominantly risk-
averse. They are not comfortable with debt. To obtain debit cards, an account in the bank is
only what is needed. Debit cards are mostly used for low value transactions. Since, purchases
and ATM withdrawal are listed on monthly statement; cardholder can track his/her spending.
It is a good financial management tool. Debit cards are typically used as substitutes for cash
and cheques to pay or everyday items such as groceries, restaurant meals and department
store purchase. Seventy per cent of cards in India today are debit cards, usage are widening
that can be a major catalyst in changing consumer behaviour. It is mostly used for payment of
low end use.All the cards issued by banks are the ATM cards which are dual cards used both
to draw money from ATM and use them as value added debit cards. Consolidation of ATM
and debit card networks begin in the mid l980’s and continues today. Bankers and analysts
see tremendous scope for growth in debit cards. The potential is much higher than that of
credit card. Both debit cards and credit cards exist as complementary products. Banks are
now giving a new thrust to debit card, since it reinforces the habit of using plastic money,
which saves the banks substantial transaction costs. In case of debit card, banks need not
worry about recovering the money or about risk assessment of the customer as in case of
credit card. In case of credit cards, banks require a separate recovery team and constant up
date is required to recover the credit amount given and there is risk involved in the process.
This is not the case with the debit cards and most banks that have the debit card facility,
offers its account holder an optional, bi-functional ATM/Debit card either at its nominal fee
or free of cost. Now this debit card can be used to withdraw cash from ATMs of other banks
depending on whether the debit card maker has a VISA or Maestro tie-up.15 This is done
because all the debit cards either have a tie up with Master or Visa and thus it is easy to
assess the banker and the account holder from any ATM that the card is used. Now, just as
there is convenience, there is danger too. The number of ATM and the number or card
holders and the number of banks have increased tremendously and the fraudsters can actually
use this to their benefit and the credit and debit card fraud become all the more complicated
to decipher. The future growth of debit card is also likely to depend on promotional efforts,
technological changes and changes in the pricing of existing payment services. There will be
a time when almost every person, who has an account, will hold a debit card. RBI issues
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separate guidelines for issuance of debit/smart cards to protect the consumer’s interest and
ensure fair dealings.
IMPACT OF BANKING SECTOR DUE TO PLASTIC MONEY:
The revolution of information technology has influenced almost every fact of life, among
them is the banking sector. The introduction of electronic banking has revolutionized and
redefined the ways banks were operating. As technology is now considered as the main
contribution for the organisations’ success and as their core competencies. So the banks, be it
domestic or foreign are investing more on providing on the customers with the new
technologies through e banking. PC banking, mobile banking, ATM, electronic funds
transfer, account to account transfer, paying bills online, online statements and credit cards
etc. are the services provided by banks. Also, the feature which is commonly unique to
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internet banking includes importing data into personal accounting software. Some online
banking platforms support account aggregation to allow the customers to monitor all of their
accounts in one place whether they are with their main bank or with other institutions.
Banking through internet is considered as a complimentary delivery channel for the services
rather than a substitute for the brick-and-mortar banking branches. Manual banking has been
reduced; the culture of keeping ledgers and recording transactions by hand has diminished by
the advent of electronic banking. Now, banking has become really fast, customers get the
services more quickly and reliably, the local and international transactions require a very less
time as compared to before. It has also increased the competition and now all the banks tend
to provide these services and facilities to the customers also, the environment and ambiance
provided by the banks is a factor which complements their client age, loyalty and banks’
profits. At first, the customers had to follow a long and agonizing procedure even for account
opening but now, owing to e-banking this procedure has become a “one window operation”
where the authority is localized to the cashier which serves as convenience for customers.
The funds can be transferred from account to account, bank to bank and even internationally
in a very less period of time as compared to before which took days for the purpose. Banks
are linked with each other within the country and also a few are linked with banks with other
countries, this has increased the accessibility of the customers and also the number of
customers for the banks. Visa cards have made it possible to make transactions globally. E-
banking has opened new scenarios, increased service quality and more customers. Customers
seek all the facilities under one roof and banks are devising more and more electronic
banking techniques to cater their customers and for their retention. Call centre facility has
been provided by many banks in order to answer to their needs and problems. The
relationships with the customers have enhanced due to these measures undertaken by banks
for better customer services. The main motive for e-banking identified by the all-bank
managers was their customers, to amplify their client age, to increase customer satisfaction,
retention and business expansion which would eventually gain them more profits. E-banking
enables banks to achieve efficiency; it has reduced the requirements of manual maintaining as
now the transactions and activities are recorded automatically on computers which in turn
reduces human errors hence, increasing the accuracy, it saves time, labour costs as now less
labour is required to do same amount of work, and it also has resulted in improvement in the
services provided.
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As now the scope is transferring to plastic money, the electronic banking is gaining more
importance by the passing time. The electronic banking services provided by the banks
include ATM, credit cards, funds transfer, cheque payment, funds deposit, balance enquiry,
utility bills payment, statement of account, remittance, draft, pay order, phone banking,
mobile banking, PC banking etc. the interviews from various bank managers have given rise
to many findings about the impact of e-banking on profitability, service quality and
efficiency. The introduction of e- banking has changed the banking environment. The manual
banking was a lengthy and time-consuming procedure, there was manual maintaining of the
accounts and transactions for which the accuracy was damaged due to human errors, labour
cost was considerable. By the initiation of e banking, the efficiency of banks has been
increased, the labour costs have decreased as now, less number of employees are required to
deliver the services because of electronic means, the accuracy of transactions and
maintenance has been also supplemented as computer has taken the place of humans hence,
decreasing human errors, the procedures, processes and services are now fast and reliable
which saves time, efforts and costs. The customers are more satisfied with the services, their
accuracy and timeliness. This has in turn augmented the efficiency of banks; decreasing the
costs and increasing profits. The main motive for the banks to switch towards electronic
means is to increase their client age, to serve the customers with best of the services, to
facilitate them and to boost customers’ loyalty. Also, the business expansion was another
motive for which the electronic medium for provision of services.
The transition from traditional to electronic means has not affected banks in the negative
way. In fact, profits tend to augment in transition also because customers who now seek these
online services get them increasing customers’ satisfaction which contributes to the customer
loyalty and hence profits. The banks tend to generate customer awareness if they are
providing services to uneducated customers, the employees cater to the needs for questions
and issues faced by customers, call centre facilities are provided by many banks and also the
employees in the banks which overcomes illiteracy to a larger extent and hence, customer
literacy is not considered as a deterrent in achieving profits for the banks. Banks are also
earning from these services in a way of commission and annual deductions. The banks charge
a certain amount or flat charges or a certain percentage on products and services like
ATMs,funds transfer etc. If the eras of traditional banking are compared to the present e-
banking eras, the results show that e-banking has contributed positively and increased the
profits of banks. Banks are gradually transitioning from manual means to the electronic
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means rather than jumping to electronic banking means. Efficiency has risen as the costs have
been reduced; costs of labour, provision of services, time saved, accuracy, reliability and
quality of services has improved. However, the managers added that the transitional impact is
seen more for the big cities as compared to small cities. The financial statements of these
banks have also been studied for the research and these statements have also shown that the
profitability of banks has increased to a large extent by incorporating electronic means in
provision of their products and services.
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
cheque book. Debit cards are like digitized versions of cheque books; they are linked to your
bank account (usually a checking account), and money is debited (withdrawn) from the
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.
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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 rates.
This comparison provides a detailed overview of what debit and credit cards are, their
similarities, differences and their different types.
Similarities
The same financial institutions offer both debit cards and credit cards. Both cards
offer special rewards, such as points and cash back on purchases made through the card.
Debit cards and credit cards can be used to make online payments with the help of the
pin number assigned to them. They can be used to withdraw money from ATM‟s depending
on the cash limit available on these cards.
Differences
In the case of a credit card, the issuer offers credit and overdraft facilities. This facility is
not available with a debit card, which will only debit payments from existing and available
funds within the cardholder’s account.
A credit cardholder therefore has a monthly bill to pay in every month that the card is used.
If they don’t pay that bill, high interest charges are applied. A debit card holder is free from
the hassle of paying those bills and from the risk of building up large debts to credit card
companies.
Debit Card Problems can be worse than Credit Card Problems

When an improper charge appears on the credit card it cannot automatically out the money
and simply need to work with the credit card issuer to have the charge removed from the bill.
When an improper charge occurs with a debit card, however, the funds are automatically
taken from the account and customer is burdened with attempting to get the money back.
Meanwhile, he may experience cash flow problems and the legitimate checks could bounce.
Traveling with your Debit Cards
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The reverse side of the debit card will display the names or symbols of the various ATM
systems that will accept the card. Debit card can be used at any ATM in the world as long as
the ATM displays one of the same system names or symbols that is on debit card. When
obtaining funds at an ATM in a foreign country the funds dispersed will be in the currency of
the country going to visit.
Technology and Infrastructure
 One of the most important features that Plastic Money offers is the technology
associated with this business.
 Credit card businesses rely on very reliable and secure technology and demands very
Strong connectivity backbone.
 Although a third world country, with lot of insecurities and almost no infrastructure,
Pakistan has no exception when it comes to credit card business.
 There is approximately 3000 Point of Sale Terminals (POST) present on merchant's
sites connected with bank host system.
 Inter-city connectivity is accomplished through X.25 networks.
 Perhaps, it is the most important time in the history of Pakistan as the parameters of
its Infrastructures are coming into existence.
 There is an immense need of reliable wide area connectivity and this market is so
huge and lucrative that it can accommodate many more industry giant.
CREDIT CARD DEBIT CARD
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CASH REWARDS CARD
Pros and Cons of Using Debit vs. Credit Cards
Most people carry and use both credit and debit cards because both types of cards have their
unique advantages.
Acceptance by Merchants
The vast majority of retailers accept both credit and debit cards, and customers pay the same
price irrespective of the payment method they choose. But merchants pay a fee — called
interchange fees — to payment processors like Visa and MasterCard for every credit or debit
card transaction. This is usually flat fee, plus a percentage of the total transaction. The fees
charged for a debit card are much lower than those charged for a credit card.
Security and card Theft
Debit cards, which make use of a PIN, are more secure cards in and of themselves. However,
credit cards are much more secure for consumers in a practical sense when fraud occurs.
If someone steals your debit card information, the thief has direct and immediate access to the
funds available in the bank account connected to your card. As it takes banks time to
investigate fraud, you will have little immediate recourse. Worse, if you do not notice and
report the fraud soon enough (within two days), you may be on your own loss. This can make
paying bills that you would have otherwise had the money for difficult, if not impossible.
In contrast, if your credit card information is stolen, the thief takes out money from your
credit issuer. This is money that you will very rarely be held responsible for if you make a
concerted effort to report suspicious account activity as soon as you are aware of it
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Risk of Overspending
With debit cards, you can usually ask your bank to offer overdraft protection or reject
transactions when there are insufficient funds in the account. There is some risk of overdraft
fees but you generally cannot spend a lot more money than you have if you use a debit card.
On the other hand, credit card debt can become a nightmare very quickly if you fail to pay
your bills on time. Most monthly credit card bills list two amounts — minimum payment due
and monthly balance. If you only make the minimum payments that are due, interest starts to
accrue on the remaining balance at staggeringly high rates of 12 to 24%. And since this
interest is compounded, it is very easy to get mired in a lot of debt. Financial advisors are
unanimous in recommending that consumers repay their credit card debt first, before other
loans like student loans or home equity loans.
Credit History
It is important to build a good credit history for yourself over time. A good credit score
ensures you pay lower interest on mortgages and car loans, and lower insurance premiums.
Landlords and potential employers also run credit checks. Debit cards do not affect credit
history at all. But credit cards can play an important role in building credit history. Owning a
credit card and paying off credit card bills in full every month makes a positive impact on
your credit history. Conversely, owning a credit card but falling behind on payments
negatively impacts your credit score.
Rewards and Cashback
For years credit card issuers have been enticing customers to sign up by offering rewards
programs for using the card. The more you spend, the more money card issuers make in
transaction fees and, possibly, in late payments and interest if you fall behind in repayment.
The most common credit card rewards are airline miles, "points" that can be redeemed for
cash or discounts at certain retailers, and cash back. A majority of the credit cards that offer
rewards also require an annual fee for the use of the card. Banks have also started offering
some rewards for the use of debit cards but these are not as strong as credit card reward
programs because banks get lower fees per transaction on debit card use. Examples of debit
card rewards include fee waiver on checking accounts if the debit card is used three times in a
month, and revolving discounts at certain merchant locations.
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Interest and Fees
Few debit cards charge monthly or annual fees, nor do they charge interest. Some credit cards
charge an annual fee (which may or may not be worth it, depending on the card's rewards),
and all credit cards charge late fees and interest on debts that are not repaid on time. .
The main fee consumers have to be aware of when it comes to debit cards is the overdraft
fee or charge, which may be as steep as $30 or more per overdrawn transaction. An account
becomes overdrawn when you make a charge that exceeds your available balance. For
example, if you have Rs1000 in your account, but spend Rs1200, you have exceeded your
account balance by Rs 200 and may be charged an overdraft fee by the bank. If you have not
opted in to an overdraft coverage program, your card will simply be declined. Most banks
offer overdraft protection and coverage services for a price. A few banks, support free
overdraft protection by linking up multiple accounts so an overdrawn account will have
access to "backup" funds. Not all fees are bad, perhaps. For example, debit and credit cards
often charge small fees for transactions carried out overseas, but these fees or rates are often
much lower than currency conversion rates you can get at a traveller's exchange using
physical money. (And some credit cards, in particular, have no foreign transaction fees at all.)
Of the two types of cards, debit cards are more likely not to work overseas, so confirming
their functionality before traveling with them is a must.
Churning
In recent years, a personal finance subculture has risen out of credit card rewards —
specifically out of how to take the most extreme advantage of card signup bonuses and card
rewards programs. This process, which usually involves signing up for lots of different credit
cards (and sometimes later closing them), is usually known as "churning." While not exactly
widely known, churning has become popular enough over time to have an active subreddit
community and garner the attention of financial advice sites and the credit card companies
themselves.
Some who are especially careful may benefit from their efforts, but long-term returns may
not go as planned, and churning — particularly any and all opening and closing of accounts
can negatively affect your credit score. Churning can be an especially bad idea if you are
looking to take out a mortgage any time soon.
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Payments
Because a debit card is connected to a bank account that it withdraws funds from, as needed,
there are no further payment processes to consider. Credit cards, however, are loans that must
either be repaid in full by a certain date or have a minimum amount, as set by the card
company, paid onto them at the end of each billing cycle (with the knowledge that interest
will be charged on any balance carried over into the next month — the loan left unpaid).
Most credit cards operate on a 30-day billing cycle. In the past, some credit cards operated on
different billing cycles that made due dates fall on different days of the month. By law, credit
card bill due dates must fall on the same day each month, and no late fees can be charged for
payments that are "missed" due to the effects of holidays or weekends on the banking system.
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.
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.
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
paid). Standards cards are usually starter credit cards, usually for applicants with little or no
credit history who meet 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 re-establish credit. The user first deposits a
"secure" amount into a savings account — that makes for the credit line. The credit limit is
usually a percentage (50%-100%) of this amount. These cards come with an annual fee and a
high APR.
4. Charge Cards: Charge cards do not have a pre set 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 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 e Card offers you a safe and
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easy way to shop on the Internet. On approval, you get your card number, 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 card. 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. Master Cards: 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 is
known today was born on August 16th 1966. Member committees were established to run the
association. These committees established rules for authorization, clearing and settlement,
handled marketing, security and legal aspects of running the organization. In 1968, the
erstwhile ICA began what is a huge global network by forming an association with Banco
National in Mexico. They also formed an alliance in Europe with Euro card. The first
Japanese members also joined that year. The eighties saw the Africa, Australia, Asia, and
Latin America joining the ICA. ICA was renamed MasterCard to reflect the global
commitment.
9. 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
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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 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 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
banks and private sector banks like ICICI and HDFC Bank are aggressively launching credit
card with value added features.
The rise of ecommerce in India has pushed consumers towards plastic money instead of
keeping cash in their wallets. Banks say the new-age sector has been one of the main forces
pushing sales and transaction values of credit and debit cards in India. “Ecommerce has to be
one of the reasons for the uptick in credit and debit card sales today. Use of cash will come
down significantly and this could lead to potential transformation in the Indian economy,”
said Soumya Kanti Ghosh, chief economist at SBI. He said that with increased usage of
cards, the cost of printing money comes down and banks save on maintaining and manning
thousands of ATMs and the trail left after every transaction is more visible.
There was a 16.3% increase in the use of debit cards in FY15 from a year earlier and a 21.3%
jump in credit cards by volume, according to Reserve Bank of India data. The value of debit
card transactions shot up 14% in FY15 and that of credit cards surged 23%. The rise in usage
is not just n the metros but in tier-II and tier-III cities as well.
There is a definite impact of ecommerce sector on card sales despite the cash-on-delivery
option. There is an ease of shopping via cards and this has been discovered in smaller towns
where some brands are not available. Credit cards give them an accessibility and we have
seen spends rising,” said Shubhada Rao, president and chief economic advisor of Yes Bank.
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According to data on volumes released by the RBI, 236 million credit cards and 2,892 million
debit cards had been used by Indian consumers by July. Payments valued at Rs 72,500 crore
via credit cards and Rs 8,73,200 crore via debit cards were made so far in this financial year.
Rao of Yes Bank said while cash is still preferred for small ticket transactions, large
electronic goods, grocery purchases and household items are bought from ecommerce sites
using plastic money.
HDFC Bank NSE 0.88 % has issued over 6 million credit cards and over 22 million debit
cards and these numbers are growing by about 30%, annually. “Close to 50% of transactions
happens in online form for credit and more than 40% on debit and this is been increasing
year-on-year. We have also constantly engaged with leading merchants in e-shopping, travel
and entertainment categories to bring exclusive offers for HDFC Bank customers which had
led to the growth in ecommerce transactions,” said Parag Rao, senior executive vice-
president, business head, card payment products and merchant acquiring services, HDFC
Bank. The bank expects online transactions to grow by more than 70%.
With e-wallets, or pre-paid accounts, becoming popular, banks are coming up with special
offers for their credit and debit card holders. In July, Citibank tied up with MasterCard to
come up with Citi Master-Pass, an e-wallet, allowing Citibank debit and credit card
customers to shop at more than 250,000 ecommerce merchants globally. There was a 76%
increase in ecommerce transactions by Citibank customers in the past two years.
India’s digital commerce market reached Rs 81,525 crore by end of December 2014 and is
expected to cross Rs 1 lakh crore by the end of 2015, with online travel the biggest segment
in terms of revenue generation according to the Internet and Mobile Association of India.
The rise of ecommerce in India, along with the increase in Internet users and growing
smartphone sales, has made banks realise how online transactions will play an integral role in
their credit and debit card business. The number of internet users in India exceeded 350
million as of June, according to a report by IAMAI and KPMG.
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
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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 analyse
cashless transaction behaviour 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 awareness. This transition would lead to saving
currency management costs and generate valuable information on spending behaviour of the
masses.
Credit Cards and Young Consumers
Students’ attitudes toward credit cards appear to come under the “good, if used correctly”
class. It seems that the young students have a rational outlook towards the plastic cards usage
but still not acquainted with the technicalities of their credit cards. Of course, the majority of
students are ignorant regarding the interest charges to be paid by them on their credit cards
(Warwick and Mansfield, 2000) . Austin and Phillips (2001) claimed that regular users of
credit card among the young students pay off the outstanding balance timely and it is because
they have been using the cards before entering to college. However, D Braun Santos et al.
(2016) advised that financial self-tenacity and social comparison have predominance on how
credit cards are used and exert an influence on financial health of college going female
consumers. In same way, Blankson et al. (2012) evaluated what motivates college students
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for consuming credit cards and credit cards are useful to them. Four major parameters
namely: “customer service”, “incentives”, “need for credit” and “purchasing power”, were
considered to find decision making criteria of college students. Further, Phau and Woo
(2008) suggested that the adults consider money as a tool of impressive and respectable
image in search of self- realization. It indicated that the relationship between adult’s outlook
towards money and the compulsive purchases can be strengthened by the increasing usance
of credit cards. Although Rutherford and De Vaney (2009) contradicted it by stating that that
squandering is generally an outcome of influence of companion or compeer. On the contrary,
Hayhoe et al. (2000) warned that the rigorous marketing strategies adopted by the financial
companies in colleges are increasing the risk of isolating students in the long run. At the same
time, realizing the depth of the problem, as all the corrective measures taken till date to avoid
insolvency among the college students have been a big failure. So, inoculation has come out
to be a preventive measure and another one can be good marketing practices catering to
young students with specialized messages. Student’s outlook towards plastic cards can be
safeguarded with the help of Inoculation and by offering various tools strengthening students
against the companies’ misleading marketing practices (Compton and Pfau, 2004).
NEED OF CREDIT CARDS

There may be many people who suggest that you get a credit card, but before you do you
should carefully decide whether or not you really need a credit card. The answer is that you
can get by without a credit card. Although a credit card can be a useful tool, when used
properly (paid in full every month), it can be a bigger liability than an asset. Here are five
common misconceptions about needing a credit card.
 Credit Card to Build Credit

You build credit by paying your bills on time. You can build enough credit to qualify for a
home loan by paying your rent on time for several years. You destroy your credit when you
do not pay your bills on time. The utility companies and other businesses can send you to a
collection agency if you do not pay on time. You do not need a credit card to build your
credit history. You may find it a little easier to do with a credit card, but you should be very
careful as you try to do so.
 Credit Card to Shop Online or Rent a Car
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Since debit cards have been introduced you no longer need a credit card to do these things.
In fact you can do everything with a debit card that you can with a credit card, except spend
money that you do not have. You should not be doing that anyway. Debit cards can be used
anywhere a credit card can. This completely debunks the statement that you need one to rent
a car.
 Credit Card for emergencies

If you plan well you should set up an emergency fund for emergencies. Emergency
fund should have at least $10,000.00 in it, but you should have three to six months of
expenses saved up. This much money should be able to handle any emergency that
comes in your way. If you are stranded on road and need to be towed you can use
your debit card to pay for the tow, and your emergency fund to cover up those
expenses.
 Credit Card to save money on purchases

Many stores will offer discounts for having a store credit card. stores do not offer
cards to offer you with discounts, they offer cards because they realize that while
most people intend to pay the card off every month, few actually do. they make more
back on interest then the discount they offer to you.
 Credit Card to earn rewards

This is a dangerous game play. If you are responsible and pay off your balance in full
each month, you may consider having a rewards credit card. You should make sure
that you have a credit card with no annual fee. Additionally, it is important to
remember that the credit card offers its rewards, because it realizes that most people
are not going to pay off their credits in full each month. This means that they take
more money off customers, than the rewards they give out.
Credit Card Frauds

Frauds through credit card are swelling in numbers as it is an easy way of stealing millions
from the accounts of customers, financial companies and business merchants. The techniques
like Phishing, Skimming and counterfeit cards are used by fraudsters. Anupama Sharma
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(2012) has also thrown light on the rising frauds and the business merchants are the most
suffered parties as they have to bear the full loss arising due to frauds, the banks also bear
some part of the cost indirectly. A report of the Association of Certified Fraud Examiners
(ACFE, 2007) showed that the mark of frauds has touched $3 billion in the US alone. By the
same token, J. Barker et al. (2008) gave four recommendations for controlling these growing
frauds like implementing security chip based cards, accessibility to skimming and counterfeit
tools should be made more complex, provide incentives and training to Business merchants
should be given special training and incentives for noticing counterfeit credit cards; and
giving an effective remedial measure to sufferers to return their credit amount. In the same
way, K. Kathirvel (2013) added some measures like Address Verification Service (AVS),
Credit Verification Values (CVV), 3D-Secure, Biometrics, Chip and Pin for preventing credit
card frauds in India. To put it in another way, in those countries where debit cards play dual
role as a leading payment card for purchases and international payment card -then fraud on
debit is as problematic as fraud on credit/charge cards. It has been observed that the frauds on
payment cards, specifically on MasterCard and Visa debit cards, is generally concealed
amongst the data for overall frauds on payment card. So, with the augmented usage of these
cards i.e. online transactions and international e- payments further contributed to the
refinement of the fraudsters (Worthington, 2009) . Similarly, Ma Yu-Feng (2005) proposed

the elements adding to the changing behaviours of credit card fraud. In Taiwan, the proficient
authorities, financial institutions and scrutiny and tribunal authorities are putting combined
efforts to check and fight Plastic card frauds. In Addition, Prabowo (2012) established that
practices for prevention of frauds in credit card industry in Indonesia are presently at a lower
-level of sturdiness as compared to America, UK and Australia. Inadequacy in fraud
prevention practices have been specified like unreliable data collection on frauds, poor
management and circulation system and the ineffective and incompetent identity check
mechanism. Not only this but also Due to increasing menace of frauds, especially triggered
by fraudsters operating from outside the country particularly from the developed nations
already having strong defense against frauds. Rigorous steps have been taken in six major
extents: considering the actual problems, protection based upon technology, fraud
precautionary practices, identity check & management, fraud alertness and legal restriction
(Prabowo, 2010).
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Fraud using the plastic cards is different from that using money. The plastic fraud is usually
done by a technically strong person and he uses technology to his benefit to commit fraud and
get monetary benefit from the plastic money. Credit card fraud has been defined by ‘The
Fraud Examiners Manual’ as “the misuse of credit card to make purchases without
authorization or counterfeiting a credit card.” The Visa and Master Card, the two largest
credit card issuers generally and naturally also lose most. The failure in an operation of credit
card fraud is almost negligible and generally, the credit card fraud is successful on most of
the occasions. Chances of being caught are small and the necessary legal procedure to book
the culprit based on strong evidences is not available.
Like other countries if the genuine credit card has come to India, the fraudulent credit card
cannot be far behind. It is likely that it will show its true colours very quickly in India and it
will only keep growing year by year. The banks are the most important institutions dealing
with the credit cards frauds.18 Credit card misuse is growing in popularity because it is easy,
often anonymous and leaves no trace. Victims usually are ordinary citizens; most countries
do not have specific legislation to address credit card fraud, according to Visa and Master
Card Fraud Management. Credit card theft and misuse is committed every second across the
world. There are no special segments or geographic areas. The universal acceptability of
credit cards allows card numbers stolen in one country to be counterfeited in another country
and committed successfully on most of the occasions. Chances of being caught are small and
the necessary legal procedure to book the culprit based on strong evidences is not available.
The banks are the most important institutions dealing with the credit cards frauds. Card
industry data shows that the United States accounts for more than half the total worldwide
credit card fraud. But countries such as Taiwan, Hong Kong, Malaysia, Italy, Spain and Japan
have a high card fraud rate. India is no exception to credit card fraud. The only consolation
being that most of the frauds are small in value and can be easily checked.20 It is feared that
with the expansion of e-commerce, M-commerce and Internet facilities being available on
massive scale, the fraudulent fund freaking via credit cards will increase tremendously.
TYPES OF FRAUD:
 Fraud in the Application
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In this all the information of the card holder is obtained and the fraudsters can actually pose
to be the applicant himself. The original card holder’s residential address is replaced by the
fraudster’s temporary address. It also happens that the fraudsters sometimes also talks to the
applicant and gets all the information from him posing to be the issuing authority or the
person from the bank issuing the credit cards. They also get signatures on the card by saying
print is not clear or any other such excuses. The card holder also cannot deny this type of
fraud because this signature is on the card and the application thus, the card holder in this
fraud cannot deny any thing since he himself has signed the charge slips.
 Sold charge sheets fraud

When the original card is stolen or lost and in case it comes to the possession of the forger/
fraudster, then they give it a new entity by altering it suitably. It is ream bossed with a new
name, an account number, a convenient expiry date, etc. The original signatures are changed
sometimes but often the original signatures are allowed to remain and the defrauder practices
to imitate them and acquires the skill to write the signatures on the sale draft and in other
credit card transactions with passable resemblance.22 It takes a long time to detect altered
card forgery. Only when there are some abnormal statements does the account holder even
realize that there is a forgery of the card. It takes so long to deduct that even when such cases
are deducted, it become useless because most damage is already done.
 Duplicate Card
Now with additional help from technology in the way of photo- mechanical process, the
fraudsters can actually duplicate the original card which will have almost replica to the
original card. They use almost the same material as their original and even the encoding of
the magnet. In fact the work is being professionally done by some gangs. White Plastics, are
imitations of credit cards in general aspect. The forger does not make any serious effort for
exact replications of dimensions, sizes or shapes of letters, graphics, etc. The counterfeit
credit cards are poor imitations of the genuine cards and even a layman can distinguish one
from the other, if the two are presented to him. The manufacture of the white plastics does
not follow the pattern of the manufacture of the normal genuine cards. In white plastic fraud,
it is not difficult to identify that of a fake card because the embossed figures of the card pin
number are bound to be crooked and will not follow the same font or pattern as the original
card.
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 Terminal Takeover Fraud

In this fraud, the fraudster does not collude with the merchant, instead he poses as the
acquirer’s employee and proceeds to examine the working of the terminal. He will find a fault
in the machine and replace it with another machine. This machine is capable of performing
the same functions as that of the bank’s terminal and in addition also has the facility to store
the credit card information obtained through the magnetic stripe. After a few days, the
fraudster returns the machine claiming that it has been repaired. He replaces his own machine
with the original machine and disappears along with all the confidential credit card data.
 Save and Paste

Any number of alpha or numeric characters are sliced from the card other characters are
attached to the card surface utilizing fast drying epoxy-type glues. This is done to put an
entirely new but valid account number as to change the name, so that the fraudster can use the
card as if it is his own.
 Identity Theft
One of the boom fraud types is identity theft. The simple fact, however, is that identity theft
existed long before the internet. What the internet has done is to facilitate both the ease with
which other people’s information can be obtained and then used. Identity theft is a blissfully
concept; the fraudster illegally acquires and uses an innocent person’s personal details, credit
as account information to obtain money, credit goods, services and anything else of value. All
such spending or goods ultimately end up being recorded on the innocent victim’s credit
record.26 There have been numerous way of acquiring the required personal information to
commit identity theft including stealing a wallet or a purse, going through trash and picking
out financial statements or credit card slips or taking mails directly.
 Lost/stolen card
A card holder can genuinely lose his card when he forgets to collect it from the ATM
machine or the cashier after signing for the goods or loses his wallet with his card in it and in
many other ways. When a fraudster comes across such lost cards, either he himself uses the
card or sells the card to a gang which specialises in credit card related crimes. This gang has
recruits persons at various levels. Those who have to show their face in the shops by going
35
there physically are called ‘runners’. These runners try out the cards at various establishments
for the small amounts in order to ascertain whether the card has already been put on ‘hot list.’
If the card is found to be ‘clean’, the card is immediately used for high value purchase-by
forging the signature.28 There are instances of course, when the cardholder reports his card
as lost and then himself goes on shopping. This can be done because once the cardholder
reports his card as lost, his maximum liability is limited to Rs. 1000/-. When the cardholder is
billed for the items purchased after the date of the card being reported as lost, the cardholder
refuses to pay claiming that he had reported the card as lost and is therefore not liable to pay
the charges. Stolen cards can be stolen in mail or in person from the wallet / purse or from the
house.
As technology develops, so do the types of frauds. The latest fraud happening abroad is
skimming. In simple terms catching the Customer verification value (CVV) data. CVV is an
algorithm (a code) which is very difficult to break through. The fraudster therefore does not
bother to do so. He simply colludes with a merchant or merchants. He then provides the
merchant with a terminal similar to the one provided to the merchant by the bank. This type
of scheme usually occurs in businesses where the patron’s credit card is taken out of sight
while the transaction is processed.
Debit card is one of the most important forms of plastic money. People all over the world
especially in India widely use it for withdrawal of cash through ATMs and as a payment
instrument for purchase of goods/services. There are various factors exclusively attracting
customers to prefer debit cards, such as it has the advantages of immediate cash, it is useful
for small purchase, it helps to avoid credit and pay immediately, it helps to control high
spending and also enjoy a few privileges and exclusive offers. People residing in rural area
have given prime importance to debit cards because it serves the advantages of immediate
cash; followed by other reasons in the order of preference where it avoids credit and pays
immediately, it is useful for small purchase. In semi-urban areas, there is a different pattern of
preference. Among them, users of debit card alone are concerned their first reason to prefer
debit card was that it avoids credit and pay immediately, second and third reasons
respectively were it serves the advantages of immediate cash, and it is useful for small
purchases. In urban areas there was no difference between the users of debit cards alone and
users of both debit and credit cards with regard to the preference.
36
Whether the card used in debit or credit, the usability and technicality is increasing and so is
the number and types of frauds in plastic money. Each case of the fraud seems to use a new
technique and sometimes the history of each type of misuse and fraud is so different. The
legal aspects of these frauds also play a vital role in curbing or limiting the frauds using
plastic money. The next chapter gives a brief over view of the legalities of this credit and
debit cards in some important countries. If legalities and the punishments are strengthened
then may be the frauds using the plastic money will decrease.
 Electronic Money Transfer

Much attention is no been given to “Electronic Money Transfers”. It may be due to the fact
that it is novel technically and it has huge marketing potential. Electronic Fund Transfer
(EFT) is a process through which exchange of value is done through electronic devices. The
value of the exchange can be initiated through credit or debit cards. It is important to
appreciate the wide variety of services that are included within the term services that may be
included within EFT systems to which consumers will have access. Credit card transactions
are those in which a plastic device is used as a means of identification in the accomplishment
of transactions in which the card issuer’s obligation to pay the provider of goods or services
replaces that of the consumer and the consumer promises to repay the card issuer. Predicting
the future of EFT as an industry has always been a gamble. Change is constant in this
growing technology and new products and services keep evolving in the industry which is
competing with its own growth. EFT and it money transfers have always been of interest to
the private and public agencies. Now new legalities pertaining to credit and debit cards have
been issued by the Information and Technology (IT) Act 2000 (21 of 2000). In the next
chapter, these legalities are described in detail.
FRAUD QUESTION
 What kinds of credit card frauds are more prevalent?

Counterfeit and CNP (card not present) continue to be the two main types. Physical theft of
cards is not such an issue. Since online transactions typically don't require the card to be
presented, the information sitting on the card and other customer authentication details are
sometimes compromised and used for transactions. This is becoming a big problem.
However, India has been pro-active in this regard and has introduced the two-factor
identification system, wherein a customer transacting online must also have a T-Pin for
37
transactions where the card is not present.
 What is being done to prevent such fraud?

Visa is doing a number of things in partnership with issuers to introduce measures which can
easily prevent such frauds.
Since the prevention of theft is of utmost important, banks are offering customers the option
of opting for alerts whenever there is a transaction.
This measure is immediate in nature and can help the customer know about his or her
transactions in real time. Also, we are increasingly encouraging issuers to opt for chip cards,
which can go a long way in controlling fraud. We would like all banks to issue chip cards to
increase security.
 Why is a chip card safer?

It is very difficult to copy, as a unique cryptogram or code is generated for each transaction.
So, even if a card is counterfeited, it will be declined. In India, banks are selectively issuing
chip cards to consumers, depending on their usage pattern.
 What are some of the most effective fraud detection tools that Visa has?
Some very sophisticated ones are in place. Some are rule-based tools, wherein a customer can
define a set of rules for transactions like a spending limit, places of transactions, etc.If there is
a deviation from these, and the transaction won't be complete. In the USA, neural networks
(artificial intelligence) are being deployed to ensure the authentication sits on the back-end.
These networks basically study the pattern of usage by a customer and any deviation comes
up for further verification.
So, a customer gets a call if there is a deviation from his or her set Patter
 What can a customer do to avert card-related frauds?

They should first opt for customer alerts each time there is a transaction. Second would be
dynamic authentication by using chip cards.
Also, they should be careful of hidden cameras in ATMs and should watch for fake ATM
fronts, where your card can be skimmed.
CREDIT CARD FRAUD CASES IN INDIA:
38
In June this year, police in Mumbai busted a card cloning racket that involved waiters at bars
and restaurants across the city stealing data using credit card skimmers. The accused had
managed to steal the credit card and debit card data of some 1,000 unsuspecting customers
over a period of two years.
This was not a one-off incident. Between April and December last year, nearly 24,000 fraud
cases related to credit, debit cards and internet banking were registered in India, Mint
reported in April, citing Reserve Bank of India (RBI) data. In Mumbai alone, cases related to
credit and debit card fraud jumped 42% in 2017, the Hindustan Times has reported.
India was ranked among the top 5 countries with regard to credit card fraud, with more than
one third of the people saying they had been scammed, according to the 2016 Global
Consumer Fraud Report published by payments technology company ACI Worldwide.
"The reasons for this are manifold, but it is fair to say that the use of more sophisticated fraud
prevention and a crackdown on criminals in Western Europe has forced criminal gangs to go
elsewhere," Jay Floyd, the regional head of payments intelligence and fraud strategy at ACI
Worldwide, told DW.
"Many of them are targeting countries that are still not fully EMV [chip and pin cards]
compliant, countries such as India," he said.
India's post-demonetization digital push

India is witnessing a surge in digital payments thanks to Prime Minister Narendra Modi's
2016 decision to recall 86% of cash in circulation, and his government's aggressive push for a
more cashless economy.
The number of credit cards rose by a quarter to more than 38 million in the 12 months ending
in May, while the number of debit cards jumped 17% to over 925 million in the same period,
according to RBI data. But many of the cards continue to come with magnetic strips which
store all important customer data and are more vulnerable to cloning.
The Indian central bank has instructed banks to issue more secure chip-enabled (EMV) cards,
which require the customer to enter a PIN code or sign on the receipt. The deadline to
completely move to EMV cards is set for the end of this year. But with large numbers of
39
ATMs and swiping machines still not EMV compliant, meeting the deadline could be a
challenge.
"India is, in many ways, an easy target for criminals, with a sizeable card base,
demonetization and still some way to go before becoming truly EMV-compliant," Floyd said.
"Criminal gangs are clearly seizing the opportunity to fill their boots."
Lack of awareness making Indians vulnerable to criminal gangs
Many of the new card owners in India are people from smaller cities who are not fully aware
of ways to secure their banking transactions, making them a perfect target for criminal gangs.
Alarmed by the rise in incidents of fraud, the Indian government and banks are running
awareness campaigns to educate card owners about the dangers and pitfalls.
Altaf Halde, cybersecurity global business head at the cybersecurity consulting firm Network
Intelligence, told DW that the awareness campaign around these issues is already bearing
results.
"People now are more comfortable lodging complaints of fraud with the law enforcement
agencies," he said. "Credit card frauds have been a problem for quite some time now, it's only
now they are being widely reported and discussed."
Rahul Tyagi, co-founder of cyber security firm Lucideus, told DW that the government
should go a step further and make it mandatory for banks officials to "explain to every new
customer the risks involved in layman's terms."
WHAT IS CREDIT CARD CLONING?

Credit card cloning is a form of identity theft in which scammers create a fake credit card by
using data stolen from a person's actual card.
Creating a credit card clone is not rocket science. All a scammer needs to do is to swipe your
card on a device known as a skimmer, which is readily available even on some popular e-
commerce websites for as little as ₹1,400 ($20). The skimmer can be placed at ATMs, retail
stores or simply be carried around in one's hand.
"The skimmer, unlike the regular swiping machines, permanently stores a person's data,
which can be easily retrieved using software," Tyagi said.
The scammer then transfers the data to another card with a magnetic strip such as a hotel key
or an old credit or debit card—a reason why banks ask their customers to cut their old cards
into pieces—and use it to make purchases.
40
Statistics obtained from the police reveal that in the year 2017 the city witnessed a 42% rise
in cases related to credit and debit card fraud. The detection of these cases, however, went
down by 28% during this period, as compared to the cases detected in 2016 . In 2017, 606
cases related to debit and credit card fraud was registered across the city, as compared to 423
cases registered in 2016. As far as the crackdown of the cases is concerned, the police had
succeeded to crack 54 cases in 2016, but could crack only 42 last year, taking the rate of
detection from 12% in 2016, to roughly 7% in 2017.
As has been noted by the police so far, there are two to three types of card frauds. One of
them is “phishing” wherein the fraudsters pose as bank officials on phone and trick customers
into giving their card details as well as the pin.
The second type of fraud is “card cloning.” Cards are cloned usually by waiters or shop-
keepers when customers use them for the payment of bills. When customers enter the card
pin, fraudsters record it.
The third type of fraud pertains to rigging ATMs to gain card details and passwords of
individuals, to withdraw amounts from their bank accounts using those details.
According to statistics provided by the police, between 2011 and 2014, a total of 243 cases
involving card frauds were reported in Mumbai. However, in 2015, the figure went up to 320.
Spokesperson for the Mumbai Police, Deputy Commissioner of Police, Deepak Deoraj said
this spike in numbers was due to the awareness created by the police and the fair registration
of First Information Reports (FIR).
41
RECENT DEVELOPMENTS IN PLASTIC MONEY :
(1) Now, you will be able to pay vendors through your debit card while traveling via Indian
Railways. The IRCTC or Indian Railway Catering and Tourism Corporation has introduced
billing through Point of Sale or PoS handheld machines in trains. IRCTC, the online ticketing
arm of Indian Railways, has said the move is "to check overcharging by vendors". Payments
through PoS devices, said IRCTC, is being introduced in trains in phases. "This will help not
only making passengers aware of relevant information but also in improving the passenger
satisfaction," IRCTC said in statement.
There have been some complaints of passengers regarding overcharging by the vendors in
trains, IRCTC added.
(2) Currently, payment through the Point-of-Sale mode is available in train No. 2627-28 of
the SBC-NDLS Karnataka Express on a pilot basis, IRCTC noted. In next phase, according to
IRCTC, 100 PoS machines will be commissioned on 26 trains.
There are 50 rakes of the identified 26 trains. Each rake of the train will be provided with 2
PoS machines each to start with which will be progressively increased as per the usage and
response from passengers. IRCTC said it is also deploying its officials onboard on these
trains for the purpose of monitoring the catering services.
Introduction of PoS-based payments in trains, IRCTC said, is a step towards passenger
awareness "for menu & tariff of meal and catering items being sold onboard in trains".
IRCTC has been continuously taking passenger-friendly steps so as to ensure smooth catering
services as well as disseminate information critical for passenger travelling in trains, the
statement dated March 21 added.
(3) Payment processor Visa is launching a new service called Visa Checkout that eliminates a
few steps in online payment. The company and its retailing partners, including Neiman
Marcus, Pizza Hut, Staples and others, hope a quicker pay-out will lead to fewer abandoned
shopping carts online. As more customers shop on smaller screens
like smartphones and tablets, the hassle of entering in credit card numbers and billing
addresses is becoming a sticking point and payment processors have been working to find
ways to simplify the process.
42
Beginning Wednesday, users can sign up with Visa credit and debit cards, as well as other
branded cards, and enter their card information just once. Then they will be able pay for
things via Visa by only entering their username and password at participating sites. The
service is currently being offered in the U.S., Canada and Australia,
Visa Checkout joins similar services like eBay's PayPal, MasterCard's Master

Pass, Amazon's one-click checkout and others. It's not Visa's first effort. In 2012, Visa
launched a similar V.me service, which Visa Checkout is replacing.
(4) It also functions as a pop-up window on a retailers' site rather the directing users to
another window. Major banks that issue Visa cards including Chase, Citi and Wells Fargo are
also supporting it.
(5) Visa has been working to expand its reach into the payments processing business with
new products like Visa Checkout. The company is also opening a technology center in San
Francisco in an effort to court mobile developers in the Bay Area tech community. It plans to
hire 100 new technology staffers for the centre.
(6) Don't have enough cash to pay traffic challan? Well, the excuse will no longer help you
dodge the fine as Delhi Traffic Police is soon going to upgrade its hand-held e-challan device
which will accept money through debit and credit cards.
"A proposal in this regard has been approved and very soon we would be able to accept
challan through debit and credit cards on the spot," a senior police official has said. The e-
challan scheme was rolled out last year under which the hand-held device replaced the
challan book used by traffic police personnel earlier. Now, the e-challan is issued on the spot
with these devices. However, as of now, offenders can only pay in cash.
Currently, the traffic police here have around 1,200 such hand-held devices. On an average,
around 12,000 challans are issued in Delhi every day. “We are waiting for the service
providing company to make the devices adaptable so that debit and credit cards can be
swiped on them and money can be transferred," the official said. This will be another feather
in the cap of Delhi Traffic Police which had on Thursday launched a mobile application
through which commuters can get instant traffic updates, calculate taxi and auto fares, report
defunct traffic signals and fetch all related information right on their smartphones.
43
The mobile App and an upgraded website of the force were launched by Delhi Lieutenant
Governor Najeeb Jung. The new mobile application is currently available on Android phones
and can easily be downloaded from Google Play Store. It will be soon available on Windows
and Apple Store.
The App is currently available on Android phones and can easily be downloaded from
Google Play Store. It will be soon available on Windows and Apple Store. This application
will enable the public to utilise the e-services provided by Delhi Traffic Police like obtaining
information about traffic alerts and advisories to plan the journeys accordingly, in advance.
People can assess fare charges to be paid to auto/Taxi /Radio Cab drivers, calculation of
distance travelled and shortest route to be taken for destined journey in Delhi. Complaints can
be lodged against TSR/Taxi drivers for misbehaviour, refusal and overcharging. Commuters
can also access information about pit for vehicles towed away by Traffic Police when parked
unauthorisedly or improperly. Direct calls could be made to Emergency Numbers.
44
CHAPTER 2: REVIEW OF LITERATURE
Hirschman 1982; Jonker 2005: -We complement our analysis of payment behaviour with
qualitative data on payment attribute perceptions. Perceptions - or perceived differences in
payment attributes - have been found to be important determinants of consumer payment
behaviour
Brito and Hartley (1995) indicate that the cost of paying interest on credit card debt is likely
to be lower than the transaction costs associated with arranging loans from banks or other
financial institutions.
Telyukova and Wright (2005) and Zinman (2007) show that consumers maintain balances in
their low-interest-bearing bank accounts for liquidity reasons, even while carrying high-
interest credit card debt. The authors suggest that a rational consumer may pay interest on
credit card debt to avoid some of the expected costs associated with not holding
precautionary or transactions balances.
Zinman (2007a) and Klee (2006) have shown that individuals who carry revolving credit card
balances are significantly more likely than convenience users to adopt debit.
Kaur Mandeep and Kaur Kamalpreet (2008), in their article, “Development of Plastic Cards
Market: Past, Present and Future Scenario in Indian Banks” conclude that Indian banking
sector is accepting the challenge of information technology as all the groups of bankers have
now recognized it as essential requirement for their survival and growth in future Despite the
strong advances in e-payments, an estimated 90 percent of personal consumption expenditure
in India is still made with cash which indicates the tremendous growth potential of this
business. So this can be considered as mere beginning which indicates the bright future
prospects of plastic card market in India.
Cliford Alvares, 3(2009) The article reports on the problem regarding fake currency in India.
It is said that the country's battle against fake currency is not getting easier and many fakes go
undetected. It is also stated that counterfeiters hitherto had restricted printing facilities which
made it easier to discover fakes. According to chief economist Soumendra K. Dash, the
45
solution to the problem is to provide people incentive to use plastic cards and make cashless
transactions.
In this Project, we revisit the contents and method of Keynes’s Indian Currency and
Finance(1971a). By focusing on the rationale of his proposal for a new international
monetary system combining cheapness with stability, we argue that Keynes’s analysis of
monetary developments in Asia in the first years of the twentieth century may provide useful
hints for an overall rethinking of the major faults of today’s Bretton Woods II system.
(2010–11)
Subhani in 2011 conducted a study on ‘Plastic Money/Credit Cards Charisma for Now and
Then’. The study was based to find out the charisma of plastic money, its usability and
affordability and its impact on its preference to use. The research found that the preference to
use of plastic money/ credit card has its pros and cons with its usability and affordability.
According to the consumer behaviour, plastic money is a form of conditioning and acts as a
stimulus which qualifies a consumer to spend. The study shows that the preference to go for
plastic money has a positive association with the easy use of plastic money because the
precept of credit card usability is linked with a psychological phenomenon that people are
likely to spend less with credit card and spend more with the same amount of cash on hand in
the same budget and this precept also linked with the consumer self-convenience, i.e.
convenience and easy use which delves into spending.
Khurana, Sunayna, Singh, S. P. (2011) In today's busy world, nobody has the time to
withdraw money from the bank account for shopping. Everybody is interested in carrying the
plastic money (credit card and debit card) in their wallet for shopping as it gives convenience,
safety, easiness and even style. In this cutthroat competition, banks have to work hard to gain
market share and to meet the expectations of customers so that they can delight their
customers. This study is carried out to identify customer preferences and expectations from
credit/debit card services. The main objective is to identify the factors that influence the
choice of credit cards, customer satisfaction, and consumer behaviour regarding the credit
card in Tier-III cities. Primary data was collected from 200 respondents by the questionnaire
method. Results show that the choice of credit card depends upon income, gender and
profession of the respondent. Customer satisfaction depends upon income, frequency of
usage in a month and amount of usage per month.
46
Loewenstein and Hafalir in 2012 conducted a study on “The Impact of Credit Cards on
Spending”. The study focused on two types of customers, revolvers (who carry debt) and
convenience users (who do not carry debt), and measured the impact of payment with credit
card as compared with cash by an insurance company employee spending on lunch in a
cafeteria. It was found that there was change in the diner’s payment medium from cash to a
credit card when an incentive to pay with a credit card was given. It was then found out that
credit cards do not increase spending. However, the use of credit cards has a differential
impact on spending for revolvers and convenience users. Revolvers spend less when induced
to spend with a credit card, whereas convenience users display the opposite pattern.
Patel Bansi and Amin Urvi (2012) in their research paper “Plastic Money: Roadmap Towards
Cash Less Society” discussed that now days in any transaction Plastic money becomes
inevitable part of the transaction and with-it life becomes easier and development would take
better place and along with the plastic money it becomes possible that control the money
laundry and effective utilization of financial system would become possible which would also
helpful for tax legislation.
P Manivannan (2013) in his research paper “Plastic Money a way for cash Less Payment
System” examined that Plastic Money i.e. usage of Credit card was measured a luxury, and
has become needed. These plastic money and electronic payments was and used by only
higher income group. This facility extended not only to customers in urban areas or cities, but
also to customers residing in rural area. However, today, with development of banking and
trading activity, the fixed income group or salaried classes are also start using the plastic
money and electronic payment systems and particularly Credit cards.
Vimala V. and Dr. Sarala K.S., (2013).” Stressed on the Usage and perception of plastic
money among the customers of BOI” with emphasis of the awareness level, perception and
usage of new innovative services in regards to plastic money.
Patil Sushma, 2014 Sharma Anupama (2012) in her research paper “Plastic card frauds and
the counter measures towards a safer payment mechanism” have thrown light on the number
47
of frauds increased considerably in the usage of plastic cards as in case of plastic card frauds
the most affected parties are the merchants of goods and services as they have to bear the full
liability for losses due to frauds, the banks also bears some cost especially the indirect cost
whereas the cardholders are least affected because of limited consumer liability and
concluded that all these losses can be dealt with by making the prudent use of the new
technology and taking the respective counter measures.
Haq Tabrez and Malik Bushra, (2014).”Consumer response towards the usage of plastic
money” with emphasis on increase of shift of plastic money in India by consumers from
Credit cards to Debit cards -The distribution of plastic money has increased due to the fact
that banking sector has become more aggressive. Moreover, duplication of users is an
important area of concern for the industry which can exaggerate the number of active users.
The present paper makes an attempt to understand the after effects of recession on plastic
money industry and its impact on consumer preferences. The paper duly investigates the
acceptability of the cards among the Indian consumer and the factors influencing the card
choice.
48
CHAPTER 3: RESEARCH METHODOLOGY
2.1 OBJECTIVES
 To study the frauds in plastic money
 To study the recent developments in plastic money
 To study the issues faced by the customers using plastic money
2.2 HYPOTHESIS
 Youngsters prefer using plastic money more than old age group
 Credit Card is Safer than Debit Card
2.3 COLLECTION OF DATA

Since the objective of research is to find out about the developments and frauds in plastic
money it is very important to know the experiences of customers with plastic money. For this
purpose the best source is by issuing questionnaire to public.
 PRIMARY DATA
A questionnaire was used to conduct the whole survey. To control the response bias
and to increase the reliability of data, a structured pattern of question was also used in
the questionnaire. The advantages of using this specified construction of the
questionnaire are being administrative simplicity and easy in data processing analysis,
and its interpretation.
 SECONDARY DATA
Secondary data refers to data that was collected by someone other than the user.
Common sources of secondary data for social science include censuses, information collected
by government departments, organisational records and data that was originally collected for
other research purposes. Primary data, by contrast, are collected by the investigator
49
conducting the research.

Secondary data analysis can save time that would otherwise be spent collecting data and,
particularly in the case of quantitative data, can provide larger and higher-quality databases
that would be unfeasible for any individual researcher to collect on their own. In addition,
analysts of social and economic change consider secondary data essential, since it is
impossible to conduct a new survey that can adequately capture past change and/or
developments. However, secondary data analysis can be less useful in marketing research, as
data may be outdated or inaccurate.
The secondary data can be both qualitative and quantitative. The qualitative data can be
obtained through newspapers, diaries, interviews, transcripts, etc., while the quantitative data
can be obtained through a survey, financial statements and statistics.
 SAMPLING DESIGN
Sampling is that part of statistical practices concerned with the selection of a subset of
individual observations within a population of individual intended to yield some knowledge
about the population of concern, especially for the purpose of making predictions based on
statistical inference. Random sampling method is adopted in this study. Survey method has
been followed for gathering the information from the respondents. A sample is called a
random sample for each unit of the population has an equal chance a being selected for the
sample. The research was done on the basis of a structured questionnaire 105 respondents
were interviewed in and around Mumbai. Questionnaire was distributed to people of various
classes and standards.
 SAMPLING AREA
A method in which an area to be sampled is sub-divided into smaller blocks that are then
selected at random and then again sub-sampled or fully surveyed. This method is typically
used when a complete frame of reference is not available to be used. The sample size for this
study is 105 samples. The sampling area covers the city. Data has been collected from
customers who use plastic money or are not willing to use.
 SAMPLING METHOD
The basic type of random sample is known as a simple random sample, one in which each
person or item has an equal chance of being chosen. Often a population contains various
50
distinct groups that differ on the attribute that is being researched. Random sampling is the
best method for ensuring that a sample is representative of the larger population
 SAMPLING TECHNIQUE
In this study 100 samples have been selected by convenience sampling method from the
population of Mumbai. This means collection of information from members of population
who conveniently available to prove it. Convenience sampling is most often used during the
exploratory phases of research project and its perhaps the best way of getting basic
information quickly and efficiently.
 LIMITATIONS OF THE STUDY

1. The data was collected only from middle level customers
2. The results of the analysis are solely dependent on the information provided by
the respondents
3. The sample size is limited to 100 respondents
4. The selection of area/geographic location and the size of the sample is a
limitation of the study in terms of generalization of the results to other region.
51
CHAPTER 4: DATA ANALYSIS & INTERPRETATION

The previous chapter provided an overview of the design and research method used in the
study. The procedure followed to collect, capture, process and analyse the data that was duly
presented. this chapter concentrates on the findings of the empirical study through analysis of
the result. The results of the main survey and findings are subsequently discussed.
DEMOGRAPHIC VARIABLES OF THE STUDY :
Table 4.1 Gender
RESPONSES NO OF RESPONDENTS PERCENTAGE %

Male 56 56
Female 42 42
Prefer not to say 2 2
INTERPRETATION :
52
From the above table 4.1 it is observed that there were 56% males, 42% females and
remaining 2% preferred not to mention about their gender.
Table 4.2 Age

15-20 18 18
21-26 36 36
27-32 19 19
33 & above 27 27
INTE
RPRETATION:
From the above diagram, it is clear that very less number of respondents between the
age group of 15-20 and high number of respondents in age group between 21-26.
There are reasonably good number of respondents between age group of 27-32 and 33
& above.
Table 4.3 Occupation

Job 49 49
53
Business 28 28
Student 9 9
Any Other 14 14
INTERPRETATION:
From the above pie chart it is clear that 49% respondents are from working class, 28%
respondents who run their own business, 14% of respondents are into any other
profession besides doing a job or business. And very few respondents are students
with only 9%
Table 4.4 Idea about Plastic Money

Yes 69 69
No 22 22
Maybe 9 9
54
INTERPRETATION:
From the above chart it is clearly observed that majority of respondents are aware
about plastic money, 22% are still not aware about it. Remaining, 9% are still in doubt
whether they know or not about plastic money.
Table 4.5 Respondents having plastic money

Yes 79 79
No 21 21
INTERPRETATION:
55
From the above chart 79% of respondents use plastic money. 21% of respondents
don’t use plastic money.
Table 4.6 Safe & Secure Mode Of Payment

Credit Card 58 58
Debit Card 28 28
Any Other 14 14
INTERPRETATION:
From the above chart it is clearly observed that majority of respondents find debit
card the most safe and secure mode of payment. 28% think that credit card is secure
mode of payment. Remaining, 14% think that there are other secure mode of
payments than debit card and credit card.
Table 4.5 Payment for consumables
Cash 26 26
56
Credit Card 21 21
Debit Card 43 43
Bajaj Card 6 6
Cheque 3 3
Other 1 1
INTERPRETATION:
From the above chart it is observed that 43% of respondents use cash while
purchasing household consumables. 21% of respondents use credit card, 6% use bajaj
card, 3% use cheque and only 1% of respondents use any other medium for
purchasing household consumables.
Table 4.6 Reason for choosing plastic money

Easy to pay 43 43
Attractive Offers & Schemes 50 50
Any Other 7 7
57
INTERPRETATION:
From the above chart it is clear that main reason for choosing plastic money is the attractive
offers and schemes offered by the company. Good number of respondents feel that it is easy
to pay by using credit/debit card. Remaining, few respondents have other reasons for
choosing plastic money.
Table 4. 7.Issues with Debit Card/Credit Card

Yes 32 32
No 43 43
Maybe 25 25
58
INTERPRETATION:
From the above chart it is clear that 43% of respondents don’t have any issues while using
plastic money. Very few number of respondents face issues or they have faced (32%), and
remaining 25% think they might have faced issues regarding plastic money in the past.
Table 4.8. Issues

Option 1 41 41
Option 2 40 40
Option 3 13 13
Option 4 6 6
INTERPRETATION:
From the above chart it is observed that 41% of respondents Facing issue of Card not
retrieved from ATM,40% Respondent are facing the issue due to high interest rate,13%
respondent are facing issue of pin no. not Accepted. Only 6% are telling Bank not issuing
A/C Details on Time.
59
Table 4.9 Duplication of money

Yes 35 35
No 33 33
Maybe 32 32
INTERPRETATION:
From the above chart it is observed that 35% of respondents have shifted to plastic money
because of the duplication of paper money. 33% have some other reasons for using plastic
money and remaining 32% think that might not be the primary reason for shifting to plastic
money.
Table 4.10 Black Money

Yes 37 37
No 31 31
Maybe 32 32
60
INTERPRETATION:
From the above chart, it can be clearly stated that 37% of people think that more digital
transactions will help to curb black money in the economy, 31% of respondents feel that it
won’t help remove black money from country and remaining 32% feel it may or may not help
in removing black money from economy.
Table 4.11Penetration of black money in future

Yes 45 45
No 26 26
Maybe 29 29
61
INTERPRETATION:
From the above chart it can be observed that 45% of respondents feel that black money will
penetrate more in future. 26% don’t think there will be no more use of plastic money and
remaining 29% are still in state of confusion and think it may or may not penetrate in future
as it is now.
Table 4.12.Frauds in plastic money

Option 1 50 50
Option 2 75 75
Option 3 85 85
INTERPRETATION:
From the above chart it can be observed that 50% Respondent are telling there is 50%
frauds,75 respondent are telling 75% frauds,85% are telling 85% Frauds are there in plastic
62
money. As we can see from the above pie chart clearly that there is high chance of plastic
money fraud.
Table 4.13. Using of plastic money

Option 1 49 49
Option 2 39 39
Option 3 12 12
INTERPRETATION:
From the above chart it can be observed that 49% respondent knows how to use the debit or
credit card 39% respondent are not able to use debit or credit card 12% respondent are not
sure about using the debit or credit card.So from these we can say that mostly young age
group people are aware of using the plastic Money.
Table 4.14. Recycle of plastic money

Option 1 48 48
Option 2 34 34
63
Option 3 18 18
INTERPRETATION :
From the above chart it can be observed that 48% respondent are telling it is recyclable,34%
are telling it is not recyclable and 18% respondent are confused that it is recyclable or not. As
a matter of fact plastic money is recyclable.
Table 4.15. Risk in plastic money

Debit Card 54 54
Credit card 46 46
64
INTERPRETATION:
From the above chart it can be observed that debit card is riskier than credit card.
Debit Card has 54% risk whereas credit card has 46% risk. As a result Credit card is safer
than debit card because it is safe and secure.
Table 4.16. Easy and convenient to carry

Paper money 33 33
Plastic money 67 67
65
INTERPRETATION:
From the above chart it can be observed that 67% plastic money is easy and convenient
because it is safe to carry a huge amount anywhere at anytime whereas only 33% it is easy
and convenient to carry paper money because we can’t carry more money it will be
dangerous.
CHAPTER 5: CONCLUSION & SUGGESTIONS
Although cash continues to be used heavily in retail transactions in India, the use of plastic
money such as credit card and debit card on the whole has been increasing in recent years.
The use of payment cards, in volume and value showed increasing trends from 2004 - 2005 to
2007 - 2008, indicates the high growth rate, acceptance and usage of it in the business deals
by cardholders and merchants which in turn leads to the overall growth of e-commerce and
consequently e-economy. As the world, particularly the rich world knows, credit and debit
cards are dangerous as they are convenient. With millions of consumers from the east in
China to the west up to Mexico filling their wallets with plastic cards, the risks are mounting.
In just about ten years the global spending on credit and debit cards has increased almost four
66
times. It is a proven fact that Americans were responsible for more than 40% of the spending
through the credit and debit cards and the future looks very promising in most eastern
countries especially China and India. The United States has maximum spending in credit
cards with almost five credit cards on an average and other countries like Britain and Ireland
is more conservative in credit cards.
With the spread of plastic money, there was also the spread of frauds using plastic money.
Fraud using the plastic cards was different from that using money. The plastic fraud is usually
done by a technically strong person and he uses technology to his benefit to commit fraud and
get monetary befits from the plastic money. Credit card fraud has been defined by ‘The Fraud
Examiners Manual’ as “the misuse of credit card to make purchases without authorization or
counterfeiting a credit card”. The Visa and Master Card, the two largest credit card issuers
lose most. Generally, the credit card fraud is successfully on most of the occasions. Chances
of being caught are small and the necessary legal procedure to book the culprit based on
strong evidences is not available.
Like other countries if the genuine credit card has come to India, the fraudulent credit card
cannot be far behind. It is bound to cast its shadows far and near, throughout the sphere. And
they will thicken every year. The banks are the most important institutions dealing with the
credit cards frauds. Credit card misuse is growing in popularity because it is easy, often
anonymous and leaves no trace. Victims usually are ordinary citizens; most countries do not
have specific legislation to address credit card fraud, according to Visa and Master Card
Fraud Management. Credit card theft and misuse is committed every second across the world.
There are no special segments or geographic areas. Victims usually are ordinary citizens;
most countries do not have specific legislation to address credit card fraud, according to Visa
and Master Card Fraud Management. Credit card theft and misuse is committed every second
across the world. There are no special segments or geographic areas. India is no exception to
credit card fraud. The only consolation being that most of the frauds are small in value and
67
can easily be checked. It is feared that with the expansion of E-commerce, M-commerce and
Internet facilities being available on massive scale, the fraudulent fund freaking via credit
cards will increase tremendously.
In India, credit card frauds have become more prevalent only from 2010. The awareness
regarding this is still lacking in some states and even among some banks. People using credit
cards are either not using them to the optimum or become easy prey to the tech savvy frauds
who everyday become smarter by new ways to misuse the credit cards. There are various
types of cyber crimes in India. These crimes are listed below in which Tampering computer
sources documents which is section 65 IT Act, Loss of damage to computer resource utility
section 66 (1) IT Act and Hacking section which is section 66 (2), Failure of compliance or
orders of certifying authority which is section 68 IT Act and unauthorized access or attempt
to access to protected computer system which is section 70 IT Act. Section 71 is about
obtaining Digital Signatures and section 73 IT Act is publishing this false digital signature,
section 74 IT Act is Fraud digital certificate and Breach of confidentiality and privacy is
section. All these above, at sections of the IT acts apart from this there are IPC Acts against
cybercrimes were also described.
The three major IT section acts which were analysed are Section 65 IT act which is on
Tampering of computer equipment’s, section 66 (1) IT Act which is Punishment for sending
offensive messages through communication service, etc. and section 66 (2) IT Act which is
Hacking with computer and computer related instruments. These three acts are analysed for
all the states of India.
There are different key measures, which are used for detecting and preventing credit card
frauds. Some of them are as follows:
68
1. Address Verification Service (AVS): This technique matches the cardholders’ billing
address and Zone Improvement Plan (ZIP) code information given for delivering the
purchases against the bank record. This system is available in the USA and in a few countries
of Europe. However, this technique has different weaknesses i.e. the address information is
available online; it makes the bankers work boring in preventing the fraud; it cannot check
the entire informational card. Only American Express bank has the facility to check all the
international frauds through its AVS system.
2. Credit Verification Values (CVV): This technology checks 3 - 4 digit number embossed
codes on credit card. This technology has advantage that it requires physical possession of
card but this advantage can be nullified by phasing. It also cannot protect the merchant from
transactions placed on physically stolen cards.
3. Negative Databases: This technology checks the order against fraud attempts.
4. Fraud Rates: This technology checks for recognized patterns associated with the fraud. It
carries the advantage that it is easy to configure and understand, but the disadvantage is that
in case the fraud patterns are changed. A new fraud pattern may not be recognized.
5. Relocation: This technology checks the consumers’ geographic location based on IP

addresses. It is advantageous as it can block or flag orders originating from high- risk
countries. However, negative aspect is non-applicability on IP proxies and satellite.
6. 3D-Secure: This technology works on the principle of authenticating the consumer via
previously established password. The positive side of this system is that the fraudster needs
legitimate cardholders’ password to complete the transaction. However, this advantage can
also be neglected as the passwords can be hacked.
7. Chip and PIN: The smart cards introduced to prevent credit card fraud by using this
technology. The credit card has an encrypted Euro pay Master and Visa Card (EMV) chip
storing all information and a PIN instead of a signature, which are used to prove that you are
the genuine cardholder. Thus, this technique minimizes fraud.
8. Biometrics: This is the most recent and sophisticated technology to prevent credit card
frauds. It records a unique characteristic of the cardholder like fingerprints, voice, signature,
iris, and other similar biological components so that a computer can read it. Then the
69
computer compares the stored characteristics with that person who presents the card for
ensuring that he/she is the legitimate cardholder. Negative aspect of this technology is that it
carries additional costs and customers are still reluctant to accept it.
9. Expertise: A team, having the responsibility of managing the infrastructure, handling over
verification, processing of charge back, analyzing the transactions, etc., is required to ensure
that the technology is well managed.
10. Collaboration: The whole industry has to work in collaboration to prevent fraud. This is
the right time when a united group is required to combat fraud and safeguard the business.
Although credit card frauds are found in large number in some major economies like the
United Kingdom, Malaysia, Japan, Taiwan, Australia, and Hong kong as compared to India,
because credit card industry in India is still in its nascent stage and cards have low credit
limits. Of all the credit cards issued in India, 80-85% cards are active which is equal to 3-4
times smaller than Malaysia, which is on credit card fraud list. Although, the incidences of
fraud in India are less, the Reserve Bank of India (RBI) has advised the banks to establish the
internal control system to check the credit card frauds within certain limits, and to strengthen
their appraisal system. India has still the potential to protect and prevent credit card frauds to
a large extent. Fraud is growth Industry and Plastic money fraud in India and especially the
metro cities like Chennai is on steroids. Existing mitigation efforts are only touching the tip
of the ice berg and the solutions to plastic money frauds is only trying to lessen the financial
burden and reduced the money loss incurred than to protect the customers and prevent the
fraud. Many of us feel shopping is safe and convenient using credit or debit cards. It saves us
the bother of carrying large amounts of cash on our person as we move in crowded shopping
areas especially during the festive season. However, the card option is not necessarily that
safe and leaves us vulnerable to fraud and theft.
There have been many cases of credit card frauds in the city. Recently; a city-based
businessman received multiple alerts of purchases made using his card. He immediately
alerted the bank that stopped further transactions from his credit card. Even after blocking his
card, he continued to get alerts on the mobile phone that a few more futile attempts to use his
card were being made. There are incidents when multiple transactions have been made for
huge sums using someone else’s credit card. It can be stopped if the card owner informs the
police and blocks the card immediately after getting an alert of a transaction.
70
It is strange that some people ask the bank to block their card immediately but inform the
police only a few days later. Delay of more than a day or two makes it impossible to reverse
the transaction as the product purchased on the card would have been dispatched by the
supplier. Simple steps taken by credit and debit card users will save them from falling victim
to misuse of the card.
Continuing its efforts to improve the safety of card transactions, the Reserve Bank of India
(RBI) on Tuesday extended the use of tokenisation -- hiding of actual card details with a
unique token -- in the wider payments ecosystem.
To date, the RBI had allowed card payment networks like Visa and MasterCard to use the
tokenisation technology in card transactions. The technology is now allowed to be used by
merchants holding the card credentials like online retailers.
"It has now been decided to permit authorised card payment networks to offer card
tokenisation services to any token requestor (i.e., third party app provider)," the RBI said in a
statement. For now, the facility will be offered through mobile phones and tablets only.
The permission extends to all use cases and channels like near field communication (NFC),
magnetic secure transmission (MST)-based contactless transactions, in-app payments and QR
(quick response) code-based payments, the bank said.
"The Reserve Bank has today (Tuesday) released guidelines on tokenisation for debit/ credit/
prepaid card transactions as a part of its continuous endeavour to enhance the safety and
security of the payment systems in the country," the statement said.
Tokenisation involves a process in which a unique token masks sensitive card details and
thus, in lieu of actual card details, this token is used to perform card transactions. The token
will be unique for a combination of card, token requestor and "identified device".
While all other instructions related to card transactions will be applicable for tokenised card
transactions as well, the RBI stated: "The ultimate responsibility for the card tokenisation
services rendered rests with the authorised card networks."
Before providing card tokenisation services, card payment networks will have to put in place
a mechanism for periodic system (including security) audit at frequent intervals, at least once
a year, of all entities involved in providing card tokenisation services to customers.
71
"Tokenisation and de-tokenisation shall be performed only by the authorised card network,
and recovery of original Primary Account Number (PAN) should be feasible for the
authorised card network only. Adequate safeguards shall be put in place to ensure that PAN
cannot be found out from the token and vice versa, by anyone except the card network," the
RBI said.
Registration of card on the token requestor's app will be done only with explicit customer
consent and the customers will have the option to register or de-register their card for a
particular use.
"Card issuers shall ensure easy access to customers for reporting loss of 'identified device' or
any other such event which may expose tokens to unauthorised usage. Card network, along
with card issuers and token requestors, shall put in place a system to immediately de-activate
such tokens and associated keys," the bank added.
The following are the major findings of the research work:
1. History and evolution of Credit cards proved that the trends of growth in other
countries particularly the west is also almost the same in India especially in metros
like Mumbai, Delhi and Chennai.
2. As credit cards and their usability is increasing so it the misuse and frauds associated
with the credit cards
3. The fraudsters are just not ordinary people but are very intelligent and with
knowledge of latest technology and knowhow.
4. Plastic cards are going to flood the market more and it is not too long when all our
valets will be filled with more cards than money.
5. It is not only Credit and Debit card that will flood the market but also Petro cards,
Agri Cards, Kissan Cards and other smaller cards issued by banks or NBFC which
will be the regular medium of exchange.
72
6. Many banks and NBFC have the responsibility of not just issuing the cards but also to
check on the frauds and mis use of these cards.
7. Legal binding of the credit cards is not very strong and many of the cyber acts either
are combined in IT acts or in the general IPC Acts.
8. The punishment for breach of these acts and legalities is so minimal that the fraudsters
can actually execute the crime and pay the penalty and still benefit.
9. It is true that these credit card frauds are actually very difficult to deduct even with all
the growth in policing and cyber technology.
The Primary survey revealed that most customers especially in banks like HDFC used both
the Credit and Debits cards. The customers interviewed knew about the use of both the cards.
Most of respondents in all the three banks interviewed felt that credit cards gave them more
time to settle their money and debit cards were more limiting their purchases. Almost all the
respondents from all the banks were of the opinion that they have had some issues with the
plastic cards. Most of them felt that there were more issues with credit than the debit cards.
In Chennai most of the people are not aware that they should complaint to the police about
any problem with their cards. It is apparent that most respondents were not aware of types of
frauds. The Central Crime Branch of Chennai City Police operates a separate wing to deal
with bank and payment card-related frauds. Lost / stolen card frauds are generally the most
prevalent form of frauds as these types of frauds are mostly reported to the police. Counterfeit
card frauds are also prevalent.
Some suggestions on the findings of the research are as follows:
General Customers and Banks
1. Banks should be more cautious in issuing plastic cards
2. Banks and NBFC should give instructions and awareness spread to the customers using
these cards
73
3. As technology is enhanced training in technology and particularly in the new changes

incorporated by the financial companies is a must for the bankers and the police particularly
those in the cyber crime department.
4. In case of on line use of the plastic money Ensure you're using a secure internet
connection. Secure communications between you and your web server help prevent cyber
attacks, especially when utilizing un-trusted networks at places like coffee shops or libraries.
Before entering credit card information online, check to see that the URL begins with https://
and an icon of a lock appears to the left of the web address, signifying a secure network
connection. Additionally type in a trusted URL for a company's website into the address bar
of your browser and bypass the link in what could be a phishing message or unsecure site.
One can also use a variety of difficult passwords. With the seemingly endless number of sites
requiring a password, by randomly generating unique passwords for each website, you reduce
the risk of one stolen password compromising security in other areas of your life. There are
also several mobile applications available for the use of your debit and credit card. This way,
there is an alert every time your card is used and this largely helps to deduct frauds almost
immediately.
5. Keeping personal information safe will largely help in prevention of frauds.
Merchants and Vendors
The above are some of the suggestion for the users and the banks. Similarly merchants and
vendors can also largely help in checking credit card frauds by the following
1.The IP location and the credit card address generally should match up and usually credit
card fraudsters block the IP address so if this matches up it can largely prevent a fraud.
2. General stores, shopping centres can keep a log of the credit cards. This helps in reviewing
if the card is used earlier. If the number of times is five or higher, it is likely to be a fraud.
Most credit card processors will allow you to review the batch transactions for the day.
Scammers will attempt many transactions using multiple credit card numbers. Be sure to flag
these.
3. There are fraud profiling devices that can be installed on at least on line stores.
74
4. Restrict the number of declined transactions because the solution is to restrict the number
of times a user can incorrectly enter in credit card numbers. Ban them once they exceed that
number of attempted transactions.
Law Making Agencies and Police
These are a few suggestions for the police and law making authorities
1.The provisions of Section 66 C and Section 66 D of IT Act may be used for legal
monitoring of plastic money frauds. Also the IPC 468 and 471 may also be cited in certain
circumstances. These laws have very nominal punishments that are by far too shallow. When
punishments are severe, the frauds become lesser. Hence, the punishments should be stricter
and loopholes are few.
2. In case of a credit card fraud, banks generally take initiative to file an FIR but more
individuals should be asked to give an FIR based on their credit card fraud.
3. Police and verifying authorities should also take the initiative to talk to the public and card
holders about the importance of IP address and other features of the credit card which would
help them to investigate better.
4. The judiciary and the police should work in coherence with each other. In several cases,
police cases are pending in the court and the fraudsters gets the much needed time to find
some reason and cause to escape the crime.
5. Laws regarding frauds of plastic cards should be amended time to time based on the level
of technology.
6. Training not just in laws but also in technology and type of cyber technology that the fraud
generally uses should be given may be by financial institutions to the Banks and the police so
that they also be tech savvy.
75
CHAPTER 6 : BIBLIOGRAPHY
1. Rajani V. (2009).An Evaluation Of Business Deals Using Plastic Money In Kerala “

Thesis submitted to Cochin University for science and technology for the award of
doctor of philosophy under the faculty of social science .p.44.
2. Sharma, B.R. (2003). Credit card Frauds, Bank Frauds Prevention and Detection.
Universal Law Publishing Company, New Delhi, pp 111-121.
3. Frazer, P. (1985). Plastic and Electronic Money: New Payments Systems and their
Implications. Woodhead-Faulkner Ltd. Cambridge 148-164.
4. Kevin .J. Leonard. (1993). A Fraud Alert Model for Credit cards during Authorization
Process. Journal of Mathematics and Applied in Business and Industry. pp. 57-62.
5. 2. John Higgs, William J. O'connor And Richard S. Simmons.(1971). Bank Credit
Cards-Problems Under Regulation Z And Possible Problems As A Result Of Future
Developments Under Proposed Consumer Legislation .The Business Lawyer, 27 (1),
pp. 111-138.
6. Bare Act. (2015). Indian Penal Code (45 of 1860) as amended by “The Criminal Law
(Amendment) Act 2013(13 of 2013) with effect from 3.2.2013. New Delhi:
Professional book publishers. pp.416-423.
7. Bare Act .(2015). The Information Technology Act 2000 (21 of 2000) as amended by
Signature or Electronic Authentication Technique and Procedure Rules 2015. New
Delhi :Professional book publishers. pp.30-31.
76
CHAPTER 7 : APPENDIX
Name:
Age:
Occupation:
Gender:
(1) Female
(2) Male
(3) Prefer not to say
Q.1. Do you have any idea about plastic money?

(1) Yes
(2) No
(3) Maybe
Q.2. If yes, then do you have any of them?

(1) Yes
(2) No
77
Q.3. According to you, which is safe and secure mode of payment while using plastic
money?
(1) Credit Card
(2) Debit Card
(3) Any Other
Q.4. How do you make payments for purchase of household consumables?

(1) Cash
(2) Credit Card
(3) Debit Card
(4) Bajaj Card
(5) Cheque
(6) Any Other
Q.5. According to you, what is the reason for choosing plastic money?
(1) Easy to pay
(2) Attractive Offers and Scheme
(3) Any Other
Q.6. Do you have any issues with your credit/debit card?

(1) Yes
(2) No
(3) Maybe
Q.7.What kind of issues do you face?

(1) Cards not retrieved from ATM
(2) Interest rates are too high
(3) PIN no. not accepted
(4) Banks not issuing A/C details on time
Q.8. Is duplication of money the reason for people shifting to plastic money?
(1) Yes
78
(2) No
(3) Maybe
Q.9. Do you think that more credit card and debit card transactions over cash transactions in
country will help to crab the black money in the economy?
(1) Yes
(2) No
(3) Maybe
Q.10. Do you think that plastic money will penetrate more in future?
(1) Yes
(2) No
(3) Maybe
Q.11.How much Percentage fraud is in Plastic Money?

(1) 50%
(2) 75%
(3) 85%
Q.12.Do you know how to use debit card or credit card

(1) Yes
(2) No
(3) Maybe
Q.13.Is Plastic Money Recyclable?

(1) Yes
(2) No
(3) Maybe
Q.14. Which Card Is more Risky?

(1) Debit Card
(2) Credit Card
79
Q.15.Which Money is easy and Convenient to handle?

(1) Paper money
(2) Plastic money
PLAGARISM REPORT
80
CHAPTER 8. REFERENCE
REFERENCES:
1. Use of Plastic Cards in Banking: A Study | Think India Journal
(thinkindiaquarterly.org)
2. Does It Make Sense to Have A Credit Card - Pros and Cons (groww.in)
3. Why businesses don't accept certain credit cards | ZDNET
4. Consumer And Merchant Benefits Of Cardholding And Use | Reform of Credit Card
Schemes in Australia: II Commissioned Report | RBA
5. Credit Cards vs. Debit Cards: What’s the Difference? (investopedia.com)
6. plastic money: Latest News & Videos, Photos about plastic money | The Economic
Times - Page 1 (indiatimes.com)
81
DECLARATION
I the undersigned MS. UJALA GUPTA hereby declare, that the work embodied in
the project work was titled “A STUDY ON FRAUDS AND DEVELOPMENT ON
PLASTIC MONEY.” forms my own contribution to the research work carried out
under the guidance of Mr. Akash Deshmukh is a result of my own research work
and has not been previously submitted to any other university for any other
degree/diploma to this or any other university.
Wherever references have been made to previous work of others, it has been clearly
indicated as such and included in the bibliography.
I, hereby further declare that all the information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.
Name and signature of Learner

Ujala Gupta
82
CERTIFIED BY
Name and signature of guiding teacher
Akash Deshmukh
Date:
Place:
CERTIFICATE
This is to certify that MS. UJALA GUPTA has worked and duly completed her
project work for the degree of Bachelor in commerce (Accounting & Finance) under
the faculty of Commerce in the subject of and her project is entitled, “A STUDY ON
FRAUDS AND DEVELOPMENT ON PLASTIC MONEY.” under my supervision.
I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any degree or diploma or any
university.
It is her own work and facts reported by her personal findings and investigation
Name and signature of guiding teacher
83
PRINCIPAL
Mrs. C.T. Chakraborty
INTERNAL EXAMINER EXTERNAL EXAMINER

Mr. Akash Deshmukh
Date of submission
ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous and the depth is so
enamors.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me
chance to do this project. I would like to thank my principal DR. C.T.Chakraborty
for providing the necessary facilities required for completion of this project.
I take this opportunity to thank our coordinator DR. Nishikant jha for his moral
support and guidance.
I would also like to express my sincere gratitude towards my project guide Mr.Akash
Deshmukh whose guidance and care made the project successful.
I would like to thank my COLLEGE LIBRARY for having provided various
reference 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 especially my parents and peers who supported
me throughout my project.
84

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A STUDY OF FRAUDS AND DEVELOPMENT ON PLASTIC MONEY

A STUDY OF FRAUDS AND DEVELOPMENT ON PLASTIC MONEY

FOR PARTIAL COMPLETION OF THE

UNDER THE FACULTY OF

UNDER THE GUIDANCE OF

THAKUR COLLEGE OF SCIENCE AND COMMERCE,

Sr. No Particulars Pg. No.

4 DATA INTERPRETATION AND ANALYSIS 51

5 CONCLUSION AND SUGGESTIONS 65

SR.NO Task Task Start End

Student Project Guide Coordinator

HISTORY OF PLASTIC MONEY

By 1951 there were 42,000 Diners club cards in circulation.

1.2 PROPERTIES OF PLASTIC MONEY

FUTURE OF PLASTIC MONEY:

CREDIT CARDS HOLDERS IN DIFFERENT COUNTRIES

SR NO COUNTRIES PEOPLE/PER CARD

PLASTIC MONEY SCENARIO IN INDIA:

CREDIT AND DEBIT CARD IN INDIA:

IMPACT OF BANKING SECTOR DUE TO PLASTIC MONEY:

Debit Card Problems can be worse than Credit Card Problems

Traveling with your Debit Cards

Technology and Infrastructure

CREDIT CARD DEBIT CARD

CASH REWARDS CARD

Pros and Cons of Using Debit vs. Credit Cards

Security and card Theft

Rewards and Cashback

Interest and Fees

Types of Debit Cards

Types of Credit Cards

An in depth analysis of use of cashless transactions in the Indian economy particularly in a

Credit Cards and Young Consumers

NEED OF CREDIT CARDS

 Credit Card to Build Credit

 Credit Card to Shop Online or Rent a Car

 Credit Card for emergencies

 Credit Card to save money on purchases

 Credit Card to earn rewards

Credit Card Frauds

refinement of the fraudsters (Worthington, 2009) . Similarly, Ma Yu-Feng (2005) proposed

 Sold charge sheets fraud

 Terminal Takeover Fraud

 Save and Paste

 Electronic Money Transfer

 What kinds of credit card frauds are more prevalent?

transactions where the card is not present.

 What is being done to prevent such fraud?

 Why is a chip card safer?

 What can a customer do to avert card-related frauds?

CREDIT CARD FRAUD CASES IN INDIA:

India's post-demonetization digital push

WHAT IS CREDIT CARD CLONING?

RECENT DEVELOPMENTS IN PLASTIC MONEY :

Visa Checkout joins similar services like eBay's PayPal, MasterCard's Master

CHAPTER 2: REVIEW OF LITERATURE

CHAPTER 3: RESEARCH METHODOLOGY