Archive for the ‘ Tips for Card Users ’ Category

High-end users drive credit card business

The credit card market in India is seeing a consolidation of sorts with the irresponsible users of the cards at the lower end of the market being eased out and a growth being seen in the high-end segment.

The total outstanding credit cards in the Indian market, fell for the second consecutive year to 1.80 crore in 2010-11, after 1.83 crore cards recorded in 2009-10 and 2.46 crore in 2008-09.

But the total transaction amount through credit cards hit an all time high of Rs 75,515 crore in 2010-11, a 22 per cent growth over 2009-10. The number of credit card transactions also hit a high of 26.51 crore, up 13 per cent over the previous financial year.

This, the industry members say, is an indication that not only the value of credit card transactions is going up, but also the high end of the market is contributing significantly to the growth.

Indian Overseas Bank, which already has a visa branded credit card, is betting big on its co-branded cards launched in association with American Express Cards, targeted at high-end customers. The bank hopes to sell 50,000 Amex co-branded cards in six months and plans to take it up to 5 lakh cards in two to three years, compared to the 40,000 customers it has garnered so far for its visa-branded card targeted at the average customer.

“We have been seeing good growth in the high end credit card segment over the past few years,” said Shailesh Baidwan, country manager and head of consumer cards, American Express Banking Corp.

“On the flip side, balances outstanding on cards are declining in spite of higher spending on cards,” according to a HSBC official.

2011
06/09
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Stick to 2G Data Plans in the 3G Regime

Abhinav Bharghav caught the nail-biting quarter finals between India and Australia on his 3G-powered mobile TV. The following day, he realised the luxury cost him Rs 1,000.

“3G is an expensive affair. But, I have decided to use it only for special occasions like ground-breaking matches. For e-mails and surfing, I will continue to use my 2G GPRS plan,” he says.

Bharghav’s sentiments were echoed by several mobile subscribers Business Standard talked to, including Snehal Vaidya. “I am almost addicted to surfing, be it social networking sites, blogs or to get information on the net. But I have restricted myself to my unlimited 2G data plan. I can’t use 3G because I might run up a huge bill with the amount of surfing I do. I plan to use 3G only for downloading videos fast.”

 

On an average, 3G is several times more expensive than 2G because most private operators offer it as a ‘premium service’.

Consumers are of the view that basic services like e-mail and even accessing social networking sites do not require 3G data speeds, and most prefer having multiple data plans to suit their needs.

BlackBerry subscribers also prefer their existing internet plans that give unlimited mail access. “I get unlimited e-mails free with this and I am fairly satisfied with the 2G speeds for e-mail and downloads as well. I have 3G but I prefer to use it only when I need to,” says Nandini Patwardhan, an avid e-mail user.

Baburajan K, the chief editor of telecomlead.com says the high cost of 3G services are prompting consumers to take a cautious approach. “People are currently experimenting on 3G services and this can go on for the next six months.” According to him, consumers might try and strike a balance between their 2G and 3G requirements depending on their requirements to avoid bill shocks.

“We have a section of the population which is not concerned about the bills. And those who are, go for selective options like weekly packages or smaller vouchers that would allow only one module like mobile TV,” says Baburajan.

Connectivity issues, too, are driving some 3G enthusiasts back to 2G data plans. For example, Vikram Tripathi had a set back with his office e-mail services after he activated 3G on his Blackberry. “I could send e-mails but I could not receive any. I tried getting help from a colleague from my tech department but we struggled for two days before I decided to revert back to 2G,” he says.

“It was obviously not a problem either with the server or the device, it is the 3G service. I discovered yet another friend had experienced similar problems with his enterprise mail when he activated 3G service,” Tripathi adds.

 

2011
04/06
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One-time Password for Shopping or Payments on phone starting January 2011

Come January 1,2011 and you will have to provide another password for credit card transactions done over phone. But unlike other passwords and PINs (personal identification numbers), the new requirement will be a one-time password (OTP), which is extinguished after a transaction or after the lapse of a specified period of time, ranging between 30 minutes for one bank and 24 hours for another.

Following a directive from RBI , issued last August, some banks are now sending out mailers to cardholders informing them about the new six-digit code that will be required from January 1.

Though you can do with only the CVV number and a special password for online transactions, an OTP will be required for all Interactive Voice Response (IVR) transactions that are done over phone and you are required to provide your credit card number on an automated system for making a payment. Besides, some banks have made OTP mandatory for mobile transactions such as recharging your cellphone or direct-tohome connection.

So, how do you get an OTP? Each bank has put in place its own system. Bigger players—such as SBI—have given cardholders the option to generate the new password either through a call to the helpline number or get it online or through an SMS. The OTP will be sent to your registered cellphone number . So, make sure that the registered number with the card issuer is the same as the one that you are using.

On the other hand, some of the foreign banks – such as Standard Chartered -are , however, insisting that you generate your OTP online. For that, you will need to first punch your credit card number and then put your online password, which was mandated last year onwards , and it will be displayed online.

Others like HDFC Bank are not offering web-based generation facility at present and are confining the password generation to SMS, IVR system-based or through a call to the helpline. Once you get your OTP, make sure that you punch the correct number since a wrong input will mean that you need to generate a new one to complete the transaction.

Things You Need To Know

What’s an OTP?

It’s a one-time password required for IVR transactions that require credit card holders to provide card details on an automated system

When do you need it?

You will need it for all IVR transactions from January 1. Some banks have also made it mandatory for cellphone and DTH recharge

Why do you need it?

It is required as an additional security feature

Who can get it?

Credit card holders who have a registered mobile number and have the required passwords from the bank and credit card issuers.

How do you get an OTP?

Most banks are giving option to generate the number via an SMS-based system, by using their phone helpline or online.

How long is the validity?

It ranges between 30 minutes and 24 hours, but the bottomline is you can only complete one IVR-based transaction at one go

One-time Password for Shopping or Payments on phone starting January 2011
2010
12/29
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Chip Cards set to replace Swipe Cards from Banks

SWIPE cards with magnetic stripes will be replaced with EMV chip cards, owing to its solid security features, and will become ubiquitous in three to four years in India, smartcard maker Gemalto said reports N Vasudevan for mydigitalfc.com

EMV stands for Europay, Mastercard and Visa, the global standard for interoperation of chip cards and IC card capable point of sale (POS) terminals for authenticating credit and debit card transactions.

EMV chip card transactions are believed to improve security against fraud compared to magnetic stripe cards as the former rely on the holder’s signature and visual inspection of the card to check for features such as hologram.

Nimish Swarup, vicepresident, POS Asia and secure transactions of Gemalto India, said, “Swipe cards are magnetic stripe-based, which can easily be cloned or skimmed. Few banks in India have already issued EMV chip cards to their premium customers. The banks are doing cost-benefit analysis and are studying other associated benefits with such cards.”

Unlike swipe cards, EMV chip cards must be inserted into the terminal for validation. According to Swarup, today 90 per cent of the terminals in India are ready to accept chip cards.

“As per regulations of Master and Visa, if the infrastructure is more than 80 per cent ready, the banks can go for chip cards,” Swarup said.

Other than EMV chip cards for banking sector, Gemalto is working with oil companies, such as BPCL and Indian Oil, to issue cards for loyalty and payment solutions. It is also in talks with some healthcare companies in India to issue smart cards that carry individual’s health records.

Gemalto has also introduced smartcard technology with biometric authentication for Financial Information Network and Operations, an Indian Financial Inclusion Solutions and Services company, to enable microbanking and simplify access to financial services for the under-banked population in rural India.

2010
12/29
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Your Paperless Office: Five Great Reasons to Move Payments Online

A single check seems small enough. But added up, the checks your company deposits or prints can ultimately bury your staff under a mound of paper. If you are on the way to a paperless office but haven’t yet tackled electronic payments for receivables and payables, you are paying more than you need to run your operation.

Many companies use a blended approach of electronic and paper-based payments, although the trend is clearly towards electronic payments. Most electronic payment implementations involve a combination of one or more of the following:

  • Moving payments, application fees and other receivables online using ECS, NetBanking, Debit or Credit cards.
  • Moving your payables online by sending electronic payments to vendors, owners or investors, employees and others.

You may have already implemented check scanning for receivables or MICR laser check processing for payables. Congratuations – both these technologies are effective ways to streamline your backoffice. However, these methods still carry handling costs. Electronic payments can dramatically reduce these costs even further.

Here are five great reasons you should implement electronic payments as part of your paperless office initiative:

  1. Improve efficiency and accuracy. After all, isn’t that the reason you decided to go paperless in the first place? With electronic payments, your staff can save a significant amount of handling time and reduce errors. According to independent studies, each paper check you eliminate can save your company at least 90.00 in handling costs.
  2. Greater security. Each time a check is handled, whether it’s by the post office, bank, courier service or your backoffice staff, the odds of a loss or security issue is increased. Online payments are a more secure way of getting the payments into or out of your account.
  3. Improve cash flow and visibility. Rent payments made using an electronic system are deposited more rapidly than a traditional paper check. Notification of non-sufficient funds occurs faster as well. In addition to faster funds availability, electronic payments provide your accountant and management team with a more real-time view into receivables and payables.
  4. Fewer trips to the bank by you and others. Payments you receive online are automatically deposited at the bank, saving you trips to the bank and improving deposit security. Your payables are deposited directly as well, and although this doesn’t affect your bottom line, it’s the greener way to go.
  5. More convenience for your customers. Payments by paper check are clearly on the decline, and forward-thinking companies are offering innovative electronic payment methods to their customers. In property management, you can provide more convenience to your customers: residents, vendors, investors/owners, and employees. These customers expect it.

You can find electronic payment solutions from multiple sources, including your bank, independent payment processing companies, and from your property management software vendor. Once you get started with electronic payments, you can streamline your operation even further and start to unbury your staff from that mound of paper.

Please feel free to contact us @ BillBharo to help in achieving a paperless office.

2010
10/14
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29% increase in Credit Card transactions in Aug 2010

Credit card transactions during August 2009, were at Rs 5,817.46 crore, according to the figures released by the Reserve Bank of India.

Transactions worth Rs 6,259.42 crore were carried out in the country by credit cards during the August-month, a growth of 28.89 per cent from the figure recorded in the same period last year.

The number of credit cards in circulation have, however, declined by nearly 14 per cent to 1.89 crore as on August 31, 2010, from 2.19 crore in the same period last fiscal.

During the first five-months of the fiscal, the total transactions carried out via credit cards increased 18.82 per cent to Rs 29,024.75 crore, as against Rs 24,427.33 crore in the April-August period of 2009-10.

In April-August period, the total transactions carried out by debit cards jumped by 44.16 per cent, to Rs 14,288.61 crore, from Rs 9,911.92 crore in the first five-months of the last fiscal.

Meanwhile, debit card transactions in August was up by 42.32 per cent to Rs 3,321.09 crore, as against Rs 2,333.46 crore in the corresponding month last year.

There were 20.01 crore debit cards in use in the country as on August 31, 2010, up over 29 per cent over the figure of 15.51 crore in the year-ago period.

2010
10/13
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Credit Card Payments Due ? Pay. Don’t Procastinate!

You could be the proud owner of a platinum card with a credit limit of a whopping Rs6L ! Still, surely you would agree it would be madness to max out your credit limit every month as a habit or even worse, procrastinate to pay the full outstanding amount.

A very safe practice to follow when you use your credit card is to utilize only around 30- 40% of your credit limit and limit the charges levied by your credit card company up to around 10% of your credit limit.

These are very safe margins and when you utilize your credit card safely within these margins it is a sure shot way to escalate your credit score. Incidentally, a credit score is basically a grading given to you based on your ability to handle credit or loans well and repay on time, everytime!

It is always advisable not to draw cash using your credit card. The same interest rates that are applicable for purchases on cards apply, which is in the range of 2.7-2.85% on a monthly basis translated to an annualized rate of around 38-40%.

Note that in the case of card purchases there is a 25-40 day interest free credit period, whereas in the case of cash withdrawals the interest rate meter starts to tick from the moment cash is withdrawn. On top of this, there is also a withdrawal fee of about 3-3.5% of the amount withdrawn.

Now, while we are on the subject of interest rates levied by credit cards, let’s discuss a related issue. Have you ever wondered if there is an upper limit to the interest rates charged by credit cards?

Well, RBI has been stressing repeatedly on transparency in such issues as the banking ombudsman receive a very high percentage of complaints on credit card interest rates especially! In a recent circular sent to the banks RBI has requested the banks to fix a celing rate of interest for interest rates, processing fee and other charges for loans and as well as credit card dues.

Taking into account that interest rates will vary depending on the repayment track record and default history of the credit card holder RBI has requested that the banks should publish a ceiling of interest rate for different categories of people considering such factors, in the bank’s website.

RBI believes if banks adhere to these guidelines then the average credit card customer will be more aware of the implications of the interest he needs to pay especially if he is in the habit of only paying a part of the outstanding amount due.

In the circular issued in the beginning of July RBI has also warned that it reserves the right to impose penalty on a bank or NBFC under the provisions of the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, respectively for violation of any of these guidelines issued in its recent circular with respect to credit cards.

What is the learning from all of this for the consumer?

Simple. Do not delay your credit card repayments ever.

Also remember that if you neglect payments you will be labeled a defaulter and consequently will be shelling out payments at a higher interest rate compared to a credit card holder who is regular in repaying his dues.

It is important to repay more than your minimum payment due on time, which can be anywhere between 2% and 5% of the outstanding amount due, depending on your bank.

Here are some pointers to keep a close tab on your credit card usage.

  • Concentrate on long term requirements rather than give in to short term whims.
  • Remember credit cards are intended for emergencies and not as a means to spend more money!
  • Do a close study of terms and conditions. i.e. Read the credit card statement thoroughly and carefully everytime you get your monthly credit card statement. New rules are often announced in this statement and might escape your notice if you are not diligent.
  • Never default a payment
  • Repay the full amount due, if you cannot, try to pay as much as possible beyond the minimum payment due
  • Be aware of your credit limit
  • Understand how charges are applied
  • Mark your own limit that does not exceed 30% of the limit set by the credit card company
  • Closely monitor transactions
  • Enjoy spending on your credit card within reasonable limits and never delay repayment of your dues.
2010
08/13
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Usage of credit cards on the rise again

Credit card use — a strong indicator of consumer confidence — is on the rebound, touching a 15-month high in May. While consumer confidence is one factor triggering such high transactions, the move by banks to ramp up the credit card business, acceptance of plastic money for routine deals and increased security aspects are also aiding the surge, experts said.

Consider this: In May this year, nearly 2.1 crore point of sale (PoS) transactions were done using credit cards as compared to 1.98 crore such transactions in April. The May figure was the highest since January 2009 figure of 2.18 crore swipes, data in RBI’s Monthly Bulletin for July showed.

In terms of value, aggregate transactions in May was worth Rs 5,936 crore, the second highest figure in the last 18 months with the highest being Rs 6,770 crore in March. The Reserve Bank of India data showed that the highest-ever monthly swipes and value were recorded in October 2008, just before the US economy started showing signs of extreme weakness. In that month, 2.4 crore swipes led to PoS transactions worth Rs 6,442 crore.

‘‘ This rise was primarily because credit cards issued by banks, excluding those withdrawn or blocked, increased from 1.83 crore cards in March to 1.93 crore cards in April,’’ said Piyush Khaitan, MD, Venture Infotek Global, a major player in processing credit and debit card transactions using PoS terminals.

During the previous two financial years, banks in India exercised extreme caution while issuing credit cards. With 2.68 crore credit cards in circulation in September 2008, the downward trend continued right till March 2010. However , ‘‘ Since 10 lakh cards were issued in April this year, their effect in terms of increased usage was witnessed in May,’’ Khaitan said.

Apart from the push by banks to net new customers, experts feel the growth was aided by the fact that people have regained their faith in the economy and are more confident about retaining their jobs. The RBI had a small role to play in the surge.

2010
08/09
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