The credit card business of India is booming with just over 24million credit cards in circulation.They are still not accepted with only about 28% of the Indianpopulation possessing one.But even so between 2008 and 2009 the incidence of nonpaymenton those India credit cards rose via 20%.Most likely just being aware of a few accepted mistakes wouldlower this incidence by a considerable amount.
This process involves the following parties:Cardholder: the owner of the card used to make a purchaseMerchant: the business accepting credit card payments forproducts or services sold to the cardholderAcquirer: the financial institution or other organization thatprovides card processing services to the merchantCard association: a network such as VISA®, MasterCard®,Discover® (and others) that acts as a gateway between theacquirer and issuer for authorizing and funding transactionsIssuer: the financial institution or other organization thatissued the credit card to the cardholder
The flow of information and money between these parties—always through the card associations—is known as theinterchange, and it consists of a few steps:1.AuthorizationThe cardholder pays for the purchase and the merchant submitsthe transaction to the acquirer. The acquirer verifies with theissuer—almost instantly—that the card number and transactionamount are both valid, and then processes the transaction for thecardholder.2.BatchingAfter the transaction is authorized it is then stored in a batch,which the merchant sends to the acquirer later to receivepayment (usually at the end of the day).
The entire process, from authorization to funding, usually takes about 3days. However, Bank of America Merchant Services offers next-daydeposits to customers with a Bank of America business checkingaccount.12.Clearing and settlementThe acquirer sends the transactions in the batch through the cardassociation, which debits the issuers for payment and credits theacquirer. In effect, the issuers pay the acquirer for the transactions.3.FundingOnce the acquirer has been paid, the merchant receives payment.The amount the merchant receives is equal to the transactionamount minus the discount rate, which is the fee the merchant paysthe acquirer for processing the transaction.
How card processing benefits your businessRegardless of your businesss size or industry, there are manybenefits in having the ability to process credit card transactions.By accepting multiple forms of payment, you give your customersoptions and improve their experiences. You also introduce a newaudience of customers to grow your business organically.In addition, card processing is an efficient, convenient paymentsolution that helps you improve cash flow by ensuring timely,automatic deposits to your account.Value-added services—like gift card and prepaid card programs—can provide a new channel for generating profits and increasingyour revenue. Check protection services can help you limit your riskfrom bad checks.
1. Merchant calculates the amount of purchase and asks buyer forpayment2. Buyer presents merchant with a credit card.3. Merchant runs credit card through the point of sale unit. Theamount of the sale is either hand-entered or transmitted by the cashregister.4. Merchant transmits the credit card data and sales amount with arequest for authorization of the sale to their acquiring bank.5. Point of sale units are usually set to request authorization at thetime of sale, and then actually capture the sales draft at a later time.
6. The acquiring bank that processes the transaction, routes theauthorization request to the card-issuing bank. The credit cardnumber identifies type of card, issuing bank, and the cardholdersaccount.7. If the cardholder has enough credit in their account to cover thesale, the issuing bank authorizes the transaction and generates anauthorization code. This code is sent back to the acquiring bank.8. The issuing bank puts a hold on the cardholders account for theamount of the sale. Note that the cardholders account has not beenactually charged yet
9. At a later time, probably that night when the store is closing up, themerchant reviews all the authorizations stored in the point of sale unitagainst the signed sales drafts. When all the credit card authorizationshave been verified to match the actual sales drafts, the merchant willcapture, or transmit, the data on each authorized credit card transaction tothe acquiring bank for deposit. This is in lieu of depositing the actualsigned paper drafts the with the bank.10. The acquiring bank performs what is called an interchange for eachsales draft, with the appropriate card-issuing bank. The card-issuing banktransfers the amount of the sales draft, minus an interchange fee to theacquiring bank [Baughn, 88] .11. The acquiring bank then deposits the amount of the all the salesdrafts submitted by the merchant, less a discount fee, into the merchantsbank account.
* Premium Credit Cards* Cash Back Credit Cards* Gold Credit Cards* Airline Credit Cards* Silver Credit Cards* Business Credit Cards* Balance Transfer Credit Cards* Co-branded Credit Cards* Low Interest Credit Cards* Lifetime Free Credit Cards* RewardsTypes of Credit Cards
Cash back offers are a type of rewards program where thecardholder receives a cash rebate equal to a specified percentage ofthe amount charged to the card on an annual basis.Cash back reward programs started appearing in 1990 when theDiscover Card made their industry-shattering 1% cash back offer.Cash back programs typically come with higher interest rates thancards that do not offer a cash back incentive. If the cardholder doesnot pay their balance in full every month, that higher interest ratecan offset the value of the cash back incentive.Cash Back Credit CardsCash Back Credit Cards
Premium Credit CardsThese cards offer incentives and benefits beyond that of aregular credit card. Examples of premium credit cards areGold and Platinum cards that offer cash back, rewardpoints, travel upgrades, and other rewards to cardholders.Premium cards can have higher fees and usually haveminimum income and credit score requirements.Both standard credit cards and premium credit cards havespecific types of credit cards. Student credit cards, zeropercent interest cards, and travel cards are just a few typesavailable.
There are 25 major airline credit cards available in India. Thesecards provide a number of travel related benefits to cardholders.Diners Club British Airways Credit CardFollowing are some interesting facts about Diners Club BritishAirways Credit Card:* First year is free.* Renewal fee is INR 3000.* Cardholders can earn 2.5 BA miles. This offer is applicable forevery INR 100 spent by cardholders with the card.* Regular interest rate is 2.75% per month.* Cardholders get access to international standard businesscenters and lounges.Airline Credit Card
* Cash advance fee is 3% per month. Minimum cash advancefee is INR 100.* Cardholders receive priority booking facilities in busyflights. They receive meal and seat preferences as well.* Issuer is Diners Club.* There are no joining fees.* Co-brand of this card is British Air
A charge card is a credit card without a credit limit. On a chargecard, the balance must be paid in full at the end of each month.Charge cards typically do not have a finance charge or minimumpayment since the balance is to be paid in full. Some charge cardsdont have a preset spending limit, giving you the flexibility tocharge as much as you want as long as you repay the balance by thedue date.Charge cards typically have more qualification requirementsincluding a high credit score and income level.Late payments may have stricter penalties on a charge card. Youmay receive a late fee, charge restrictions, or card cancellationdepending on your card agreement.Charge Credit Cards
Lifetime free Credit CardsLifetime free credit cards come to you absolutely free with noannual fee. Free for life credit cards may require a minimumspend per year in order provide the card free of cost. Pleaserefer to the terms and conditions of these offers with therespective banks. Compare, Choose and Apply for yourLifetime Free Credit Card.
Business credit cards are designed specifically for business use.They provide business owners with an easy method of keepingbusiness and personal transactions separate. There are standardbusiness credit and charge cards available.Business Credit Cards
Secured credit cards are an option for those without acredit history or those with blemished credit. Securedcards require a security deposit to be placed on the card.The credit limit on a secured credit card is equal to theamount of the deposit made. Secured credit cards haverevolving balances depending on the purchases andpayments made.Secured Credit Cards
Limited purpose credit cards can only be used atspecific locations. Limited purpose cards are used likecredit cards with a minimum payment and financecharge. Store credit cards and gas credit cards areexamples of limited purpose credit cards.Limited Purpose Cards