The credit card business of India is booming with just over 24
million credit cards in circulation.
They are still not accepted with only about 28% of the Indian
population possessing one.
But even so between 2008 and 2009 the incidence of nonpayment
on those India credit cards rose via 20%.
Most likely just being aware of a few accepted mistakes would
lower this incidence by a considerable amount.
This process involves the following parties:
Cardholder: the owner of the card used to make a purchase
Merchant: the business accepting credit card payments for
products or services sold to the cardholder
Acquirer: the financial institution or other organization that
provides card processing services to the merchant
Card association: a network such as
VISA®, MasterCard®, Discover® (and others) that acts as
a gateway between the acquirer and issuer for authorizing
and funding transactions
Issuer: the financial institution or other organization that
issued the credit card to the cardholder
The flow of information and money between these parties—
always through the card associations—is known as the
interchange, and it consists of a few steps:
The cardholder pays for the purchase and the merchant submits
the transaction to the acquirer. The acquirer verifies with the
issuer—almost instantly—that the card number and transaction
amount are both valid, and then processes the transaction for the
After the transaction is authorized it is then stored in a batch,
which the merchant sends to the acquirer later to receive
payment (usually at the end of the day).
The entire process, from authorization to funding, usually takes about 3
days. However, Bank of America Merchant Services offers next-day
deposits to customers with a Bank of America business checking
2.Clearing and settlement
The acquirer sends the transactions in the batch through the card
association, which debits the issuers for payment and credits the
acquirer. In effect, the issuers pay the acquirer for the transactions.
Once the acquirer has been paid, the merchant receives payment.
The amount the merchant receives is equal to the transaction
amount minus the discount rate, which is the fee the merchant pays
the acquirer for processing the transaction.
How card processing benefits your business
Regardless of your business's size or industry, there are many
benefits in having the ability to process credit card transactions.
By accepting multiple forms of payment, you give your customers
options and improve their experiences. You also introduce a new
audience of customers to grow your business organically.
In addition, card processing is an efficient, convenient payment
solution 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 increasing
your revenue. Check protection services can help you limit your
risk from bad checks.
1. Merchant calculates the amount of purchase and asks buyer for
2. Buyer presents merchant with a credit card.
3. Merchant runs credit card through the point of sale unit. The
amount of the sale is either hand-entered or transmitted by the cash
4. Merchant transmits the credit card data and sales amount with a
request for authorization of the sale to their acquiring bank.
5. Point of sale units are usually set to request authorization at the
time of sale, and then actually capture the sales draft at a later time.
6. The acquiring bank that processes the transaction, routes the
authorization request to the card-issuing bank. The credit card
number identifies type of card, issuing bank, and the cardholder's
7. If the cardholder has enough credit in their account to cover the
sale, the issuing bank authorizes the transaction and generates an
authorization code. This code is sent back to the acquiring bank.
8. The issuing bank puts a hold on the cardholder's account for the
amount of the sale. Note that the cardholder's account has not been
actually charged yet
9. At a later time, probably that night when the store is closing up, the
merchant reviews all the authorizations stored in the point of sale unit
against the signed sales drafts. When all the credit card authorizations
have been verified to match the actual sales drafts, the merchant will
capture, or transmit, the data on each authorized credit card transaction to
the acquiring bank for deposit. This is in lieu of depositing the actual
signed paper drafts the with the bank.
10. The acquiring bank performs what is called an interchange for each
sales draft, with the appropriate card-issuing bank. The card-issuing bank
transfers the amount of the sales draft, minus an interchange fee to the
acquiring bank [Baughn, 88] .
11. The acquiring bank then deposits the amount of the all the sales
drafts submitted by the merchant, less a discount fee, into the merchant's
Cash back offers are a type of rewards program where the
cardholder receives a cash rebate equal to a specified percentage of
the amount charged to the card on an annual basis.
Cash back reward programs started appearing in 1990 when the
Discover Card made their industry-shattering 1% cash back offer.
Cash back programs typically come with higher interest rates than
cards that do not offer a cash back incentive. If the cardholder does
not pay their balance in full every month, that higher interest rate
can offset the value of the cash back incentive.
Cash Back Credit Cards
Premium Credit Cards
These cards offer incentives and benefits beyond that of a
regular credit card. Examples of premium credit cards are
Gold and Platinum cards that offer cash back, reward
points, travel upgrades, and other rewards to cardholders.
Premium cards can have higher fees and usually have
minimum income and credit score requirements.
Both standard credit cards and premium credit cards have
specific types of credit cards. Student credit cards, zero
percent interest cards, and travel cards are just a few types
There are 25 major airline credit cards available in India. These cards provide a
number of travel related benefits to cardholders.
Diners Club British Airways Credit Card
Following are some interesting facts about Diners Club British Airways Credit
* First year is free.
* Renewal fee is INR 3000.
* Cardholders can earn 2.5 BA miles. This offer is applicable for every INR
100 spent by cardholders with the card.
* Regular interest rate is 2.75% per month.
* Cardholders get access to international standard business centers and
Airline Credit Card
* Cash advance fee is 3% per month. Minimum cash advance
fee is INR 100.
* Cardholders receive priority booking facilities in busy
flights. 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 charge
card, the balance must be paid in full at the end of each month.
Charge cards typically do not have a finance charge or minimum
payment since the balance is to be paid in full. Some charge cards
don't have a preset spending limit, giving you the flexibility to
charge as much as you want as long as you repay the balance by the
Charge cards typically have more qualification requirements
including a high credit score and income level.
Late payments may have stricter penalties on a charge card. You
may receive a late fee, charge restrictions, or card cancellation
depending on your card agreement.
Charge Credit Cards
Lifetime free Credit Cards
Lifetime free credit cards come to you absolutely free with no
annual fee. Free for life credit cards may require a minimum
spend per year in order provide the card free of cost. Please
refer to the terms and conditions of these offers with the
respective banks. Compare, Choose and Apply for your
Lifetime Free Credit Card.
Business credit cards are designed specifically for business use.
They provide business owners with an easy method of keeping
business and personal transactions separate. There are standard
business credit and charge cards available.
Business Credit Cards
Secured credit cards are an option for those without a
credit history or those with blemished credit. Secured
cards require a security deposit to be placed on the card.
The credit limit on a secured credit card is equal to the
amount of the deposit made. Secured credit cards have
revolving balances depending on the purchases and
Secured Credit Cards
Limited purpose credit cards can only be used at
specific locations. Limited purpose cards are used like
credit cards with a minimum payment and finance
charge. Store credit cards and gas credit cards are
examples of limited purpose credit cards.
Limited Purpose Cards
10th Floor, Plot G1,
Block EP & GP,
Sector V, Salt-Lake,
Kolkata – 700091.
Next to Chincholi Fire
(West), Mumbai – 400