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October 26, 2016

Banking Awareness 2016 in Simple Language - Lesson 15

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Dear Gr8 Ambitionists, in our previous Banking Awareness 2016 Lesson 14, we have learnt about the Cheque and Demand Draft. In today's lesson, we shall learn about the Plastic Money. Happy Reading :) 

What is Plastic Money ?
Plastic money is a term to refer the hard plastic cards we use every day in place of actual bank notes. 
  • They can come in many different forms such as cash cards, credit cards, debit cards etc. Now let's have a look at the types of cards.

Banking Awareness 2016 : Types of Card

There are three types of cards : 
  1. Debit card
  2. Credit card 
  3. Prepaid card 

Debit Card  

It is also called bank card. Debit cards are used to withdraw cash from an ATM, purchase of goods & services at point of sale (POS)/E-Commerce (online purchase) both domestically and internationally. However, it can be used only for domestic fund transfer from one person to another.

Credit Card  

A credit card is a payment card issued to users (Cardholders) as a method of payment. It allows the cardholder to pay for goods and services based on the holders promise to pay for them. The issuer of the card (usually a bank) grants a line of credit to the cardholder from which the cardholder can borrow money for payment to a merchant or as a cash advance.
Important Note : 1st credit card was issued by "National Bank of Brooklyn in New York in 1946".

Types of Credit Card : 
  • Business Credit Card : This is specialized credit cards issued in the name of a registered business and typically they can only be used for business purpose. 
  • Secured Credit Card : This is a type of credit card secured by a deposit account owned by the card-holder.

Prepaid Card

A prepaid card is a payment card that is loaded with money by anyone. A prepaid card looks just like any normal credit card or debit card, with a card number, signature strip and company branding. As per RBI instructions, the maximum value can be stored in any prepaid card (issued by banks and authorised non-bank entities) at any point of time is Rs. 50,000.

ATM Card

An ATM card is any payment card issued by a financial institution that enables a customer to access an Automated Teller Machine (ATM) in order to perform transactions such as deposits, cash withdrawals, obtaining account information, mini statement, amount transfer etc. ATM cards are known by a variety of names such as bank card, MAC (money access card), client card, key card or cash card. Most payment cards such as debit and credit cards can also function as ATM cards, although ATM only cards are also available.
Important Note : The first ATM cards were issued in 1967 and 1969 by respectively Barclays in London and Chemical Bank in Long Island, New York. 

WLA (White Label ATM)

White label ATM doesn't have such Bank Logo, hence called White Label ATMs. RBI has given license/permission to non-bank entities to open such ATMs. Any non-bank entity with a minimum net worth of Rs 100 crore, can apply for white label ATM's. FDI under the automatic route, for white label ATM — 100%. 
  • TATA communication payment solutions limited : The first company to get RBIs permission to open white label ATMs. They started their chain under brandname "Indicash".
Facilities :
  1. Any customer from belonging to any bank, can use it. 
  2. Every month 5 transactions are free. 
  3. Value added services like mobile recharge, utility bill payment etc. 
  4. Open 24 x 7 and on Holidays. 
  5. Users can also withdraw a maximum of Rs. 10,000 per transaction. 

BLA (Brown Label ATM)

Brown Label ATM are those automated teller machines where hardware & the lease of the ATM machine is owned by a service provider, but cash management and connectivity to banking network is provided by a sponsor bank whose brand is used on the ATM.

Complaint of ATM transaction
  • The RBI has reduced the time that banks take to resolve customer's complaints regarding ATM transactions to 7 working days from 12 working days
  • Banks, which fail to resolve complaints within 7 working days, will have to pay Rs. 100 per day as compensation
  • Five free transactions (Financial- cash withdrawal & Non-Financial-Balance Inquiry etc) per month are allowed for saving account holders in other Bank ATMs and max 3 transactions are allowed in 6 metro cities (Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, New Delhi) in other banks ATM. The customer should lodge a complaint with the card issuing bank at the earliest (in case of failed ATM transactions where his account is debited). This process is applicable even if the transaction was carried out at another bank's ATM. 
  • However it must be noted that if the complaint is not lodged within 30 days of transaction, the customer will not be entitled to any compensation for the delay in resolving his/her complaint. 
MAESTRO Card

Maestro is a multi-national debit card services owned by Master Card that was founded in 1992. Maestro cards are obtained from associate banks & can be linked to the card holder's current account, or they can be prepaid cards.
Headquarter : Purchase, New York, USA.

MASTER Card

Master card was converted from a privately held company to a public company on 25 May, 2006. Master card is a American Multinational Financial Services Corporation.
Headquarter : Purchase, New York, USA.

VISA Card

Visa Inc. is an American Multinational Financial Services Corporation. It facilitates electronic fund transfers throughout the world, most commonly through Visa branded credit cards and debit cards. Headquarter : Foster city, California, USA.

Rupay

Rupay is combination of two words — Rupee & Payment. Rupay is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India (NPCI). Rupay facilitates electronic payment at all Indian banks & financial institutions and competes with Master Card & VISA card in India. NPCI entered into a strategic partnership with Discover Financial Services (DFS) for Rupay Card, enabling the acceptance of Rupay Global Cards on Discover's global payment network outside of India.
  • Discover finance is the 3rd largest credit card brand in USA . 
  • Rupay was renamed after India Pay scheme. 
  • Rupay card was launched on 26 March 2012.
  • On 8 May 2014, Rupay has been dedicated to India by president of India, Pranab Mukherjee at Rashtrapati Bhawan, New Delhi. 
  • Dombivall Nagrik Sahaltari Bank (DNSB) became first ever scheduled urban co-operation hank in India to introduce Rupay Debit cards to its customers. 
That's all for now friends. In our next lesson we shall learn about the Currency. Happy Reading :)
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