Paypal is a leader in card related acceptance system…..They have recently launched a device that can be attached to mobile phone and you can do card transactions….Just similar to what Square is offering….difference is that while Paypal device is blue in color and triangle in shape, square is white in color and square in shape. You can get more details of this device of Paypal from following link:
Square was started in 2009 by Twitter founder Jack Dorsey and it is currently the mobile payments market leader. Square’s card reader, which is square and white in color, attaches to the top of iPhones and other mobile devices. It has been a hit among small merchants in US such as cab drivers.
Visa Inc bought a stake in Square last year. Apart from Sqaure, other solutions offered in the market are Intuit GoPayment and PAYware Mobile. All these solutions are coming from experienced entrepreneurs and seasoned payment veterans, and each offers a slight variation on the same idea that you can accept payments from anyone, everywhere
More details on Square, Intuit GoPayment and PAYware Mobile can be had from the following link:
This technology change has brought wholesome changes in card acceptance devices. Now any merchants can afford to have card acceptance system without feeling the burden of high rentals and service charges. All the new devices has made it easy and affordable for small businesses, professionals, seasonal merchants & tradespeople to accept major credit cards.
Another good article on the subject matter can be found here:
Sometimes back, one of the visitors of this blog asked me a question on credit worthiness. I present her question as it is here:
“I just need to develop good credit, what do you suggest?”
While, I was not able to reply immediately to this visitor- due to explanatory nature of this topic, I had decided that I will have to cover this topic very soon. Though, after many months I have started writing again, the following post will cover important guidelines to increase credit score in your life.
The Credit scoring is dependent on various parameters and these parameters vary from bank to bank. Generally banks do not disclose their method of scoring and keep this confidential. Based on my experience of financial industry, I present the following parameters, which are considered by banks to decide credit worthiness of applicants:
Education level of the applicant
Annual Income including income from other sources
Marital status – married / divorced / separated / single
Number of dependents
Residence type – owned or rented
Vehicles ownership – two and four wheeler
Ownership of consumer durables like fridge, washing machine, PC, laptop etc
Type of employment – part time / full time / private / government etc
Area of Residence (locality)
Duration of professional life and duration of current employment
Details of other credit cards ownership
Status of other loans and liabilities
Fixed assets including life insurance policy, fixed deposits
The above list is for illustration purpose only, but banks are not limited to only these parameters. You will be surprised to know that most of the banks do not prefer to give loans to lawyers, policemen and politicians – and this aspect has been contested many times.
All above parameters are not given equal weightage. While some may carry 10 points other could have only 5 points or even 2 points. Most of the banks maintain “automated” system and the data entry operator enters parameter details as per application record. System then calculates final score and data created is further analysed and evaluated by the Processing Manager.
The automated system only provides a guiding platform for the user. The score generated by the system is not final and it can be overruled by the Processing Manager. A Bank can have following policy for application scrutiny:
Scoring pattern(Total 100)
Result
55 and above
Pass for processing
Between 45 and 55
Re-evaluate
Less than 45
Reject
The credit score system is in fact a continuous evaluation system for the users. For example, if manager thinks that a certain category of applicants who are thought to be creditworthy are defaulting, then Bank can change parameter to exclude those people from getting credit card. Vice-versa, if certain good applicants are not getting cards due to parameters settings, the scoring pattern could be rechecked again.
So my suggestion is that “You can also score good credit, provided you have filled all major details in your application inclusive but not limited to above parameters”. Remember, a good credit card holder will always score good credit at the time of application.
Almost all the active card users must have undergone through the distress of losing the credit cards and looking for the ways to immediately block the cards to stop card misuse. During my professional experience in the card industry, I have found that most of the transactions take place within two hours after losing the card and in most of these cases; cardholder are not even aware that he has actually lost the card. Situation becomes more serious, if the customer is not having card number and Bank’s customer care number to report the incident to Bank.
I have also gone through similar situation. However, I managed to block all my lost cards within 15 minutes of the incident. This had happened overseas and luckily, I was carrying details of all my card numbers and customer care number with me. Here are some precautionary measures you can take to safeguard your card from unauthorised transactions.
♦ Never leave your cards unattended. You should always know the whereabouts of your card and keep checking the physical presence of card regularly.
♦ It is not wise to carry all the cards in your wallet when going out. Some cards, which you do not use regularly, can be kept in your locker at home.
♦ Do not keep cards in your shirt pocket. It can easily slip out when you bend to do something.
♦ Take photocopy of all your cards’ front image on one single sheet and then write Bank’s customer care number besides them. This could be very useful when you lose your card.
♦ If you have not registered your mobile number for transaction alerts, my suggestion is that, do it now. The alert messages can be very helpful to prevent unauthorized transactions.
♦ Same suggestion I will give for registering your email Id for transaction alerts. And these alerts are not going to cost you anything – this service is offered free by Banks.
♦ Regularly check card’s billing statement as distant possibility is that you may receive some transactions even if card is always in your possession.
Now, following are for your immediate actions, when you have noticed that you have lost your card.
If you have kept details of your lost cards with you:
♦ Do not panic as this is the time for some real actions.
♦ Take out information of your card(account) number and call Bank’s customer care number and give them following details to block the card:
1. Card number.
2. The date on which you have lost your card.
3. The last transaction date you remember with amount.
♦ After reporting through phone, write a letter to your Bank giving all the details of your lost card and take acknowledgement of the letter for your record.
♦ Report your card lost incident to police and give copy of FIR to your Bank also.
If you do not have details of your lost cards:
♦ Check Bank’s website and find out customer care number. You may also call your branch manager to ask for customer care number.
♦ Call Bank’s customer care number and give them your name to find out your card details.
♦ Customer care executive will ask you some questions to verify your identity.
♦ Ensure to report the matter to police and also send a copy of FIR to Bank with your letter.
♦ Also, unless you recover your lost credit card from some trustworthy locations like home or office, it is always advisable to get the card replaced by your Bank.
Remember, it is you, who is in control of all your financial transactions. And why you will allow a situation where all your financial planning goes haywire only because you did not take action on time?
Most of the credit cardholders think that credit cards are to be used only when someone do not have enough cash in hand. This concept generally comes from the fact that most of the card issuers advertise it as easy money for the customer to meet their desired expenses. Card issuer comes up with the catchy slogans like…
A. If you have cash, use debit card. If you do not have cash, use credit card.
B. Fulfil all your dreams today, buy a XYZ bank Credit card.
C. No Money, No Problem. Avail our credit card facility today.
D. Buy today and pay in 12 easy interest free instalments using XYZ Bank Credit card.
E. Now you can own anything, any time, anywhere……etc
Now let us analyse above catchy punch lines one by one.
In the first advertisement, the issuer is saying that credit card is the answer of shortage of cash as if that customer should not worry about paying back the used amount. But in fact, it is not advisable for the customer to use the credit card for non-emergency related expenses. Also, the customer is advised to use the credit card only when he is having enough float money at the time of billing to pay back the entire billed amount to the Bank.
In the second advertisement, Bank is advising the customer that even if you do not have your own cash with you, purchasing should not be stopped. The third advertisement also has the similar type of message for the customer. Both the slogan encourages the customer to think about today and forget about tomorrow(future). Where as in real life, no wise person will be going to an extent, where he will be buying TV, fridge, washing machine etc using a credit card knowing very well that he do not have enough liquidity to pay back the amount to the Bank after he is billed for the same.
In the fourth advertisement, the Bank tells the customer to accept the offer of purchasing a certain item from a shop and pay the amount in instalments. Well, this arrangement generally comes from the Bank to sell its own credit card. Here, the Bank has a tie-up with the merchant under which both are having a win-win situation. Merchant gets the promotion of their merchandise as well as new customer and the Bank, on the other hand, sells its credit card and gets a new customer.
In the fifth advertisement, the Bank is misleading the customer with the catchy slogan that he can own anything in the World. The cardholder has to just use the card to a certain extent and he will receive bill for payment on monthly basis. Now, here the bill always comes with some interest amount along with administrative fee added to it. That means you have to pay for the item along with interest and other fee. So, even though the consumer is not having the purchasing power, Bank is trapping the consumer to pay for the interest and administrative fee.
My prey to the readers is not to fall for these types of misleading advertisement traps. You will do a favour to yourself and your family by not taking up these offers. These offers are very dangerous and will act against the financial well being of your life.
Use Credit card wisely. Never ever cross the limit of your purchasing power. If you are having a good paying capacity, you can always spend using a credit card on regular basis. But remember to pay back the entire used amount on the first billing itself and do not allow the Bank to revolve the billed amount.
Besides a blogger, I am also a credit card holder. At present I am having 3 credit cards(and not 10 as I usually find with most of my friends) and I use all the cards on regular basis. Here are my pledges , which I had taken long back as a credit card holder and now being shared with you. Till sometimes back, all these pledges were in my mind and I was following these in totality in my life. For the first time it is being written here to share with my readers. I hope you will find it good enough to adopt in your life also.
Now, here I present all the pledges for you…
@ I will use my credit cards only as an electronic mode of purchasing just as I use cash for purchasing items from the market.
@ In any case, if there is shortage of cash with me, I will not use credit card to purchase those items which are avoidable in my life.
@ I will limit the total number of credit cards to maximum three, so that I can easily keep tracks of monthly bills and timely payment.
@ I will use my card only when I am sure that I have sufficient means to pay back the utilised credit limit to the Bank in the very next month without carrying over any part of the billed amount to the next month.
@ I will use the credit card for cash withdrawals only in the state of emergency and only in that case when I realise that there is acute shortage of cash in hand to meet the requirement. (e.g. urgent medical attention for my family members and cannot go to banks for cash withdrawal).
@ I will keep a track of all my expenses and will always follow the bills for the Bank. If for any reason, I do not receive bills on time, I will give a call to the Bank to find out the outstanding amount to ensure that I make the payment before due date.
@ I will keep following record of the cards at a different place to help me to refer the same in case the card is lost. These details are customer care numbers, card number, Name on card, Bank name and card expiry date.
@ I will make sure that cards are used online only on those sites, which are secured, certified and recommended by the card issuer.
@ I will also ensure that the merchant always initiates the card transaction in front of me and in any case I will not allow him to take the card at the back of the counter.
@ I will not use the cards to make transactions for entertainment, party, casino, pub, disco and other means of enjoyment because all these are avoidable in my life.
@ I will not rush to any credit card offers by any Bank unless I find out that the offer is going to benefit me in the longer run and is better than the cards I am already having.
@ As a proof of identity, I will not give photocopy of my card to anybody; neither will I allow the Banks to get the details of my card to find out my credit worthiness.
@ I will ensure that my credit rating history should always remain excellent with the Credit bureau agencies and the Bank.
@ In case of renewal, if the PIN or cards are delivered to me, I will ensure that envelopes are always received in sealed conditions by me. In case of tampered envelopes, I will refuse to accept the card.
@ I will also see that the Banks do not get undue advantage from me by way of adding new charges to my account or by increasing credit limit or interest charges without prior consent from me.
@ I will also ensure that the Bank always maintain up-to-date information about me to fulfil their KYC requirements. In case of any changes in my personal details such as phone number or address, I will immediately inform my Bank.
@ In case of dispute of any transaction, I will immediately write to the Bank with all the details of the transaction. I shall be maintaining copy of all such correspondence with the Bank.
Believe me; I am enjoying the possession of all the three cards because of the above pledges taken by me long back. And all above pledges are easy to do and very simple to track, you have to just stick to basics and exercise the rights of a credit card holder. You will not be required to approach any consumer forum, Banking ombudsmen or the civil courts to resolve your disputes with the Bank.
One of my friends went to purchase some merchandise from a shop and he used his credit card to make payment. But the following month, when he received his credit card bill, he found that apart from one transaction which he did in that shop, he had one more transaction from the same merchant with equivalent amount. He came to me for an advice. I told him to raise this dispute with his card issuing bank and keep an acknowledged copy of his letter received by the Bank. On his written request, his bank returned the second transaction to the merchant’s bank and in the next month’s billing, he received the credit against the disputed transaction. In eBanking terminology, such transactions are called double swipe transaction or back-to-back transaction.
So, the same next time when you go to any shop to do a card transaction, be vigilant that the merchant is not using your card to make extra bucks from you. In an obvious case of fraud, some merchant quest for such type of extra earning especially with ignorant or non-regular customers. These merchants believe that these customers will not raise dispute for the transaction. Also, if you approach them later, they will give excuses like, this might be due to machine fault or something.
While these incidents are not very common, all possible precautions must be taken to protect yourself from such frauds.
Here are some of the best approaches to be practised by the cardholders to mitigate the risk of possible frauds on the cards. Remember, here I am mentioning only those approaches, which can be the best practiced at the time of initiating a transaction on a Point of Sales (EDC terminal).
1) Make sure that you have given a signed credit card to merchant. If it is not signed earlier, sign at the back of the card before initiating transaction.
2) Allowing the transaction in your absence is like inviting trouble to be happen. Always tell the cashier to do the transaction in front of you.
3) Never ever allow the shopkeeper to take the cards to the back of the shop or some inside room to do the transaction. Remember, the Bank always insists shopkeeper to do the transaction in front of the customer.
4) Till that time, the terminal is showing “Wait….” ,“Connecting…” etc messages on its screen, the shopkeeper should not use your card to swipe again. This not only generates double transaction, but will also block your card account with that amount.
5) If the response is not being received by the terminal, it is better to tell the shopkeeper to cancel the previous transaction before trying again. It is not advisable to keep on trying several times if each time the issuer is not able to send response within timeout time.
6) Once the sales slip is printed, before signing on the slip, you have to check the following entries are printed correctly on the sales slip: Date and time of transaction, Item details(if any), amount of transaction and card number(generally masked and only part of the card number is visible).
7) Always ensure that you are signing “Merchant’s Copy” of the sales slip. Signing on the “Customer’s Copy” of the sales slip is not required, but the shopkeeper will give this copy to you along with invoice copy for your record.
8) The major Payment System like Visa and Mastercard does not allow the acquirer to print the complete card number and expiry details on the card. Before signing, ensure that the application has masked the card number on the merchant copy of the sales slip.
9) The printer generally uses thermal paper to print the transaction details. It is advisable to take a photo copy of the sales slip and keep the same at a safe place for future reference or checking with your billed amount.
10) I had observed that some people are hiding the three digits CVV or CVC number at the back of the card using a marker. I do not see any problem in doing so, as this will prevent the merchant to note down your CVV/CVC. But you should memorize this number if you want to do online transactions.
Remember, it is the cardholder who is going to stop fraud at the point of origin and help the system. Your little attentiveness at the time of card transaction is going to save you from various pain afterwards.
More on best approaches very soon on this blog. I hope you will send your comment to me about this post.
Credit Card transactions can be returned to the merchant’s bank through a process called chargeback. Chargeback is a post-transaction process where the issuer of credit card charges a portion or entire amount of the disputed transaction to the merchant’s bank(acquirer) when cardholder raises dispute with his bank.
A chargeback can occur for a number of different reasons. Some of the more popular reasons used by the issuer bank are as under:
unauthorised transaction – where no card was present or the cardholder’s permission was not granted;
non – receipt of documents requested – where the merchant’s bank does not supply required information pertaining to the disputed transaction;
goods not received – informed by the cardholder with details;
cancellation of recurring transaction – where a merchant ignores a request from the cardholder to cancel a recurring transaction;
another payment method used – effectively paying for the goods or service twice;
services not rendered – merchant unable to provide agreed goods or services.
It should be noted here that whenever a chargeback is initiated by the issuer bank, acquirer bank’s account is debited by the payment settlement system(e.g. Visa and Master card settlement system) with the transaction amount. This debit remains with the acquirer bank incurring loss to them till the time they represent the case to the issuer bank or if the mistake is found to be at merchant’s end – the acquirer bank recover the transaction amount from the merchant.
So, next time as a cardholder, if you are not satisfied with the items you have purchased from a merchant, you simply have to write a dispute letter to your bank requesting them to chargeback the transaction. Always remember to provide full details of the transaction giving them the invoice copy, date of transaction, delivery details etc along with the reason why you want to dispute the transaction. Al those details which supports your claim would help the Bank to act on your behalf and give you the credit for the disputed amount.
Yesterday, I was reading an article, which had appeared under the category of credit card of personal finance blogging site. The blogger seems to be totally against credit card and its uses in the economy. He was giving his personal example that he had stopped using credit card since long and others should also follow him in restricting credit card usage. He seems to be giving advice that one should save more for rainy days than spending through credit card.
The blogger seems to have forgotten one thing that most of the credit card seekers generally come from that cross-section of society where they do not have sufficient income to meet essential expenses – even for buying monthly provisions. So they buy a credit card thinking that somehow their income is going to increase in near future and they will pay back the debt soon thereafter.
But eventually, they fall in the debt trap never to rise again. These customers had a short-sighted bigger size goal to meet routine expenses before him than a future goal of making a sound financial position for the family. Actually, Banks lure them with all falsified information about credit card benefits and projecting a rosy picture of life before them. Hardly anybody reads terms and conditions before applying for a credit card and some even do not look at the charges to be applied in the credit card account.
Yes, I agree that Credit card should be used for essential expenses only. But, why to limit card usage for emergency purpose only? Credit card has become an essential part of everyday’s life now. My wife makes purchase using credit/debit card depending upon the convenience of particular mode of electronic money. But we never pay interest and also earn bonus points against purchase. It is a very useful alternative of currency to buy online air-ticket & railway ticket. Apart from this, it can also be used to make purchase of certain other goods, which is not generally available in neighbourhood shops. I do not remember, when did I last visit to get the reservation of railway journey done by standing in front of reservation counter? I had also never imagined the kind of discount (30 – 50%), I am getting while buy books online from e-commerce site. And isn’t it very convenient in paying admission to a foreign university using a credit card?
Certainly, life has become easier in this era of different modes of electronic channels. Why not to enjoy this life?
The blogger, instead of writing not to buy a credit card, should have advised the visitors to use credit card wisely, pay dues on time, follow transactions and usage pattern to limit expenses etc. Credit card is not an alternate source of income but it is an alternate spending medium. It replaces cash in daily life with a powerful and convenient medium of e-transaction. The Credit card can be beneficial for the holders in the following way:
• Maintain all your purchase records at one place so that you can track it later.
• Easy to maintain as e-purse and has unlimited purchase power based on credit limit.
• Can be used as a means to make good credit history by paying the dues on time.
• Insurance and other purchase protection that comes generally free with the card.
• Very good to meet your emergency expenses, saves time in arranging for cash.
• Home shopping made easy – a very good medium to buy e-commerce related products.
• Travelling made easy – booking online ticket, hotel booking, car rentals, safari etc.
So maintain a discipline in your life by using a credit card judiciously and paying all your dues on time.
In more than 20 years of years of my professional experience in card operations, Systems and maintenance, I had observed and closely followed usage patterns of many credit cardholders. A sizeable number of these cardholders’ always do their first few transactions to withdraw cash from ATM and in the process drain cash limit within month. These credit cardholders treat their card as source of income rather than a spending medium.
The Card BI reports tells us that more than 50% of these customers never turned up to pay back the dues forcing the Bank to close the card account and initiate recovery proceedings. When this outstanding remains unpaid for more than a year, the total outstanding along with interest and other charges applied reaches beyond the paying capacity of customer. The court matters and litigation proceedings then make the life of customers miserable and a cause for social stigma also.
Here I present the 5 top reasons why the customer should not use credit card to withdraw cash:
1) Interest rate on the withdrawal of cash from the credit card account is very high and in some cases these interest rate reaches up to 50% APR if remain unpaid. The interest component starts applying from the very first date on which the cash was withdrawn and there is no waiver of interest till the first due date of the payment.
2) The service charge on cash withdrawal is also very high and is applied along with theprincipal amount in first billing itself. As per the policy of most of the Banks, rate of interest applied on cash is higher than normal unpaid purchase transactions.
3) Any dispute on cash transaction is not admissible by the Bank as these transactions are always supported by the PIN supplied with the card. Hence no chance of getting the transactions disputed with the Bank.
4) Any single default in payment will prompt the Bank to send your payment default details to Credit rating agency thus making your life more difficult in all future loans.
5) Making partial payment is never advisable for cash transactions because, if you select to make payment of minimum amount due every month, you will end up by paying more than 10 times of original amount.
So when to use card for cash?
You should use the credit card to withdraw cash only when you are in emergency and do not have liquidity to meet you emergency expenses. Make a habit to pay back the entire outstanding amount immediately after the first billing giving no chance to the Bank to earn extra bucks from you.
For those cardholders who do not want to use their card to withdraw Cash, they can tell the Bank to deactivate this facility. Most of the Banks provide this facility free of cost and there is no point why you should not use this facility for your financial well-being. Once the Bank notifies you that cash withdrawal has been deactivated in your card, maintain a record of this communication in your file till the life of the card.
Use your credit card wisely to make your life convenient. But do not become total dependent on these cards to make your life miserable.
The information contained in mycardclub.com is for general information purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.
By reading this blog you acknowledge full responsibility for your actions with respect to any loss or damage caused or alleged to be caused directly or indirectly in connection with the blog.
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