In today’s fiercely competitive environment, technology is an unavoidable instrument. Today’s banking industry operates in a highly liberalised, competitive, privatised, and globalised environment.
Banks must employ information technology to offer traditional and additional financial services on a digital platform in order to survive in this market. The term “plastic money” refers to the hard plastic cards that bank customers use daily in place of actual banknotes.
Banks believe it would be advantageous to enter this industry given the growing economic and financial liberalisation. A new and more convenient way to pay for products and services is with plastic money, often known as polymer money.
In the 1900s, plastic money was made available worldwide. It lessens the danger of handling a significant sum of cash. It includes ATM cards, prepaid cards, transit cards, commercial cards, add-on cards, and debit, credit, and charge cards.
The convenience and security that plastic money offers are its key benefits. The plastic money industry is simply the best result of technology in the financial industry, and people are becoming more and more dependent on it.
An Overview of Plastic Money
When the first credit card was released in the USA in the 1920s, plastic money was invented. In the USA, Diners Club and American Express introduced the first plastic card ever in 1950.
The Diners Club unveiled the first credit card in 1951. Only after 1970 did plastic cards with magnetic strips become widely utilised. Plastic cards gained popularity in the late 1990s, and by 2001, plastic money had established itself as a crucial type of “ready money.”
Indian plastic money
Banks in India aggressively introduced plastic money in the form of cards during the 1990s. When it was first released, it was not well-liked by Indian customers.
Consumer preferences have changed in line with changes in consumer demographic characteristics such as income, marital status, education level, etc. as well as developments in technology and consumer awareness.
Their perspective and choice regarding the acceptance or rejection of various goods and services on the market have also been altered by these shifting tastes. Plastic cards are becoming more and more accepted in the marketplace and among bankers and clients.
The advantages and disadvantages of plastic money in India are the main topics of this essay. Credit cards, debit cards, ATM cards, smart cards, co-branded cards, add-on cards, etc., are all common types of cards. Cards such as credit and debit cards are widely used for electronic money.
Charge Card
A credit card enables the cardholder to charge purchases to a line of credit that has been authorised by the bank or organisation that issued the card. The card issuer often permits the cardholder to make a full or partial repayment of the used amount (minimum monthly payback).
The card can be used at points of sale in retail establishments to pay for goods and services. The card can also be used for e-commerce and online shopping.
In the 1980s, Citibank and HSBC were the market leaders for credit cards in India. Banks in India issued credit cards with a volume and value of 17724 lakh and Rs. 607881 crore, respectively, as of March 2019.
Cash Card
Using an ATM, a debit card user can make cash withdrawals straight from the customer’s bank account. Additionally, it makes it easier for users to pay for products and services by swiping their cards at point of sale (POS) terminals at retail outlets.
The same card may also be used for e-commerce and online purchasing. In India, the debit card market is doing well. Debit cards have quickly gained popularity and consumer acceptance since their introduction in the mid-1990s.
This debit card has credit and interest components attached to it, which is the main factor contributing to its popularity since there is no monthly card payment.
Debit cards issued by Indian banks totaled 142739 lakh as of March 2019 and were valued at Rs. 3904264 crore.
Bank Card
These cards are frequently used at ATMs to make deposits, fund transfers, and withdrawals.
ATM cards are used by inserting the card into the machine and, for security reasons, entering a PIN or personal number. Before allowing every transaction, the system verifies if the account has enough money in it.
Credit Card
All credit card functions are available on this card. At the conclusion of each billing cycle, a charge card enables the user to pay the entire balance of the account. If the payment is missed, there will be steep late fees to pay.
Card Smart
A smart card uses an electronic chip to hold money. It is typically employed to cover the cost of little goods like tea or bus fares. No identification, signature, or payment authorisation is required for this card.
The smart card is read by the payment devices, which subtract the precise amount of the purchase. Only really developed nations like the US use it.
Card With Two Brands
Co-branded credit cards provide the client special advantages when they shop at numerous locations. They are distributed by card firms that have partnerships with well-known brands. With this kind of card, customers can accumulate reward points to purchase more and receive discounts.
Extra Card
A second credit card that falls under the overall credit limit is known as an add-on card. These are issued in the names of family members, such as parents, spouses, siblings, and all children who are at least 18 years old.
The add-on card’s purchase information is reflected in the primary billing statement. In India, this card is quickly becoming a practical means of payment.
