Friday, November 30, 2007

Loss of plastic money—credit and debit cards—can lead to huge monetary setbacks

Plastic money, debit and credit cards are taking place of cash in your wallets. There are two main reasons for this firstly as cash earns interest in the bank so it would be right to keep it there as long as possible. Secondly, cards are safe to carry than cash, in case you lose a card you will be limited to pay the replacing cost of the card. But are the cards really safe?

When you lose cash the loss is limited to the amount you were having in the wallet. But when you lose your plastic card and do not report about the loss immediately then there could be a great loss. When you report the loss immediately, the transaction would be blocked and the loss will be zero. Always remember to keep your card’s 24-hour helpline number with you. Ravi Shankar, head of direct banking at YES BANK, says cards have a loss protection policy cover. “Under this, if the card is lost and misused, the liability shifts from the customer to the bank, usually after the customer informs the bank.”

If your loss of card goes ignored and, hence, unreported, and goes into wrong hands then there are chances of misuse of your card. In that case you could end up taking a much bigger hit than if you used cash. For instance, your credit card can be used to buy merchandise up to your credit limit, or whatever part of it is available. Your debit card can be used similarly till cash in your account runs out, inclusive of overdraft. In case you have not reported loss of your card, it is up to you to prove that your card details were being misused. Yogesh Sangle, head, marketing (cards), Barclays Bank, “Any misuse or loss before the customer informs the bank is taken on a case-to-case basis.” Barclays Bank launched its credit card in India recently. This kind of loss is not a possible in case of cash.

At times people write their ATM Pin number on the card so that it is easy to use. But if you lose your card then, it is unlikely that anyone will be able to withdraw cash using them.

Now see the other possibility, your credit card does not get stolen or misplaced, you are doing transaction on the internet with your card. The card has a number and a CVV number. The latter is usually embossed on the card, so you cannot even scrape it off. If someone notes the two numbers down, it will be possible to use your card, although not at a merchant location or ATM. The advantage in this case is that it may be possible to track down purchases since, in most cases; deliveries of goods will have to be made at some physical destination.

So, it is apparent that if used smartly, it is possible to limit the loss on plastic money, but not in the case of cash if it gets pick pocket. Then from both the cards which one is the best to choose in terms of safety?

Amuleek Bijral, country manager, RSA, a security solutions provider says, “The biggest disadvantage with the debit card is that it hits your own account directly.” So, till the money is restored back into your account, you may have a cash flow problem.

On the contrary to it, if any mala fide transaction on a credit card is done, it is possible to withhold payment. Another way of containing loss on a credit card, says Rohit Tripathy, director and founder-promoter of ControlCase, India’s first payment card industry (PCI) auditing certification company, “is through chargeback”. This is done globally, where banks reverse the entire transaction in case of theft. And it is the possessing bank—the one on whose terminal the card is swiped—that usually bears the liability. Check about the chargeback policy with the bank before taking the card. So, there is a chance opting for a credit over debit cards.

By the end of this year, all merchant establishments will have to conform to the standards for processing credit cards itemized by the Payment Card Industry Security Standards Council (PCI-SSC), a global body.

Try to be safe and smart enough while using your plastic cards to prevent misuse of card.

Wednesday, November 28, 2007

New credit scoring model by Cibil and TransUnion to assess your worth

A new credit scoring model was launched for individual borrowers by Credit Information Bureau of India (Cibil) and TransUnion. A new model will be help lenders in evaluating borrowers‘creditworthiness.

In the mean time, banking regulator the Reserve Bank of India (RBI) will soon be issuing rules which will make possible for co-operative banks to be members of CIBIL.

The new credit scoring model — Cibil TransUnion score — will foresee the possibility of a customer becoming a defaulter in more than 91 days on one or more lines of credit.

In starting the creditworthiness would be decided on products like credit cards, personal, home and auto loans. TransUnion has launched a similar model in four other countries — Hong Kong, Shanghai, Korea and South Africa.

Speaking at the press conference on the launch of the product, TransUnion vice-president for international solutions and operations Geoffrey Miller said, “The scoring model factors in the payments history, outstanding debt, credit account history, recent credit inquiries and the different types of credit the borrower has availed of.”

The model does not feature statistic information like the religion, place from where the loan was availed of, or the employment history like the type of job and the salary drawn by the borrower.

The criteria for rating the borrower under the new credit scoring model is an individual should have availed of at least one loan six months ago for Cibil. The range of the scoring starts from 300-900 points, where the 300 is for the worst-rated individual, while the best rates would be 900 points.

Cibil chairman V Santhanakrishnan pointed out that at initial stage only the schedule co-operative banks will be allowed to be members of Cibil, and later on, regional rural banks will be permitted to become the members of Cibil.

The list of CIBIL members include 77 banks, 32 NBFCs, six state financial corporations, 10 financial institutions and two credit card companies. On the peripheral, Mr Santhanakrishnan pointed out that co-operative banks would derive maximum benefits from Cibil since they have information of over 90 million individuals.

He said,“Similarly, insurance companies, telecom companies and credit rating agencies have shown interest in becoming member of Cibil. However, RBI will issue guidelines on this.” While speaking to at the press conference during the launch of the product, Mr Santhanakrishnan said that with the increase in available credit options, borrowers took advantage of the system by moving from one institution to another even though they had defaulted in earlier banking relationships.

Tuesday, November 27, 2007

Experience the luxury in three months complimentary trial period given by RBS Black Card

Premium credit card, RBS Black Card is giving a complimentary offer to its new customers. The customers will get a chance to experience all the luxury benefits of the product in a three month complimentary trial.

The RBS Black Card, supported by MasterCard Worldwide, is having a range of first-class services for its cardholders which include worldwide travel insurance for all the family and complimentary priority pass to over 500 international airport lounges.

In addition, to the above services there is a 24 hour, multi-lingual personal assistance service which can help you with any type of special arrangements: be it from reservations for the theatre; personalized party plans; bespoke travel plans to more day-to-day duties such as decorating and cleaning. In total, value of these combined services is over £1,000 annually.

Dennis Jones, Director of Personal Cards at RBS said: “We are so confident that the service provided to RBS Black cardholders is amongst the best offered by any premium card provider that we have decided to offer new customers the chance to experience these quality services free of charge for three months.”

Other benefits of the RBS Black Card include:

Worldwide usability through MasterCard
An automatic minimum credit limit of £15,000
Up to three additional cardholders free of charge
24-hour, multi-lingual, personal assistant service
Extensive travel insurance cover for you, partner and any dependent children
Enjoy access to over 500 executive airport lounges as a Priority Pass™ holder
Round-the-clock travel service to make all your travel arrangements for cardholder
24-hour home or roadside response cover for cardholder’s main car, be this in the UK or Europe
24-hour support service for emergencies involving plumbing, electrics, drains, windows and doors
Card protection for all credit cards – whether at home or overseas
Exclusive offers including RBS Black Card invite-only events throughout the year

After the three month trial, customers can select to sign-up for twelve months annual membership at £250. There is no compulsion to continue with this after completing the trial period.

To get an RBS Black Card, the applicant has to fulfill eligibility criteria. An applicant must have an income of £75,000 or more and be over the age of 25. Credit status is subject to terms and conditions of the card issuing company.

Monday, November 26, 2007

Credit card customer’s complaints increase in number- RBI gives indication

There has been increase in the number of complaints regarding banking services specially credit card. The maximum number of complaints relate to public sector banks (PSBs) even though they have a very small credit card base compared with their counterparts in private and foreign banks. One-fifth of the banking services-related complaints come from credit card customers.

Reserve Bank of India deputy governor Usha Thorat speaking at Bancon seminar gave this indication. The grievances on home loans related lacked the transparency in fixing and reset of interest rates. She said, “Customers of floating rate loans have complained about the spread that banks charge over the benchmark rate. Other issues include the process regarding resets of interest rates and changes in the interest rates.”

If we look at the figures PSBs, complaint per every 1,000 customers is 0.79. For foreign banks, the same stands at 0.26 and for private banks, it’s 0.20. Currently there are over 40 million credit card customers in the country and the industry is growing at 35-40% on a compounded annual growth rate for the past few years, of this from the private sector banks like ICICI Bank, HDFC Bank are among the biggest players. Other big players include SBI Cards — a joint venture between SBI and GE — and Citi.

With regards to the overall complaints, excluding credit cards, Ms Thorat said for every 1000 accounts, the maximum complaints are from customers of foreign banks at 0.61, 0.33 for new private banks, 0.07 for PSBs and 0.05 for old private banks. And the other complaints received by RBI include time taken for collection of outstation cheques, charges levied by the bank and entries not properly recorded.

Speaking at the seminar, Ms Thorat said till recently, in India customers were loyal to their banks, but slowly the change can be seen and the study by Mckinsey shows that the affluent are becoming shrewd. She added that the consumer market is growing like never before and because of financial inclusion, the growth in numbers would be such that which was never seen before.

“New generation private banks, which have got enhanced market share of the mass affluent and affluent customers, what is also being observed is that they have high negative moments of truth,” she said, indicating that customers may shift loyalties if they find the services not up to the mark.

New Credit Card rules for the Merchants set by PCI Standards

Christmas is coming start of holiday season! But no jingle bells or caroling choirs can be heard these days but the ka-ching of the cash register or say the hiss of swiped credit cards.

This year those happy holidays sounds have been dampened a bit for merchants because of ongoing security fears and a grinch as PCI SSC, or the Payment Card Industry Security Standards Council call it.

A November report by Pleasanton Calif.-based research firm Javelin Strategy & Research reveals that sixty- three percent of consumers believe merchants are the “weak link" when it comes to data security.

Retailers find themselves exposed to credit card fraud at numerous points along the payment chain: data thieves -- sometimes store employees -- cull data as shoppers swipe cards at the register, intercept it as it is being sent out for processing, or steal it straight out of storage files that may not be properly protected.

The PCI SSC is a quasi-independent group founded by the world's credit card networks -- American Express, Discover Financial Services, JCB, MasterCard Worldwide, and Visa International. The aim to form this group was to improve data security standards throughout the payments industry.

According to the group the merchants need to beef up security to avoid credit card fraud, but the Merchants say the council's demands are too high, and might not solve the problem anyway. A few small payments companies, including one in Delaware, have come forward to provide potential solutions they say will protect both merchants and customers.

PCI standards directive how everyone along the payment chain -- including merchants, processors and gateways, banks, card issuers, and credit card networks themselves -- should store, transmit and process sensitive credit card data.

PCI Standards the world’s credit card networks have directed the merchants that to keep their customers swiping, they should comply with PCI Standards.

The card networks have marked a deadline and have said they'll slap fees on any merchant that doesn't get into shape by deadline. Merchants that process more than 6 million credit card transactions per year were supposed to comply by Sept. 30 or face monthly fines of $5,000 to $25,000. The second tier of merchants, those that process between 1 million and 6 million transactions annually, are supposed to be compliant by Dec. 31.

The goal is to keep credit card data safe and avoid another TJX nightmare. TJX Cos., which owns off-price retailers like Marshalls and T.J. Maxx, had stated publicly earlier this year, it had lost 45.7 million credit card numbers (court documents now say the number could be closer to 100 million) and has since set aside more than $256 million for damage control.

Javelin said that complying with PCI's security standards is costly for merchants. Depending on the size of the company and the payment system it uses, the price tag for technology upgrades, audits and maintenance could range from several thousand dollars to seven figures.

Reports by Bruce Cundiff co-author says "Merchants are feeling overburdened by this." "They're really the ones who are feeling the pressure from Visa and MasterCard."

Merchants are agreeing with the group that something should be done, but beefing up security at the retail level is not the best answer, they say.

"All of us -- merchants, banks, credit card companies and our customers -- want to eliminate credit card fraud," the National Retail Federation's Chief Information Officer David Hogan wrote to the PCI SSC in October. "But if the goal is to make credit card data less vulnerable, the ultimate solution is to stop requiring merchants to store card data in the first place ... it makes more sense for credit card companies to protect their credit card data from thieves by keeping it in relatively few secure locations than to expect millions of merchants scattered across the nation to lock up their data for them."

A recent study by Forrester Consulting on behalf of security company RSA has found that eighty-one percent of merchants store credit card numbers and 73 percent store credit card expiration data.

A Delaware company thinks it has found a solution: skip over the merchant entirely, never allowing retail stores to collect the card data, much less store it.

According to Jason J. Gwynn, vice president of sales at a Wilmington-based payment processing company, Electronic Payment Exchange (EPX), "At the end of the day, if you don't have the cardholder numbers, you're in no danger of exposing them if you're compromised."

The Delaware company, have about 20 people as its employs at its headquarters on Naamans Road and about 20 more in a Phoenix-based payment processing facility, revealed that its system transmits data from the card directly to the payment processor, leaving the merchant with a unique 19-digit code that can be used later to trace the transaction in case of returns, charge-backs, or customer disputes. But this code is useless for data thieves because it cannot be traced to the card.

Similar type of product is being offered by Shift4 Corp., a Las Vegas-based payment gateway that gives merchants a digital "token" for each transaction.

"We take the data completely out and then give the merchant something else," says Randy Carr, the company's vice president of marketing. "Technology in the security space is the equivalent of building higher walls around the data. ... Hackers just bring taller ladders ... the only way to really win this fight is to take the data out of the end points."

Friday, November 23, 2007

Top 10 ways to protect yourself from identity theft

Helen Monks reveals some simple steps to stop you falling victim to identity theft and cash-related crimes

1. Never reveal your place of birth to anyone you've just met.

2. Always cover your pin with your hand when you use an ATM.

3. Register with the telephone-, email- and mail-preference services.

4. Check your bank statements regularly.

5. Never throw out statements, or junk-mail loan and credit card applications without ripping them up or, better still, shredding them.

6. Never give out bank details asked for via unsolicited phone calls or emails.

7. Never carry around any more cards than you need. If the credit card you use only once every few months goes missing, when would

you notice?

8. Never keep your name and address in your wallet, even keep your driver's licence separate.

9. Never put your home address on your luggage when you travel abroad, put your work address.

10. If you suspect your mail is being stolen, contact the Royal Mail customer enquiry line (0845 774 0740) to check whether a mail redirection order has been made in your name without your knowledge.

Credit card holders time to work out the EMIs

People spend lavishly during Diwali, they exhaust their budgets. Now diwali festivity is over burst the crackers, savored sweets and distributed gifts, so it’s time to make up for all that spending. Most of the people have taken personal loans and shopped using credit cards now its time to work out the EMIs.

Varun Singh, a senior database manager, went all out with his expenditure this Diwali. He spent heavily on clothes, jewellery, food and a new refrigerator, which took his expenditure beyond the Rs1 lakh mark.

“The festive season has landed me in a big financial crunch. Having a big family means meeting everyone’s demands. Thankfully, the Diwali bonus my company gave helped soften the blow a little. I’ll now have start saving seriously to pay the numerous EMIs over the next few months.”

Like Singh there are many spent lavishly during Diwali. With an upswing in the economy and an increase in the spending power of the middle-class, retailers made a killing profit this Diwali.

Atul Takle, media representative of Pantaloons India told media “There was an almost 50 per cent growth in sales during Diwali. People don’t mind shelling a few extra bucks during the festival. Besides, there are a number of promotional offers that help boost sales.”

The consumer appliances chains saw increase in the sales, Vijay Sales saw a 40 per cent increase in sales during the last week of Diwali as compared to the rest of the year.

During Diwali many attractive promotional schemes, in the form of heavy discounts on certain goods, and the facility of purchasing products are offered on Easy Monthly Installments (EMIs), which result in higher sales.

But, the difficult part for consumers begins now, when they have to start paying the EMIs, which means cost-cutting and saving to make up for the shopping spree.

Some people start saving for Diwali from the beginning of the year so that don’t have to disturb their budget as Hardik Shah, a senior tele-caller, starts saving for Diwali from March. This year, he went grossly over-budget during Diwali.

Then how does he plan to cope now?

He says, “I am going to refrain from going out, even on weekends, for a few months. I have shopped so much over the festive season that I’d hate the sight of another shop for a few weeks.

I think I’ll have to work overtime in order to manage the EMIs.”

After Diwali celebrations the consumers are taking easy so the sales are set to face a slowdown over the next few weeks.

According to Shailesh Ghatlia, owner, Premsons, “Since a lot of people exhaust their budgets during Diwali, there’ll be a lull in sales over the next few weeks. People will look at saving money for a few months. Even though they’ll be back with a vengeance in a few weeks, it will not be the same as it was during Diwali.”

Thursday, November 22, 2007

Credit Bank Worldwide launched the new website for consumers

Credit Bank Worldwide launched the newest website ( to help consumers choose the card that is worry free because when it comes to choose the right card it becomes difficult as there are so many options available and with different features and benefits. The site is designed to help the consumers locate the credit product and service that match their individual current financial situation.

This site will be helpful for both current and prospective consumers in ways that effectively uses the credit system to achieve their goal.

The newly opened site has searched and compiled the best deals on credit card offers, auto loans, mortgage, and debt consolidation on the internet. With the continuous updating, consumers can search, review, and apply online for instant results on the lowest interest rates available. All of the credit card offers are linked to a secure website for an online application provided by the card issuer to help instantly apply for credit cards of the consumers' choice. All this can be done from the comfort of your home.

Company’s CEO, Tony Underhill said, "With the total debt on credit cards at $2.46 trillion in June 2007 (1) consumers need a lower interest rate to consolidate or when choosing a new credit card." He further added, "This is the simplest, stress free way to provide consumers with an answer right in the comfort of their home."

Obtaining online approval is not difficult to do with the simple online applications available within just a few minutes. comes with online tools with a mortgage calculator and tips to help navigate the credit card process.

Wednesday, November 21, 2007

Indians started living life on plastic money

In India in financial services plastic money business is growing faster. People have finally started using plastic money, though the number of users is too less as compared to western countries.

In India there are around 25 million credit cards from which ICICI Bank is the largest competitor with 8.5 million cards issued. Citibank, SBI-GE Card and HDFC Bank are the other prominent players in the sector.

The lifestyle of the people has changed so as the spending power. From traveling to dining to paying small bills to apparel purchases; they pay everything through their credit cards. Fuel accounts of a very small amount of these credit purchases, unlike what is usually believed, as most of it is done through debit cards.

According to the reports of the credit card companies the consumers are spending Rs 50,000 crore annually which is expected to grow at 50 percent over the next four to five years. Experts are of a view that with changing lifestyle this trend will catch momentum in the future.

"Travel and dining corner about one-fourth of the total credit card purchases which signifies the shift in Indian spending habits. According to industry expert analysis earlier, purchases of both consumer durables and jewellery items were larger than the hospitality segment. Going forward, this trend should continue."

HDFC Bank VP and head (credit cards and product portfolio) Parag Rao says, "Jewellery, consumer durables, fuel purchases, apparel are a much smaller segment than travel and dining which comprise the largest chunk of credit card purchases. Eating out has in fact become a big concept now."

According to the experts while travel and hotel bills along with dining, account for about 25-35 percent of the total value of purchases through credit cards, purchase of jewellery accounts for 10-11 percent of the purchases. Apparel purchases account for eight to 10 percent and consumer durables like TV and mobile phones account for nearly six to seven percent of the purchases through plastic money. Besides this, a utility payment is yet another segment where plastic money is making inroads.

Of course this is good news for the credit card companies, but there is a hitch attached to it. While there is no doubt that more and more Indians are turning towards plastic money, not many of them are able to repay their debts. Bad news! But sadly its true.

The default rate on credit cards is the highest across different loan categories in the country. The rate for credit cards has risen from seven to nine percent of total outstanding payments last year to about 10-12 percent this year. In contrast, the default rate is three to four percent for personal loans, two percent for auto and two-wheeler loans and is less than one percent for mortgage loans.

Experts are of a view that with growing daily expenses and rising EMIs on existing loans, the number of customers defaulting on credit card payments has risen significantly. But volume games will slowly remove this hitch.