Now when you shop with your credit card you earn more reward points in the current economic conditions. Banks and credit card companies are announcing special reward programs to increase the demand and help merchants in dealing with falling pace of credit card use at their shops. The consumers can earn up to five times reward points by shopping at select outlets, especially during the weekends.
Sanjeev Takru, manager (marketing) of TGI Friday's (India), pointed out although consumer confidence has been affected due to slump conditions but there has been increase in weekend spends. He said, “For marketers, it is an opportunity to tap this captive customer base by providing added value and benefits through smart partnerships. This drives both loyalty and repeat purchases, thereby increasing our sales”.
There has been increase in the consumer base comprising young working couples and the IT/BPO workforce, eating out, watching movies, socializing and visiting retail shops is now not restricted to special occasions and have thus become a part of daily lives.
Approximately around 50% of the total weekly spending is done on weekends. People mostly spend in retail shops and quick service restaurants. Sunil Sachdev, head of merchant services business at American Express informed last year company had launched Extraordinary Weekends program after it had noticed that in spite of curtailing optional expenses, consumers continued to spend on everyday expenses, such as dining and shopping. It also noticed that consumers everyday spending was more than the weekends in comparison to that on weekdays.
Last year American Express cards witnessed 30% increase in the transactions after the launch of the program in June. The company on weekends spending is offering 5 points for every Rs 40 spent on the card, in comparison to just one point on weekdays. The bank has tied up with Chroma, Wills Lifestyle, Select Citywalk for the year-long program.
Sachdev notified, “By studying both card members as well as merchants into our network, we get an understanding of how and where people spend. We track card members’ purchases at merchant establishments and then help develop profitable and targeted marketing programs that customers find valuable and relevant,”
On the other hand HSBC has introduced a limited period offer (valid till September 30) for its gold, platinum and premium card customers who can earn reward points 10 times faster at its merchant partners, such as Westside, makemytrip.com and bookmyshow.com. Bank is offering 10 points instead of one reward point, on spending Rs 100 during the offer period.
While SBI Cards is offering up to 15 per cent discount on Spicejet air tickets and domestic holiday packages booked through travelguru.com. The bank is also offering discounts on brands such as Pierre Cardin, Allen Solly and VLCC, valid up till December 31. ICICI Bank the largest credit card issuer is giving special offers including payment in monthly EMIs, an insurance plan for every member of the family and a pair of Reebok shoes at a discount of 50 per cent.
Thursday, August 13, 2009
New PIN system can lead to dip in online credit card transactions
From August 1 according to the Reserve Bank of India norms it is mandatory to have second identification number (PIN) to ensure safe and secure online credit card transactions According to sources there can be dip in online credit card transactions in August since only 20-30% of online credit card users have signed up for the second personal identification number (PIN). On the other hand banks are expecting there can be picking up in the number as in the past few days the banks have started sending SMS and email alerts to their customers.
An ICICI Bank spokesperson informed, “We have started sending out email and SMS alerts very recently and are receiving a very good response for registration from credit card customers as there are no exceptions to the RBI guideline.” At present around 20 million ICICI Bank registered users are using internet banking facility.
However in India out of 30 million credit card customers there are approximately 4-5 million active online credit card users.
As per industry estimates around 7-15% of a bank’s customer have signed up for net banking and of these registered customers only 30-40% use net banking frequently
Also the number of customers of new entrants such as Kotak Mahindra Bank stand to 10,000 out of 15,000 who have signed up for second identification number. The banks on their websites have made provision for the customers who want to sign up for additional password.
According to TV Seshadri, vice-president & country general manager MasterCard Worldwide, “Having an additional password was a voluntary exercise till last month. RBI stipulations now make it compulsory. It’s just a single password but if banks insist, we can even introduce features like a one-time password going forward”.
A few months back Visa and MasterCard have introduced Verified for Visa and MasterCard Secure codes so that customers get used to it. Under this customers are required to generate an additional online PIN which wouldn’t be mentioned on the plastic card.
There was boost in online use of debit/credit cards after the launch of online railway and flight bookings. The IRCTC, makemytrip and yatra.com websites are getting maximum customers. According to bankers, now most of the credit card customers have also started paying their utility bills such as mobile and electricity through net banking.
According to RSA report, in India major banks have lost funds of around Rs 36.5 crore because of fraudulent transactions and 13,000 such cases were filed in India.
KVS Manian, group head retail liabilities & branch banking, Kotak Mahindra Bank pointed out, “The two-stage security screening makes the possibility of fraud or theft of username and password of a customer nearly impossible as it involves simultaneous use of multiples gadgets like a computer and mobile phone”. The main reason for security breach is carelessness on the part of the customer.
An ICICI Bank spokesperson informed, “We have started sending out email and SMS alerts very recently and are receiving a very good response for registration from credit card customers as there are no exceptions to the RBI guideline.” At present around 20 million ICICI Bank registered users are using internet banking facility.
However in India out of 30 million credit card customers there are approximately 4-5 million active online credit card users.
As per industry estimates around 7-15% of a bank’s customer have signed up for net banking and of these registered customers only 30-40% use net banking frequently
Also the number of customers of new entrants such as Kotak Mahindra Bank stand to 10,000 out of 15,000 who have signed up for second identification number. The banks on their websites have made provision for the customers who want to sign up for additional password.
According to TV Seshadri, vice-president & country general manager MasterCard Worldwide, “Having an additional password was a voluntary exercise till last month. RBI stipulations now make it compulsory. It’s just a single password but if banks insist, we can even introduce features like a one-time password going forward”.
A few months back Visa and MasterCard have introduced Verified for Visa and MasterCard Secure codes so that customers get used to it. Under this customers are required to generate an additional online PIN which wouldn’t be mentioned on the plastic card.
There was boost in online use of debit/credit cards after the launch of online railway and flight bookings. The IRCTC, makemytrip and yatra.com websites are getting maximum customers. According to bankers, now most of the credit card customers have also started paying their utility bills such as mobile and electricity through net banking.
According to RSA report, in India major banks have lost funds of around Rs 36.5 crore because of fraudulent transactions and 13,000 such cases were filed in India.
KVS Manian, group head retail liabilities & branch banking, Kotak Mahindra Bank pointed out, “The two-stage security screening makes the possibility of fraud or theft of username and password of a customer nearly impossible as it involves simultaneous use of multiples gadgets like a computer and mobile phone”. The main reason for security breach is carelessness on the part of the customer.
Thursday, August 6, 2009
RBI approves cash withdrawal using debt card at merchant establishment
In many countries worldwide you can withdraw cash at retail outlets using point of sale terminals through debit cards. Recently the Reserve Bank of India (RBI) has given approval for this facility. At present you can use debit card to withdraw cash only at ATMs. But now you will be able to draw cash at the nearest shop using the debit card.
As per RBI approval you can withdraw cash using the swipe machines at retail shops. In the beginning around 14.3 crore people holding debit cards issued in India will be able to avail this facility. Debit card holders can withdraw cash up to Rs 1,000 directly from merchant establishments. Moreover you are not required to purchase anything from the shop to avail this facility. But you might have to pay a fee of 2-3%.
In case a cardholder does purchasing at the same shop then the receipt must have a separate indication of the cash withdrawal. To offer this facility the swipe machines, or point-of-sale (PoS) terminals, will have to be upgraded and it might take a month for the smooth flow of this service. The banks might divide the service charge with retailers in order to persuade them to offer this service.
Currently for every card transaction merchants have to pay fee of 1.5-2 per cent. The customers of smaller towns and rural areas will be most benefited from this service, where few ATM machines are available. This facility will also increase the use of debit cards ast PoS- enabled merchant establishments. The retailers offering this facility will be able to deposit less amount of money which they are required to deposit in a bank every day as he can use this amount to disburse it for a fee. For banks increase in usage of debit card means increase in fee income.
The RBI stated the merchant establishment which has been designated by the bank after thorough checking can avail this facility. RBI has clearly stated that the merchants will offer cash withdrawal facility at PoS terminals irrespective of the fact the debit card holder does the purchasing from that shop. In the near future it might be possible to set up ATMs therefore a POS terminal can be a cheaper alternative for banks. Once smooth operation of this service starts the customers living in rural areas won’t have to travel to withdraw money.
At present most of the people use their debit card to withdraw money from ATMs and only 2-3 percent of PSU bank customers make payments through debit cards, whereas around 14-19 percent of the customers of private and foreign banks use debit card to make payments.
The RBI has said the boards of banks have to decide to whom to offer this service after taking into consideration the product profile, risk sensitivity and risk alleviation measures. Once the board has given the approval the banks will be required to get one-time approval from the RBI.
The RBI decision to allow debit card holders to withdraw money at POS terminals reveals that there has been a steady increase in the number of terminals at different merchant establishments. By the end of May 31, 2009, the number of POS terminals increased to 4.70 lakh in the country as against about 45,000 ATMs.
Once the cash withdrawal facility at PoS terminals starts bank customers won’t have to depend on either branches or ATMs to draw small amounts. They can simply go to nearby merchant establishment, swipe their debit card and take the cash from the merchant. This move will also help in promoting financial inclusion.
On banks part, to offer this facility they will have to formulate a proper customer grievance redressal mechanism.
As per RBI approval you can withdraw cash using the swipe machines at retail shops. In the beginning around 14.3 crore people holding debit cards issued in India will be able to avail this facility. Debit card holders can withdraw cash up to Rs 1,000 directly from merchant establishments. Moreover you are not required to purchase anything from the shop to avail this facility. But you might have to pay a fee of 2-3%.
In case a cardholder does purchasing at the same shop then the receipt must have a separate indication of the cash withdrawal. To offer this facility the swipe machines, or point-of-sale (PoS) terminals, will have to be upgraded and it might take a month for the smooth flow of this service. The banks might divide the service charge with retailers in order to persuade them to offer this service.
Currently for every card transaction merchants have to pay fee of 1.5-2 per cent. The customers of smaller towns and rural areas will be most benefited from this service, where few ATM machines are available. This facility will also increase the use of debit cards ast PoS- enabled merchant establishments. The retailers offering this facility will be able to deposit less amount of money which they are required to deposit in a bank every day as he can use this amount to disburse it for a fee. For banks increase in usage of debit card means increase in fee income.
The RBI stated the merchant establishment which has been designated by the bank after thorough checking can avail this facility. RBI has clearly stated that the merchants will offer cash withdrawal facility at PoS terminals irrespective of the fact the debit card holder does the purchasing from that shop. In the near future it might be possible to set up ATMs therefore a POS terminal can be a cheaper alternative for banks. Once smooth operation of this service starts the customers living in rural areas won’t have to travel to withdraw money.
At present most of the people use their debit card to withdraw money from ATMs and only 2-3 percent of PSU bank customers make payments through debit cards, whereas around 14-19 percent of the customers of private and foreign banks use debit card to make payments.
The RBI has said the boards of banks have to decide to whom to offer this service after taking into consideration the product profile, risk sensitivity and risk alleviation measures. Once the board has given the approval the banks will be required to get one-time approval from the RBI.
The RBI decision to allow debit card holders to withdraw money at POS terminals reveals that there has been a steady increase in the number of terminals at different merchant establishments. By the end of May 31, 2009, the number of POS terminals increased to 4.70 lakh in the country as against about 45,000 ATMs.
Once the cash withdrawal facility at PoS terminals starts bank customers won’t have to depend on either branches or ATMs to draw small amounts. They can simply go to nearby merchant establishment, swipe their debit card and take the cash from the merchant. This move will also help in promoting financial inclusion.
On banks part, to offer this facility they will have to formulate a proper customer grievance redressal mechanism.
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