A credit card in Nepal is used to purchase goods and services through POS (Point of Sales), Study Guides, Projects, Research of Introduction to E-Business

Download A credit card in Nepal is used to purchase goods and services through POS (Point of Sales) and more Study Guides, Projects, Research Introduction to E-Business in PDF only on Docsity! Introduction A small rectangular shaped card that is issued to a cardholder for the use of purchasing goods using a credit account, the card holding information on a magnetic strip. In order to be issued with a credit card, you will need to satisfy certain criteria from the bank or other financial organization such as passing credit checks. Credits cards are accepted in millions of ATMs and stores around the globe and are a convenient and hassle-free way of making purchases abroad as well as online. Each credit card issued is unique and non-transferable and each cardholder will be asked to sign a credit card agreement at the time of issuing. Credit cards are issued to consumers by financial institutions, typically banks, and allows a cardholder or their designee to borrow money for purchases and pay it back at a later date with interest. Credit cards also include a line of credit that allows the cardholder to borrow money in the form of a cash advance. Borrowing limits are usually preset by the issuing financial institution and the credit limit may differ from the cash advance limit. It’s well known that credit cards have substantially higher interest rates when compared with other forms of consumer credit. Many credit cards will offer a grace period in which no interest is charged if the goods charged are paid for by the end of the billing cycle (or within a given number of days, typically 20). Credit cards still remain one of the most popular forms of payment for consumer goods and services, and nearly every merchant or service provider will accept credit cards for payment. Most major credit cards are affiliated with Visa, Mastercard, American Express or Discover and are issued by banks or credit unions. Additionally, many credit cards also offer incentives for using that card ranging from airline miles to hotel points to cash back. This can increase consumer interest in using a specific reward card. Another type of credit card is the store credit card, which is intended specifically to increase customer loyalty. Typically offered by major retailers such as Sears or JC Penney, this type of credit card is often easier to qualify for, but can only be used at the retailer who issues the card. However, that loyalty can pay off when the retailer offers special sales and discounts to their cardholders. Consumers who have problems with their credit and can’t qualify for a typical credit card might opt for a secured credit card. This type of credit card requires a deposit be made and the total line on credit extended is then usually the amount of the deposit, but it could be less or more, depending on the terms of the card. Secured cards allow consumers to rebuild their credit and eliminate the need to carry cash. Secured credit cards will report to the major credit bureaus. One downside is that secured credit cards often charge high annual fees. Credit Card Payment using credit card is one of most common mode of electronic payment. Credit card is small plastic card with a unique number attached with an account. It has also a magnetic strip embedded in it which is used to read credit card via card readers. When a customer purchases a product via credit card, credit card issuer bank pays on behalf of the customer and customer has a certain time period after which he/she can pay the credit card bill. It is usually credit card monthly payment cycle. Following are the actors in the credit card system.  The card holder − Customer  The merchant − seller of product who can accept credit card payments.  The card issuer bank − card holder's bank  The acquirer bank − the merchant's bank  The card brand − for example , visa or Mastercard. Credit Card Payment Process Step Description Step 1 Bank issues and activates a credit card to the customer on his/her request. Step 2 The customer presents the credit card information to the merchant site or to the merchant from whom he/she wants to purchase a product/service. Step 3 Merchant validates the customer's identity by asking for approval from the card brand company. Disadvantages of Credit Cards: 1. Minimum due trap The biggest con of a credit card is the minimum due amount that is displayed at the top of a bill statement. A number of credit card holders are deceived into thinking the minimum amount is the total due they are obliged to pay, when in fact it is the least amount that the company expects you to pay to continue receiving credit facilities. This results in customers assuming their bill is low and spending even more, accruing interest on their outstanding, which could build up to a large and unmanageable sum over time. 2. Hidden costs Credit cards appear to be simple and straightforward at the outset, but have a number of hidden charges that could rack up the expenses overall. Credit cards have a number of taxes and fees, such as late payment fees, joining fees, renewal fees and processing fees. Missing a card payment could result in a penalty and repeated late payments could even result in the reduction of your credit limit, which would have a negative impact on your credit score and future credit prospects. 3. Ease of overuse With revolving credit, since your bank balance stays the same, it might be tempting to put all your purchases on your card, making you unaware of how much you owe. This could lead to you overspending and owing more than you can pay back, beginning the cycle of debt and high interest rates on your future payments. 4. High interest rate If you do not clear your dues by your billing due date, the amount is carried forward and interest is charged on it. This interest is accrued over a period of time on purchases that are made after the interest-free period. Credit card interest rates are quite high, with the average rate being 3% per month, which would amount to 36% per annum. 5. Credit card fraud Though not very common, there are chances you might be victim of credit card fraud. With advances in technology, it is possible to clone a card and gain access to confidential information through which another individual or entity can make purchases on your card. Check your statements carefully for purchases that look suspicious and inform the bank immediately if you suspect card fraud. Banks usually waive off charges if the fraud is proven, so you will not have to pay for purchases charged by the thief.