Information technology, infrastructural back-up and networking in the country have enabled banks to provide transaction settlements through financial cards such as credit cards, debit cards and ATM cards as well as smart cards to their customers. These plastic cards have given a new shape to money with instant liquidity, constant flow of funds and added convenience. These cards have provided the users with many benefits but the chances of incurring losses through frauds are also high.

Diners club was the first organization to issue credit cards to its customers in 1951. These were called and treated as member cards and the members could use them at about 27 restaurants in New York.

A plastic card with a magnetic strip is issued by a bank or business, authorizing the holder to buy goods or services on credit. This is also called as charge card. It means the cardholder is enabled with funds under the credit card to transact any payment without physical exchange of cash. The merchant outlets and corporate retailers who have the network with the card-issuers/ bankers swipe the card on the spot, in the manual swiping machines or Electronic Data Capture (EDC), to validate the person's and card's identity, realness, legitimacy of the credit card and the cardholder. The card-issuer will refund the merchant outlets later. The authorization of the transaction can be given either telephonically or electronically to the merchant outlets and send out an authorization code that can conclusively seal the transaction. The cardholder will be asked to refund the card-issuer after making purchases through credit cards, either in lumpsum or by way of monthly installments. To bring to light the details of the past transaction reference number is being used. These credit cards are issued by card-issuer purely on the basis of the creditworthiness of the applicant.

Any system will have its own merits, but at the same time, no system can be a foolproof one. The credit card as a financial settlement medium has its own merits and also suffers from certain defects or drawbacks. The merits and demerits of credit cards are discussed below.

Professional Banker Magazine, Credit Cards, Information Technology, Infrastructural Back-up, Financial Cards, ATM cards, Smart Cards, Corporate Retailers, Electronic Data Capture, EDC, Private Sector Banks, ICICI, HDFC, Foreign Banks, Standard Chartered Bank, Public Sector Banks, Canara Bank, State Bank of India, Personal Identification Number, PIN, Address Verification Scheme System, AVS, Credit Information Bureau.