Casting plastic into novel moulds

It was Standard Chartered Bank which was first off-the-block with a global rupee card in March this year, after the Reserve Bank of India stipulations lastyear permitted banks to launch such cards. Stanchart had the advantage of launching the card before others, but it didn’t want to bank on just that. To draw a larger part of the market to its global Rupee card, it introduced a scheme on March 31 (which ended on July 31), whereby the bank waived the entrance fee for first-time cardholders and gave heavier discounts to persons who hold credit cards of other banks. The scheme, according to V. Krishnan, Head, External Affairs, Standard Chartered Bank has fulfilled its purpose. Till July 15, it had drawn over 50,000 new members and 1,10,000 existing Standard Chartered cardholders had converted their cards into global rupee cards, which was done free of cost.

All other international credit cards issued in India, according to Krishnan, are available at a fee starting from US $ 40 or approximately Rs 1,600 onwards. But during the period of the scheme, anyone could get a Classic Stanchart global rupee card for Rs 350 (or even lesser if the person already held acredit card). Even without the scheme, the card is available at a starting fee of Rs 700. The next in line to offer a global rupee card is American Express. The technical team of Amex is working on the global rupee card, which according to Mittra, will be launched soon. He, however, did not reveal the time-frame. What he did reveal was its unique features. The company has tied up with 10 international airlines and a domestic airline for its rewards programme on the global card. The cardholder would earn points on the spend, which can be redeemed as free air-miles.

After a phase of cobranded cards and tie-ups, credit card companies are coming out with more innovative schemes. And these aren’t limited to magazine subscriptions or free gifts. Standard Chartered, for instance, has launched a credit card instalment plan product called InstaBuys. The bank has tied up with several dealers for this scheme. Under this plan, the cardholder can buy white goods, scooters, motorcycles, computers, cell phones etc on thecredit card without making any downpayment. The cardholder will have to give monthly instalments to Stanchart. The advantage is that approval of purchase is given instantly and post-dated cheques are not required.

Similarly, American Express has introduced an account for persons who have the money, but don’t fulfill the eligibility criteria required to become an Amex credit cardholder. For such persons, Amex has introduced an account-linked credit card called Secure Card. For getting this credit card, a person has to open an account with Amex. The credit limit is 80 per cent of the money in the Amex account.

Last month, the market leader in the credit card industry — Citibank — launched its debit card. Times Bank has issued debit cards to its account holders in Delhi that will become operational this month. Both the cards are MasterCard Maestro cards. For the uninitiated, a debit card is an ATM card that can be used at certain merchandise outlets to make payments. The amount gets debited from the debitcardholder’s account automatically. The advantage with a debit card is that you don’t have to make purchases on credit (as in the case of a credit card) and the money earns interest in the bank till the time of purchase. The drawbacks, unfortunately, seem to be many more. Firstly, you need to maintain a minimum balance in the bank account. Secondly, it has very limited access point at present. The debit card facility has been introduced in only three cities by Citibank — Mumbai, Delhi and Bangalore. Moreover, only 2,000 merchandise establishments in these three cities accept Citibank’s debit cards. In the case of Times Bank, the debit card can only be used at 500 merchandise outlets in the Capital as of now. While Vivek Kumar, Director, Member Relations and Marketing, MasterCard International, is of view the that debit cards “will account for the single largest number of payment-card transactions worldwide by 2005,” Sujit Mittra, Manager, Public Affairs and Communications, American Express Travel RelatedServices feels that debit cards can wait.

“Our surveys tell us that the Indian consumer does not require a debit card,” he says. As of today, both charge card and credit cardholders enjoy around 50-days of free credit. Whereas in the case of a debit card, the amount gets debited immediately from the account of the cardholder. “Debit cards work in countries where banks offer a low interest rate on deposits. So the debit cardholder does not mind foregoing it,” Mittra adds.

Several banks have introduced online banking too (refer chart). Even though the legal framework for ecommerce is still not in place, the general belief is that the country need not wait for such a legislation. Even in the USA, the industry went ahead with ecommerce, the laws came later.

The internet and plastic money together can solve many day-to-day problems of the common man. At a recent seminar organised by the Federation of Indian Chambers of Commerce and Industry, the Mahanagar Telephone Nigam Limited (MTNL) Chairman andManaging Director, S Rajagopalan, had announced that telephone bills can be paid online after August 15 in Delhi and Mumbai. He feels that the common man today wants to stay as away from the government and its departments as possible. MTNL also plans to tie-up with other utility services for the payment of electricity and water bills. The company has already tested its online service in Bangalore. With so much in the offing, credit card penetration is sure to go up. After all, that piece of plastic is making our lives easier!