Plastic money is a term used to represent the hard plastic cards used in day to day life in place of actual banknotes. They come in several forms such as debit cards, credit cards, store cards and pre-paid cash cards. The plastic cards began to be used widely after 1970 when the specific standards were set for a magnetic strip. In 1981, the concept of Credit cards was introduced in India and was on the verge of an exceptional boom.
Today the domestic card industry is applied with different types of cards from gold, silver, global, smart to secure, co-branded credit cards, etc. the list is endless. There is enormous growth potential in the domestic card industry.
Types Of Plastic Money
Charge Card: A charge card has similar features of credit cards. However, after using a charge card, it is necessary to pay the whole amount of bill till the due date. If the person defaults to pay the amount of the charge card, then he has to pay the late payment charges.
Visa & MasterCard: Visa & MasterCard are international non-profit organizations. They are dedicated to promoting the growth of the business of cards across the globe. They have designed a wide network of merchant institutions by keeping in mind that the customers might use their credit cards to make several transactions worldwide.
Debit Cards: The debit card is an encoded plastic card which is issued by banks and has replaced with the cheques. It allows the customers to pay in exchange for goods and services without carrying cash. It is a multipurpose card, as it can be used as an ATM to withdraw the money and check the balance of the bank account. It is issued by bank free of cost with the savings or current account. It is one of the best online-payment tools where the amount of purchase is immediately subtracted from the account of the customer and credited to the merchant’s account. It has overcome the delay in the payment process.
There are presently two ways in which debit cards transactions are processed:
- Online debit (also known as a PIN)
- Offline debit (also known as signature debit)
ATM Cards: These cards are typically used at ATMs to withdraw money, transfer funds and make deposits. ATM cards are used by inserting the card into a machine and enter a PIN or personal number for security purpose. The system checks the account for sufficient funds before allowing any transaction.
Advantages Of Plastic Money
Convenience: Plastic money provides an easy way to make financial transactions without carrying cash. It also provides the benefits of anywhere and anytime banking.
Check Counterfeiting: The proposed plastic currency notes will reduce the chances of counterfeiting.
Long life of Plastic Currency Notes: The proposed plastic currency notes will have the life of five years as against one-year life of paper currency notes.
Check on Black Money: It is possible to trace the financial transactions done through cards. Developing a culture of plastic money will make it easy for the government to trace black suspected black money sources.
Supports Growth of E-commerce: The use of cards has supported the growth of e-commerce. Growth of e-commerce enhances cost-effectiveness and alternative channels to improve economic growth.
Power of Purchasing: Debit or Credit cards made it easier to buy things. Now we do not have any need to carry money in a large amount. Plastic money is accepted at any time and everywhere.
Time-Saving: one can purchase anything from any place through a credit card or debit card without spending money on fare or cash transaction. You have to provide your card details to seller store or corporations and settle your order. It saves time in the transaction by debit and credit card.
Safety: In case, if an individual loses the cards, then he/she may contact the bank or financial institution, which provide the cards. The financial institution or bank will block the account and no-one can draw a single penny without your permission.
Disadvantages Of Plastic Money
Shops using other Vendors: Numerous shops accept credit cards of a specific company only. In this situation, money is the only mode of payment for those who use a credit card of another company.
Less Availability: There are several cases where the firms do not let their cards to be utilized in specific areas wherever they have a regional dispute.
An issue with Magnetic Strip: The Credit card consists of the magnetic strip that can get worn out due to extensive use of it. If it happens while travelling, and credit card is the only form of money with the person, then he/she must wait till the time they receive a new card. The new card may take a minimum of forty-eight hours to get active.
Increased Debt and rates of high-interest: Credit Card from Corporations and financial institutions charge high-interest rate on more money if the person fails to pay off till the fixed date of the particular month. These interests are the earnings, for which they provide the additional shopping for limits then the money. It is not a good idea to owe loan on high-interest rates and spend it in necessary things or purchasing.
Fraud: In the case of stolen credit cards, the thief may use it directly to get the information. In today’s world, it is possible to get a clone of any debit or credit card, which works like original and can be a substantial loss. Thus be aware of the frauds of credit cards.