Topic: Credit Card - PowerPoint Presentation

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Topic: Credit CardSlide2

Credit cards and charge cards, what is the difference?

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. Slide3

The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.Slide4

A credit card is different from a charge card:

a charge card requires the balance to be paid in full each month

. In

contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. Slide5

A credit card also differs from a cash card, which can be used like currency by the owner of the card. A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.Slide6

History

The concept of using a card for purchases was described in 1887 by

Edward Bellamy

in his utopian novel Looking Backward. Bellamy used the term

credit

card

eleven

times in this novel, although this referred to a card for spending a citizen's dividend rather than borrowing.Slide7

The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specifically to sell fuel to a growing number of automobile owners. In 1938 several companies started to accept each other's cards. Western Union had begun issuing charge cards to its frequent customers in 1921. Some charge cards were printed on paper card stock, but were easily counterfeited.Slide8

The

Charga-Plate, developed in 1928, was an early predecessor to the credit card and used in the U.S. from the 1930s to the late 1950s. It was a 2½ in × 1¼ in rectangle of sheet metal related to Addressograph and military dog tag systems. It was embossed with the customer's name, city and state. It held a small paper card for a signature.Slide9

In 1934, American Airlines and the Air Transport Association simplified the process even more with the advent of the Air Travel Card

.

They created a numbering scheme that identified the issuer of card as well as the customer account.

This

is the reason the modern UATP cards still start with the number 1. With an Air Travel Card, passengers could

«buy

now, and pay later" for a ticket against their credit and receive a fifteen percent discount at any of the accepting

airlines.Slide10
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The concept of customers paying different merchants using the same card was expanded in 1950 by Ralph Schneider and Frank McNamara, founders of

Diners Club

, to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card, and required the entire bill to be paid with each statement. Slide12

That was followed by Carte Blanche and in 1958

by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after

BankAmericard demonstrated the feasibility of the concept).Slide13

In September 1958, Bank of America launched the

BankAmericard in Fresno, California. BankAmericard

became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned), and with its overseas affiliates, eventually evolved into the Visa system. Slide14

In 1966, the ancestor of MasterCard was born when a group of banks established Master Charge to compete with

BankAmericard; it received a significant boost when Citibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969.Slide15

Nowadays

Credit cards are the most popular form of credit today. Accounts for these cards are set up by banks, oil companies, retail stores, or by businesses that specialize in extending credit for special purposes such as travel and entertainment. Slide16

MasterCard

and VISA are

two of the best known. There

usually is an annual

fee

that must be paid for

the

privilege of using the

card

.

A special card, showing the person’s name and account number and a place for the person’s signature, is issued to identify the customer as one having a charge account. These charge cards have become very popular. Slide17

Bank charge cards are issued to people whose credit ratings meet the bank’s standards. A bank charge card, in effect, indicates that the credit rating of the cardholder is good. Agreements are made between banks and various merchants to accept the charge cards. The bank charges your account for your charge purchases and gives you a bill once a month for all the purchases you made. Slide18

Customers like bank charge cards because they are accepted by many businesses in many foreign countries. Credit cards also become popular in Ukraine nowadays. Bank charge card users like the fact that they receive only one monthly bill rather than many from various businesses where they charge purchases.Slide19

The main disadvantage to bank charge cards is that consumers often find it too easy to use their “plastic” money and may find themselves buying more than they can afford. Slide20

The

necessary details on the credit

cardSlide21

Of

the front in a typical credit card:

Issuing

bank

logo

EMV

chip on "smart cards" (electromagnetic

vulnerability)

Hologram

Credit

card

numberCard

brand

logo

Expiration Date

Card

Holder

Name

C

ontactless chip

"Smart card"

credit card with embedded microchip.Slide22
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Slide24

O

f

the reverse side of a typical credit card:

1. Magnetic

Stripe

2. Signature

Strip

3. Card

Security CodeSlide25
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