Банковское дело: современная система кредитования

Contents

 

 

 

     Introduction ____________________________________________2

 

1. Banking plastic card as a tool for calculations and credit

 

 

     1. Types of plastic cards ___________________________________ 3     

2. The basic scheme of operation with the bank's credit card ______  8     

3. The benefits of card payment systems for its members ________ 12

 

2. Banks are members of card payment systems

 

 

     1. Issuing bank __________________________________________13     

2. Bank-acquirer _________________________________________19     

3. Repayments __________________________________________ 21     

4. Profitability of operations with bankcards ____________________ 22

 

   Conclusion______________________________________________ 25

   Bibliography_____________________________________________ 26

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

The introduction of bank cards as a primary means of cashless transactions is an important task "technological revolution" of banking activities. This is a means of payment, having many undoubted advantages, provides both cardholders and credit organizations involved in their production and maintenance, a lot of advantages. For cardholders are - convenience, reliability, practicality, time saving, and most importantly - no need to carry large sums of cash. For credit organizations - increasing competitiveness and prestige, assurance of payment, reducing costs for manufacturing, accounting and processing of paper-money supply, the minimum time cost and economy of a living labor. This is just an incomplete list of possibilities of plastic money, leading to their recognition in the global market.

The successful experience of the calculations, using credit cards will ensure the convenience and practicality of plastic money. However, despite this they are widely used on the territory of Russia, we must acknowledge that the law proper and necessary attention to the legal regulation of relations arising from the use of that money transfers are not paid. The conceptual questions of production, maintenance, handling, import, export, storage and payment cards have remained one of the most essential over last years and have became the basis of customary business practice, relying on the global experience gained over a long time for their application.

 

 

 

 

 

 

 

 

 

I. BANKING PLASTIC CARD AS AN INSTRUMENT OF PAYMENTS AND CREDIT.

 

Along with development of banking system, different types of plastic cards, different purpose, functional and technical specifications came in hand. From the standpoint of the mechanism of calculation of bilateral and multilateral system. Two-sided cards appeared on the basis of bilateral agreements between participants in settlements, where cardholders can use them purchase goods in closed networks, controlled by the issuer of cards (Department stores, gas stations, etc.). In contrast, the multilateral system, which is spearheaded by national association of bank cards, as well as companies, card issuers tourism and entertainment (American Express) give cardholders the opportunity to buy goods on credit from

various vendors and service organizations that recognize these cards in

as a means of payment. The cards of these systems also allow you to receive cash advances, use machines to withdraw cash from

bank account, etc.

Another division of the cards is determined by their functional characteristics. Here are different credit and debit cards. The first relates to the discovery line of credit in the bank, which enables the owner to use the credit when buying goods or obtaining cash advances. The latter are designed for withdraw cash from ATMs or purchase goods from calculated through electronic terminals. Money while being debited

cardholder's bank. Some people set a special category - payment cards as

variety of credit cards.

The difference is that the total debt using the card must be repaid in full within some time after receipt of the statement without the right to extend credit.

There are differences in the use of cards in the systems based on paper technology (paper-based systems), or in electronic systems (electronic systems).

 

 

In the "paper" systems the holder puts his signature on the trade invoice or other document prepared by the trader, which is confirmation of its authorization to debit your bank account. After shopping directed by the issuer of cards as the basis for payment appropriate amount trader (crediting his account) and debit money from cardholder's account. In the electronic system cardholder directly associated with terminal. Instead, the signature on the bill he introduced with keyboard secret combination of numbers that, when properly set is enforceable by debiting his bank account.

Main types of cards are as follows.

 

1. Types of plastic cards.

 

Bank credit cards  are intended for sale goods using a bank loan, as well as for advances in monetary form. The main feature of this card - opening Bank line of credit, which is used automatically every time carried purchase of goods or take out a loan in cash. Credit

The line is used within the user's bank limit. Some systems, bank credit card can apply for a reduced payment some types of services, as well as for withdrawals from ATMs. Distinguished individual and corporate cards. Solo issued individual bank customers and may be "standard" or "golden".

The latter are intended for those with high credit standing provide many benefits for users. Corporate card issued by the organization (firm), which is based on this card can give Individual cards selected individuals (managers or simply valuable employees). They open personal accounts, "tied" to corporate card account. Responsibility to the Bank on Corporate account is the organization rather than individual owners cards.

Cards for tourism entertainment and recreation (travel & entertaiment cards). This "Payment" cards, produced under the above terminology. They produced companies specializing in serving the specified areas (American Express, Dinners Club).

 

 

 

Cards are accepted by hundreds of thousands of retail and service enterprises around the world to pay for goods or services, as well as provide cardholders can enjoy when booking tickets, rooms in hotels, get a discount on the price of goods, life insurance, etc.

The main differences of this type of card from bank credit cards is first, in the absence of a single limit on purchases and, secondly, Acting cardholder to repay the debt within a month without the right to roll over loans. In the case of late payment from the cardholder charged higher interest rates.

In these systems, there is also a personal and corporate cards.

Private payment card business trade and services (private cards,

retail charge cards, departament store cards, affinity cards). Application

these cards is limited to a particular closed network of trade institutions,

such as chain stores, gas stations system defined company. Credit provides the company itself, it also gets a percentage of loans. Since 70-ies have proliferated in private banking cards (bank private cards), you can use to make purchases in some stores at a discount, but the issue of cards, issuance of credit by purchases and transactions for payment of accounts by the Bank - party agreement. Sometimes this kind of card is issued to members of certain professional groups (pilots, lawyers), or persons bound by common interests (eg stamp collectors). They are called "club" cards.

 

Cashpoint card (ATM cards). This kind of debit cards, which enable the owner of the account at the bank to get cash money within the balance of the account through automatic devices installed in banks, trading rooms, etc. You can receive money at any time of day and on holidays, weekends.

In recent years a proliferation of debit cards private networks

(Property debit cards). They are produced banks that participate in regional systems, POS terminals, and not connected to national communications.

 

Banks are attracted by the fact that in this case do not need pay a fee for the transfer of information on general communications.

When using the POS-card purchase amount immediately withdrawn from the account of the buyer. It is unprofitable to the latter as at other

forms of payment (check, credit card), he receives a delay of payment. For

traders also deal with POS-card more expensive than using

checks. This resulted in relatively slow growth of operations

cards of this type.

Cheque Guarantee Card (cheque guarantee card). This card is issued the owner of a bank account for the identification of the drawer and guarantees

Payment by check. The card is based on the credit line, which allows the account holder to use the credit on the overdraft. The bank

guarantees the merchant receive money by check within the established limit .In the event that the account issuer is not required amount.

Basic rules of using a check guarantee card are reduced to following:

- The signature on the check and the card should be identical

- Amount of the check must not exceed the limit specified on the card

- If the amount of the payment on the check exceeds the amount of funds in the account with the owner commission is charged for the use of credit lines and overdraft.

 

Another classification of credit cards linked to their technological

features. The most popular cards of two types - with magnetic

stripe and embedded chips (chip card - chip card, smart card -

smart card, "smart" card) Cards with a magnetic strip on the back have a magnetic strip, where the recorded data required for identification card holder at its the use of automated teller machines and electronic trading terminals institutions.

When the card is inserted into the appropriate reader device, the individual owner's data transmitted over communication networks to obtain authorization for the transaction.

On the cards of the major international card associations, Visa and Master Card, magnetic strip has a few tracks to secure the necessary information in a coded form. At one of the tracks recorded Personal Identification Number - PIN (Personal Identification Number), who introduced the card holder by using a special keyboard with

use of ATMs and terminals POS. Dialled numbers compared with the PIN recorded on the strip. In case of mismatch owner is given the opportunity to make several more attempts set the PIN code. This extends the functionality of the card and increases its reliability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Basic scheme of operation with the bank's credit card.

 

Bank credit card is not a legal proof of debt or claims, such as, for example, a bill or receipt. This more material character of legal relations arising between the parties have concluded Card Agreement.

The main participants of the system of card payment:

- Owner of the card (cardholder)

- The issuing bank (issuing bank)

- Trade or services (merchant) (merchant)

- Bank-acquirer (bank serving commercial enterprise - acquring bank,

acquirer).

 

Cardholder:

- Can use the card to pay for goods or services offered other participants in the card agreement, as well as obtaining a bank loan in form of cash within the established limit;

- Can pay off its debt to the bank for purchases during the grace

period (grace period) without paying interest;

- Can take advantage of extended loan of the bank (outside the grace

period with payment of the prescribed percent) obliged to pay the debt and interest in accordance with the scheme defined agreement.

Card Issuing Bank (here and acquirer):

- Gives the card after a thorough verification of the financial situation and assess customer creditworthiness;

- Opens the cardholder a special account, which takes into account all

operations with the card;

- The client a monthly statement indicating the size of debt amounts and maturities of debt

- Undertakes to pay the bills trading company for purchases made with

use of cards minus fees (discount);

- May refuse to pay trade accounts, if violated any terms of the agreement (eg limit exceeded purchases without permit a bank issuer).

 

Merchant participating in the agreement:

- Agrees to accept cards in payment for goods and services and conduct

authorization (a permit) in the cases stipulated in the agreement;

- Undertakes the card if there is suspicion that the bearer is not

is the legitimate owner.

- Can bring a bank to pay trade accounts to get on them

money immediately;

- Is obliged to keep confidential customer information.

 

This is the general scheme of legal relations between parties to the agreement with use of credit cards. From a legal point of view, the essence of the operation of credit (and payment) card is that the cardholder and the merchant after the preliminary opening bank accounts agree that any transaction between them will settled by crediting and debiting of the account merchant account holder cards. However, except in cases provided for explicitly, this payment will be final and conclusive. Scheme of card payments is basically assumes the existence of three separate

types of contracts:

- Between the merchant and cardholder - the sale of goods or services;

- Between the bank and the merchant - on the latter's consent to accept card payment for goods or services ;

- Between the bank and the card holder - for reimbursement of the bank the amount paid merchant in a transaction with a credit card.

 

 

 

 

General rules for dealing with credit card.

 

1. The client bank is a bank to apply for banking credit cards. Form is determined by the bank. Following the information provided by a customer, bank uses to assess the creditworthiness of the client and for determining of the value witch sets the limits.

2. If a positive decision, the bank offers the customer special card account. At the same time made a personal plastic card on which the information is recorded: name and surname holder, card account number, expiration date cards.

3. The issuing bank establishes two types of restrictions:

- The total credit limit the amount of outstanding debt on the card account,

which must be respected during the whole period of the card;

- One-time limit on the amount of a purchase;

Different clients are set different credit limits in accordance with

adopted by the bank credit standards.

4. At the time of purchase of goods or services the cardholder shows the

card. Seller prints account, which with the help of special imprinted device information from the card. This process is called imprinting. Trade account is made in triplicate. The first copy gets the owner of the card, the second is from the seller, the third is sent to the bank acquirer.

5. If the amount of the transaction exceeds the one-time limit, trader to

design of the trading account is required to hold a so-called authorization, then have to obtain permission of the bank issuer of the operation. If you have special POS authorization conducted for each transaction in real time (on-line). In these cases, the limit on one operation unrecorded.

6. Bank merchant (acquirer) obtains from his client on a daily basis or in other deadlines properly completed trading accounts. These accounts

Bank considers as equivalent to cash, subject to immediate transfer to the account of a merchant. The merchant can immediately use this money regardless of whether it will reimburse the buyer in consequence with its purchase of bank issuer.

An exception is made in those cases, if the purchase is made in violation of the rules in conscious participation of the trader. When you pay bills with the dealer held a special commission (discount) in the amount from 2 - 5% of transaction amount.

7. At the end of each month, the bank carries out the procedure for billing, ie sends the cardholder a special excerpt from his card account with

showing all transactions made during the period, as well as the amounts and timing debt.

The owner card has two alternative calculations with the bank:

- To pay the debt without interest payments during period - 25-30 days from the date of payment specified in the statement;

- To extend the loan beyond the grace period from the accrual of 1,5-2% a month the daily average amount of outstanding balance of the debt.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. The benefits of card payments for its members.

 

Rapid spread of the bank credit cards around the word, their transformation into mass calculation tool, the steady growth of their popularity among the general groups of population illustrates the fact that it is a popular mean of payment nowadays.

 Main benefits of it are as follows:

Cardholders. The main attractive features for owners of the cards

are as follows:

- Usability

- Automatic provision of bank credit

- Possibility of postpone repayment of the debt

- Regular visualizing the complete information on transactions.

Dealers. For this category of players cards have the following benefits:

- Expansion of sales and attract new buyers

- The possibility of extending credit without using their own funds and

maintenance of special accounting systems

- Reducing the risk due to the substitution of bank checks cards.

Banks. Banks have initiated the introduction of credit and other cards, hoping to receive the following benefits:

-Increase in consumer loans

- Expansion of the bank's activities in remote areas

- "Cross" sell additional products and services to card holders

- To provide additional income in the form of commission and interest income.

 

 

 

 

 

 

 

II. BANKING SYSTEM OF ATTENDANCE CARD PAYMENTS.

 

In a system of bank cards, a clear functional distinction between the issuing bank cards and bank-acquirer. First serve cardholders, offer them special accounts and perform functions processing, the latter provides a set of services and commercial enterprises service firms accept credit cards as payment for goods and services. Initially period of the card systems, most banks performed simultaneously B / W issuer and acquirer. However, as a result of competition discount rate paid by traders, fell so that the operations of acquiring yield are available to big banks and the specialized agencies, receiving savings on mass operation. Accordingly, there was concentration of acquiring of a few institutions.

 

1. The issuing bank.

 

The main functions of the issuing bank are as follows:

- Issue cards (coding and recording of personal data owner card embossing, card customer renewal card).

- Analysis of creditworthiness (evaluation of the financial situation of the applicant, the discovery card account, the definition of credit limit)

- Authorization (a response to a query about the possibility of merchant transaction in automatically or by phone, update master file interaction with systems of information exchange)

- Exchange information and receive commission for Interchange

- Billing (preparation and expulsion of the cardholder statement showing the amounts and maturities)

- Accounting transactions on the card account

- Recovery of arrears and control the excess of credit limit

- Work with customers (answers to queries, complaints)

- Security and control of fraud (preparation of reports using stolen and counterfeit cards, the blocking of accounts)

- Marketing (search for new customers, advertising, software activation operations card accounts)      

Issuance of cards. This is not a technical function. Positive

decision on the client's request for a card shall be made after careful

examine its financial situation and risk assessment of non-payment. If the results of analyses is positive for the client, it can offer a debit card for

withdrawing cash from an account with 100% authorization in real

time.

If the client's creditworthiness evaluated positively, all existing

information from the application is entered in the laptop, which creates a master file for personal data. It stores a name and the name of the client, his permanent address, number in the system of social insurance, credit limit, Omer card account and term renewal card. At the same time prepared magnetic tape needed to manufacture the customer's card.

You must specify the security measures that must be respected in

production and shipment to customers cards. Land production

cards in the bank (or in a specialized firm) is separated from other departments and is under strict control. Access is permitted to a narrow circle of persons to reduce the risk of stolen blank or finished cards to be sent owners.

After the expulsion of cards in the mail to the owner reported the PIN code used to identify the owner of the operations through electronic terminals and ATMs.  Envelope with pin is usually sent through a few days

after the expulsion of the card. Also on the card often the date of validity is shown. This is done in order to reduce the risk of fraudulent use of cards, if it is stolen in transit.

 

 

 

Authorization bargain by the issuing bank can be carried out in two ways:

- Through an electronic terminal in commercial

- By telephone (voice authorization)

 

The terminals are installed in large shopping malls with big daily traffic. Typically, terminals produce a 100% authentication of all transactions in automatic mode. In the presence of an electronic terminal central computer in shopping center is directly connected to a central computer of the exchange systems, such as "Vizanet" or "Banknet" .

Voice authentication is used where the volume of transactions is relatively small. How and authorization through the terminal, it is carried out when the purchase amount exceeds the established limit for a single transaction or in cases where there are doubts about the identity card bearer.

Authorization must be done quickly so as not to force the buyer to wait. However, this is very time-consuming process that requires time and attention. An employee answering the request, records on the keyboard of his terminal the following data: