Special means of payment in the form of emitted in accordance with the established procedure plastic or other type of the card which is used for initiation of money transfer from the account of the payer or from the corresponding bank account for the purpose of payment of cost of goods and services, money transfer from the accounts into accounts of other persons, receiving money in a cash form in cash desks of banks, financial institutions, exchange bureaus of foreign currency of authorized banks and via ATMs and also implementation of other transactions provided by the relevant agreement.
Card payment systems
Main article: Card payment systems
Main article: Virtual cards
Classification of cards
Cards can be separated on the organizations which release them (issuers) and respectively on scope of application:
- bank cards (the issuer - banks)
- trade cards (the issuer – shops)
- fuel cards (the issuer – networks of gas station)
- transport cards (the issuer – the transport organizations (the subway, the railroad))
- multiapplication cards (allow to pay purchase in shop, to receive medical care, to pass on the subway or by rail, to receive a discount in shop)
There is a technical classification of plastic cards connected with write methods and data processing on the card. Are divided by this classification on:
- embossed or printing (drawing information on the specific card by method of stamping or thermoprinting)
- with a magnetic band or the shaped code (it is coded or a magnetic band, or shaped the code). Actually this carrier differs in nothing from a piece of paper with the text written on it which can be read and somehow further to use. It can be erased and written new, but at the same time it can also only be read further
- with the built-in chip (contact and proximity smart cards). Such card not only stores and changes data, but also can actively communicate with information receiver. Actually it is about interaction of two devices, one of which is the smart card (the smart card).
If issuers two, then usually speak about joint (co-branding) cards. In many cases joint cards are perceived as a method of promotion of the trademarks belonging to each of issuers. It is one party of a question, another consists on combination on one material object of the different technologies available to the card holder. For example, the card can be used both for payments, and for receiving discounts. It is also possible to classify cards by their solvency:
- payment cards can be divided by different payment schemes:
- credit cards – serve for receiving a consumer loan (the holder use money of the issuer, and then pays off to it the arisen debt).
- debit cards – can be used for settlings with trade service organizations and for receiving cash in banks within balance on the bank account.
Happens that as a separate object add the so-called e-wallet to credit and debit cards. The e-wallet usually is understood as the smart card working offline at its debiting without registration of transaction by the issuer at the time of transaction using the card.
- not payment cards provide functions of the card which is not linked with payments, - generally it is access to services or discounting at payment of goods and services:
- the discount card, as it appears from the name, provides it to the holder of a discount or other privileges from card issuer or from the organization which signed the relevant agreement with the issuer of the discount card.
- as a separate class select ID cards. Understand the cards serving for identification of their holders as them. It is possible to tell that any ID plastic card, is its basic function. A common example – control charts of access as physical (for example, for an input to the premises), and information (for example, for use of the computer).
Now the cards having except identification also authentication function – the specimen signature or photos of her holder on the card gain ground. More difficult – the data on fingerprints which are stored in memory of the smart card. The future of ID cards are the cards with biometric information allowing to identify unambiguously the card holder, electronic passports and other identity certificates. As any plastic card – identification, it is obliged to have unique number. Besides, the card can bear also other identification information – a name of her holder, validity period, etc. and also data for visual authentication of the holder - the photo, the specimen signature. All other information stored by the card depends on a system in which this card is used.
Bank payment cards were initially created as the retail product focused on the holder – the individual. And now around the world payment cards for banks – one of the important directions of retail business. At the same time the marketing purposes of business can be different. Generally depending on these purposes it is possible to select three principal directions of use of plastic cards:
- works with clients of bank – individuals.
- works with legal entities and their employees within salary projects.
Salary projects, as we know, appeared in Russia some of the first. The main number of cards is issued within these projects. According to the Central Bank of Russian Federation in 2003 - 2006 more than 90% of the cards issued in Rossi were salary, i.e. were used not as payment instruments but only for receiving cash. As at the initial stage of history of development of card business in the country, and now salary projects are intended: #привлечение additional resources in the form of a remaining balance on card accounts of staff of the enterprise at which the wage project is implemented; #закрепление behind bank of the large customer – the legal entity, having closed on itself still big cash flows of the client (if the project is implemented at the enterprise which already have a checking account in bank); #привлечение the new client – the legal entity with perspective to transfer it to itself to settlement and cash services (if the enterprise has no in bank of a checking account yet).
- cards can be offered corporate clients as an additional service for payment of entertainment expenses (corporate cards). The profitable client can designate the purpose of the corporate cards allowing the management of the enterprise to plachivat so-called entertainment expenses with their help as an additional service – to the legal entity for the purpose of increase in a customer loyalty to bank.
Classification of bank payment cards
Let's carry out classification of the payment cards used by banks for conducting retail business by a number of essential signs in terms of both functional characteristics of the card, and card business. First, bank payment cards can be subdivided on the basis of existence of the personal account:
- cards with the account. The bulk of bank cards is tied to a certain personal account on balance of bank on which according to accounting rules all payments on transactions with the card – whether it be transactions, the commissions of bank for their end or charge of percent on a remaining balance are reflected if like that is in rates on service of the card. Cards with the account can be classified, using two additional signs, - an account type and the mode of its maintaining. On these signs of the card with the account can be separated into two main classes:
- debit cards. The personal card account – the checking account, payment under the map are made within a free account balance, an overdraft (a loan of money at bank) is inadmissible (though in principle and it is possible)
- credit cards. It is possible to subdivide into three categories:
- settlement or so-called chardzh-cards (from engl. Charge-the charge, the card is kind of loaded on a certain amount within which her holder can be credited) – type of the personal card account – a checking account, but the account management mode such is that allows to make calculations for the card not only within a free remaining balance, but also within the permitted overdraft on the account which size makes a reservation in the agreement or rates of bank, at the same time the debt should be repaid monthly by the card holder in full.
- revolving credit (type of the personal card account – loan, however the strict requirement of monthly repayment of loan debt in full is absent).
- revolving overdraft (type of the personal account – a checking account with assumption of an overdraft, the requirement of monthly repayment of loan debt in full is absent).
- cards without account. As a rule, it is prepaid not personalized cards. In a case with such cards the bank can act as the distributor of the card rendering under the agreement with the company issuer still some information services to clients. The bank distributor at first accumulates the money received from the client on transit account, and then under the agreement with the company issuer transfers to account the companies. It is necessary to tell, that cards with the account can be not nominal, though in the majority they after all nominal too (can be an example of not personalized card with the personal account Visa Instant Issue Maestro Prepaid).
By consideration of cards with the account it is appropriate to give definition of two basic concepts – an available balance and a credit limit. Available balance – the amount within which it is possible to make transactions with the payment card at the moment when it is supposed to make transaction. Thus, an available balance - the value changing. It decreases by the amount of the transactions executed with the card, and increases by the amount of the commissions of bank, for example, if on the card the bank accrues interest on a remaining balance or money on the transaction disputed by the client returned. The credit limit is the maximum amount of judgment debt on the card which can arise in (a case with the revolving credit card), or the maximum permitted overdraft (in a case with account or overdraft credit cards). Thus, the credit limit unlike an available balance is the value recorded in the agreement between bank and the client, and it is not treason, so far bank and the client will not sign the new agreement or will not make change to operating. At the same time, of course, card transactions can reach a credit limit, and performing transactions will become impossible up to debt repayment. For the debit card the available balance equals to a free remaining balance on the card account (i.e. minus the transaction amounts blocked on the card according to the card). For the account card the available balance equals to the amount of a free remaining balance according to the card plus an available limit (i.e. the permitted overdraft). For credit revolving - the amount of a credit limit which is not selected at the time of calculation. For revolving overdraft – a free remaining balance plus a credit limit. Special case – the card with the chip implemented as the e-wallet. The smart card – the e-wallet has a personal account too, but the mode of its maintaining differs from the mode of the personal account of traditional cards. The normal card in itself does not contain information on the account status, it is kind of the instrument of access to a checking account (or the tool for execution of the payment document for the subsequent write-off from the account of a transaction amount – in a case with unauthorized transaction). Respectively at the time of transfer of money by bank into the card account to which the normal payment card is linked on the bank card of any transfer it is not made. Another case – the e-wallet card: at the time of its replenishment the remaining balance on the personal account decreases by the amount for which replenishment of the card was made. So on the card really there is electronic cash therefore there is also possible and safe (in terms of emergence of an overdraft on the account) an authorization of offline transactions. As any product intended for retail, payment cards are focused on mass market. Therefore the card products offered by payment systems and the companies are most standardized. In each payment system there are card products focused on three main client segments:
- mass client (Standart cards)
- wealthy client (class Gold)
- elite client (class of cards Infinite Platinum)
- corporate clients (class of cards Business)
In recent years in connection with development of the Internet and e-commerce there are cards, held for use in the field. The Russian banks – members of payment systems (not only international, but also Russian) based on standard card products of payment systems create the standard products. For each of such products flat fares on release and service, as a rule, affirm, standard client agreements, schemes of postings on transactions are drafted.
Classification of projects based on smart cards
Smart cards give to bank the chance to implement the unique financial products which are important as for increase in efficiency of the financial sector of national economy, and for improvement of welfare of the population, including its most socially unprotected layers. On the basis of smart cards it is possible to implement several bank projects and to adapt them for the client. Promotion of these products can be performed on the following five segments of the market.
- Segment of the large and average amounts. Here it is reasonable to offer a banking product on smart cards to clients who need operational interregional movement of the average and large amounts that is widespread in our country. For example, in the morning the client places money in Khabarovsk, gets into the airplane, and removes them in Moscow in the evening. Or money is deposited to the customer account in the region, and then he quickly removes them in other city. Such transactions practice at share purchase at individuals, regular payment of services and goods (including apartments) in other regions. For successful to bank the network of regional branches is necessary for work in this segment, but it is possible to attract regional banks also.
- Segment of distributors of firms of direct sales. Clients – the distributors of the different companies who are regularly paying purchase of goods from firm treat this segment. As shows experience, in this segment cosmetic firms ("subsidiary" of the western firms) having wide network of distributors in Russia well work at smart cards. Besides, using smart cards it is possible to connect travel, computer, pharmaceutical and other companies to this segment of calculations. In respect of security, efficiency and convenience of service in this sphere of calculations of a smart card out of competition.
- Salary projects. Here smart cards give the chance not only receiving cash (for what the first e-wallet of the card is used), but also for payment of a lunch in the dining room (the second e-wallet) and purchases of goods in shops of the enterprise (the third e-wallet). At some enterprises one of e-wallets is used for issue to employees of a consumer loan. Besides, the same cards can be used in a control system and accounting of access to the enterprise.
- Social projects. Now practically in all regions of Russia address social programs exist and develop. At the same time good results on their implementation bring the projects of social cards applying technologies using smart cards. The new legislation on replacement of federal privileges for monetary compensation did not reduce interest in different social cards since the majority of these projects develops on the basis of the programs provided by regional administrations (the Social Card of the Muscovite project, etc.). As banking practice showed, the smart cards containing several e-wallets very much are suitable for such address social programs.
Programs for providing a holiday of free drugs in drugstores can be a specific example of effective use of smart cards. The following scheme is applied: the city administration transfers the funds intended for this purpose for transit account in bank. Cards are issued to those categories of citizens to which put free drugs, and on the first e-wallet as required (presentation of the recipe) funds for purchase of drugs are brought. In drugstores terminals of service of smart cards via which the client using the smart card pays drugs are installed. At the end of the day information on purchases comes to the center of transaction processing from where after processing it is transferred to branch. After processing of information on purchases obtained from drugstores from this transit account in bank money is transferred to accounts of specific drugstores. For implementation of this scheme agreements between drugstores, local administration and bank are signed. Electronic purses of the same smart card can be transferred to the second and third benefits which are put to preferential categories of citizens: to single mothers, large families, veterans, etc. (only 28 categories) which do shopping in special shops for preferential prices. In these shops (as well as in drugstores) the equipment payment of goods and services in the smart cards received by exempts is installed. For implementation of this program it is necessary to sign the quadrilateral agreement between bank, administration, trade enterprise and department of employment of the regional government.
- E-commerce. The technology of payments using smart cards is very perspective for e-commerce (especially for the sector of B2B).
When using corporate payment cards the buyer (legal entity) does not have need to reserve the amount for purchases on electronic marketplace – payment of purchase is made on the basis of the limit of such card which is taken away by bank. In schemes on the basis of other means of payment before carrying out purchases on such platform the buyer needs to distract means or to hold them on the special accounts belonging, for example, to marketplace, etc. Payments in a system are executed online. At the same time there is a guaranteed transfer of money into the account of the seller in the stipulated terms (to the day, in 3 hours, etc.), there is a possibility of carrying out flexible tariff policy and implementation of special financial schemes.
Fraud with bank cards
Main article: Fraud with bank cards
International standards and requirements to production of plastic cards
Technologies of work with magnetic and smart cards are based on international standards. Following to standards provided the property of mutual acceptance of cards, major for successful business (in specifications on products of payment systems — interoperability). This property obvious at first sight, requires after all an explanation. The matter is that both cards, and technology of execution of operations with them, and their processing are accurately defined within each payment system (in the form of specifications and the guides in the conventional and having wide experience payment systems and in the form of Regulations of Admission of cards in rather "young" payment systems). For acceptance of cards in network of one payment system following to standards could be optional, but as any point of acceptance of cards, whether it be shop or bank department, is interested in work on uniform or at least to similar rules, technologies of different payment systems should be compatible, at least. The compatibility is reached due to following to standards. There is a number of the international standards defining practically all properties of cards, beginning from physical properties of plastic, the sizes of the card and finishing with contents of information placed on the card one way or another among which references 150 7810 "ID cards deserve there are physical characteristics", 150 7811 "ID cards are write methods", 150 7812 "ID cards — the system of numbering and registration procedure of identifiers of issuers" (5 parts), 150 7813 — "ID cards — maps for financial transactions", 150 4909 "Bank cards — the maintenance of the 3rd track of a magnetic band", 150 7816 "ID cards. Maps with a chip with contacts" (6 parts). There is also Russian GOST P 50809 standard "Numbering and metrological support of ID cards for financial calculations". Cards should have the following geometrical parameters: width — 85.595 ± 0.125 mm, height — 53.975 ± 0.055 mm, thickness — 0.76 ± 0.08 mm, circle radius in corners — 3.18 mm. On the face of payment cards put with a polygraphic method a logo of financial institution, trademarks of a payment system. Besides, usually at the card there is a hologram with a certain character of a payment system, there can be also special element seen only in ultraviolet rays. On the face of the smart card there is a chip, its arrangement is strictly defined by the standard (150 7816-1). On a reverse side of the card there are a magnetic band (which place is also strictly defined by the standard), a panel for the signature and the text of bank put with a polygraphic method. Interesting from the marketing point of view the solution on miniaturization of cards presented by Visa Europe is presented. The new type of the EMV mini-card — Visa Mini, despite the diminutiveness, meets all EMV standards. The surface of the Visa Mini card makes only 57% of the size of the normal bank card. The card can be used for payment of goods and services via normal payment terminals of outlets, the card is not supported by ATMs. The card of a similar type in MasterCard is called SideCard.
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