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Credit Card

The credit card is a tool payment, consisting of a paper plastic device for the recognition of identification data the owner and the bank issuer. The first device is applied to paper, some thirty years, a magnetic stripe, to meet the growing needs of security and the advance of the phenomenon of fraud, since 1993 has been applied to a microchip card, making it a smart card . Compared to magnetic stripe cards with the sole, which can not store cardholder data securely and have a limited memory capacity, smart cards store information securely and use them during the transaction. With a greater capacity to memory and microprocessor, smart cards can be used to access multiple services, they can be stored on the same card more data (identification, access, point competitions, etc..), this characteristic of the smart card is called "multi-application". Instead, the only magnetic stripe cards can usually only one or two features of payment such as direct access to the account (debit card, ATM) and / or access to a credit line (credit card). A credit card is issued by a bank or a financial institution from which the customer has in a bank account. The use of the availability of the card varies depending on client and then himself.

Operation

system operation of credit cards is a process of approval of the banking system. This process is divided into three entities:

1. issuer (issuer in English) is the company which shall issue a credit card. This may be a bank or financial institution. The issuing company defines a loan agreement with the cardholder. Cardholders are considered customers of the issuing company and are the ones who spend money through the use of paper.
2. body operator (merchant ) is the business that, by joining a payment circuit, enables its customers to pay through half of the fee agreement, an alternative to cash. Membership of the circuit is usually through the intermediary of a management company terminals ( acquirer), which provides sales or rental POS (Point of Sale ), accounting and reporting of payments, reporting and management disputes (usually defined disputes), communication information flows to and from the circuit.
3. circuit of payment is the company that takes care of the car through its own network of communication requests and the corresponding authorizations to spend. The network of the circuit extends through delegation to the acquirer to install POS terminals represented as a network, with new merchants. The circuit is also in charge of operations settlement, ie accounting and accounting items on the balance of views of individual cardholders and merchants. This information is constantly sent to the institution issuing and management company with terminals that maintain updated their relationship with cardholders and merchants. The main world tracks are Visa, MasterCard, Diners , American Express, Japanese Card Bureau (JCB) and China Union Pay (CUP).

credit card, then, is a tool that allows you to adjust payment after purchase. On paper shows the generality of the holder, the card number and its expiry. The holder is required to put their signature in the space predisposto.La sales transaction involves three actors with their reports, namely:

1. The cardholder agrees to return the card issuer in the amount of the transaction on time and in the manner prescribed by the contract signed.
2. The supplier delivers the goods or services requested by the customer.
3. If your school agrees to pay the client's behalf the amount due, net of fees may be predetermined.

Then, the customer can obtained without the use of cash, the vendor is not subject to the risk of a payment by check, and then the possible insolvency of the same, and the institution pays a service as perceived, therefore, a commission. As well as the payment instrument, the card can be used as an instrument of withdrawal from the ATM (similar to an ATM card) using the secret code is delivered with the paper.

mode romborso

The holder, upon redemption, may opt for a refund or in a lump sum or through installments. Only in the latter case it establishes a credit relationship between the customer and the issuer. In essence, the card is a credit (there is no mobilization of the law, since the delivery remain the property of the issuer, temporarily, to the holder), and is not an identity document, as it is incumbent upon the provider to ascertain the identity of the cardholder. The paper is, instead, a document certifying the issuer-customer contract, as well as the issuer's lurking in a shop window sticker indicating the presence of a relationship between the owner of the shop itself and the supplier.

Credit cards and money circulation

In Italy, volumes transacted through credit cards have, ripetto the rest of Europe is still very low volumes. What has hampered the use of cards (the so-called "money") than the use of cash is probably attributable to the high cost that banks apply to transactions with the same whether the customer card to the individual retailer. Among the motives for the use of cards, the safety factor represented by the desired reduction in the volume of cash and the high costs incurred by the country's system for Counting and mass transport of cash.

Main types of credit cards

The main types of credit cards are:

1. bank credit card: it is the traditional payment instrument issued by a bank, usually as an additional service to open a bank account. Allows you to defer payment of goods purchased for a short period, generally between a few days and two months depending on the contract and without additional financial burdens for the purchaser.
2. revolving credit card : it represents the payment instrument issued by a bank or financial institution that allows you to pay in installments to pay for the goods purchased. The rescheduling involves an additional cost to the buyer due to the payment of interest on the loan. Operating expenses represent a very high value because of the high fragmentation of the users. Even in Italy in recent years, the revolving credit card market is experiencing, as well as in all advanced countries, a strong development. The growth expectations are for 2007, approximately 20-25%.
3. Credit card co-branded : it represents the payment instrument issued by a bank or financial institution in collaboration with a third company that facilitates the distribution of the instrument with its customers and offers additional services designed to loyalty card holders credit. The operation is the same as a credit card or bank revolving.
4. Credit Card pre-paid: it is a card with a value scale. It is essentially a kind of electronic purse that can be recharged at the request of the owner. For the particular operation does not need to have a bank account on which to be supported. One of its main uses we have for payments via the Internet, because the possibility of subtracting the code only threatens the amount loaded.

A separate type of credit cards is given by the so-called card deprivation. These are cards issued by a credit structure to exclusive use of an industrial enterprise or a trading company for its customers. The companies they distribute to their customers to increase loyalty to their brand.

Marketing associated with credit cards

To counter the competition have sharpened some marketing techniques. He pointed, for example, to grant new cards at lower prices or no relation to the main, to introduce services such as cash withdrawal at ATMs or assistance in travel (luggage, health). Advertising campaigns have been activated by accumulation of frequent flyer points, that after a certain amount, give the right gifts. To penetrate the market more aggressively introduced the "cards to target" (directed, for example, students) with services or targeted conventions (such as discount concert).

Adapted from: Wikipedia
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