A STUDY ON IMPACT OF PAYMENT THROUGH ELECTRONIC CARDS

A project works submitted to

MANONMANIAM SUNDARANAR UNIVERSITY
TIRUNELVELI

In partial fulfilment of the requirement of the

Award of the degree of

MASTER OF COMMERCE
Submitted
BY
M.VIGNESH SHUNMUGARAJA
Reg. No: 20182102301317
Under the Guidance of
Mrs. E.ESAKKIAMMALM.Com., M.Phil.
Associate Professor in commerce

DEPARTMENT OF COMMERCE
KAMARAJ COLLEGE
THOOTHUKUDI – 628008
APRIL –2020
MRS. E.ESAKKIAMMAL M.COM., M.PHIL.
ASSISTANT PROFESSROR,
DEPARMENT OF COMMERCE
KAMARAJ COLLEGE (SF)
THOOTHUKUDI-628003

CERTIFICATE

This is to certify that the project entitled “A STUDY ON IMPACT OF

PAYMENT THROUGH ELECTRONIC CARDS” Submitted by
MR.M.VIGNESH SHUNMUGARAJA, M.COM., Kamaraj college, under my
supervision and guidance. This project has not previously formed the basis for the
award of any degree, diploma, Associate ship, Fellowship or any similar title. It
represents entirely an independent work on the part of the candidate

Place: Signature of the External Examiner

Date:

Signature of the H.O.D Signature of the guide

(Dr. P.Selva mani) (E.Esakkiammal)
M.Vignesh Shunmugaraja

Reg. No: 20182102301317

II M.COM

KAMARAJ COLLEGE (SF)

THOOTHUKUDI - 628003

DECLARATION

I hereby declare that the project entitled by “A STUDY ON IMPACT OF

PAYMENT THROUGH ELECTRONIC CARDS” Submitted to Manonmaniam
Sundaranar University in partial fulfilment of the requirement for the award master
of commerce is the original work and that it has not previously formed the basis for
the award of any degree, diploma, associate, fellowship or similar title

Place:

Date: Signature of the candidate

(M.VIGNESH SHUNMUGARAJA)
 ACKNOWLEDGEMENT

I think the god almighty for him blessings to complete this project on time

I am highly indebted to Mrs. E.ESAKKIAMMAL M.COM., M.Phil.assistant

professor of commerce. Kamaraj college, Thoothukudi for her valuable guidance,

Constructive criticism and scholarly remarks. Her enlightened suggestions made me

easy to complete the project work.

I extent my sincere thanks to the management and principal DR.D.NAGARAJAN

M.sc., M.Phil., PH.D., kamaraj college, Thoothukudi and DR.A.M.TONY MELWYN
M.Com., M.Phil., Ph.D., M.F.M.,NET director of self financing courses kamaraj
college, Thoothukudi for providing me necessary facility in the department, browsing
facilities and in the general library. Without which I would not have completed this
project

I am indebted to my parents for their constant encouragement and financial support

for carrying out the task successfully.

Signature of the candidate

(M.VIGNESH SHUNMUGARAJA)
 List of contents

Chapter Title Page No

I Introduction 1-8

II Profile of the study 9-30

III Analysis and interpretation of data 31-58

IV Findings and suggestion 59-61

V Conclusion 62-64

Bibliography 65-66

Questionnaire 67-70
 CHAPTER-I

INTRODUCTION AND DESIGN OF THE STUDY

1.1 INTRODUCTION:

Electronic payment system is a way of paying for a good or services

electronically, instead of using cash or cheque, in person or by mail. It is a financial
exchange that takes place online between buyers and sellers. The content of this exchange
is usually some form of digital financial instrument (such as encrypted credit card
numbers, electronic cheques or digital cash) that is backed by a bank or an intermediary,
by a legal tender.
Payment System
In today's world there have been major changes to the commerce industry. The
most important of it is the introduction of computers into the commerce industry.
Computerization of commerce has taken the world by a storm. There are significant
improvements in the areas of initiating sale of products, placing orders, making
payments, and transfer of funds. This has led to a much better global economy and better
living standards for all.
Payment started with the barter system centuries ago. Goods were exchanged
directly between people in the barter system. The major drawback of barter system was
that the buyer and the seller had to mutually like the goods that they had in surplus. This

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led to next generation of payment method called Commodity Money System. Here, the
buyer would buy goods from the seller in exchange of some commodity in the form of
gold, silver, coin etc. Commodity Money slowly evolved into standard of having paper
notes at the exchange parameter. The cash payment method does not require the seller to
like the commodity that he/she is going to receive in exchange for the goods. About 80
percent of all the transactions in the world are done through cash payment. The process is
simple and there is no bank involvement. There is however an overhead of printing notes.
The cash payment method is very insecure. There is no record of the transaction
maintained. There is a possibility for generating counterfeit notes. Cash Payment is
mostly used for low-value payments.
Cheque Payment is employed for making medium to high value Payment. A record of the
transaction is maintained at the bank at the cost of the transaction fee. However, it is not a
guaranteed form of payment since the cheque do not represent real time cash. There is a
possibility that the cheque could be turned down by the buyer's bank due to various
reasons. As the volume of cheque processing started increasing, banks had to think about
ways of improving the turn-around time for payment processing.
Electronic Commerce is defined as a monetary transaction that occurs
electronically as opposed to the physical exchange of money or cheques. Tangible
currency is eliminated and accounts are maintained electronically to reflect the effects of
transaction. E-commerce involves trading using the latest electronic equipment and
software between the sellers and the buyers. The trade in e-commerce is conducted in a
slightly different way than the traditional trading.
E-payment system is a way of making transactions or paying for goods and
services through an electronic medium without the use of check or cash. It’s also called
an electronic payment system or online payment system. The electronic payment system
has grown increasingly over the last decades due to the widely spread of internet-based
banking and shopping. As the world advance more on technology development, a lot of
electronic payment systems and payment processing devices have been developed to
increase, improve and provide secure e-payment transactions while decreasing the
percentage of check and cash transaction.

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 E-payment systems are important mechanisms used by individual and
organizations as a secured and convenient way of making payments over the internet and
at the same time a gateway to technological advancement in the field of world economy.
Basic requirements of payment system:
❖ Provide secured and confidential transaction processes.
❖ Conduct authentication and authorization for all involved parties.
❖ Ensure the integrity of payment instructions for goods and services.
❖ Availability, cost-effective, efficiency and reliability.
❖ Global access and international useful.
Features Of Electronic Payment:
Security:
»Trust in electronic transactions further drives consumption:
With electronic payments, consumers have recourse for fraudulent transactions.
The peace of mind that merchants have with guaranteed payment also extends to
consumers, who feel more comfortable making purchases when they can pay with a card.
This trust in the payment system eases friction, bolstering consumption and thereby GDP
growth.
Convenience:
»Cards provide convenience and lower business costs:
Consumers cite the convenience of electronic payments, whether it means not
having to visit the ATM to obtain cash or not having to count out the cash at the point of
transaction. This convenience benefits merchants as well. For instance, when consumers
use their own cards at the self-service gasoline pump or supermarket it lowers labor costs
for merchants. Each small portion of friction that electronic payments eliminate from the
system contributes to higher consumption and GDP.
Transparency:
»Electronic payments reduce central bank costs in providing currency:
By reducing paper transactions, electronic payments can reduce the cost to
central banks of providing notes and coins or to Treasury or Finance departments of
processing paper money, thereby improving overall efficiency in commerce and the
economy.

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» Electronic transactions eliminate a substantial portion of the gray economy:
Retailers who do not report some or all of their transactions to avoid paying
certain taxes usually prefer cash transactions. Electronic transactions, on the other hand,
are “above board” and create an audit trail that greatly reduces unreported transactions,
thereby rising tax revenues.

1.2 STATEMENT OF PROBLEM:

In the modern business world, due to development of science and technological
advancements the customers are in a compulsion to adopt electronic payment system.
Mostly people prefer electronic payment system to get advantage of saving time. The
bankers’ burden is reduced by implementation of electronic payment systems.
In this context this study has been made to know about the impact of payment
through electronic cards and also helps to gain knowledge on issues related to the usage
of electronic cards.

1.3 REVIEW OF LITERATURE:

Nirmala. R. Sonu (2015): Analysis of the Use of Plastic Money highlighted the
advantage of instant transaction as one of the major factors favouring the use of plastic
money over real money by the population today. It has already been highlighted by the
study that convenience of not carrying cash and ease of transaction is one of the major
psychologically influencing factors that encourage the use of plastic money instead of
real money. Additionally, the results of the study have also stressed upon the convenience
and ease of use while paying or shopping by plastic money. The saving of time and the
fact that the plastic money seems to be more portable also seems to further the cause of a
possible change in the scenario of money usage in the economy. On the other hand,
Security comes forward as a major cause for concern for the population using plastic
money. Therefore, it is easy to conclude that the population is ready as ever to use plastic
money at a greater level due to its high levels of ease and convenience.

P Manivannan (2013) in his research paper “Plastic Money a way for cash Less
Payment System” examined that Plastic Money i.e. usage of payment card was measured
a luxury, and has become needed. These plastic money and electronic payments was and

4
used by only higher income group. This facility extended not only to customers in urban
areas or cities, but also to customers residing in rural area. However, today, with
development of banking and trading activity, the fixed income group or salaried classes
are also start using the plastic money and electronic payment systems.

Bansi Patel and Urvi Amin (2012)in their research paper “Plastic Money :
Roadway towards Cash less Society” discussed that now days in any transaction Plastic
money becomes inevitable part of the transaction and with it life becomes more easy and
development would take better place and along with the plastic money it becomes
possible that control the money laundry and effective utilization of financial system
would become possible which would also helpful for tax legislation.

Anupama Sharma (2012)in her research paper “Plastic card frauds and the counter
measures towards a safer payment mechanism” have thrown light on the number of
frauds increased considerably in the usage of plastic cards as in case of plastic card frauds
the most affected parties are the merchants of goods and services as they have to bear the
full liability for losses due to frauds, the banks also bears some cost especially the
indirect cost whereas the cardholders are least affected because of limited consumer
liability and concluded that all these losses can be dealt with by making the prudent use
of the new technology and taking the respective counter measures.

Al-Laham (2009) in his research “Development of Electronic Money and its

Impact on the Central Bank Role and Monetary policy” asserts that, in recent years there
has been considerable interest in the development of electronic money schemes.
Electronic money has the potential to take over from cash as the primary means of
making small-value payments and could make such transactions easier and cheaper for
both consumers and merchants. Electronic money is a record of the funds or “value
“available to a consumer stored on an electronic device in her possession, either on a
Prepaid card or on a personal computer for use over a computer network such as the
internet. This paper argues that electronic money, as network goods, could become an
important form of currency in the future. Such a development would influence the
effectiveness and implementation of monetary policy. Author feels that, if an increased
use of e-money substantially limits demand for central bank reserves, it would require

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changes in the operational target of the central bank and a closer coordination of
monetary and fiscal policies.

Mandeep Kaur and Kamaldeep Kaur (2008) Development of plastic cards market:
past, present and future scenario in Indian banks found that plastic money in the form of
cards has been actively introduced by banks in India in 1990's. But it was not very
popular among Indian consumer at the time of its introduction. The change in
demographic features of consumers in terms of their income, marital status, education
level etc. and up gradation of technology and its awareness has brought the relevant
changes in consumers' preferences. These changing preferences have also modified their
outlook and decision regarding the acceptance and non- acceptance of particular product
and services in the market. Thus, the plastic cards are gaining popularity among bankers
as well as customers and getting accepted in the market place.

Murali D. and Jaishankar P., 2007 analyzed in his research that banks in India are
looking at deploying biometric ATMs targeted to reach the unbanked population in rural
India. Using thumbprint and voice guidance in ATMs reduces literacy requirements to a
considerable extent. Thus, establishing the identity of a rural depositor through
biometrics makes it possible for illiterate or barely literate people to become part of the
banking user community.

1.4 OBJECTIVES:

❖ To study the impact created by electronic cards among the customers.

❖ To find out the payment system and categories of electronic cards.
❖ To study the effectiveness and other facilities rendered by the bankers towards the
issue of electronic cards.
❖ To analyze the benefits and problems faced by the customers during the initial
stages and at a later phase.

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1.5 SCOPE OF THE STUDY:
The study restricts itself to the analysis on the impact of payment through
electronic cards conducted for various classes of people who are scattered in different
areas of Thoothukudi. Therefore the coverage of the study is limited to Thoothukudi.

1.5.1 PERIOD OF STUDY:

The study was carried out over a period of 4 months, from July 2017 to October
2017. The questionnaire was circulated from July 2017.

1.6 COLLECTION OF DATA:

Primary data were collected by framing a questionnaire. A set of questionnaires
were prepared and 80 questionnaires were given to selected public to know their views.
The secondary data were collected from articles published in newspapers, internet
websites, magazines, and journals.

1.7 SAMPLING DESIGN:

The data collected are original in nature. It is first hand information. Samples of 80
respondents who use electronic cards were selected. The researcher adopted simple
random sampling method.

1.8 CONSTRUCTION OF TOOLS:

Keeping the objectives of the study in mind, the researchers constructed the
questionnaire to elicit the required information from the respondents. The questionnaire
was administered to a sample of 80 respondents. A copy of the questionnaire is appended.

1.9 FRAME WORK OF ANALYSIS:

The information collected through the questionnaire was analyses by using the
following statistical tools namely,

 Percentage Analysis
 Ranking
 Garrett Ranking
 Chi-Square test

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 From the analysis made, the researcher has interpreted the data theoretically and
statistically displayed through the diagrams.

1.10 PROCESSING OF DATA:

The questionnaire was prepared in such a way that it would be easy for the
respondents to answer. The questionnaire consists of multiple choices and Yes/ No
questions. Regarding multiple choice questions the respondents tick the best option and
the yes/no questions were scored as under:

Statement Yes No

Positive 1 0

Negative 0 1

Scores for the impact of payment through electronic cards was ascertained and
an analysis was made on the scores. Also necessary tables were prepared from the
collected data.

1.11 LIMITATIONS OF THE STUDY:

In an attempt to make this project authentic and reliable, every possible aspect of the
topic was kept in mind. The main limitations are:
❖ Time is one of major constraint, which limits the effective data collection.
❖ Possibility of errors in data collection due to the bias of the respondents.
❖ The number of respondents is limited to 80.
❖ Getting information from the respondents was very difficult.
❖ Some information cannot be accessed due to its confidential nature.
❖ Reliability and accuracy of the analysis depends on the respondent’s openness
and trueness towards each question in the questionnaire.

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 CHAPTER-II

PROFILE OF THE STUDY

Today, many users make payments electronically rather than in person.

Hundreds of electronic payment systems have been developed to provide secure
Internet transactions. Electronic payment systems are generally classified into four
categories: credit card and debit cards, electronic cash, micropayment systems, and
session-level protocols for secure communications.
E-payment is the “exchange of monetary value online via the Internet, private
networks or a combination of it”. A typical e-payment transaction is where merchants
collect revenue from customers when they pay for goods or services online using
electronic payment methods such as PayPal. There are many risks involving
conducting a payment electronically such as fraudulent activities. E-payment is a
multi participant activity, with each participant trying to minimize their risk.
Nevertheless, e-payment does provide some benefits and convenience to the
customer, merchants and banks that are involved in an electronic transaction such as
the convenience enjoyed by the buyer by using a credit card to pay for goods and
services online. Different electronic payment methods have different benefits and
risks. A secure electronic financial transaction has to meet the following four
requirements:
i) Ensure that communications are private.
ii) Verify that the communications have not been changed in transmission;
iii) Ensure that the client and server are who each claims to be

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 iv) Ensure that the data to be transferred was, in fact, generated by the signed
author.
In short, e-payment can be simply defined as paying for the purchase of goods
and services on the Internet. It includes all financial operations using electronic
devices such as computers, mobile phones or tablets. As Indian citizens rapidly move
up the value chain of e-Payments, the crooks also have started to follow them. On an
average, the Indian media reports 2- 5 news articles, wherein Indian Bank customers
have lost money due to breaches in electronic payment channels.

Electronic Payment In India:

The Reserve Bank of India is doing its best to encourage alternative methods
of payments which will bring security and efficiency to the payments system and
make the whole process easier for banks. The Indian banking sector has been growing
successfully, innovating and trying to adopt and implement electronic payments to
enhance the banking system. Though the Indian payment systems have always been
dominated by paper-based transactions, e-payments are not far behind. Ever since the
introduction of e-payments in India, the banking sector has witnessed growth like
never before.
According to a survey by client, the ratio of e-payments to paper based
transactions has considerably increased between 2004 and 2008. This has happened as
a result of advances in technology and increasing consumer awareness of the ease and
efficiency of internet and mobile transactions.
In the case of India, the RBI has played a pivotal role in facilitating e-
payments by making it compulsory for banks to route high value transactions through

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Real Time Gross Settlement (RTGS) and also by introducing NEFT (National
Electronic Funds Transfer) and NECS (National Electronic Clearing Services) which
has encouraged individuals and businesses to switch and is clearly one of the fastest
growing countries for payment cards in the Asia-Pacific region. Behavioural patterns
of Indian customers are also likely to be influenced by their internet accessibility and
usage, which currently is about 32 million PC users, 68% of whom have access to the
net. However these statistical indications are far from the reality where customers still
prefer to pay "in line" rather than online, with 63% payments still being made in cash.
E-payments have to be continuously promoted showing consumers the various routes
through which they can make these payments through like ATM’s, internet, mobile
phones and drop boxes.
Due to the efforts of the RBI and the (BPSS) now over 75% of all transaction
volume are in the electronic mode, including both large-value and retail payments.
Out of this, 98% come from the RTGS (large-value payments) whereas mergers 2%
come from retail payments. This means consumers have not yet accepted this as a
regular means of paying their bills and still prefer conventional methods. Retail
payments if made via electronic modes are done by ECS (debit and credit), EFT and
card payments.
Steps in online payment process:
The basic online payment process can be presented in these three steps:
• Customer action – The process begins with the visit to the merchant’s site.
The user defines what he or she is paying for and then fills in the payment
form with their credit card information. Depending on the payment method
chosen the user is either being transferred to their bank’s website or continues
the payment in the app or e-shop.
• Payment authentication by the operator – The payment gateway checks if
the credit card number is valid. If everything’s ok, the process continues and
payment gateway reports back the successful transaction. Next, the user
receives payment confirmation (usually the notification is shown in real-time).
• Payment to the seller’s account – Online payment provider receives payment
from customer’s bank and transfers it to the merchant’s account (or merchant
receives a transfer directly from customer’s bank).
E-payments are effective, especially if we talk about international transactions.

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It is generally cheaper, easier and faster than other payment methods. Sellers don’t
have to worry about specific customer details, currency conversion or high
commission. Payment is made instantly and saves time.

ADVANTAGES OF ELECTRONIC CARDS:

1. Time savings:

Money transfer between virtual accounts usually takes a few minutes, while
a wire transfer or a postal one may take several days. Also, we don’t have to waste
time waiting in lines at a bank or post-office.

2. Expenses control:

Even if someone is eager to bring his disbursements under control, it is

necessary to be patient enough to write down all the petty expenses, which often takes
a large part of the total amount of disbursements. The virtual account contains the
history of all transactions indicating the store and the amount we spent. And we can
check it anytime we want. This advantage of electronic payment system is pretty
important in this case.

3. Reduced risk of loss and theft:

We cannot forget virtual wallet somewhere and it cannot be taken away by

robbers. Although in cyberspace there are many scammers, we can make our e-
currency account secure.

4. Low commissions:

If we pay for internet service provider or a mobile account replenishment

through the UPT (unattended payment terminal), we will encounter high fees. As for
the electronic payment system, a fee of this kind of operations consists of 1% of the
total amount, and this is a considerable advantage. .

5. User-friendly:

Usually every service is designed to reach the widest possible audience, so it

has the intuitively understandable user interface. In addition, there is always the
opportunity to submit a question to a support team, which often works 24/7.

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Anyway we can always get an answer using the forums on the subject.
6. Convenience:

All the transfers can be performed at anytime, and anywhere. It is enough to

have an access to the Internet.

DISADVANTAGES OF ELECTRONIC CARDS:

1. Restrictions:

Each payment system has its limits regarding the maximum amount in the
account, the number of transactions per day and the amount of output.

2. The risk of being hacked:

If we follow the security rules, the threat compared to the risk of something
like robbery can be minimised. The worse situation is when the system of processing
company has been broken, because it leads to the leak of personal data on cards and
its owners. Even if the electronic payment system does not launch plastic cards, it can
be involved in scandals regarding the Identity theft.

3. The problem of transferring money between different payment systems:

Usually majority of electronic payment systems do not cooperate with each

other. In this case, we have to use the services of e-currency exchange, and it can be
time-consuming if we still do not have a trusted service for this purpose.

4. The lack of anonymity:

The information about all the transactions, including the amount, time and
recipient are stored in the database of the payment system. It means the intelligence
agency has an access to this information.

5. The necessity of Internet access:

If Internet connection fails, payment through electronic system is not possible.

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IMPORTANCE OF ELECTRONIC PAYMENT SYSTEM:

Variety of Choice:

Electronic payment systems allow financial institutions, businesses and the

government to offer a variety of payment options to their customers. These systems
include automated teller machines, debit cards, credit cards, mobile banking and
payment of bills through the phone. Traditional business payments systems depends
mainly on a limited number of the business outlets situated in different locations. This
limits the client coverage. Through Internet services, e-payment systems are available
to a large number of clients.

Reduced Costs:

E-payments systems reduce cost for both businesses and individuals.

Operational and processing expenses are mainly reduced due to technological costs.
For example, the use of the Internet and the acquisition of computers and other
machines. Expenditures in paper and postage are cut down along with time spent in
executing personal transactions. Customers also save time spent in dealing with
personal transactions as in traditional payment systems.

Reliability:

The use of e-payments cancels out the use of drafting checks, transmitting
cash and invoices for both business and customers. This allows for faster execution of
transactions -- for example, we do not have to wait for the 30 days required in
invoicing transactions. Credit cards also allow customers to partake in transactions
without immediate cash.

Security:

The traditional payment systems mainly involved clients sending their

confidential information via post or physically visiting the transaction site. This
presented a number of security risks. For example, mail may get lost or fall into the
wrong hands. Additionally, places where financial transactions take place are targets
for criminal attacks. E-payment systems offer encrypted services which protects the
clients’ private information.

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TYPES OF ELECTRONIC CARDS:

Electronic Cash

Similar to regular cash, e-cash enables transactions between customers without

the need for banks or other third parties. When used, e-cash is transferred directly and
immediately to the participating merchants and vending machines. Electronic cash is a
secure and convenient alternative to bills and coins. This payment system
complements credit, debit, and charge cards and adds additional convenience and
control to everyday customer cash transactions. E-cash usually operates on a smart
card, which includes an embedded microprocessor chip. The microprocessor chip
stores cash value and the security features that make electronic transactions secure.
Mondex, a subsidiary of MasterCard is a good example of e-cash.

E-cash is transferred directly from the customer's desktop to the merchant's

site. Therefore, e-cash transactions usually require no remote authorization or
personal identification number (PIN) codes at the point of sale. E-cash can be
transferred over a telephone line or over the Web. The microprocessor chip embedded
onto the card keeps track of the e-cash transactions. Using e-cash the customer has
two options: a stand-alone card containing e-cash or a combination card that
incorporates both e-cash and debit.

A customer or merchant signs up with one of the participating banks or

financial institutions. The customer receives specific software to install on his or her
computer. The software allows the customer to download “electronic coins” to his or
her desktop. The software manages the electronic coins. The initial purchase of coins
is charged against the customer's bank account or against a credit card. When buying
goods or services from a web site that accepts e-cash, the customer simply clicks the

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“Pay with e-cash” button. The merchant's software generates a payment request,
describing the item(s) purchased, price, and the time and date. The customer can then
accept or reject this request. When the customer accepts the payment request, the
software residing on the customer's desktop subtracts the payment amount from the
balance and creates a payment that is sent to the bank or the financial institution of the
merchant, and then is deposited to the merchant's account. The attractive feature of
the entire process is its turnaround time which is a few seconds. The merchant is
notified and in turn ships the goods.

Electronic Cheques

E-cheque is the result of cooperation among several banks, government

entities, technology companies, and e-commerce organizations. An e-cheque uses the
same legal and business protocols associated with traditional paper checks. It is a new
payment instrument that combines high-security, speed, convenience, and processing
efficiencies for online transactions. It shares the speed and processing efficiencies of
all-electronic payments. The key advantages of e-cheques are as follows:
• Secure and quick settlement of financial obligations
• Fast check processing
• Very low transaction cost

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Credit Cards

The issuer of a credit card creates a line of credit (usually called a credit limit)
for the cardholder on which the cardholder can draw (i.e. borrow), either for payment
to a merchant for a purchase or as a cash advance to the cardholder. Most credit cards
are issued by or through local banks or credit unions, but some non-bank financial
institutions also offer cards directly to the public.
The cardholder can choose either to repay the full outstanding balance by the
payment due date or to repay a smaller amount, not less than the "minimum amount",
by that date. The rate of interest and method of calculating the charge vary between
credit cards, even for different types of card issued by the same company. Many
credit cards can also be used to take cash advances through ATMs, which also attract
interest charges, usually calculated from the date of cash withdrawal. Some merchants
charge a fee for purchases by credit card, as they will be charged a fee by the card
issuer.
There are two types of credit cards on the market today:
• Credit cards issued by credit card companies (e.g., MasterCard, Visa) and
major banks (e.g. Is Bankasi, ZiraatBankasi, YapiKredi, etc.) Credit cards are issued
based on the customer's income level, credit history, and total wealth. The customer
uses these cards to buy goods and services or get cash from the participating financial
institutions. The customer is supposed to pay his or her debts during the payment
period; otherwise interest will accumulate. Two limitations of credit cards are their
unsuitability for very small or very large payments. It is not cost-justified to use a

17
credit card for small payments. Also, dueto security issues, these cards have a limit
and cannot be used for excessively large transactions.
• Credit cards issued by department stores (e.g Boyner), oil companies (e.g.
Shell)
• Businesses extremely benefit from these company cards and they are cheaper
to operate. They are widely issued to and used by a broad range of customers.
Businesses offer incentives to attract customers to open an account and get one
of these cards.
Debit Cards

Debit card (also known as a bank card or check card) is a plastic payment
card that can be used instead of cash when making purchases. It is similar to a credit
card, but unlike a credit card, the money comes directly from the user's bank account
when performing a transaction.

Some cards may bear a stored value with which a payment is made, while
most relay a message to the cardholder's bank to withdraw funds from a payer's
designated bank account. In some cases, the primary account number is assigned
exclusively for use on the Internet and there is no physical card.
In many countries, the use of debit cards has become so widespread that their
volume has overtaken or entirely replaced cheques and, in some instances, cash
transactions. The development of debit cards, unlike credit cards and charge cards,
has generally been country specific resulting in a number of different systems around
the world, which were often incompatible. Since the mid-2000s, a number of
initiatives have allowed debit cards issued in one country to be used in other countries
and allowed their use for internet and phone purchases.

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 Unlike credit and charge cards, payments using a debit card are immediately
transferred from the cardholder's designated bank account, instead of them paying the
money back at a later date. Debit cards usually also allow for instant withdrawal of
cash, acting as the ATM card for withdrawing cash. Merchants may also offer cash
back facilities to customers, where a customer can withdraw cash along with their
purchase.
Smart Cards

A smart card, chip card, or integrated circuit card (ICC), is any pocket-sized
card with embedded integrated circuits which can process data. This implies that it
can receive input which is processed — by way of the ICC applications — and
delivered as an output. There are two broad categories of ICCs. Memory cards contain
only non-volatile memory storage components, and perhaps some specific security
logic. Microprocessor cards contain volatile memory and microprocessor components.
The card is made of plastic, generally PVC, but sometimes ABS. The card may
embed a hologram to avoid counterfeiting. Using smart cards is also a form of strong
security authentication for single sign-on within large companies and organizations.
EMV is the standard adopted by all major issuers of smart payment cards.
The benefits of smart cards are directly related to the volume of information
and applications that are programmed for use on a card. A single contact/contactless
smart card can be programmed with multiple banking credentials, medical
entitlement, driver’s license/public transport entitlement, loyalty programs and club
memberships to name just a few. Multi-factor and proximity authentication can and
has been embedded into smart cards to increase the security of all services on the
card. For example, a smart card can be programmed to only allow a contactless
transaction if it is also within range of another device like a uniquely paired mobile
phone. This can significantly increase the security of the smart card.

19
 Governments and regional authorities save money because of improved
security, better data and reduced processing costs. These savings help reduce public
budgets or enhance public services.
Individuals have better security and more convenience with using smart cards
that perform multiple services. For example, they only need to replace one card if
their wallet is lost or stolen. The data storage on a card can reduce duplication, and
even provide emergency medical information.
Some of the advantages of smart cards include the following:
• Stored many types of information
• Not easily duplicated
• Do not occupy much space
• Portable
• Low cost to issuers and users
• Provide high security
The disadvantages of smart cards are the lack of universal standards for their
Design and utilization. On the other hand, smart card applications are expected to
Increase as a result of the resolution of these disadvantages in the near future.
E- Wallet

Electronic wallets being very useful for frequent online shoppers are
commercially available for pocket, palm-sized, handheld, and desktop PCs. They
offer a secure, convenient, and portable tool for online shopping. They store personal
and financial information such as credit cards, passwords, PINs, and much more.
To facilitate the credit-card order process, many companies are introducing
electronic wallet services. E-wallets allow you to keep track of your billing and
shipping information so that it can be entered with one click at participating
merchants' sites. E-wallets can also store e-checks, e-cash and your credit-card
information for multiple cards.

20
 A popular example of an e-wallet on the market is Microsoft Wallet. To obtain
Microsoft Wallet, one needs to set up a Microsoft Passport. After establishing a
Passport, a Microsoft E-wallet can be established. Then, e-wallets can be used for
micro-payments. They also eliminate re-entering personal information on the forms,
resulting in higher speed and efficiency for online shoppers. Microsoft Passport
consists of several services including the following, A single sign-in, wallet and kids
passport services. A single sign-in service allows the customer to use a single name
and password at a growing number of participating e-commerce sites. The shopper
can use to make fast online purchases with an E- wallet service.
Paypal

A peer-to-peer payment service allows the transfer of digital cash (e-Cash) via
e-mail between two people who have accounts at e-Cash-enabled banks. Peer-to-peer
transactions allow online financial transfers between consumers. One example of
peer-to-peer payment service is PayPal. Transactions through PayPal are immediate,
the service is free for individuals sending money to one another and the payee is not
required to enter any credit-card information. Businesses pay a small transaction fee.
PayPal allows a user to send money to anyone with an e-mail address,
regardless of what bank either person uses, or whether or not the recipient is pre-
21
registered with the service. People wishing to send money to others can log on to
PayPal at open an account and register the amount to be sent. That amount is hilled to
the person's credit card, Payment notification is sent to the recipient, and an account is
established in the recipient's name.
When the person to whom the payment is sent receives the e-mail notification,
he or she simply registers with PayPal and has access to an account containing the
payment. The funds in this account can he transferred to the recipient's bank account
by direct deposit or mailed by check from PayPal.
The PayPal system can also be used to enable credit-card payment for auction
items in real time. Credit card information is checked before a transaction is initiated.
This means that the transaction begins processing immediately after it is initiated,
reducing the risk of fraud or overdrawn accounts. The buyer or the seller can initiate
the service. If one refers someone to PayPal the person will receive a small monetary
reward.
Gift Card

Two types of gift cards are common: store – specific gift cards and those
issued by major credit card companies. Cards issued by credit card companies’
process just like ordinary credit cards. If user have small business website uses a
service capable of processing credit cards from gift card issuers such as visa and
MasterCard, then user will be able to accept this type of gift card. Otherwise, user will
only be able to accept gift cards that for the user business issued.

22
Automated Teller Machine (ATM card)

An ATM card is any payment card issued by a financial institution that

enables a customer to access an automated teller machine (ATM) in order to perform
transactions such as deposits, cash withdrawals, obtaining account information, etc.
ATM cards are known by a variety of names such as bank card, MAC (money access
card), client card, key card or cash card, among others. Most payment cards, such as
debit and credit cards can also function as ATM cards, although ATM-only cards are
also available. Charge and proprietary cards cannot be used as ATM cards. The use of
a credit card to withdraw cash at an ATM is treated differently to a POS transaction,
usually attracting interest charges from the date of the cash withdrawal. Interbank
networks allow the use of ATM cards at ATMs of private operators and financial
institutions other than those of the institution that issued the cards.

ATM cards can also be used on improvised ATMs such as "mini ATMs",
merchants' card terminals that deliver ATM features without any cash drawer. These
terminals can also be used as cashless scrip ATMs by cashing the receipts they issue
at the merchant's point of sale. The first ATM cards were issued in 1967 by Barclays
in London.

National Electronic Fund Transfer

National Electronic Funds Transfer (NEFT) NEFT is electronic funds transfer

system, which facilitates transfer of funds to other bank accounts across the country.
This is a simple, secure, safe, fastest and cost effective way to transfer funds
especially for Retail remittances.

23
 Customers can remit any amount using NEFT Customer intending to remit
money through NEFT has to furnish the following particulars:

• IFSC (Indian Financial System Code) of the beneficiary Bank/Branch

• Full account number of the beneficiary.
• Name of the beneficiary.
The facility is also available through online mode for all internet banking and
mobile banking customers.
This is designed to cater to the need of ad-hoc and individual fund transfer
requirement of bank customers. The system replaces the requirement of DDs, TTs and
usage of cheques for effecting such payments. NEFT has been operational since
November 2005 and covers around 56,000 bank branches across the country.
The system works on net settlement basis and provides same-day settlement
across 6 settlement batches every day. NEFT is robust, reliable and a secure
mechanism to transfer funds from one bank account to another, and can also cater to
the demands of walk in customers who do have any bank account. Many banks have
also provided facilities to their net banking customers for originating NEFT transfer
instructions online.

24
Electronic Clearing Service (ECS)

1. Credit Clearing:

ECS (Credit) is designed for repetitive and bulk payment such as salary,
pens)on, 1TRD refunds, etc. settlement which means that payment instructions
submitted up to the cut-Off time on day zero' will be settled with credits given to all
the account holders on the next working day.

2. Debit Clearing:

ECS (Debit) is designed for the collection of repetitive and bulk receipts such
as electricity bills, telephone bills, EMI payments, Insurance Premium, etc.

Real-Time Gross Settlement

The acronym 'RTGS' stands for real time gross settlement. The Reserve Bank
of India (India's Central Bank) maintains this payment network. Real Time Gross
Settlement is a funds transfer mechanism where transfer of money takes place from
one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible
money transfer system through the banking channel. Settlement in 'real time' means
payment transaction is not subjected to any waiting period. The transactions are
settled as soon as they are processed.

25
 'Gross settlement' means the transaction is settled on one to one basis without
bunching with any other transaction. Considering that money transfer takes place in
the books of the Reserve Bank of India, the payment is taken as final and irrevocable.
Fees for RTGS vary from bank to bank. RBI has prescribed upper limit for the
fees which can be charged by all banks both for NEFT and RTGS. Both the remitting
and receiving must have core banking in place to enter into RTGS transactions.
Core Banking enabled banks and branches are assigned an Indian Financial
System Code (IFSC) for RTGS and NEFT purposes. This is an eleven digit
alphanumeric code and unique to each branch of bank. The first four letters indicate
the identity of the bank and remaining seven numerals indicate a single branch. This
code is provided on the cheque books, which are required for transactions along with
recipient's account number.
SECURITY AND RISK MITIGATION MEASURES FOR ELECTRONIC
PAYMENT:

As the electronic payment channels have multiple entry points, securing all of
them is an impossible task. These weaknesses are exploited by criminals and hackers
to cause havoc with your monies. In Reserve Bank of India is continuously releasing
guidelines to enhance the safety of E-Payments.

The best part of the guidelines is that all the players (All Scheduled
Commercial Banks including RRBs / Urban Co-operative Banks / State Co-operative
Banks / District Central Co-operative Banks/Authorised Card Payment Networks) in
the electronic payment eco-system are expected to adhere to the guidelines in a
reasonable period of time.

26
Securing Card Payment Transactions:
1) By default all new debit and credit cards should be enabled only for domestic use.
On specific customer request, cards can be enabled for international use too. Such
cards enabling international usage will have to be essentially EMV Chip and Pin
enabled.
2)Issuing banks should convert all existing MagStripe cards to EMV Chip card for all
customers who have used their cards internationally at least once (for/through e-
commerce/ATM/POS) .
3) All the active Magstripe international cards issued by banks should have threshold
limit for international usage. The threshold should be determined by the banks based
on the risk profile of the customer and accepted by the customer. Till such time this
process is completed an omnibus threshold limit (say, not exceeding USD 500) as
determined by each bank may be put in place for all debit cards and all credit cards
that have not been used for international transactions in the past.
4)Banks should ensure that the terminals installed at the merchants for capturing card
payments (including the double swipe terminals used) should be certified for PCI-
DSS (Payment Card Industry– Data Security Standards) and PA-DSS (Payment
Applications -Data Security Standards).
5) Bank should frame rules based on the transaction pattern of the usage of cards by
the customers in coordination with the authorized card payment networks for arresting
fraud. This would act as a fraud prevention measure.
6)Banks should ensure that all acquiring infrastructure that is currently operational on
IP (Internet Protocol) based solutions are mandatorily made to go through PCI-DSS
and PA-DSS certification. This should include acquirers, processors / aggregators and
large merchants.
7) Real time fraud monitoring system to be implemented at the earliest.
8)Banks should provide easier methods (like SMS) for the customer to block his card
and get a confirmation to that effect after blocking the card.
9) Customers should have an option for additional factor of authentication for cards
issued in India and used internationally (transactions acquired by banks located
abroad).
10) Real time call referral rules should be framed in co-ordination with the card
payment networks.

27
Securing Electronic Payment Transactions:
1) Customer induced options may be provided for fixing a cap on the value / mode of
transactions/beneficiaries. In the event of customer wanting to exceed the cap, an
additional authorization may be insisted upon.
2) Limit on the number of beneficiaries that may be added in a day per account could
be considered.
3) A system of alert may be introduced when a beneficiary is added.

4) Banks may put in place mechanism for velocity check on the number of
transactions effected per day/ per beneficiary and any suspicious operations should be
subjected to alert within the bank and to the customer.
5) Introduction of additional factor of authentication (preferably dynamic in nature)
for such payment transactions should be considered.
6) Digital signature for large value payments for all customers, to start with for RTGS
transactions, is another safety option.
7) Capturing of Internet Protocol (IP) address as an additional validation check should
be considered.
8) Banks accepting sub-members should ensure that the security measures put in place
by the sub members are on par with the standards followed by them so as to ensure
the safety and mitigate the reputation risk.
9) Banks may explore the feasibility of implementing new technologies like adaptive
authentication, etc. for fraud detection.
Investment in technology and manpower will be required to quickly safeguard Indian
Bank customers from electronic payment risks. The safer the e-Payments are, the
more people will shift their payment modes to e-Payments channel.

28
The Future Of India’s Payments System

Looking at the trends, we can be sure that an electronic payment is the future
and that digital will redefine the payment systems of years to come. Based on our
experience, these are some of the broad trends that will redefine payment systems in
India:
a. Inter-operability: With a myriad of payment service providers servicing
millions of customer accounts, the time is ripe to unleash network effects
through inter-operability between various digital channels.

b. Proliferation of acceptance networks: As of now, India has about 1.2

million POS terminals. This needs to increase rapidly, given India’s
population, geography, number of merchants, etc.
c. Government initiatives: The Government of India has been at the forefront
in the drive to encourage digital payments. Furthermore, it is working to use
direct benefit transfers for its various schemes and thus deliver entitlements
directly into beneficiaries’ accounts, identified and authenticated by
the Aadhaar system. Buoyed by the success of DBT for LPG, the Union
Budget 2016 announced trial of DBT for fertilisers.
d. Customer convenience and affordability: With a critical mass of 50
million transactions per month happening over mobile wallets – increasingly
in rural areas of country, the continued focus on convenience will be essential.
There are very real concerns about client service and protection that should be
addressed urgently. With this, and a low-cost 24X7 backbone offered by
IMPS, the time is ripe to reduce the transaction cost for the customer. This

29
would be something that will be hastened with the entry of new players. The
various experiments and initiatives in the market need to ensure safety and
security of transactions, in addition to adding convenience for the customer
and affordability for the service provider.

30
CHAPTER- III

31
 DATA ANALYSIS AND INTERPRETATION

Analysis of data is a process of inspecting, transforming, and modelling

data with the goal of discovering useful information, providing suggestions, arriving at
conclusions and supporting decision making. Data analysis has multiple facts and
approaches, encompassing diverse techniques under a variety of names, in different
business, science and social science domains.
This chapter deals with the analysis and interpretation of data regarding impact of
payment through electronic cards. Data are collected from 80 respondents and tabulated
for easy understanding and good presentation, which assists the researcher to analyse the
data efficiently.
The data collected are been analysed using the following statistical tools:
 Percentage Analysis
 Chi-Square test
 Garrett Ranking method
 Ranking method

The diagrams, tables and charts provide a bird’s eye view of the entire data and helps in
summarising and presentation of the data collected in a systematic manner.

The Chi-Square test (𝑥 2 ) is used to understand the accuracy of the variables used
and to find out whether they are dependent or independent. It is applied to validate the
results of the study.

32
 Table 3.1

Gender wise classification

Gender No. Of Respondents % Of Respondents

Male 53 66
Female 27 34
Total 80 100

Source: Primary data

70

60

50
Male
40
Female
30
66%
20
34%
10

0
Male Female

INFERENCE
Form the above table, it is inferred that 66% of the respondents are male and 34%
of the respondents are female. Majority of the respondents are male i.e., 66%.

33
 Table 3.2

On the basis of payment types

Types No. Of Respondents % Of Respondents

Cheque based payments 6 7.5
Electronic payments 40 50
Both 34 42.5
Total 80 100

Source: Primary data

07.5%

Cheque based payment

42.5%
Electronic payments
50% Both

INFERENCE
The above pie chart indicates that, majority of the respondentsi.e.50% are using
cheque based payments ,42.5%of the respondents are using electronic payment system
and 7.5% of the respondents are using both cheque based payment & electronic payment
system.

34
 Table 3.3

Source of information about electronic cards

Source No. Of respondents % of respondents

By Friends 26 32.50
By Relative 22 27.50
Business people 9 11.25
Others 23 28.75
Total 80 100

Source: Primary data

28.75% By Friends
32.5%
By Relative
Business people
Others

11.25%

27.5%

INFERENCE
The above table indicates that, 32.5% of respondents get their source of
information from friends, 28.75% from others, 27.50% from relatives and 11.75% from
business people. Majority of the respondents get their source of information from friends.

35
 Table 3.4

On the basis of frequency usage

Frequency Usage No. Of Respondents % Of Respondents

Daily 3 4
Weekly 29 36
Monthly 20 25
Frequently 5 6
Based on needs 23 29
Total 80 100

Source: Primary data

40
36%
35

30 29%
25%
25

20 no of respondents
15 % of respondents
10
6%
5 4%
0
Daily Weekly Monthly Frequently Based on
needs

INFERENCE
The above table shows that 36% of the respondents use electronic cards weekly,
29% of them use it based on needs, 25% of them use monthly, 6% of them use frequently
and 4% of them use daily. Hence majority of the respondents use electronic payment
system weekly.

36
 Table 3.5

Opinion on creating security

Response No. Of respondents % of respondents

Yes 58 72
No 22 28
Total 80 100

Source: Primary data

80

70

60

50 Yes
40 No

30

20 72%
28%
10

0
Yes No

INFERENCE
The above table portrays that 72% says electronic cards create security and 28%
of the respondents say electronic cards do not create security. Majority of the respondents
says electronic cards create security i.e. 72%

37
 Table 3.6

Easy procedure and formalities for using electronic cards

Response No. Of respondents % of respondents

Yes 60 75
No 20 25
Total 80 100

Source: Primary data

0
25%

Yes
No

75%

INFERENCE
The above table shows that75% feel that the procedure and formalities for getting
electronic card service is simple and 25% of the respondents disagreed to it. Majority of
respondents feel that the procedure and formalities for getting electronic card service is
simple i.e.75%

38
 Table 3.7

Reason for using electronic cards

Reason No. Of Respondents % Of Respondents

Necessity 22 27
Quick Access 41 51
Prestige 7 9
Changes in Technology 10 13
Total 80 100

Source: Primary data

60
51%
50

40 Necessity

30 27% Quick Access

Prestige
20 13% Changes in Technology
9%
10

0
Necessity Quick Access Prestige Changes in
Technology

INFERENCE
The above table shows that 27% use electronic cards for their necessity, 51% for
quick access, 9% for their prestige and 13% for changes in technology. Hence Majority
of the respondents says that they use it for quick access.

39
 Table 3.8

Factors influencing the use of electronic cards

Influencing Factors No. Of Respondents % Of Respondents

Safety 22 27
Increasing purchasing 10 13
power

Design 2 3
Easy availability 8 10
Easy to use 38 47
Total 80 100

Source: Primary data

Safety

47% 27% Increasing purchasing

power
10% 3% 13%
Design

Easy availability

Easy to use

INFERENCE
The above table shows that 47% of respondents are influenced as it is easy to use,
27% of them for safety, 13% of them for increasing purchasing power, 10% of them for
easy availability and 3% of them for design. Hence the majority respondents are
influenced as it is easy to use.

40
 Table 3.9

Satisfaction level of service provided by the banker

Satisfaction level No. Of Respondents % Of Respondents

Highly satisfied 18 23
Satisfied 40 50
Neutral 10 12
Unsatisfied 5 6
Highly dissatisfied 7 9
Total 80 100

Source: Primary data

9%
6% 23% Highly satisfied
Satisfied
12%
Neutral
Unsatisfied
Highly dissatisfied
50%

INFERENCE
The above table indicates that 23% of respondents are highly satisfied by the
service provided by the bank, 50% are satisfied, 12% are neutral about their opinion, 6%
are unsatisfied and 9% are highly dissatisfied. Hence majority of the respondents say that
they are satisfied with the service provided by the bank.

41
 Table 3.10

Usage of electronic cards during emergency situation

Response No. of respondents % of respondents

Yes 68 85
No 12 15
Total 80 100

Source: Primary data

15% 0

Yes
85% No

INFERENCE
The above table depicts that majority of respondents i.e. 85% say that electronic
card is more useful in emergency situation and the remaining 15%say that it is not useful
in emergency situation .

42
 Table 3.11

Effects of income on electronic cards

Options No. Of respondents % of respondents

Lower income group 5 6
Middle income group 55 69
Higher income group 20 25
Total 80 100

Source: Primary data

69%
70

60

50

40
no.of respondents
30 25%
% of respondents
20
6%
10

0
Lower income Middle income Higher income
group group group

INFERENCE
The above table depicts that 69% of the respondents who are from the middle
income group use electronic Cards, 25% from higher income group and 6% from lower
income group. Hence the majority from Middle Income Group use Electronic Cards.

43
 Table 3.12

Risks faced by the usage of electronic cards

Electronic card is No. of respondents % of respondents

risky
Yes 32 40
No 48 60
Total 80 100

Source: Primary data

Yes
40%
No

60%

INFERENCE
The above chart indicates that 60% of the respondents say that is not risky to use
electronic cards and 40% say that it is very risky. Hence the majority says that electronic
card is not risky.

44
 Table 3.13

Need for guidance for operation of electronic cards

Response No. of respondents % of respondents

Yes 30 38
No 50 62
Total 80 100

Source: Primary data

62%
No

Yes
No

38%
Yes

0 10 20 30 40 50 60 70

INFERENCE
The above table shows that 62% of the respondents use electronic payment system
without any guidance and the remaining 38%usewith guidance. Hence majority of the
respondents say that electronic payments are easy to use.

45
 Table3.14

Possession of electronic card for all bank accounts

Response No. Of respondents % of respondents

Yes 63 79
No 17 21
Total 80 100

Source: Primary data

21%

yes
No

79%

INFERENCE
From the above table it is inferred that majority i.e., 79% of the respondents have
electronic cards in all the bank accounts and 21% do not have in all bank accounts.

46
CHI -SQUARE TEST:
The 2test is used to understand the accuracy of the variables used and to find out
whether they are independent or dependent. It is applied to validate the results of the
study.
2 tests also used to find out whether or not there is a significant relationship
between the levels of customer satisfaction with Electronics payment in relation to the
following factors
 Age
 Nature of employment
 Income

NULL HYPOTHESIS (H0):

There is no significant relationship between the level of consumer satisfaction
towards payment through electronic card and the independent variables like age, nature
of employment, income.

ALTERNATIVEHYPOTHESIS (H1):
There is a significant relationship between the level of consumer satisfaction
towards payment through electronic card and the independent variables like Age, Nature
of employment, Income.

2= Σ (O – E)2

E
O – Observed frequency

E – Expected frequency

Expected frequency =Row total x Column total

Grand total

47
GARRETT’S RANKING:

Under the Garrett’s ranking technique the present position is calculated by using
the following formula:

Present position = 100(Rij-0.5)/Nj

Where Rij= Rank given for the i Item variable by the j respondents

Nj = Number of variables ranked by the j respondent with the help of Garrett’s

ranking table, the present position estimated is converted into scores. Then for each factor
,the scores of each respondent were added together and then total value of score and
mean value of score is calculated .This mean score for all factors were arranged in a
descending order and ranks are assigned and the important factors are identified.

Table 3.15

Level of satisfaction towards electronic payments - age wise

Level Highly Satisfied Neutral Unsatisfie Highly Total

Age Satisfied d Unsatisfie
d
<25years 2 20 3 3 1 29

25 – 35 2 16 1 1 1 21

35 – 45 3 5 1 2 0 11

Above 45 3 11 3 1 1 19

Total 10 52 8 7 3 80

48
Source: Primary Data

Rows &Columns O E O-E (O – E)2 (O – E)2/E

R1C1 2 3.63 -1.63 2.66 0.73
R2C1 2 2.63 -0.63 0.39 0.15
R3C1 3 1.38 1.62 2.62 1.89
R4C1 3 2.38 0.62 0.38 0.16
R1C2 20 18.85 1.15 1.32 0.70
R2C2 16 13.65 2.35 5.52 0.40
R3C2 5 7.15 -2.15 4.62 0.65
R4C2 11 12.35 -1.35 1.82 0.15
R1C3 3 2.9 0.10 0.01 0.003
R2C3 1 2.1 -1.10 1.21 0.58
R3C3 1 1.1 -0.10 0.01 0.009
R4C3 3 1.9 1.10 1.21 0.64
R1C4 3 2.54 0.46 0.21 0.08
R2C4 1 1.84 0.84 0.70 0.38
R3C4 2 0.96 1.04 1.08 1.13
R4C4 1 1.66 -0.66 0.44 0.27
R1C5 1 1.08 -0.08 0.0064 0.006
R2C5 1 0.79 0.21 0.04 0.05
R3C5 O 0.41 -0.41 0.17 0.41
R4C5 1 0.71 0.29 0.08 0.11
TOTAL 80 2 =8.498

DEGREES OF FREEDOM = (c-1) (r-1)

= (5-1)(4-1)

=12

49
INFERENCE

At 5% level of significance the table value for 12 degrees of freedom is 21.026.

The calculated value is 8.498 which is less than the table value. Thus the result is
independent. Hence it is concluded that there is no significant relationship between Age
and level of customer satisfaction towards their electronic cards. Therefore null
hypothesis (Ho) is accepted.

Table 3.16

Level of satisfaction towards electronic payments – income wise

Level Highly Highly

Satisfied Satisfied Neutral Unsatisfied Unsatisfied Total
Income
a)Below 1 9 1 2 1 14
Rs.20000

b)Rs.20000- 2 17 3 3 2 27
RS.30000
c)Rs.30000- 4 12 1 1 0 18
Rs.40000
d) Above 3 14 3 1 0 21
Rs.40000
Total 10 52 8 7 3 80

50
Source: Primary data

Rows& Columns O E O-E (O – E)2 (O – E)2/E

R1C1 1 1.75 -0.75 0.56 0.32
R2C1 2 2.63 -1.38 1.90 0.56
R3C1 4 2.25 1.75 3.06 1.36
R4C1 3 2.63 0.37 0.14 0.05
R1C2 9 9.10 -0.10 0.01 0.001
R2C2 17 17.55 -0.55 0.30 0.017
R3C2 12 11.70 0.30 0.09 0,008
R4C2 14 13.65 0.35 0.12 0.009
R1C3 1 1.40 -0.40 0.16 0.11
R2C3 3 2.70 0.30 0.09 0.03
R3C3 1 1.80 0.80 0.64 0.35
R4C3 3 2.10 0.90 0.81 0.39
R1C4 2 1.23 0.77 0.59 0.48
R2C4 3 2.36 0.64 0.41 0.17
R3C4 1 1.58 -0.58 0.34 0.22
R4C4 1 1.84 -0.84 0.71 0.39
R1C5 1 0.53 0.47 0.22 0.42
R2C5 2 1.01 0.99 0.98 0.97
R3C5 0 0.68 -0.68 0.46 0.68
R4C5 0 0.79 -0.79 0.62 0.75
TOTAL 80 2 =7.29

DEGREES OF FREEDOM = (c-1) (r-1)

= (5-1)(4-1)

=12

51
INFERENCE

At 5% level of significance the table value for 12 degrees of freedom is 21.026.

The calculated value is 7.29 which is less than the table value. Thus the result is
independent. Hence it is concluded that there is no significant relationship between
income and level of customer satisfaction towards their electronic cards. Therefore null
hypothesis (Ho) is accepted.

Table 3.17

Level of satisfaction towards electronic payments – employment wise

Level Highly Highly

Satisfied Satisfied Neutral Unsatisfied Unsatisfied Total
Employment
Student 1 6 3 1 0 11
Government 7 12 2 2 2 25
employee
Businessman 1 9 3 1 0 14

Private 2 20 3 4 1 30
employee
Total 11 47 11 8 3 80

52
Source: Primary data

Rows &Columns O E O–E (O – E)2 (O – E)2/E

R1C1 1 1.513 -0.513 0.263 0.17
R2C1 7 3.44 3.56 12.67 3.68
R3C1 1 1.93 -0.93 0.87 0.45
R4C1 2 4.13 -2.13 4.54 1.09
R1C2 6 6.46 -0.46 0.21 0.032
R2C2 12 14.69 -2.69 7.24 0.49
R3C2 9 8.23 0.77 0.59 0.072
R4C2 20 17.63 2.37 5.62 0.32
R1C3 3 1.51 1.49 2.22 1.47
R2C3 2 3.44 -1.44 2.07 0.60
R3C3 3 1.93 1.07 1.15 0.59
R4C3 3 4.125 -1.125 1.27 0.31
R1C4 1 1.10 -0.10 0.01 0.009
R2C4 2 2.50 -0.50 0.25 0.10
R3C4 1 1.40 -0.40 0.16 0.11
R4C4 4 3 1 1 0.33
R1C5 0 0.41 -0.41 0.17 0.42
R2C5 2 0.94 1.06 1.12 1.19
R3C5 0 0.53 -0.53 0.28 0.53
R4C5 1 1.13 0.13 0.017 0.015
TOTAL 80 2 =11.98

DEGREES OF FREEDOM = (c-1) (r-1)

= (5-1) (4-1)

=12

53
INFERENCE

At 5% level of significance the table value for 12 degrees of freedom is 21.026.

The calculated value is 11.98 which is less than the table value. Thus the result is
independent. Hence it is concluded that there is no significant relationship between nature
of employment and level of customer satisfaction towards their electronic cards.
Therefore null hypothesis (Ho) is accepted.

Table 3.18

Ranking the purpose of electronic cards

Purpose I II III IV V
Travel and entertainment 2 13 13 18 34
Shopping online 13 12 20 24 11

Purchase product 11 20 20 20 9
Withdraw money 43 13 9 9 6
Transfer fund 11 22 18 9 20
Source: Primary data

Purpose I II III IV V Total Percentage Rank

Travel and
entertainment 10 52 39 36 34 171 14.25 V
Shopping online
65 48 60 48 11 232 19.33 IV
Purchase
product 55 80 60 40 9 244 20.33 II
Withdraw
money 215 52 27 18 6 318 26.50 I
Transfer fund
55 88 54 18 20 235 19.58 III

TOTAL 1200 100

54
INFERENCE

In this above table clearly shows that the respondents were asked to rank for the
purpose for using electronic cards. Certain weights have been assigned to various degrees
of opinion. Like, I RANK - 5 points, II RANK – 4 points, III RANK – 3 points, IV
RANK – 2 points, V RANK -1 point. The parameters considered are, travel and
entertainment, shopping online, purchase of product, withdraw money, transfer fund by
multiplying given weights with the corresponding number of respondents to get
individual score. Give a total score for concerned purpose. This is the representative of
different respondent’s opinion .The above table makes clear that withdraw money ranks
first, followed by purchase product, transfer of fund, shopping online, travel &
entertainment.

Table 3.19

Ranking the problems of electronic cards

Problem I II III IV V VI

High cost of service charge 9 20 18 15 10 10

Linkage and power failure 16 6 19 14 15 8

Insufficient knowledge 10 13 4 12 13 28

Wrong entries in an account 18 10 10 19 17 8

Security problem and card damages 9 13 12 18 16 12

Delay in process 18 17 17 12 9 14

55
Source: Primary data

Problem I II III IV V VI Total Percentage Rank

High cost of service 54 100 72 45 20 10 301 17.74 II

charge

Linkage and power 96 30 76 42 30 8 282 16.62 IV

failure

Insufficient knowledge 60 65 8 36 26 28 223 13.14 VI

Wrong entries in an 108 50 40 57 34 8 297 17.50 III

account

Security problem and 54 65 48 54 32 12 265 15.62 V

card damages

Delay in process 108 85 68 36 18 14 329 19.39 I

Total 1697 100

INFERENCE

The above table clearly shows that the respondents were asked to rank for the
problems of electronic cards. Certain weights have been assigned to various degrees of
opinion. Like I RANK – 6 points, II RANK - 5 points, III RANK – 4 points, IV RANK –
3 points, V RANK – 2 points, VI RANK -1 point. The parameters considered are High
cost of service charge, linkage and power failure, insufficient knowledge, wrong entries
in an account, security problem and card damages, delay in process by multiplying given
weights with the corresponding number of respondents to get individual score. Give a
total score for concerned problem. This is the representative of different respondent’s
opinion .The above table makes clear that delay in process ranks first, followed by High
cost of service charge, wrong entries in an account, linkage and power failure, security
problem and card damages , insufficient knowledge.

56
 Table 3.20

Benefits of electronic payment

Ranks 1 2 3 4 Total
Factor

Saves time 15 19 29 17 80

24 hours service 31 23 15 11 80

Easy to use 21 14 25 20 80

Short processing time 13 24 11 32 80

Source: Primary data

Rank 100[(Rij-0.5)/Nj] Percentage position Garrett value

1 100[(1-0.5)/5] 12.5 72

2 100[(2-0.5)/5] 37.5 56

3 100[(3-0.5)/5] 62.5 43

4 100[(4-0.5)/5] 87.5 27

57
 RANKS 1 2 3 4

FACTOR

F1 1080 1064 1247 459

F2 2232 1288 645 297

F3 1512 784 1075 540

F4 936 1344 473 864

Factors Total Average Rank

Saves time 3850 48.13 III
24 hours service 4462 55.78 I
Easy to use 3911 48.88 II
Short processing time 3617 45.21 IV

INFERENCE

The above table clearly indicates that the majority of the reasonable to 24 hours
service is ranked it’s as first, easy to use is ranked as second, saves time is ranked as third
and short processing time is ranked as last

58
CHAPTER IV

59
 FINDINGS AND SUGGESTIONS

This chapter discusses the major findings of the study besides having a few suggestions
put down by the researches. The highlight of study by the researcher in a summary format
rather the descriptive form.

4.1 FINDINGS:
 Majority of the respondents using electronic cards age is within 25 years.
 The analysis visibly affirms that majority of the respondents are male.
 Middle income group are satisfied by the electronic payment system.
 The study discloses that majority of the respondents agree that electronic cards
saves time and also they feel that is easy to operate.
 The analysis visibly affirms that majority of the respondent’s income in between
Rs.20, 000-30,000.
 Most of the respondents prefer both cheque and electronic based payments.
 It is renowned from the analysis that majority of the respondents’ source of
information is by friends.
 Majority of the respondents use E-payment system for private purpose and day to
day transaction.
 In modern world, most of the respondents operate electronic cards without any
guidance.
 The analysis discloses that most of the respondents feel electronic cards is useful
in emergency situation.
 Relatively high proportion of the respondents’ reasons for using electronic cards
is quick access.
 The study reveals that the procedure and formalities in receiving electronic cards
is simple.
 Relatively high proportions of the respondents are satisfied by the service
provided by the banker.
 The study reveals that most of respondents have given top priority to 24 hours
‘service as the first factor in the benefits of electronic payments followed by easy
to use, saves time, short processing time.

60
  The study implies that most of the respondents have ranked withdrawal of cash as
the first purpose of electronic cards followed by purchase of products, transfer of
fund, shopping online, travel & entertainment.
 The study infers that majority of the respondents have ranked delay in process as
the first problems of electronic cards followed by high cost of service charge,
wrong entries in an account, linkage and power failure, security problem and card
damages , insufficient knowledge.

4.2 SUGGESTIONS:
 Steps should be taken to minimize the service tax and other fees charged towards
electronic cards.
 Consumer must possess well-equipped knowledge about electronic payments.
 Physical proof for fund transfer or various other transactions like receipts should be
brought.
 The customer care service should be made more reliable in order to avoid
inconveniences to the customer.
 The security of e-payment service should be improved in authenticity, controls,
accuracy data, redundancy controls etc.
 Bank should still minimize the formalities to be fulfilled by the applicants in order to
avail electronic cards.
 The banker should have constant touch with the customers to achieve customer
satisfaction.
 Errors committed in e-payment transactions in case of wrong entry can be reduced.
 Substitute storage of records in case of internet or computer failure has to be prepared
to enhance the easy access.
 It is considered that start-up cost of e-payment is huge and its impact is found on the
traffic changes.
 The cardholders feel that all the shops do not accept the credit cards and only the
selected retail shops are accepting it. Awareness and effective guidance should be
given among the users who are less educated.
 Necessary steps should be taken to avoid the cyber crime issues.

61
CHAPTER – V

62
 CONCLUSION

Technology has in arguably made our lives easier. It has cut across distance,
space and even time. One of the technological innovations in banking, finance and
commerce is the Electronic Payments. Electronic Payments (e-payments) refers to the
technological breakthrough that enables us to perform financial transactions
electronically, thus avoiding long lines and other hassles. Electronic Payments provide a
greater freedom to individuals in paying their taxes, licenses, fees, fines and purchases at
unconventional locations and at whichever time of the day, 365 days of the year.
Electronic payment system has a great opportunity to transform today’s economic world.
This system provides higher security and privacy than the present traditional forms of
payment. However, the risks that are involved in the transaction are of such kind as they
to be borne by the customers. Some methods have already been developed in the current
operation system to avoid fraud and double spending. Speedy transaction, aspects of
availability to the customer, privacy and security are such aspects of electronic currency
as far outweigh the possible risks.

On the basis of present study, first remark is that despite the existence of variety
of e-commerce payment systems, credit cards are the most dominant payment system.
This is consequences of advantageous characteristics, most importantly the long
established networks and very wide users base. Second, alternative e-commerce payment
systems of some countries are debit cards. In fact, like many other studies, present study
also reveals that the smart card based e-commerce payment system is the best and it is
expected that in the future smart cards will eventually replace the other electronic
payment systems. Third, given the limited users bases e-cash is not a feasible payment
option. Thus, there are number of factors which affect the usage of e-commerce payment
systems. Among all these user base is most important. Added to this, success of e-
commerce payment systems also depends on consumer preferences, ease of use, cost,
industry agreement, authorization, security, authentication, non-refutability, accessibility
and reliability and anonymity and public policy.

63
 Developing such system is not easy as the internet is not organized geographically
and it is almost meaningless to refer to a website as national or local. Any successful
attempt at governing cyberspace will involve significant international co-operation.

Therefore, policy measures that promote open and market-driven electronic

payment solutions for consumers and a level and competitive acceptance and issuance
landscape for electronic payment companies, merchants, and the banking could improve
the economic environment at the market level. A sustainable payments system is not just
about technology, but about driving in centives for others to participate in it and derive
value from doing so. Encouraging the growth of electronic payments gives consumers
and merchants a choice and increases competition.

64
65
 BIBLIOGRAPHY
WEBSITES:
 www.google.com
 www.Slideshare.com
 www.wikepidia.com
 www.epaynews.com
 www.paypal.com
 www.scrbe.com

REFERENCE:
 The impact of electronic payment on electronic shopping decision in Jordan

66
 QUESTIONNAIRE

1. Name:

2. Age:

a) Below 25years b) 25-35

c) 35-45 d) Above

3. Gender:

a) Male b) Female
4. Marital status:

a) Married b) Unmarried
5. Monthly income:
a) Below Rs.20000 b) Rs.20000- Rs.30000

c) Rs.30000- Rs.40000 d) Above Rs.40000

6. Nature of employment:
a) Student b) Government employee

c) Businessman d) Private employee

7. No. of earning members:
a) 1 b) 2

c) 3 d) Above3
8. What type of payment system do you prefer?

a) Cheque based payments b) Electronic payments c) both

9. How many electronic cards do you have?
a) 1 b) 2 c) 3

d) 4 e) Above 4

67
10. How long have you used electronic cards?

a) Less than 1 year b) less than 2 years

c) Less than 3 years d) above 3 year

11. What is your source of knowing about electronic cards?

a) By Friends b) By Relatives

c) Business people d) Others

12. Do you think cardholders can use the card all over the world?
a) Yes b) No
13. Do you think electronic card saves your time?

a) Strongly Agree b) Agree c) Neutral

d) Disagree e) Strongly Agree

14. How often do you use electronic card system for the transaction purpose?
a) Occasionally b) Frequently
15. What is the frequency usage of your electronic cards?

a) Daily b) Weekly c) Monthly

d) Frequently e) Based on needs

16. What is the minimum balance to be maintained by the card holder?

a) 0 balance b) 0- Rs.500

c)Rs. 500-1000 d)Above Rs.1000

17. Is ATM useful to the users of electronic cards?
a) Yes b) No
18. Do you have electronic cards for all your bank accounts?
a) Yes b) No

68
19. What are the reasons for using electronic cards?
a) Necessity b) Quick Access

c) Prestige d) Changes in Technology

20. Which of the factor influence you to use electronic cards?

a) Safety b) Increasing purchase power c) Design

d) Easy availability e) Easy to use
21. Do you think electronic cards are useful in emergency situation?
a) Yes b) No
22.Which strata of the economy are satisfied by the electronic cards?
a) Lower income group b) Middle income group

c) Higher income group

23. Rank the purpose for which you use your electronic cards:

a) Travel & Entertainment

b) Shopping online

c) Purchase product

d) Withdraw money

e) Transfer fund

69
24. Rank the benefits of electronic cards:

a) Saves Time

b) 24 hours Service

c) Easy to use

d) Short Processing Time

25. Rank the problems you face during operation of electronic cards:

a) High cost of service charge

b) Linkage and Power failure

c) Insufficient Knowledge

d) Wrong entries in an account

e) Security Problem and Card damages

f) Delay in process

70