DARE - Because Entrepreneurs Do

Credit cards are extremely important for online shopping, online business model, and for consumers who want to spend money and pay it after some days. Adverse to the usage of these plastic chips, lots of issues mar their popularity. Banks find it difficult to manage them as a product and offering to customers with security of transactions and guarantee of repayment. Consumers have a general fear that they would be over-charged in some hidden way; or they would end up spending more because there is no restriction of carrying cash or psychological stoppage on spending spree.

From business point of view and for the functioning of online business, credit cards are still indispensable. If you are a freelancer, providing services on software development, graphics, website designing or even as a writer, you will have to own a credit card to get registered on an online marketplace like Elance, RentACoder, etc.

Online shopping is another area where credit cards are used extensively. While buying in foreign currency, there are some foreign transaction charges that are not displayed when you make the transaction but are reflected in the credit card statement. Booking railway tickets, paying the airfare, hotel booking, opting for guided or special tour-packages, and many more activities are also made easy through the credit cards. However, still, I have met a lot of professionals who own the credit cards but do not want to use it just because of the fear that they would be spending more. This is a psychological factor, which actually is found true almost around all over the globe—consumers end up spending more when they shop cash-less.

One more factor that limits the usage of credit card is the tracking of its payment, which professionals in India find very cumbersome. Keeping record of payable date and other issues often act as repellants. Hidden costs and lack of awareness about the terms and conditions coupled with security reasons make some peripheral phobias among the consumers. 

Now something for the banks:

In India, there is no standard guidelines for issuing credit cards as such. I have tried many banks for this issue but none of them gives a clear answer as to what requirements I have to fulfill to get a credit card issued from them. The terms and conditions of joining the credit card family often vary from bank to bank and also change with time. Sometimes, banks close offering this product to consumers based on fraud and non-repayment of money.

Around 5 years back, I tried getting a credit card from HDFC Bank at my town branch. I filled the form and completed other formalities and expected that I would be issued a credit card. After some days, the representative, who also happened to be my friend, asked me this: “Are you a journalist? Do you work for some newspaper” (he sounded in a fun-filled tone). I was a freelance writer at that time and replied in negative. “Why then you tick-marked this option as your occupation?” I said there was no option available and this seemed to be more relevant to my profession as a writer ( Banks often do not recognize home-based business as potential guarantee of repayment). He said that they did not prefer issuing credit cards to such profiles like lawyers, police personnel, press and media people and my card request was rejected on these grounds.

The whole incident was not encouraging as I required that credit card urgently. I was, however, curious to ask one question, which I immediately shot at him: “Why do you fill the form of such people if you do not prefer offering credit cards to them and even more why you make such categories as occupations when your representative can ask and tell them at spot that credit cards can not be offered to them?” He laughed at me because no concrete answer can solve this question. Later, I realized that those forms are printed by head office and for branches where verification process are more potent. Though the banks are starting to offer this product in smaller towns also, they still find it difficult to have concrete verifying processes for the same. In bigger cities, they might offer the cards to these profiles after some process of verification. The solution here can be: banks need to diversify their choice of occupations and also their knowledge of the developing professions that might not fall under the main streamline of businesses.

The second instance was with Axis Bank with the same town branch. They kept denying that credit cards are not offered at that place and even the requests of employees of the branch are rejected. However, we applied directly through some relative of ours who was working in Axis Bank at other place and got the card issues, which means that we had the product at a branch where it was not supposed to be offered. 

The main point here is that the co-ordination and knowledge of representatives dealing this segment of bank-products is not satisfactory, and this is one of the reasons why credit cards are not enjoying the potential usage that they can if offered through a concrete and robust channel.