Credit Cards – Simplified
What is credit card?
A credit card is one of the most simple and convenient modes of payment. Borrowing from the definition in Wikipedia, ‘It allows the cardholder to pay for goods and services based on the holder 's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.’ Credit cards are examples of how power can be vested in as small a thing as an 85.60 × 53.98 mm plastic card with a magnetic stripe embedded in it.
Contents of the card and their significance-
How the system works- 300
Transaction steps
Authorization- The cardholder gives the card as payment. The merchant submits the transaction to the concerned bank. The bank verifies the card details and the amount after which an approval code is generated.
Batching- Authorised transactions are kept in ‘batches’ which are sent to the acquirer at a fixed period of time usually once in a day.
Clearing and Settlement-The batch transactions are sent by the acquirer through the credit card association which debits the issuers for payment and credits the acquirer.
Funding- The acquirer in return pays the merchant for which he gets the processing fee.
Chargebacks- Sometimes, the money in the merchant account is held due to a transactional dispute mostly initiated by the cardholder. In the event of a chargeback, the issuer
James D Scurlock’s “Maxed Out” focused on the revolving use of credit cards to charge now and pay later and the fact that once the credit card was maxed out another one was sent from the credit card companies and the whole process begins all over again. Scurlock’s essay made the reader aware of the downfalls and hardships that can occur when credit cards are constantly used for purchases compared to Kevin O’Donnell’s “Why Won’t Anyone give Me a Credit Card”.
When consumers use a debit or credit card for the purchase of interchange fees paid by the merchant's bank (the buyer) to the consumer's bank (issuer). The level of interchange fees is will determine a fee relatives faced with cardholders compared to stores. The interchange fee is higher, causing the cost of acquirers charge merchants to more efficiently and reduce the costs of issuers to cardholders charging less. (Or in fact, give them a discount)
Classification: Posting of sales transaction to proper account: tested when accuracy tested; focus on unusual items
The liberalization of the money related divisions in Asia has brought about the fast spread of charge card organizations and monetary organizations giving different sorts of purchaser credit. The charge card market in general world has extended radically that the guarantors of outside nations has presented cellular telephone Visas for the comfort of their customers.(Amin, 2008) This, combined with the passage of remote banks, has enormously expanded the quantity of credit cards accessible, and consequently such spending in Pakistan. Despite the fact that charge card was presented in Pakistan decades prior when Habib Bank, the biggest bank in Pakistan, dispatched its gold card, however individuals had scarcely think about this card in view of its extremely restricted issuance. Several years back, Master card was introduced by ABL (Allied Bank of Pakistan), but that also was not get good attention. In year 1994, VISA Card is introduced by Citibank, that give a better turning point to plastic money industry in Pakistan. The working of Citibank no doubt was amazing that open doors for new offerings for the people of our country as well as for financial industry
i – One specific transaction can be captured in the accounting information as input, process and output such as a supplier invoice. This supplier invoice would be initially recorded onto the company’s books when it reaches them, this would be the input. After this, it will be included in the summary of the general ledger accounts after being processed by double entry accounting, this would be the process. Finally, it will be displayed in financial statements such as the balance sheet and this would be the output.
1. ?Reserved Inventory? table ? this table will be a transaction table that will ?reserve? the items by removing them from inventory and holding them in the reserved table until one of the following conditions is met:
A single purchase must be partially paid for immediately and the remainder can be paid within 30 days. However one check cannot pay for more than one purchase (just as one cash receipt from a customer cannot pay for more than one sale). The only payment terms BB has for a customer is to pay immediately in cash in full. Only one vendor or customer is involved in a transaction, however cash receipts and disbursements take place within other cycles of BB. All employees can be involved in many of their respective transactions over time.
Another recommendation is to eliminate the batch process so that payments can get to the suppliers at a faster rate and decrease the number of supplier complaints, summarized on Table 7 (Page 7). This will eliminate the muda of the extra time needed to un-batch the invoices so that information can be relayed to suppliers quicker.
Payment Card Industry Security Standards Council (PCI) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Essentially any merchant that has a Merchant ID (MID) (PCI Compliance
Banks are often the merchant service provider for a credit card issuer (EMV, MC, Visa), or for their own credit card. We present here, a possibly oversimplified version of a payment transaction:
You are correct that the 5 activities involved in the acquisition and payment cycle are requisition, purchase of goods and services, receipt of, and account for, approval of items for payment and cash distribution.
Many of our time rely on credit and debit cards when purchasing items. While the two seem identical to one another, failure to know the difference can result in an economic catastrophe on the card owner's part. Debit cards are used as a way to spend money that the consumer already has by withdrawing the purchase amount directly from their account. On the other hand, credit cards allow the card owner to borrow money from the bank, in which the card is issued, up to a certain amount in order to make a purchase which they will pay back to the bank at a later date.
Plastic money is in vogue in today's economy. Paying for what you buy through your credit card is fashionable and convenient. But credit cards are growingly becoming a matter of immense concern thanks to the problem of card debt. The problem of credit card debt arises when consumers buy something swapping their card but are unable to repay the money to the card company within the stipulated time period.
All in all credit cards are good because they allow for you to make big purchases in your life and being responsible with them can make it easier to apply for loans. If you are not responsible with credit cards then you will be in debt and have bad credit. They are made for almost anyone to apply for but you do not need one if you cannot afford to use them. Next time you swipe that plastic card just imagine using actual money and ask yourself, do I really need
In today’s economy, cash or a credit card is needed to meet the basic human needs. It is an apparent fact that we need cash or credit cards to purchase items such as food, clothing, and to buy gas. Also, when you are out shopping and discover that you have used all the cash in your possession, it is then that you realize that the advantage of having a credit card. Furthermore, with cash, you are restricted to the amount in your wallet or purse; however, a credit card allows you to pay for your purchase at a later date. Both cash and credit cards can be useful when you manage them wisely. While cash and credit cards are similar in that they both are readily accessible, used for goods and services at the time of purchase, they are dissimilar because of theft, high- interest rates, identity theft.