Post note ban: plastic money is a boon

Plastic Money, which continues to be a vague term for many even today, is nothing but money in the form of a plastic card — may be a ‘Debit or Credit’ card. A Debit Card is an ATM card obtained/issued from/by a bank on customers’ account and could be used to withdraw money from the account round the clock.

ATM card — ‘Plastic Money’ is an off-shoot of technology paving the way for networking or otherwise called ‘Core Banking Solution’ and has come as a boon. There is an apprehension among the people that having an ATM card is fraught with risks.

ATM cards issued today come with micro chips and are absolutely safe. The minimal care that needs to be taken is to keep one’s PIN (Personal Identification Number) a secret, safe and secure, besides the card itself.

In order to ensure safety of customers, almost all banks have posted guards at their ATM kiosks and have provided ‘Panic Buttons’ inside ATMs. Banks have also fixed CCTV cameras inside and outside the ATM kiosks.

Banks are also sending SMS alerts soon after the withdrawal of the money from the ATMs/after use at Point-of-Sales (PoS), and in case it is felt that the card has been misused, its usage can be blocked by a mere request over a toll-free number.

ATM cards can also be used to withdraw money abroad and many banks are issuing ‘abroad travel cards’ which are calibrated ones — that is pay money in advance and get the card calibrated to the extent of money paid like prepaid SIMs in case of mobiles.

Another form of plastic money comes in the form of ‘Credit Card’. Today, credit cards are proliferating. Banks not only provide, but aggressively market, credit cards. Banks charge annual fees depending on the type of card that they provide to customers.

Plastic money in the form credit cards, as the name itself suggests, is on account of the credit — credit limit approved/provided by the banks.

The credit limits are fixed by the banks while issuing the cards, and the limits fixed are after exercising due diligence by them while processing the applications for credit cards.

The banks do look for CIBIL history of the applicant and credit scores play a vital role.

The catch in case of ‘Plastic Money-Credit Cards’ is that the limit fixed is available to the card-holder free of cost — that is interest-free normally for 50 days. For example, if the limit provided by the bank on a credit card is Rs 1 lakh and the billing cycle starts from the first of the month, the dues on account of usage of the credit card can be paid by the 20th of the next month.

The penetration of plastic money in India is stated to be low when compared with Western countries. The government is pushing for usage of plastic money increasingly as every transaction done under them are duly accounted for and are ‘White Transactions’. For those who have plastic money, risk or woe of carrying cash can best be avoided.

(The writer is Chief Manager (Retired) at State Bank of Mysore)