The usage of Debit Card and Credit Card has increased dramatically since past couple of years and its user has been growing exponentially in the country. This great service undoubtedly has gained popularity among the middle class, higher middle class and of course to the upper class citizen of the nation. People now feel safer and comfortable in carrying a single piece of plastic card rather than carrying a bundle of money with them.

All my childhood I grew up watching the advertisement of Sachin Tendulkar or Mr. Bond [Pierce Brosnan] holding their Master Card and since then I became a dreamer for those fancy cards [Though I didn’t know the difference between a debit or credit card back then]. And now today I am a proud member of two credit cards and a debit card by the grace of my Salary account.

Coming to the question, what exactly is the difference between a Debit Card and a Credit Card? To me its quite simple. Let’s assume that, I got my Salary of amount 50,000 TAKA [Not actual], and unlike back on old days, I don’t need to collect it from my Finance Department in hard cash, or collect it from a Bank using a check after waiting in a long irritating queue. The Bank has awarded me with a Card with which I can now go to an ATM booth, insert my security code, type an amount and hit enter to get my money. Yap, this is my debit card. It’s my own money that I am collecting and its over once it reaches the 50,000 limit. That’s the only use? Well, with this card I am now able to purchase many services like buying food, groceries, clothes or electronics. If the shops I am visiting supports Debit Card facilities then they will have a small Electronic Card Reader Box namely POS [Point of Sale] where they will scratch my card, enter the amount and hit enter. The amount I purchased will be deducted from my account, sounds cool huh? Exactly, and since the first day of its usage I am getting addicted towards it this day by day.

Ok, now that we have understood Debit Card, let’s explore the term “Credit Card”. Back to my old example, I have come to a point to take the card service to a bit higher level. Suppose I went to a shop in the last week of the month with 5,000 TAKA left in my account and found a cool White Summer Suit on sales that will cost me around 10,000 TAKA and will run out of sale soon if I don’t get it immediately. But I don’t have much money left in my wallet or on my debit card! What would I do then? Ah! Wish my bank would lend me some money for this couple of days so that I can repay them when I get my Salary. This is exactly when a Credit Card comes into play. A credit card is a form of borrowing. It allows you to 'buy goods now and pay later'. Credit Cards aren’t linked to your bank account. Like debit cards, they can be used to buy goods in shops with the same details being required for a debit card. You can also get a cash advance by drawing money at bank cash machines but the interest will be charged on daily basis. Your bank may offer you a credit card, or you can apply for one to any institution for example American Express. Think twice before using a credit card, if you don't repay your bill by its due date you will be charged with a heavy interest rate for that month.

If Debit Card and Credit Card are so useful and why did I placed the phrase “Service Annoyance” at the top in the title bar. Well, truth be told, I am not cursing these cards, they are very loyal to me but problem lies at the back end- people supporting this services. Let me share some of my bitter experiences while using these cards. It happens so many times that I took some of my friends for a treat and it ended up in total embarrassment, why? because my cute little loyal card won’t work in POS [The stupid box that failed to read the magnetic strip of my Debit Card/Credit Card]. It happens so many times that those shops claiming to have the American Express [Credit Card] facilities but apologizing next moment just after purchasing saying that their Amex POS is not working. This is frustrating and annoying, because at that very moment if you are alone and don’t have the cash with you then you need to find a nearby ATM booth [If you are lucky enough] to draw your money in hard cash and then pay the shopper. It even happened one day that the nearby ATM booth was not working due to network failure and I had to call my boss to pay and rescue me, what a shame!!!

Another annoying thing while purchasing goods with these cards are, you cannot purchase small amount stuffs like why? They says the transaction fee is high for them to bear for such small amounts! So, Should that be my headache? Many shops even declares that, they won’t proceed any transaction if the purchased amount is less than 500 TAKA.

The last and foremost annoying card of using a credit card is its long queue while paying the bills. I am a premium customer and that’s why I am using a credit card. It’s a posh thing and definitely my expectation while be high in terms of receiving the after sale service. It happens so many times that I went to the bank for paying the Due Credit Amount and came back cursing because of the long waiting line. Common, there has to be a dedicated booth for attending Credit Card holders! This is embarrassing as well.

Who’s to blame? From consumer’s perspective, we need a seamless service that will not embarrass us. The shop owner should be more careful and maintain a regular servicing for their POS and of course should permit to buy goods of any amount and Banks should also have a strong backup policy during network outage. They should also give an extra khatir to their credit card holders. Else the boom of e-commerce will be halted.

Last of all, I would like to propose a service that will take the Card Systems even to a higher edge. Carrying cards at times could be cumbersome. Imagine you went to a jogging early in the morning and found that you are thirsty and need to buy a bottle of water but you forgot to bring your wallet. What happens then? You hold your thirst, crawl back to home and swear never to leave your wallet ever. But think, had the whole Transaction System would have been biometric you might not had to experience this bitterness.

Imagine yourself in that retail outlet, you have finished purchasing the water bottle and the shopper gives you the total. You then scan your finger, put your PIN, amount and payment method in a touch screen monitor and hit enter. That’s it, doesn’t matter whether you have the card with you or not. The whole authentication system works similar to that of a card. Just instead of reading a magnetic Strip the scanner will read the finger prints. Service annoyance for this case? Well this is why the highly paid scientists are there! Let’s leave it up to them. In this cutting edge technology era this shouldn’t be a difficult task for them.

-- Samiul Huq, BankInfoBD

Sajjadur Rahman

The school banking programme has recently been launched in Bangladesh. The scheme not only plans to help students and parents with a sizeable amount of savings after a certain period, it also aims to instil the habit of savings from an early age into students.

The scheme will teach kids money management skills that may be useful for the rest of their lives. Through the programme, kids can bank at school, with a hands-on banking experience in a simple way.

In a major decision in November 2010, Bangladesh Bank (BB) asked all banks to open school banking branches. It said students need to be brought under banking services to help them contribute to economic activities through savings.

“So far, the response is very good. Both students and their parents are quite happy with the initiative,” Ali Reza Iftekher, managing director and chief executive officer of Eastern Bank Ltd (EBL), told The Daily Star.

EBL was the first bank that came up with school banking after the central bank issued a circular in this regard. The bank has introduced 'EBL Junior', a savings account for students, aiming to include the young population of society under the umbrella of banking.

The bank has so far opened 500 student accounts. It has set a target to net another 500 by next month, according to Muhammad Musa, head of branches of EBL.

School banking is not new in Bangladesh. Some banks, including Muslim Bank, had introduced a school banking programme in the 1960s, but it did not last long. It was some time before AB Bank (formerly Arab Bangladesh Bank) launched the service in Sunshine Grammar School in Chittagong in 2003. But, that too did not work.

Finally, school banking got renewed impetus when the central bank issued the formal circular in late 2010.

Now, 17 banks have already introduced school banking, according to BB statistics. Another 24 are in the pipeline to open the scheme soon.

Any student, aged between 11 and 17 years, can open an account with banks supporting the service. The account can also be opened at ease with three copies of photo of the account holder and a parent. This is basically a joint account between the student and the guardian.

There are some advantages of opening this account, such as waivers of fees and charges, free internet banking, a waiver of minimum balance requirement, debit card at lower costs, etc.

Banking is not well accepted, particularly among average housewives in Bangladesh. Housewives have long been reluctant to accept banking services because of their poor standing on financial literacy.

But this generation will be different, said Iftekhar. “We believe that when it comes to a child's education, knowing how to manage money is just as essential as English, math, science or arts.”

He said EBL would soon take the service to Chittagong and Sylhet too.

The 'EBL Junior' scheme offers 6 percent interest on a daily balance to be paid semi-annually. This will help the fund in the account grow at a faster rate than conventional savings accounts. A parent can use the account to save for future expenses of the child, like higher education, marriage or any other purpose.

Mutual Trust Bank (MTB) is another bank that has introduced school banking. It launched two products -- MTB Junior and MTB Graduates -- for students.

“Our officials have educating students on banking, products and the financial management,” said Anis A Khan, managing director and chief executive officer of MTB.

SME-focused BRAC Bank has also launched savings products for students below 18 years.

The bank introduced the 'Future Star Account', which is a savings account for minors that offers an opportunity to save for one's child's future. The account is available for children below 18 years of age. However, the legal guardian of the child will operate the account on behalf of the minor.

'Future Star Account' offers an interest rate of up to 8 percent per annum. The interest is accrued on a monthly average balance and applied to the guest account yearly. The minimum account opening balance requirement is Tk 2,000, said a bank official.

Trust Bank has also opened school banking and set up an ATM booth at Rajuk Uttara Model School and College to render services to students. Over 500 accounts have already been opened there, according to Ruhul Amin, an accountant of the college.

“It is very easy to open a student account. Some accounts have even been opened with an initial deposit of Tk 100,000,” said Amin.

Shariah-based banks are also coming up with the service.

Shahjalal Islami Bank has a deposit product named 'Mudaraba Shikhkha (education) Deposit' that can help parents build a base for their children's future education.

Still, many banks are yet to launch school banking. The City Bank and the Prime Bank are two banks working to introduce the programme.

“We are excited and work is underway to launch school banking,” said Masrur Arefin, deputy managing director of The City Bank. But he did not specify the date when the programme would be launched in the market.

Banks do not see school banking as a profit making business. But they are hope that many of these students would become their customers in future.

“We're helping students build a 'savings-attitude'. They might be our future clients,” said Musa of EBL.

sajjad@thedailystar.net

News: The Daily Star/ Bangladesh/ May-12-2011

Credit card is a very common instrument for our day to day life, it is known as plastic money also. At present in Bangladesh most of the private commercial banks offer the credit cards to there customers, but still it remains question how many of them are aware about the credit card.

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. 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.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. Most credit cards are issued by banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. This is defined as 85.60 × 53.98 mm (3.370 × 2.125 in) (3-3/8 × 2-1/8 in) in size. Credit is a method of selling goods or services without the buyer having cash in hand. A credit card is only an automatic way of offering credit to a consumer. According to Encyclopedia Britannica, "the use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers." However, references to credit cards have been made as far back as 1890 in Europe. Early credit cards involved sales directly between the merchant offering the credit and credit card, and that merchant's customer. Around 1938, companies started to accept each other's cards. Today, credit cards allow you to make purchases with countless third parties. At presents credit cards comes from different format with different limit. And the card holders have the choise of purchase through the card from his own country as well as through out the world. Credit cards were not always been made of plastic. There have been credit tokens made from metal coins, metal plates, and celluloid, metal, fiber, paper, and now mostly plastic cards. In 1950, the Diners Club issued their credit card in the United States. The Diners Club credit card was invented by Diners' Club founder Frank McNamara and it was intended to pay restaurant bills. A customer could eat without cash at any restaurant that would accept Diners' Club credit cards. Diners' Club would pay the restaurant and the credit card holder would repay Diners' Club. The Diners Club card was at first technically a charge card rather than a credit card since the customer had to repay the entire amount when billed by Diners Club. The another type of plastic card is debit card. The basic difference between the debit card and the credit card is, by the debit card one may withdrawl the amount which is available to their account but in case of credit card one may withdrawl the amount which is sanctioned by the bank without the availability of the certain fund.

American Express issued their first credit card in 1958. Credit cards were first promoted to traveling salesmen (more common in that era) for use on the road. By the early 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and MasterCard became huge successes overnight. At present The City Bank in Bangladesh distribute and maintain the American Express Credit card. Bank of America issued the BankAmericard (now Visa) credit card later in 1958.

Credit cards are issued by a credit card issuer, such as a bank or credit union, after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. Merchants often advertise which cards they accept by displaying acceptance marks – generally derived from logos – or may communicate this orally, as in "Credit cards are fine" (implicitly meaning "major brands"), "We take (brands X, Y, and Z)", or "We don't take credit cards". When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a card not present transaction (CNP).

Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland.

For card not present transactions where the card is not shown, merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card, date of expiry, and billing address.

Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit issuer charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). In addition, if the credit card user fails to make at least the minimum payment by the due date, the issuer may impose a "late fee" and/or other penalties on the user. To help mitigate this, some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding such penalties altogether as long as the cardholder has sufficient funds.

The benefits of credit card is for the issuer, the card holder and the marchent. The card issuers gets the interest from the card holder and also provide the service to them. And the marchents gets the advantages to sell the product on credit and the card holder gets the support to purchase the product at the time of there need. A credit card may be benefited for all if it is maintained properly.

- Article Written By: Md. Mahfuzur Rahman, BankInfoBd

References:
http://inventors.about.com/od/cstartinventions/a/credit_cards.htm
http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php
http://en.wikipedia.org/wiki/Credit_card

Internet Banking is growing popular day by day in Bangladesh. A number of private as well as local banks are going online now considering the demand and necessity of fast banking. Internet banking not only provides banking facility round the clock but also helps a country to get attached to the international economy as well as business. People throughout the world are now getting engaged with more activity and business and hence need the fast and anytime access to his/her bank account. Internet banking also facilitates buying and selling various products which varies country to country.

In Bangladesh many banks have launched Internet Banking. Amongst those HSBC, City Bank, BRAC Bank, Bank Asia, Jamuna Bank, Janata Bank, Southeast Bank, AB Bank, First Security Bank, Mercantile Bank, Premier Bank etc are in action already. Some are known as online banking, some are Internet Banking, providing various facilities. Like City Bank has the facility of account check and statement print including query about cheque book information. Bank Asia has almost same facilities but with addition they have internal fund transfer facility along with bill payment and mobile phone recharge which are, in fact quite handy.

Mercantile bank has a schedule for internet banking. It is Sunday to Thursday, 9am-3pm. They have the facility of money transaction, deposit and withdrawal though they charge a particular amount for each transaction according to their policy, it is a relief if you don’t have to go to bank for depositing and drawing money, isn’t it?

HSBC and BRAC Bank are clearly not satisfied with the transaction thing only in internet banking. They thought of something more and desiring and customized the service to its best for their clients and getting better day by day. HSBC has a whole lot of features in their online banking that includes 24/7 account access, loan account information, net- worth information, transaction amongst accounts, bill pay, personal information update, demand draft,  ATM info or PIN replacement request, chequebook order and lot more.

BRAC bank is one step ahead because for the first time they have introduced online shopping in Bangladesh. With exclusive features and facility BRAC bank also provides general online facility like the other banks. BRAC bank’s online shopping facilitates merchants to buy any product as they need online, they can customize the offers as well. Those who may have BRAC Bank VISA card or any VISA card can be a part of this online shopping service.

As the world economy is growing faster and banking sector is making mark each and every day, online banking is very important and effective to be a part of it. Bangladesh just started its journey in internet banking and banks are coming forward to make it a success. Online banking is clearly a huge benefit for the customers and saves a lot of time and things get done so easily. A developing country like Bangladesh can make the best out of Internet Banking and banks are completely into it.

HSBC, known as world's local bank, has recently introduced their very popular HSBC Amanah banking in Bangladesh. HSBC Amanah is the global Islamic financial services division of the HSBC Group. Amongst the many international Islamic financial services team, HSBC Amanah represents the largest in Middle East, Asia-Pacific, Europe and the Americas. It was established in 1998 with more than 300 professional to serve the purpose. Their main concern are the customers and their needs.

HSBC Amanah offers commercial banking products along with deposits and investment products, account services, corporate financing solutions, trade services, guarantee solutions and cash management services etc. Not only these, HSBC Amanah also provides Corporate Internet Banking- an international secured service based on the award winning HSBC net platform, in Bangladesh.

Amongst so many popular services HSBC Amanah in Bangladesh has introduced Amanah Inport Finance, Short-Term Financing, Documentary credit etc.

Amanah Import Finance

For business purpose HSBC's trade specialists and financial consultants offer expertise and practical support to the business owners as HSBC is well reputed for expertise in global trade finance. Amanah Import Finance is based on the Shariah principles of Goods Murabaha, catering to import finance through Documentary Credit and Shipping Guarantees.

Main Features:

Ø Competitive pricing with the market

Ø Simple documentation and quick turn-around time

Ø In the goods Murabaha transactions, a client him/herself will be appointed as their agent to purchase the goods and negotiate the price and other specification with the supplier of goods.

Documentary Credit

Amanah Documentary Credit helps developing the overseas business relationship. A number of key factors need to be considered while developing business relationships with overseas suppliers and there comes the Documentary Credit. A documentary credit issued by HSBC Amanah provides assurance and security to both the buyer and the supplier by helping to mitigate the inherent risks of international trade.

Main Features:

HSBC Amanah documentary Credit is based on the Shariah principles of Murabahah or Wakalah. It has multiple features like following:

Ø Financial Strength

Ø Global Network

Ø Seamless and timely

Ø Expert Assistance

Ø Vendor Support

Short-Term Financing

This financing facility is known as Amanah Goods Murabaha which is a Shariah-compliant product that provides shot-term financing for a customer's working capital requirements and purchase of assets. This particular financing system involves the Bank purchasing goods/assets at a customer's request and selling the same to the same customer at a sale price on a deferred payment basis. It is a Shariah requirement that the breakup of cost and profit in the sale price be disclosed.

Product Features:

Ø It helps a customer to purchase with a wide variety like Raw Material, Spare Parts, machinery/equipment, finished goods etc.

Ø A customer may enjoy competitive pricing with the market

Ø 1-12 month tenor

Ø Simple documentation and quick turn-around time

Ø Various payment schemes

Product Structure:

How does it work? A customer of the bank will be appointed as their agent to purchase the goods and negotiate the price and other specifications with the supplier. Each time a customer needs prior approval of the bank to get engaged with a supplier. Based on the value of the purchase, bank will prepare an offer letter for the customer, which will be signed and sent by the customer to the bank advising to purchase the goods from the bank at a Murabaha price (cost plus profit).

The bank will sell the purchased goods/assets to the customer by accepting the offer and making the payment to the supplier. Customer will pay the bank on the agreed date.

HSBC Amanah has surely opened a new window to the business owners as well as regular clients in Bangladesh which will surely be a great opportunity for them to enhance the economic strength of the country with an Islamic way and view.