VARIOUS TYPES OF CARDS ISSUED BY BANKS

INTRODUCTION TO CARDS

Credit card, pre-paid card, debit card are instruments that substitute cash, paper cheque including traveling cheque. Through the use of these cards, customers of the bank can easily withdraw cash from their accounts or pay to the merchants for their purchase by debiting their account and or overdraft from their card through any authorized agents or merchants of such cards. The nature of debt to the customer account differs from the types of cards the bank issues.

The card is issued with the validity period as prescribed by the management of the bank on case to case basis of different types of cards and withdrawal amount may be limited as per the currencies as per regulations determined by the management of the bank from time to time.

Any person to whom the card is issued is called 'Card Member/Card Holder'.

The card is strictly non-transferable and can only be used by the card member.

TYPES OF CARDS

1. Credit card:

Credit card is a card that gives card members revolving line of credit, the size of which is generally determined by the income and other requirements as per the regulations determined by the management of the bank.

In credit card, there is no obligation to pay the full amount billed on the card account at the end of the billing period. However, a minimum installment payment (determined by the bank) must be paid on the outstanding amount every month within due date. For the balance amount, the card member will be liable for the payment of interest charged by the bank on the outstanding amount for the extended credit period.

2. Charge Card

Charge card also functions as credit card. The only difference is on the payment of billing amount. In case of charge card, the full billing amount must be paid within the due date. If the full billing amount is not cleared within the due date, the cardholder will be liable for the payment of interest charged by the bank along with other financial charges.

3. Prepaid Card

As per the name suggests, prepaid cards are those cards, which shall be issued against the load value of the applicants. Unlike the debit cards, the customer needn't open an account with the bank. The card member can use the card either to withdraw the cash or to pay any service/purchase up to the deposited amount.

4. Debit Card

A card that gives immediate access to the funds of Card member's nominated account for either cash advance or to pay any service/purchase up to the available balance in the account. In order to obtain the debit card, an applicant must have an account in the bank.

BRAND NAME OF THE CARDS

Bank issues various cards to its customers with affiliation from the international card brands such as VISA International, MasterCard International, American Express, UnionPay International, etc.

PARTIES TO CARD BUSINESS

The various parties involved with card business are as follows:

1. Card Member or The Applicant

The party that request the card to be issued on his/her behalf. These are usually the buyer of the card or the account holders of the bank in case of debit card, prepaid card and credit card.

2. Issuing Bank

The applicant's bank that issues card and undertake to the acquirer of the card to reimburse the withdrawal/claim of the card upon the receipt of transaction processed from the cards issued by them.

3. Acquirer Of The Card

The bank or the financial institute or the merchant or the Agent, who acquires card or accepts cards and finalizes the deal by paying cash or selling commodities. The acquirer claim reimbursement of such withdrawals to the concerned issuers of the card  as per prescribed arrangements of different brands of the card.

4. Parent Company of The Card

Parent companies are the owner of the various brands of credit cards, debit cards, prepaid cards etc. Operated by various international agencies such as VISA International, Master card International, which are economic joint venture of various financial institutions operated around the world  that issue/acquire and market various card products.

5. Reimbursement bank

A nominated bank authorized by the issuing Bank for the settlement of the transaction done from its card (as an issuer) and/or the settlement of the transaction acquired by the Bank (as an acquirer). The reimbursement bank settles this transactions either by paying or accepting the payment on behalf of the bank. The claim or reimbursement of these settlement transaction are governed through the system of settlement as prescribed by the respective parent companies of the card with bilateral agreement between the parent company of the card and the card issuing bank.

DOMESTIC VS. INTERNATIONAL CARDS

As per the nature of uses and nature of currencies, cards may be classified as:

1. Domestic Cards

Domestic card is issued in Rupees, which shall be valid in India and Nepal only.

For the settlement purpose and as prescribed by the parent companies of the card, the usage of these cards in India/Nepal for cash withdrawal and/or for purchase transactions within India/Nepal on the ATM/POS Terminals owned by other companies shall be treated as withdrawals in Indian Rupees and the usage of these cards in ATM/POS terminals owned by domestic bank shall be treated as withdrawals in Nepali Rupees.

2. International Cards

International card is issued in US dollars, which shall be valid worldwide except in India and Nepal

TYPES OF CUSTOMERS FOR CREDIT CARDS

The credit cards shall be issued to the two types of customers as follows:

1. Personal Card

2. Corporate Card

DOCUMENTS TO BE OBTAINED FOR CREDIT CARD

For issuance of credit cards, the documents required to obtain from the applicants are as follows:

For personal card

• Salary certificate/documentation - Valid Lease Agreement (Rental Income), Pension Certificate (Pensioner), Other Income source disclosing documents to prove income sources duly issued by the concerned organization.
•  KYC form is mandatory if the applicant customer does not maintain account in the Bank.
• Identification paper (copy of citizenship certificate/passport)
• Two passport size latest color photograph
• Photocopy of utility bills – either electricity or/and water, certifying the address of the applicant
• Sketch of location of resident/office of the applicant
• Personal guarantee and Promissory Note

For Corporate Card

• Company/Firm Registration Certificate
• Income Tax registration and Tax clearance Certificate
• Board Resolution authorizing availing of credit card and debiting company account for all charges
• Letter by authorized management personnel for issuing individual credit card
• A copy of latest audited balance sheet and statement of profit and loss of the company/firm along with proof of any other income sources
• KYC form is mandatory if the applicant customer does not maintain account in the Bank.
• Identification paper (copy of citizenship certificate/passport)
• Two passport size latest color photograph
• In case of FCY currency cards, Letter of undertaking for complying the FCY rules and regulations set by Nepal Rastra Bank.

Note: Besides above mentioned documents, additional documents may be required on case to case basis as required by the bank management