Research Methodology

(1)

COMPARITIVE ANALYSIS ON CONSUMER PREFERENCE

BETWEEN PLASTIC MONEY AND CASH

By

XXXXX

MBA

Session (2013-15)

RESEARCH PROJECT

Submitted to:

XXXXXX

TITLE

(2)

Title of project: COMPARITIVE ANALYSIS ON CONSUMER’S

PREFERENCE

.

BETWEEN PLASTIC MONEY

AND CASH

Name of the Student: XXXXX

Roll no: XXXXX

Name of the Institution:

Name of Advisor:

INTRODUCTION

PLASTIC MONEY

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use every day in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards and store cards.

(3)

Authorized Teller Machine (ATM) but it will not allow the holder to purchase anything directly

with it.

Credit Cards - Again this card will permit the card holder to withdraw cash from an ATM, and a credit card will allow the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high interest loan to the card holder, although the card holder can avoid any interest charges by paying the balance off in full each month.

Debit Cards - This type of card will directly debit money from your bank account, and can directly be used to purchase goods and services. While there is no official credit facility with debit cards per se, as it is linked to the bank account the limit is the limit of what is in the account, for instance if an overdraft facility is available then the limit will be the extent of the overdraft.

Pre-paid Cash Cards - As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These are usually re-useable in that they can be 'topped up' however some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent

they are disposed of.

Store Cards - These are similar in concept to the Credit Card model, in that the idea is to purchase something in store and be billed for it at the end of the month. These cards can be charged at a very high interest rate and can are limited in the places they can be used, sometimes as far as only the store brand that issued it.

CASH

Cash refers to money in the physical form of currency, such as banknotes and coins.

ADVANTAGE AND DISADVANTAGE OF PLASTIC MONEY TO

CONSUMER

(4)

Advantages of Plastic money:

 Easy to handle- it prevents to carry out heavy wallets, hence, reducing the chances of theft.

 Easy access to money- in the situation of instantaneous want for money, one can withdraw /

debit the demanded cash amount from the account and thus prevents any risk of getting marooned in travelling.

 Easy availability- Now a day’s every bank facilitates with Credit cards as long as the

account become active. The cash ATM machines are also open 24/ 7, therefore whenever in need one does not have to wait for the banks to open, but can take out the money using the card.

 Miles of Cards- Most credit cards companies offer miles on every purchase. This indicates

that by using the card for purchasing, there are points added which get aggregated in the user’s account. Lastly, when a good amount of these points get collected, the consumer can use them for purchasing any product for free, hence making a double use of money is another advantage of plastic money.

Disadvantages of Plastic money:

 Just a plastic- Besides all the advantages, Credit card is just a plastic which can get either

lost or stolen. This may results in crimes in which extensive purchases can be made under the name of the account holder. These cases might get resolved in the benefit of the applicant, but there is still an identity theft which is a very serious issue.

 Shops using other vendors- There are numerous shops which accept credit cards of a

specific company only. In this situation the cash is the only way of payment for those who use a credit card of another company.

(5)

 Less Global availability- There are many cases where various companies do not permit their

cards to be used in areas where they have a regional dispute with.

 Worn out Magnetic strip- The magnetic strip of a credit card can get worn out due to

massive use. If such a condition happens while travelling, and this is the only way of cash that the consumer has, then he or she has to wait till the time they receive a new card, which can take a minimum of 48 hrs.

HISTORY BEHIND CREDIT/DEBIT CARD

CREDIT CARD

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. Today, every credit card carries an identifying number that speeds shopping transactions. Imagine what a credit purchase would be like without it, the sales person would have to record your identity, billing address, and terms of repayment.

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

(6)

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.

The Shape of Credit Cards

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.

Diners club 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.

First Bank Credit Card

The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York. In 1946, Biggins invented the "Charge-It" program between bank customers and local merchants. Merchants could deposit sales slips into the bank and the bank billed the customer who used the card.

(7)

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.

SIX FACTORS WHICH ARE CONSIDERED FOR APPLYING FOR

CREDIT CARD

1. Interest rate charged on credit cards 2. Annual Fees & Other charges 3. Rewards and Offers on Credit Card 4. Customer Service and Transparency 5. Convenience to pay the bills

6. How easy was it to apply for credit card

DEBIT CARD

History of debit card dates back around 20 years ago, which highlighted the introduction of e-commerce and alternative means of payment.

The recent history of debit card indicates the rise in the usage of debit cards. History of debit card reflects the dominance of the debit card as a means of making payments, becoming increasingly popular. This alternative means of payment is gradually gaining ground with each passing year.

History of debit card shows that back in 1990, the count of debit cards in circulation was around 19 million.

The use of debit card boomed to 28.8 million in 2006 and is expected to reach34.4 million in 2016.

(8)

 History of debit card has shown that food and drink has dominated the scenario of the majority of the transactions involving a debit card.

 It indicates that the last 20 years have witnessed a radical change in the payment options and the plastic card has replaced cash.

DEBIT CREDIT CARD USEAGE IN INDIA:

Reserve Bank of India (RBI) stats show that credit card and debit card usage, both in terms of volume and value, has been steadily increasing over the past 4-5 years.

In the 2011 FY there were 265.1 million credit card transactions, which accounted for INR 755 billion, and 237.1 million debit card transactions, which were valued at INR 357 billion.

Also, there are more than 260 million debit and credit cards in circulation in India presently. Electronic payments have been growing at 60% in India over the last three years. Add to that the fact that India has been one of the fastest growing countries for payment cards or prepaid cash cards in the Asia-Pacific region.

(9)

(10)

THE RESULTS OF THE SURVEY WHICH CONDUCTED ON CREDIT

CARDS

(11)

As per survey conducted by www.jagoinvestor.com on the top 6 credit cards various factors along with their weight age is determined in this table. This table tells about how from various factors it is determined which Bank’s credit card is favorable or not.

(12)

QUESTIONNAIRE

Respected Sir/Madam, I XXXXX, student of MBA of XXX Institution, assure you that the details which are to be submitted below will be used only for the Academic Purpose as well as for Research Work and will be kept confidential. Thank You.

Q1. Do you have a debit/credit card: a) Yes

b) No

[Fill the questionnaire only if answer to Q1 is yes] Q2. Which bank’s card/debit card you use:

a) Axis bank e) other, please specify_______________ b) HDFC bank

c) State bank d) ICICI bank

Q3. Do you buy or register online: a) Yes

b) No

Answer Q4. only if said yes in above question:

Q4. For purchasing online, how do you make payment: a) Cash on delivery

b) Online banking c) Credit/debit card d) Paypal

Q.No. YOUR PREFERENCE IN FOLLOWING CASES CASH CREDIT/DEBIT CARD

5 For buying expensive electronic consumer goods from shop do you make payment by

6 Out on holiday do you prefer taking 7 For filling the petrol you generally use

(13)

Q9. While registering for exam, what do you prefer: (only for students) a) Pay through online banking c) By depositing in bank b) Credit/debit card

Q10. How frequently you withdraw cash from ATM card:

a) Once a week c) Once a fortnight b) Twice a week d) Once a month Q11. How long have you been using credit card/debit card:

a) Less than 6 months c) 2-4 years

b) 1-2 years d) More than 4 years Q12. How often do you use credit/debit card in a month:

a) Once c) More than 4 times b) 1-4 times

Q13. How frequently you pay back on the outstanding credit card balance: a) 15 days b) Once a month c) Once a quarter Q. No YOUR SATISFACTION LEVEL FOR FOLLOWING QUESTION HIGHLY SATISFIED

SATISFIED NEUTRAL DISSATISFIED HIGHLY

DISSATISFI ED

14 Are you satisfied with expenses/ charges charged on your credit card 15 Are you satisfied

with gifts offered on credit card points

16 Are you satisfied with long term durability of the credit/debit cards 17 Are you satisfied

with the credit limit offered to you

(14)

PERSONAL INFORMATION Name

Contact number Gender of card user:

a) Male b) Female

Age group of card user: a) 20-35

(15)

DATA ANALYSIS AND INTERPRETATION

Analysis & Interpretation of credit card users under Age Group of 20-35 & 35-60

Table 1: Analysis of number of Female respondents under both the age

groups.

(In Numbers):

Gender

Age Group: 20-35 Age Group: 35-60 Male Female Male Female

45 55 80 20

Fig 1: Percentage comparison of Female respondents

Analysis and Interpretation:

According to above Statistics there are more female card users under the age group 20-35 as compared to the card user under age group of 35-60, where number of female card users is less by %. But out of 200 respondents only 37.5% are female card users

.

Male 45%

Female 55%

Gender of Credit Card

users (Age group:

20-35)

Male 80% Female 20%

Gender of Credit

Card users (Age

(16)

Table 2: Analysis of which Bank’s Credit/Debit card preferred under both the

age groups:

(In Numbers):

BANKS Axis bank HDFC bank State bank ICICI bank Other Age: 20-35 33 24 30 16 6 Age: 35-60 16 14 60 10 3

Fig 2: Graph presenting number of respondent’s preference of Bank’s

Credit/Debit card under both the age groups

Analysis and Interpretation:

According to the above statistics 33% & 30% respondents under age group 20-35 prefers axis bank and state bank credit/debit card respectively as compared to other banks, 7 respondents of which have credit/debit card of 2-3 banks. And 60% respondents under age group 35-60 prefers state bank credit/debit card, 2 of these respondents have credit/debit card of 2-3 banks. Other Banks include PNB, Bank of Baroda, J&K Bank, Indian overseas Bank, Union Bank.

33 24 30 16 6 16 ₁₄ 60 10 3

Axis bank HDFC bank State bank ICICI bank Other

Which bank’s card/debit card used

(17)

Table 3: Analysis of preference of respondents for online buying or

registrations

(In Numbers):

Do you buy or register online

Age Group: 20-35 Age Group: 35-60

Yes No Yes No

75 25 75 25

Fig 3: Percentage of respondents preferring online buying and registration

under both age groups.

Analysis and Interpretation:

According to the above statistics under both the age groups 1/4th of the respondents do not prefer buying or registering online.

Yes 75% No

25%

Do you buy or register

online (Age Group:

35-60)

Yes 75% No 25%

Do you buy or

register online (Age

(18)

Table 4: Analysis of payment method adopted by the respondents of both age

groups

(In Numbers):

For purchasing online, how do you make payment

Sources Cash on Delivery Online Banking Credit/Debit card Paypal N/A

Age: 20-35 29 21 34 3 21

Age: 35-60 18 25 32 3 25

Fig 4: Graphical presentation of payment modes adopted by the respondents

of both the age group.

Analysis and Interpretation:

According to the statistics the respondents who prefer buying or registering online under age group 20-35 prefer credit/debit card (34%) followed by cash on delivery (29%), 8 of them prefer more than one mode to make the payment for buying online . And the respondents under age group 35-60 prefer credit/debit card (32%) followed by online banking (25%), 3 of them prefer more than one mode to make the payment. Least preferred mode opted is PayPal (3%) by both the age group respondents.

29 21 34 3 21 18 25 32 3 25

Cash on Delivery Online Banking Credit/Debit card Paypal N/A

For purchasing online, how is payment made

(19)

Table 5: Analysis of preference of payment mode for buying expensive goods

by respondents of both age groups:

(In Numbers):

Buying expensive electronic consumer goods from shop

Cash Credit/Debit Card

Age: 20-35 73 28

Age: 35-60 69 31

Fig 5: Graphical representation of respondent’s preference for payment for

buying expensive goods

Analysis and Interpretation:

According to the statistics respondents under age group 20-35 & 35-60 prefer making payment via cash 73% & 69% respectively for buying expensive consumer goods. But on comparing the data of both the age groups, the respondents of age group 35-60 prefer card more than the respondents of age group 20-35 by 10.73%.

CASH CREDIT/DEBIT CARD 73 28 69 31

Preference for buying expensive electronic

consumer goods from shop

(20)

Table 6: Analysis of preference of taking Cash or Card for holiday by

respondents of both age groups:

(In Numbers):

Out On Holiday Cash Credit/Debit Card Age: 20-35 34 69 Age: 35-60 57 43

Fig 6: Graphical representation of respondent’s preference for taking Cash or

Card out on holiday

Analysis and Interpretation:

According to the statistics the respondents under age group 20-35 prefer carrying card (69%) rather than cash as compared to respondents under age group 35-60 (43%) and 3 of them prefer taking both. The respondents under age group 20-35 prefer taking card more than 35-60 age group respondents by 60.46%.

CASH CREDIT/DEBIT CARD

34

69 57

43

Preference when out on holiday

(21)

Table 7: Analysis of preference of payment mode at petrol station on basis by

respondents of both age groups:

(In Numbers):

Filling The Petrol

Age: 20-35 78 25

Age: 35-60 66 34

Fig 7: Graphical representation of respondent’s preference for payment at

petrol station of both age groups

Analysis and Interpretation:

According to the statistics the respondents of both the age groups prefer making payment via cash at petrol station. But on comparing the data of both the age groups, the respondents of age group 35-60 prefer card more than the respondents of age group 20-35 by 36%.

CASH CREDIT/DEBIT CARD 78 25 66 34

Preference for filling the petrol

(22)

Table 8: Analysis of preference of payment mode at restaurants by

respondents of both age groups

(In Numbers):

Out On Lunch At A Restaurant

Age: 20-35 62 44

Age: 35-60 84 16

Fig 8: Graphical representation of preference of payment mode at restaurants

by respondents of both age groups

Analysis and Interpretation:

According to the statistics the respondents of both the age groups prefer making payment via cash at restaurants. But on comparing the data of both the age groups, the respondents of age group 20-35 prefer card more than the respondents of age group 35-60 by 175%.

CASH CREDIT/DEBIT CARD

62

44 84

16

Preference when out on lunch at a

restaurant

(23)

Table 9: Analysis of preference of payment mode for exam registration by

respondents of both age groups

(In Numbers):

While registering for exam pay through

Online banking Card Deposit in bank N/A

Age: 20-35 15 35 45 5

Age: 35-60 4 20 8 68

Fig 9: Graphical representation of respondent’s preference for payment while

registering for exam of both age groups

Analysis and Interpretation:

Question was for students but was also filled by the respondents who registered for their family members along with some student’s respondents. The respondents under age group 20-35 preferred making payment by depositing in bank where as respondents under age group 35-60 preferred via Card, and which exceeded the other group usage by 75%.

Online banking card Deposit in bank N/A

15 35 45 5 4 20 8 68

Preference while registering for exam pay through

(24)

Table 10: Analysis of frequency of cash withdrawn from ATM by respondents

of both age groups:

(In Numbers):

How frequently cash withdrawn from ATM

Once a week Twice a week Once a fortnight Once a month

Age: 20-35 20 33 16 31

Age: 35-60 27 41 18 14

Fig 10: Graphical presentation of frequency of cash withdrawn from ATM via

debit card by respondents of both age groups:

Analysis and Interpretation:

According to the statics maximum respondents under both the age groups prefer withdrawing cash twice a week. The respondents under age group 35-60 withdraw 30.18% more cash via debit card than respondents under age group 20-35 in one week.

Once a week Twice a week Once a fortnight Once a month 20 33 16 31 27 41 18 14

How frequently cash withdrawn from ATM

Age: 35-60 Age: 20-35

(25)

Table 11: Analysis of period of Debit/Credit card usage by respondents of

both the age groups:

(In Numbers):

Period of Debit/Credit card usage

< 6 months 1-2 years 2-4 years >4years

Age: 20-35 14 38 26 22

Age: 35-60 16 30 32 22

Fig 11: Graphical presentation of period of Debit/Credit card usage by

respondents of both the age groups

Analysis and Interpretation:

According to the statics only 22% of respondents in both the age groups are using credit/debit card for more than 2 years. 38% of respondents under age group 20-35 are using card for past 1-2 years where as 31-2% of respondents under age group 35-60 are using card for past 1-2-4 years which being the maximum percentage of respondents in their respective age groups

.

Age: 20-35 Age: 35-60 < 6 months 1-2 years 2-4 years >4years 14 38 26 22 16 30 32 22

Period of Debit/Credit card usage

(26)

Table 12: Analysis of frequency of card used within one month by the

respondents of both the age groups:

(In Numbers):

How often card used in a month

Once 1-4 times >4 times

Age: 20-35 35 46 19

Age: 35-60 28 39 33

Fig 12: Graphical presentation of frequency of card used within one month by

the respondents of both the age groups

Analysis and Interpretation:

According to the statics the respondents under age group 20-35 use card 1-4 times in a month and the respondents under the age group 35-60 use card more than 4 times in a month which is 73.68% more than the respondents under age group 20-35.

Once 1-4 times >4 times 35 46 19 28 39 33

How often card used in a month

(27)

Table 13: Analysis of Frequency of payment on the outstanding credit card

balance by the respondents of both the age groups:

(In Numbers):

Frequency of payment on the outstanding credit card balance

15days Once a month Once a quarter N/A

Age: 20-35 26 51 15 8

Age: 35-60 18 39 38 5

Fig 13: Graphical presentation of Frequency of payment on the outstanding

credit card balance by the respondents of both the age groups:

Analysis and Interpretation:

According to the statics 8% & 5% of the respondents under the age group 20-35 & 35-60 respectively do not use credit card. Most of the respondents under both the age group makes payment on their outstanding credit card balance once a month, 35-60 age group respondents making payment once in month are more than 20-35 age group respondents by 30.76%

Age: 20-35 Age: 35-60 15days Once a month Once a quarter N/A 26 51 15 8 18 39 38 5

Frequency of payment on the outstanding

credit card balance

(28)

Table 14: Analysis of satisfaction level of the respondents under both the age

group with expenses/ charges charged on credit card

(In Numbers):

Are you satisfied with expenses/ charges charged on your credit card

Highly Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied

Age: 20-35 15 41 36 0 0

Age: 35-60 7 32 45 8 3

Fig 14: Graphical presentation of satisfaction level of the respondents under

both the age group with expenses/ charges charged on credit card

Analysis and Interpretation:

According to the statics 45% respondents under age group 35-60 showed neutral response toward credit card expenses charged on their credit card. Whereas 41% respondents under age group 20-35 are satisfied by such expenses on credit card.

Highly Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfied 15 41 36 0 0 7 32 45 8 3

Satisfaction level with expenses/ charges

charged on credit card

(29)

Table 15: Analysis of satisfaction level of the respondents under both the age

group with gifts offered on credit card points

(In Numbers):

Are you satisfied with gifts offered on credit card points

Age: 20-35 16 38 30 7 1

Age: 35-60 4 31 44 12 4

Fig 15: Graphical presentation of satisfaction level of the respondents under

both the age group

Analysis and Interpretation:

According to the statics 44% respondents under age group 35-60 showed neutral response toward credit card expenses charged on their credit card where as 38% respondents under age group 20-35 are satisfied by such expenses on credit card.

Dissatisfied 16 38 30 7 1 4 31 44 12 4

Satisfaction level with gifts offered on credit

card points

(30)

Table 16: Analysis of satisfaction level of the respondents under both the age

group

(In Numbers):

Are you satisfied with long term durability of the credit/debit cards

Age: 20-35 25 50 25 0 0

Age: 35-60 19 37 28 12 4

Fig 16: Graphical presentation of satisfaction level of the respondents under

both the age group

Analysis and Interpretation:

According to the statics 37% respondents under age group 35-60 are satisfied with credit card expenses charged on their credit card where as 50% respondents under age group 20-35 are satisfied by such expenses on credit card.

Dissatisfied 25 50 25 0 0 19 37 28 12 4

Satisfaction level with long term durability of

the credit/debit cards

(31)

Table 17: Analysis of satisfaction level of the respondents under both the age

group

(In Numbers):

Are you satisfied with the credit limit offered to you

Highly Satisfied Satisfied Neutral DissatisfiedHighly Dissatisfied

Age: 20-35 16 43 29 4 0

Age: 35-60 23 34 25 10 3

Fig 17: Graphical presentation of satisfaction level of the respondents under

both the age group

Analysis and Interpretation:

According to the statics 34% respondents under age group 35-60 are satisfied with credit card expenses charged on their credit card where as 43% respondents under age group 20-35 are satisfied by such expenses on credit card.

Dissatisfied 16 43 29 4 0 23 34 25 10 3

Satisfaction level with the credit limit offered

(32)

RESULTS AND FINDINGS

 Out of 200 respondents only 37.5% are female card users.

 State bank credit/debit card preferred by both age group respondents.

 1/4

th

of the respondents do not prefer buying or registering online.

 Both prefer credit/debit card to make the payment for buying online.

 Respondents under age group 20-35 & 35-60 prefer making payment via cash

for buying expensive goods.

 The respondents under age group 20-35 prefer taking card more than 35-60 age

group respondents by 60.46% out on holiday.

 The respondents of age group 35-60 prefer card more than the

respondents of age group 20-35 by 36% for payment at petrol station.

 The respondents of age group 20-35 prefer card more than the respondents of

age group 35-60 by 175% at restaurants.

 Respondents under age group 35-60 preferred via card, and which exceeded the

other group usage by 75% for payment while registering for exam.

 The respondents under age group 35-60 withdraw 30.18% more cash via debit

card than respondents under age group 20-35 in one week.

 Debit/credit card used by respondents of both the age groups for period of over 2

year.

 35-60 use card more than 4 times in a month which is 73.68% more than the

respondents under age group 20-35.

 35-60 age group respondents making payment once in month are more than

20-35 age group respondents by 30.76%.

 Maximum respondents under both age groups are satisfied with long term

durability of the credit/debit cards.

(33)

 Maximum respondents under both age groups are satisfied with the credit limit

offered.

 Maximum respondents under 20-35 age groups are satisfied with gifts offered on

credit card points, where as maximum respondents under 35-60 age groups were

neutral.

 Maximum respondents under 20-35 age groups are satisfied with expenses/

charges charged on credit card, where as maximum respondents under 35-60 age

groups were neutral.

(34)

SUGGESTIONS

 As only 37.5% of 200 respondents are female card users, so to increase its

customer base among female card users they should bring out different schemes.

As most of the shopping is done by females.

 As 1/4

th