In Today’s world credit card has become a part and partial of our daily life, Most of us use this card everyday without realizing the enormous potential this has. Interestingly the Credit Card Industry provides a huge opportunity for jobs . Giriraj Harkut who is working in this domain since last 4 years tries to give an overview of the so-called credit card industry and the job opportunities this may provide to students.
What is credit card ?
A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling 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 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, where a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to ‘revolve’ their balance, at the cost of having interest charged.
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 provider 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).
How does this work ?
Please have a look at the following link to get an idea of the End to End process of Operation.
Interest charges
Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.
Benefits to customers
The main benefit to each customer is convenience. Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card.
Benefits to merchants
For merchants, a credit card transaction is often more secure than other forms of payment, such as checks, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card. In most cases, cards are even more secure than cash, because they discourage theft by the merchant’s employees and reduce the amount of cash on the premises. Prior to credit cards, each merchant had to evaluate each customer’s credit history before extending credit. That task is now performed by the banks which assume the credit risk. Credit cards can also aid in securing a sale, especially if the customer does not have enough cash on his or her person or checking account.
Costs to merchants
Merchants are charged many fees for the privilege of accepting credit cards. The merchant may be charged a discount rate of 1%-3%+ of each transaction obtained through a credit card.
Secured credit cards
A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down 10000, they will be given credit in the range of 5000–10000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid.
Prepaid “credit” cards
A prepaid credit card is not a credit card, since no credit is offered by the card issuer: the card-holder spends money which has been “stored” via a prior deposit by the card-holder or someone else, such as a parent or employer. However, it carries a credit-card brand (Visa, MasterCard, American Express or Discover) and can be used in similar ways just as though it were a regular credit card.
Prepaid credit cards are sometimes marketed to teenagers, for shopping online without having their parents complete the transaction
Credit history
The way credit card owners pay off their balances has a tremendous effect on their credit history. Two of the most important factors reported to a credit bureau are the timeliness of the debt payments and the amount of debt to credit limit. Lenders want to see payments made as agreed, usually on a monthly basis, and a credit balance of around one-third the credit limit. The credit information stays on the credit report generally for 7 years.
Various Types of Credit Cards :
- Balance transfer credit cards
- Low interest credit cards
- Cash back credit cards
- General reward points credit cards
- Hotel or travel points credit cards
- Retail rewards credit cards
- Gas cards with points or rebates
- Automobile manufacturer rewards cards
- Home improvement rewards credit cards
- Airline-specific credit cards
- Generic airline miles cards
- Secured credit cards
- Prepaid credit cards
- Business credit cards
- Student credit cards
- Corporate credit cards
Advantages :
- Purchase Power and Ease of Purchase
- Protection of Purchases
- Building a Credit Line
- Emergencies
- Credit Card Benefits
- Blowing Your Budget
- High Interest Rates and Increased Debt
Disadvantages:
There are chances of Credit Card frauds and such incidents are on the rise.
If you do decide to use credit cards, remember these simple rules:
- Keep track of all your purchases.
- Don’t spend outside your budget.
- Pay off your balance on all of your credit cards at the end of each month.
- Don’t loan your credit or give out your credit card information to anyone but reliable companies.
In Summary: Credit cards can make life easier and be a great tool, but if they aren’t used wisely they can become a huge financial burden.
Jobs in this Domain:
Credit Card Product Manager:
This is perhaps the most exciting job in this field. An post graduate in Finance or CA, CFA with 7-8 years experience usually fits this role better.
Following are the Roles and Responsibilities:
- Take ownership of the credit card product and P&L. This includes responsibility for developing and maintaining the business plan and ownership for executing against that business plan.
- Leverage competitive intelligence, industry knowledge, and credit card P&L / metrics to determine appropriate strategies to deliver on yearly and long-term objectives
- Develop product value proposition and positioning that drives loyalty programs and supports vehicle sales.
- Partner outside the bank to develop, execute, and report on portfolio management strategies, including activation strategies, auto purchase strategies, and balance building strategies.
- Develop and gain approval on annual and 5-year product and marketing plans. Accountability for hitting growth and expense targets. Manage product budgets and expenses to targets.
- Proactively manage marketing campaigns to maximize the value of the portfolio.
- Champion and build consensus with Management teams on new programs and ideas relating to the credit card product.
- Gain buy-in for strategies from functional managers and present to team, Sr. Management, and the organization at large as necessary to gain support for initiatives.
- Lead execution efforts of major product initiatives
- Manage the day to day functioning of the credit card team.
- Lead product research efforts. Responsible for gathering appropriate feedback on the following: product features, process improvements, customer satisfaction.
JOB REQUIREMENTS:
- Determine the appropriate method of collecting feedback, structuring the surveys, presenting the information to the organization, and developing action-oriented recommendations. Turn the recommendations into results.
- Develop business cases and interface with Enterprise Project Management teams and other cross functional teams to ensure organizational support of key initiatives.
- Responsible for designing and developing presentations for a variety of purposes (including associate communications, customer communications, and executive communications).
- Responsible for overseeing the data needs of the product and leveraging the data to solve product related problems, determine product positioning, marketing, etc.
- Proactive use of data to drive the loyalty objective and to meet the needs of teams with respect to deriving a greater understanding of the credit card customer.
Software side jobs :
This could be in credit card processing engines, payment gateway or other areas in Credit Card Operations
Technology Architect/Technical Lead : Anyone who is an expert in Technology can join in this field , some of the fields are : Java,J2EE, .Net, Mainframe, Databases like Oracle, DB2,Informatica, Middleware products (MQ, Tibco , Process Server etc) , Unix, Microsoft technologies etc.
- Developer : This is the area where entry level persons can join in with any suitable technology knowledge.
- Tester : Freshers can join in this field but knowledge in testing tools will prove useful here.
- Project Manager/Program Manager : Senior members with knowledge of both technology and business to maage projects in any one of the technology or business area will be useful.
- Business Analyst : Financial professionals can join in this domain, the job needs for high coordination skills, requirement gathering and intuitive thinking to come up with the road map of the product which act as input for the development cycle.
Common Jobs across Industries:
- Accountants: To manage the organizations accounts.
- Auditors : To conduct audits periodically both on finance and systems side and report to senior management.
- Quality Analyst : To do Quality testing and certify the quality of the product and approve all internal processes and ensure their smooth functioning.
- Financial Controllers/ Planners/ Experts : To provide financial direction to the organization.
- Marketing Analyst: To conduct market research and analysis and prepare the roadmap for new product launch.
- Sales Specialist: To design, initiate and execute the sales process.
- Vendor Manager : To manage multiple vendors and ensure proper coordination among all teams and strict adherence to SLA.
In conclusion, we can say that Careers in Credit Card domain is going to be sustainable one as the global usage of Credit Cards is increasing exponentially every year and business around it is definitely on the rise.
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