Plastic money - the great facilitator

FE Team | Published: June 28, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Ershad Khandker
IN the world of glamorous money-spinning financial products, consumer- oriented packages and countless derivative offshoots of multifarious product lines, credit cards are overshadowed. However, credit cards are stable money earners for issuers and useful tools for consumers. Status symbol or as a tool that makes usage of paper money unnecessary, the credit card is a tool of convenience. The non-habitual user like your writer has forgotten to use the ATM card many times only to realise, in moments of dire need that the paper money is not missed because the credit card is there to help. Plastic money as it is otherwise known - the credit is a great facilitator.
Western Union the money transfer company first used an embossed metal plate for its preferred customers in 1914. Later on in 1950's in America, large super-markets offered its customers the choice to buy now and pay later by giving them credit cards to be used only in the stores (more in adjoining articles). There are two types of cards - credit card and debit card. By credit card one can purchase from stores called merchants, the price of which is payable at the end of the month through the affiliated banks. On the other hand, debit card is based on immediate payment system whereby one has to have an account in the bank from where the money is debited. Debit cards also basically are issued for withdrawing money from Automated Teller Machines (ATM's)
Grindlays Bank later to be purchased by Standard Chartered Bank was the pioneer of the credit card. Now, Standard Chartered Bank presumably has the largest number of card users only because it is the largest foreign bank in Bangaldesh. Prime Bank, National Bank, One Bank, Shahjalal Bank, The City Bank, Brac Bank etc. have issued credit cards. Eastern Bank Ltd will issue its cards from July. Non-banking financial institutions like Lanka - Bangla have also launched credit cards. However many banks in Bangladesh do not offer credit cards to their customers. For example, HSBC does not offer credit cards for consumers though it happens to be one of the largest bank in the world with credit card issued in other countries.
The revenue to be earned from credit cards in Bangladesh is not whopping because the customer base in Bangaldesh is still too thin with only higher middle class and rich people having the ability to use foreign currency credit cards and even they may not be able to spend too much foreign currency because of regulations. A developing country may also not have enough variety in the consumer's spending habits for the card to be a very big money spinner. There are not enough nightlife or large shopping malls in Bangaldesh for the number of merchants to increase and the locals to frequent and use the card. However there is a large customer base waiting for the banks that have taken the trouble of preparing the ground for future revenue. All the while existing customers can use credit cards and debit cards as handy tools.