12 October, 2023In the last decade alone, the banking sector has made tremendous leaps and bounds, making financial services convenient for users. Today, we can send and receive funds online and making instant payments. But the real revolution in the banking industry started with the introduction of Debit and Credit Cards, also referred to as plastic money. Let us understand what plastic money is, its different types and benefits in this article.
What Is Plastic Money?
Plastic money refers to a payment mechanism that replaces physical currency transactions with plastic cards. These pocket-sized cards are typically made from materials like plastic or a combination of plastic and metal, earning the moniker of plastic money. The cards facilitate electronic transactions by storing your financial information securely on the plastic/metal card and you can use them to access your financial accounts on the go. This way, you do not need to keep visiting your bank each time you want to access your account.
Different Types of Plastic Money
Plastic money is broadly categorised into the following types:
ATM-cum-Debit Cards
A Debit Card is a type of plastic money instrument that is directly linked to your bank account. You can use this card to withdraw money from your linked bank account, make payments at retail stores and purchase products and services online. When you swipe, tap or use Debit Cards, money is instantly debited or deducted from your linked bank account. Essentially, you can enjoy the benefits of a liquid bank account with this type of plastic money.
Credit Cards
A banking product that enables you to make purchases now and pay for them later, Credit Cards are also referred to as plastic money. Each Credit Card comes with a pre-approved limit. When you buy something, your creditor pays the money upfront to the retailer and sends you a detailed bill on a later date. You need to repay the bill by the applicable pay-by-date. With Credit Cards, you can enjoy revolving credit benefits, which means your creditor resets the credit limit each month.
Prepaid Cards
If you prefer to set a specific budget for your expenses and spend money only up to a specific limit, you can consider getting a Prepaid Card. This type of plastic money helps you ensure that you do not overspend. All you have to do is load this card with the amount you intend to use. Once the money runs out on this card, you can reload it. You can load funds on your Prepaid Card online by linking your bank account and visiting the card provider’s website.
Forex Card
Known as the plastic money for overseas travellers, a Forex Card is essentially a type of plastic card on which foreign currencies are loaded. You can load more than one forex currency on a Forex Card. Thus, instead of exchanging physical domestic currency for a foreign currency, you can load forex on this card. Forex Cards safeguard you from currency rate fluctuations as the forex rate is locked in as of the day of purchase. Plus, these cards come validity periods lasting up to 5 years.
Benefits of Plastic Money
Besides understanding what plastic money is, you should be aware of its benefits, such as:
Convenience
One of the foremost advantages of plastic money is the convenience it offers. With just a swipe or a tap, you can conduct transactions swiftly, eliminating the need to carry wads of cash. This convenience has led to a significant reduction in time spent on traditional payment methods.
Security
Plastic money reduces the risks of carrying cash. Lost or stolen cards can be easily reported and blocked, preventing unauthorised access to funds. Plus, card issuers employ advanced security features like PINs, EMV chips and two-factor authentication to safeguard transactions.
Record Keeping
When you conduct a transaction using plastic money, the issuing entity makes an electronic record, which you can access online. This feature simplifies tracking and budgeting, as it allows you to review your spending patterns and identify areas where adjustments are necessary.
Global Acceptance
Plastic money has transcended geographical boundaries, making it widely accepted across the globe. This has greatly facilitated international travel and online shopping, as it empowers users to make transactions in foreign currencies with ease.
Emergency Access to Funds
With plastic money, you can easily make payments during emergencies as the daily transaction limits on these cards are significantly high. All you have to do is swipe/tap your plastic card. You do not have to depend on banking hours to withdraw money for urgent payments.
Rewards and Benefits
Most plastic money products come loaded with excellent benefits and exclusive deals including reward points on every swipe, cashback incentives, discounts on purchases, etc. These perks provide users with additional value on their spends and contribute to the overall appeal of plastic money.
Plastic Money in India
The rise of plastic money in India has been a significant catalyst for the country’s economic growth and digital transformation. The adoption of plastic money, especially Debit and Credit Cards, has rapidly gained momentum, reshaping the financial landscape in numerous ways:
Financial Inclusion
Plastic money has played a crucial role in advancing financial inclusion in India. Many citizens who previously lacked access to traditional banking services can now use Debit Cards to conduct transactions and access funds, even in remote areas with limited banking infrastructure.
Economic Growth
The widespread adoption of plastic money has contributed to the formalisation of the economy by promoting transparency and reducing the prevalence of unrecorded cash transactions. This has led to improved tax compliance and increased government revenue.
Digital Innovation
The popularity of plastic money has driven innovation in the fintech sector. Mobile wallet apps, digital payment platforms, and contactless payment technologies have emerged, further simplifying transactions, and enhancing user experiences.
Choose From A Range of Plastic Money Products from HDFC Bank
At HDFC Bank, we believe in pushing the envelope when it comes to offering our financial services to our customers. Our extensive range of plastic money products includes Debit Cards, Credit Cards, Forex Cards, and Prepaid Cards, fitting our customers’ varied needs and requirements. What’s more, you can apply for these cards online through our internet and mobile banking platforms and unlock unparalleled benefits.
Apply for Credit, Debit, Prepaid and Forex Cards effortlessly with HDFC Bank.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank’s requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
