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How Credit Card Industry Works?

The credit card industry basically involves four participants – banks, merchant establishments (online and offline stores), payment processing networks such as VISA, Mastercard, and customers. The process starts with the customer making a purchase, be it at online or offline merchants. The bank pays for the purchase and the amount goes to the merchant but not in full. Around 95%-98% of the purchase price goes to the merchant and the rest 2%-5% is shared amongst banks and payment processing networks.

Exclusive Credit Card Offers in Collaboration with Market Participants

The cash purchases help merchants rake in more than credit card spends. But in the digital age where everything is all but online, the use of credit cards is fast outstripping the cash component of retail spends. And so, both online and offline merchants roll out exclusive offers on credit card purchases, in collaboration with banks and payment processing networks. There are some offers that remain to the credit card throughout. And, there are some limited period offers for the customers. The offers can also be city based. All these offers are made public on the bank’s website.

Reward Points & Their Redemption

Banks offer reward points on certain spends at a specific rate as decided. The rewards can accumulate at a faster pace if the card has an accelerated rewards structure. As a customer, you can redeem the reward points for exclusive purchases at online or offline brands. At the same time, you can redeem the points as cashback to your credit card account. You can also avail discounts on dining, hotel, travel tickets and other spends.

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Customers, in turn, are obligated to pay for the purchases and other transactions made by the time the due date of the bill arrives. Ideally, one must pay the dues in full to avoid interest charges and other levies.


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HDFC Bank10.25% - 17.00%
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Tata Capital10.49% - 14.25%
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