Credit cards in ATMs
Many credit cards can also be used in an ATM to withdraw money against the credit limit extended to the card, but many card issuers charge interest on cash advances before they do so on purchases. The interest on cash advances is commonly charged from the date the withdrawal is made, rather than the monthly billing date. Many card issuers levy a commission for cash withdrawals, even if the ATM belongs to the same bank as the card issuer. Merchants do not offer cashback on credit card transactions because they would pay a percentage commission of the additional cash amount to their bank or merchant services provider, thereby making it uneconomical.
Many credit card companies will also, when applying payments to a card, do so at the end of a billing cycle, and apply those payments to everything before cash advances. For this reason, many consumers have large cash balances, which have no grace period and incur interest at a rate that is (usually) higher than the purchase rate, and will carry those balance for years, even if they pay off their statement balance each month.
Tuesday, February 23, 2010
Grace Period & Benefits of Credit Card to Merchants
Grace period
Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.
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 payment.
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.
For each purchase, the bank charges the merchant a commission (discount fee) for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee (interchange rate). In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount to compensate for the transaction costs.
In some countries, for example the Nordic countries, banks guarantee payment on stolen cards only if an ID card is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN for identification, and in that case showing an ID card is not necessary.
CREDIT CARDS INFORMATION
INFORMATION ABOUT CREDIT CARDS
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. Usage of the term "credit card" to imply a credit card account is a metonym.
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.
Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card.
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction.
Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN, but is more technically an EMV card.
Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.
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 issuer 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). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds.
INFORMATION ABOUT BANKING PRODUCTS AND SERVICES
KNOWLEDGE ABOUT BANKING SERVICES
In order to be a success in your export activities, you need to know how to finance your import or export and how to get paid, especially when dealing in foreign currencies. Your banker can and should be a key member of your advisory team. Finding a bank that is comfortable and proficient in providing the various products and services required by exporting and importing firms is becoming easier as international sales become more and more common. The expansion of the internet and the advent of e-banking are also helping to increase the number of banks that companies can work with for their international banking requirements.
Banking Products And Services
Depending upon the industry in which your company operates, there are several products and services available from major international banks that can help you to get ahead of the competition. Financing and speed are integral to any sale and now is the time to look for banks on the leading edge. Multinational companies, commodity companies, capital equipment and consumer product producers are the primary users of trade financing products, which include import letter of credit, export letter of credit, stand-by letters of credit, collections, trade-related loans, structured and barter trade. The most common of these is the letter of credit. Simply put a letter of credit is a banking mechanism that permits importers to offer secure terms of sale to exporters.
In the past, most companies didn't need to know about letters of credit. With the expansion of international trade, this has changed and even small companies increasingly are coming to utilize letters of credit and other even more advanced international financing services. Knowledge is power and you should learn about each of these instruments and evaluate if they are applicable to your particular transaction. This subject is very important both for exports and imports and a visit to the website is definitely recommended.
In addition to providing the services above, companies should also expect the financial institution to be able to provide products through a web-enabled delivery portal. Many of the best trade banks are already doing this. Additionally, your international bank should also be able to offer information on the following value-added trade products and services such as:
1. Prepayment and structured pre-export facilities: these services finance pre-export fabrication and provide export financing for a country’s key exports.
2. Export receivables financing.
3. Government-backed insurance and guarantee programs: These are available from government bodies such as Eximbank or private insurers and can help your company spread the risk.
4. Programs offered by regional development banks and institutions: the IFC, ADB, World Bank, and other institutions support international sales by providing guarantees as credit support or enhancement.
5. Linked exports and import financing: In some countries the export contract can act as security for essential imports. For example, in some countries that export value-added products (Asia has many), if imports (generally but not always raw materials) do not flow into the country then value-added exports stop. An international bank can credit-enhance the deal by using the export contract as security thus allowing country imports to continue.
6. Global trade management: This allows you to out-source the trade documentation preparation to others who are more familiar with it and who work with these forms daily.
7. Option-linked financings for commodities: Again, these are risk spreading options. Examples are trade finance solutions that have interest rate, foreign exchange, and commodity-hedging options. These can be made part of the transaction if desired.
8. Counter-trade transactions: commodities, durable and other goods are essentially bartered.
9. Forfeiting: This is a provision of medium-term trade finance where trade contracts are sold into the secondary market.
10. Multinational inter-company structured trade/tax facilities.
In order to be a success in your export activities, you need to know how to finance your import or export and how to get paid, especially when dealing in foreign currencies. Your banker can and should be a key member of your advisory team. Finding a bank that is comfortable and proficient in providing the various products and services required by exporting and importing firms is becoming easier as international sales become more and more common. The expansion of the internet and the advent of e-banking are also helping to increase the number of banks that companies can work with for their international banking requirements.
Banking Products And Services
Depending upon the industry in which your company operates, there are several products and services available from major international banks that can help you to get ahead of the competition. Financing and speed are integral to any sale and now is the time to look for banks on the leading edge. Multinational companies, commodity companies, capital equipment and consumer product producers are the primary users of trade financing products, which include import letter of credit, export letter of credit, stand-by letters of credit, collections, trade-related loans, structured and barter trade. The most common of these is the letter of credit. Simply put a letter of credit is a banking mechanism that permits importers to offer secure terms of sale to exporters.
In the past, most companies didn't need to know about letters of credit. With the expansion of international trade, this has changed and even small companies increasingly are coming to utilize letters of credit and other even more advanced international financing services. Knowledge is power and you should learn about each of these instruments and evaluate if they are applicable to your particular transaction. This subject is very important both for exports and imports and a visit to the website is definitely recommended.
In addition to providing the services above, companies should also expect the financial institution to be able to provide products through a web-enabled delivery portal. Many of the best trade banks are already doing this. Additionally, your international bank should also be able to offer information on the following value-added trade products and services such as:
1. Prepayment and structured pre-export facilities: these services finance pre-export fabrication and provide export financing for a country’s key exports.
2. Export receivables financing.
3. Government-backed insurance and guarantee programs: These are available from government bodies such as Eximbank or private insurers and can help your company spread the risk.
4. Programs offered by regional development banks and institutions: the IFC, ADB, World Bank, and other institutions support international sales by providing guarantees as credit support or enhancement.
5. Linked exports and import financing: In some countries the export contract can act as security for essential imports. For example, in some countries that export value-added products (Asia has many), if imports (generally but not always raw materials) do not flow into the country then value-added exports stop. An international bank can credit-enhance the deal by using the export contract as security thus allowing country imports to continue.
6. Global trade management: This allows you to out-source the trade documentation preparation to others who are more familiar with it and who work with these forms daily.
7. Option-linked financings for commodities: Again, these are risk spreading options. Examples are trade finance solutions that have interest rate, foreign exchange, and commodity-hedging options. These can be made part of the transaction if desired.
8. Counter-trade transactions: commodities, durable and other goods are essentially bartered.
9. Forfeiting: This is a provision of medium-term trade finance where trade contracts are sold into the secondary market.
10. Multinational inter-company structured trade/tax facilities.
TYPES OF BUSSINESS AND PLANING
Types of Business And Planing
Explanation
So you have a good business idea and you like the idea of being your own boss, but what sort of business should you start? The legal structure of the business is quite important as different types of business are subject to very different regulations and the wrong choice now could have significant repercussions in the future. In this section we look at the main types of legal structure for a business.
Unincorporated firms
An unincorporated firm is one that is not registered with Companies House as a business and there are two main types - sole trader and partnership.
Sole trader
A sole trader is the simplest form of business organisation. There are no legal requirements - you simply set up and get on with trading. Any income or profit that you earn is yours and yours alone and you pay income tax on that income. There are few legal constraints and you have what is called unlimited liability. This means that any debts are your debts and so if you stop trading with large debts, you will be personally responsible for these debts. Creditors will have a claim on your house, yacht or any other personal assets you may have.
Partnership
This is, in essence, like a sole trader but with the ownership shared between partners. However, a partnership should have a partnership agreement (a legal document) drawn up to show the rights and responsibilities of all the partners. There may also be 'sleeping partners' who own a share of the business but are not involved in the day-to-day running of the business. A partnership also has unlimited liability. Partnerships are common in the professions such as accountancy and law.
N.B. Since April 2001 there has been a new form of partnership called a limited liability partnership (llp). This is like a cross between a partnership and a limited company as it has limited liability (like a limited company), but has to be owned by at least two members - being a partnership!
Incorporated firms
The next step up in terms of legal structure is to form an incorporated firm. That is a firm that is a registered firm at Companies House (who are the government registrar of companies). There are two main types - a private limited firm and a public limited firm.
Private limited company
A private limited company is one where the liability is limited. Unlike a sole trader where the liability is unlimited, with a limited company the liability is limited to the value of the shares issued. This means that any debts are debts of the company and not of the owners. To form a limited company it must be registered at Companies House and the firm must have various legal documents including a Memorandum and Articles of Association. There need only be one director and they have to prepare annual accounts and submit them to Companies House. Private limited companies can range significantly in size. They may consist of a small family based business or they could be the Virgin group (which is a private limited company majority owned by Richard Branson).
Public limited company
Like a private limited company, a plc has shares, but the key difference is that these shares can be bought by anyone freely on a stock exchange. Ownership is therefore open to anyone who wants to buy shares. PLCs have legal requirements in that they have to produce annual reports and accounts and file them with Companies House. There are various other requirements including:
1.You must have at least two directors.
2.You have a fully qualified Company Secretary.
DEFINATION OF BUSSINESS
BUSSINESS
A business (also called a company, enterprise or firm) is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk. Notable exceptions include cooperative enterprises and state-owned enterprises. Businesses can also be formed not-for-profit or be state-owned.
The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope-the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.
A business (also called a company, enterprise or firm) is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk. Notable exceptions include cooperative enterprises and state-owned enterprises. Businesses can also be formed not-for-profit or be state-owned.
The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope-the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.
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