Credit Card Debts : Causes and Preventions

Credit card debt is one of the major debts that have affected the economy in recent times. People are filing for bankruptcy, instead of settling their debts through debt negotiation and debt management. Credit card debt happens due to many causes, such as the following:

1. Poor Money Management
Poor money management is one of the main reason of why so many people accumulate lots of debt. They do not have a monthly spending plan and not keeping track of their monthly bills makes them unaware of where their money is going.

2. Saving little or not at all
Often people cannot control themselves from spending regardless of whether the purchase is nessacery or not. They will spend excessively but do not save, this lead themselves into trouble of paying the credit card debts when the bill come.

3. Financial Ignorance
Credit card debt may also due to the lack of knowlege of people on saving and investing personal finances. They do not learn how to save and how to spend wisely, they are not able to manage their finances properly.

4. Less Income, More Expenses
This situation happens when people lose their job but monthly expenses are not cut down in line wit the reduction in income. This obviously leads to a rise in debt because they are forced to use the credit card to pay all the monthly payment or living expenses.


Here are some prevention steps in order to keep you out from credit card debt:

1. Create a Budget and Saving Plan
A well thought out budget will help you to get out of debt and stay out of debt. It is important to have a plan for your money so that you will know exactly where all of your funds are going. Besides, you also need a saving plan too for rainy days. Set some amount aside for emergency use to shield yourself from surprise expenses. Saving with a goal in mind motivates many people to stick to their savings plan

2. Self Discipline
With the ease of use of credit cards, it can be easy to think you have additional funds in your wallet.In order to spend wisely, you must learn how to control and discipline to avoid overspending. You should control yourselves by follow the budget which have been planed.

3. Choose the Right Card
Choosing the exact card serves you all the well. Cards that have low or no fees at all and have interests that are low also, are the ones that are preferably appropriate especially to those who are only beginning to use credit cards.

4. Always Pay on Time
Always remember to pay your credit card bill on time, this can avoid from unnecessary debt accumulation and higher interest charges.

references:
http://www.stop-credit-card-debt.com/2008/07/24/tips-on-credit-card-debt-prevention/
http://www.buzzle.com/articles/tips-on-debt-prevention-and-management.html
http://www.buzzle.com/articles/credit-card-debt-settlements.html
http://www.3debtconsolidation.com/top10-causes.html

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Mobile Payment Systems in Malaysia : It's potential and consumer's adoption stratergies .

What is mobile payment ?

Mobile payment is new and rapidly-adopting alternative payment method – especially in Asia and Europe. Instead of paying with cash, check or credit cards, a consumer can use a mobile phone to pay for wide range of services and digital or hard goods such as:

• Music, videos, ringtones, online game subscription or items, wallpapers and other digital goods.


• Transportation fare (bus, subway or train), parking meters and other services


• Books, magazines, tickets and other hard goods.

There are four primary models for mobile payments:

• Premium SMS based transactional payments


• Mobile web payments(WAP)


• Direct Mobile Billing

Premium SMS based transactional payments

This is where the consumer sends a payment request via an SMS text message to a short code

and a premium charge is applied to their phone bill. The merchant involved is informed of the payment success and can then release the paid for goods.

Since a trusted delivery address has typically not been given these goods are most frequently digital with the merchant replying using a Multimedia Messaging Service to deliver the purchased music, ringtones, wallpapers etc.

A Multimedia Messaging Service can also deliver barcodes which can then be scanned for confirmation of payment by a merchant. This is used as an electronic ticket for access to cinemas and events or to collect hard goods.

Transactional payments have been popular in Asia and Europe but are now being overtaken by other mobile payment methods such as mobile web payments (WAP) and Direct Mobile Billing for a number of reasons:

1. Poor reliability - transactional payments can easily fail as messages get lost


2. Slow speed - sending messages can be slow and it can take hours for a merchant to get receipt of payment. Consumers do not want to be kept waiting more than a few seconds.
   
3. High cost - There are many high costs associated with this method of payment. The cost of setting up short codes and paying for the delivery of media via a Multimedia Messaging Service and the resulting customer support costs to account for the number of messages that get lost or are delayed.
4. Low payout rates - operators also see high costs in running and supporting transactional payments which results in payout rates to the merchant being as low as 30%.
   
5. Low follow-on sales - once the payment message has been sent and the goods received there is little else the consumer can do. It is difficult for them to remember where something was purchased or how to buy it again. This also makes it difficult to tell a friend.

Direct Mobile billing

This is where the consumer uses mobile billing option during checkout at an ecommerce site such as an online gaming site to make a payment. After two-factor authentication involving PIN and One-Time-Password, the consumer's mobile account is charged for the purchase. It is true alternative payment method that does not require use of credit/debit cards or pre-registration at online payment solution such as PayPal, thus bypassing banks and credit card companies altogether. This type of mobile payment method, which is extremely prevalent and popular in Asia, provides the following benefits:

1. Security - two-factor authentication and risk management engine prevents fraud.


2. Convenience - No pre-registration and no new mobile software is required.


3. Easy - It's just another option during a checkout process.


4. Fast - Most transactions are completed in less than 10 seconds.


5. Proven - 70% of all digital content purchased online in some parts of Asia uses Direct Mobile Billing method

Mobile Web Payments ( WAP)

This is where the consumer uses web pages displayed or additional application s/he downloaded and installed on his/her mobile phone to make a payment. It uses WAP (Wireless Application Protocol) as underlying technology, thus inherits all the advantages and disadvantages of WAP. However, using a familiar web payment model gives a number of a few proven benefits:

1. Follow-on sales where the mobile web payment can lead back to a store or to other goods the consumer may like. These pages have a URL and can be bookmarked making it easy to re-visit or share with friends.


2. High customer satisfaction from quick and predictable payments


3. Ease of use from a familiar set of online payment pages

However, unless mobile account is directly charged through mobile network operator, use of credit/debit card or pre-registration at online payment solution such as PayPal is still required just as in desktop environment.

Mobile web payment methods are now being mandated by a number of mobile network operators.

A number of different actual payment mechanisms can be used behind a consistent set of web pages.

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A review on a post on e-tailing

Nowadays, almost everything can be traded online. This applies to very subjective things such as music, reservation and even information. Due to technology changes, we now isn’t limited to just purchasing, we can also customize things online.
E-Tailing or also known as sales of product over the internet has been a trend of business in this high tech era. It helps exploit a whole new market of through the internet without imposing much constraint to operate.

In Malaysia they even sell fish online, Fishermen in Tanjung Dawai have preceded auction for their catches via the internet. Other than that, other recent examples would be touch’n’go ready to impose pre-load cash purchase with their card in fast food restaurants. It is been a trend in countries like Hongkong to use such pre-load cards in their daily shopping activity and proven successful.

Online banking should be another form of E-commerce which we should be very familiar of. In recent years, stock trading online had been actively used as a form of E-tailing by major banks to encourage convenience to the consumers. Maybank, as one of the largest bank to offer online stock trading even reduce its transaction cost to encourage usage of the facility.

In US, reservation for restaurant seats are made easy by the website called Opentable.com. This website offers reservation online in just a few clicks for more than 6000 restaurants alone in New York. It is a proven effective concept and should be more effectively implemented in other countries.

Furthermore, E-tailing could be used as a way to promote a countries’ tourism for example Malaysia’s http://www.tourism.gov.my/ which gives information on Major tourism spots, graphical illustration etc. Foreign tourist could visit the website to determine where to visit in Malaysia.

Conclusion is that life is becoming more and more convenient. I believe in near future everything can be done online. That’s awesome!

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The application of pre-paid cash card for consumers

Nowadays pre-paid cash card is getting more and more popular in aligned with the development of e-commerce. Pre-paid cash card is a card like credit card which can use to purchase goods and services. Pre-paid means pay in advance which also means that the card needs to be reloaded with money before consumers can use it. They can only spend the balance that has been pre-loaded onto the card.

An example of the application of pre-paid cash card in our country is Touch n Go card. It is a quite popular card that uses contactless and smartcard technology. This is introduced in Malaysia to increase the efficiency of public transport service. With this card, consumers do not need to queue for buying tickets especially during peak hours which is really a waste of time. Besides that, it is applicable for all highways tolls users too. Positive feedbacks obtained after the implementation of Touch n Go card as it helps consumers to save up a lot of time as well as it is very convenient to use.

Another widely used pre-paid cash card is the debit card. It is usually issued by the debit card companies or banks. Consumers can use this card to purchase their goods and services either in malls or through online transactions. For internet banking, they are required to key-in their password, debit card number and the amount of money for the transaction to take place. When using it for shopping at supermarket, consumers just simply hand the card to the cashier and will be asked to sign on the payment slip. The total amount will be deducted from the card immediately and the transaction is completed by then. Moreover, i-Talk pre-paid IDD card is a service provided by Telekom Malaysia that allows people to make local or international calls at low rates.

As in other country, one of the most successful applications of this pre-paid cash card is the Octopus Card in Hong Kong which is like a trademark for all Hong Kong citizens. It was the first contactless smart card system in the world. At first, it aims to provide a simple and easy way to pay fares on public transport in Hong Kong. Today it is also used for payment in convenient stores, supermarkets and car parks. It makes life much simpler and easier.

Apart from that, pre-paid cash card also can use for paying bills, topping up mobile phone, purchasing movie tickets and withdrawing cash from ATM machine. On the other hand, the main advantages of pre-paid card include it is an ideal way to control your spending. There is no chance of over spending as consumers are limited to the amount they put on the card. Furthermore it is very convenient because the pre-paid cash card can be used abroad or travelling to overseas and it is always safer to bring along a card rather than cash.

To sum up, pre-paid cash card is indeed a very useful item and contribute a lot in our daily transaction. Most of the teenagers are having a pre-paid cash card now as they are not eligible to apply for a credit card. Nevertheless some consumers still prefer credit card in terms of security.

References :
http://www.moneysupermarket.com/c/prepaid-cards/guide/

http://prepaidcreditcardapplication.info/

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