Paying with Plastic: The Digital Revolution in Buying and Borrowing / Edition 2

Paying with Plastic: The Digital Revolution in Buying and Borrowing / Edition 2

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MIT Press
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Paying with Plastic: The Digital Revolution in Buying and Borrowing / Edition 2

The payment card business has evolved from its inception in the 1950s as a way to handle payment for expense-account lunches (the Diners Club card) into today's complex, sprawling industry that drives trillions of dollars in transaction volume each year. Paying with Plastic is the definitive source on an industry that has revolutionized the way we borrow and spend. More than a history book, Paying with Plastic delivers an entertaining discussion of the impact of an industry that epitomizes the notion of two-sided markets: those in which two or more customer groups receive value only if all sides are actively engaged. New to this second edition, the two-sided market discussion provides useful insight into the implications of these market dynamics for cardholder rewards, merchant interchange fees, and card acceptance. The authors, both of whom have researched the industry for more than 25 years, also examine the implications of the recent antitrust cases on the industry as well as other business and technological changes -- including the massive consolidation brought about by bank mergers, the rise of the debit card, and the emergence of e-commerce -- that could alter the payment card industry dramatically in the years to come.

Product Details

ISBN-13: 9780262550581
Publisher: MIT Press
Publication date: 01/01/2005
Edition description: second edition
Pages: 384
Product dimensions: 6.00(w) x 9.00(h) x 0.75(d)
Age Range: 18 Years

Table of Contents

1Plastic Cards1
The Star7
Star Performance7
The Main Characters10
Other Members of the Cast11
Supporting Roles13
The Foreign Cast14
The Thirteen Acts15
2From Sea Shells to Electrons19
What Is Money?19
Money in America22
Cash, Check, or Charge?25
Debit or Credit?26
The Role of Payment Cards in the U.S. Economy30
3A Land of Local Banks, Awash in Paper Checks37
Banking in America38
Banks, Nonbanks, and Payment Cards47
4The Rise of Payment Cards61
Diners Club and the Birth of the Payment Card62
The Infancy of the Card Associations65
Early Policy Issues: Duality and Usury69
The 1980s Spending and Debt Spree73
The 1990s and the New Millenium75
Risk, Innovation, and Investment77
5From Gourmets to the Masses85
The Growth and Diffusion of Credit Cards in the American Economy86
Payment Cards and the Transactions Demand for Money91
Credit Cards and Liquidity Constraints94
Credit Cards and Entrepreneurship100
But Are Payment Cards Really a Good Deal?107
6Everywhere You Want to Be, Not Everywhere They Want to Be111
Who Are the Players?112
Honor All Cards119
The Economics of Merchant Acceptance121
More and More Merchants Take Payment Cards127
7Chickens, Eggs, and Other Economic Conundrums137
Product Differentiation138
Economics of Network Industries149
Some Economics of Joint Ventures153
Interdependent Pricing163
8System Wars169
Who Are the Warriors?173
The Weapons of War175
The Rise and Decline of American Express Cards177
The Bankcard Battles193
9Issuer Brawls207
Who Are the Players?207
Product Differentiation and Market Segmentation210
Competitive Strategies216
Market Structure224
Market Performance235
Consolidation in Banking and Cards244
10Puzzles and Paradoxes247
High and Sticky Interest Rates248
The Myth of Exorbitant Profits251
AT&T, GM, and Credit Card Prices257
11The Antitrust Wars263
Sleeping with the Enemy: Worthen267
Good Fix: NaBanco275
Someone's Knocking at My Door: Mountain West281
Leveling the Battlefield288
12Debit Takes Off (Finally)297
Awkward Growth, Complexity, and Confusion297
The Rise of ATMs302
The Growth of PIN Pad Merchants306
The Associations Finally Get It Right310
Which Came First?315
The Future of Debit Cards317
13And They Don't Take Cash321
Sources and Notes327
Selected Bibliography349

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