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Book part
Publication date: 21 August 2012

Huseyin Leblebici

Purpose – This paper focuses on a unique historical case study of industry evolution in order to develop a road map where historical and strategic research could develop a…

Abstract

Purpose – This paper focuses on a unique historical case study of industry evolution in order to develop a road map where historical and strategic research could develop a common ground for trans-disciplinary inquiry.

Design/methodology/approach – The industry I explore is the Universal Credit Card Industry since its inception with the Diners Club in 1949 until its maturity in late 1990s. My empirical objective here is to develop a historically detailed and theoretically rich case study in which evolutionary processes are discovered as a result of the historical narrative.

Findings – The historical account of the industry demonstrates how the evolution of alternative business models as organizing forms has led to the establishment of interorganizational platforms with unique ecosystems. These alternative business models, through various experimentations, have ultimately produced two critical interorganizational organizations, one based on an open-loop system represented by Visa and MasterCard, and the other based on a closed-loop system represented by Diners Club and the American Express. The historical account also shows that in a given industry competition is not only among specific firms in the industry but also among the business models and the platforms created by these models.

Originality/value – I conclude that historical analyses reveal the nature of competition not only among firms but also among alternative business models where traditional strategy research rarely covers.

Details

History and Strategy
Type: Book
ISBN: 978-1-78190-024-6

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Article
Publication date: 5 March 2018

Bojun Fan, Hannah Ji, June Wei and Sherwood Lambert

This paper aims to develop a set of tactical electronic business solutions for the electronic credit card issuing industry.

Abstract

Purpose

This paper aims to develop a set of tactical electronic business solutions for the electronic credit card issuing industry.

Design/methodology/approach

Specifically, a strategic credit card issuing (SCCI) model is developed to analyze e-business in the credit card issuing industry. Second, a set of tactical solutions is derived on the basis of the SCCI model. Third, pattern analysis is conducted on the basis of data collected from dominant credit card issuing companies to further investigate the implementation status on these electronic business solutions in the credit card issuing industry.

Findings

The findings show that three categories of electronic business solution items can be classified. The average variability of electronic business implementation patterns for business-to-business, business-to-customer and business-to-internal in each company shows a variety of electronic business strategies implemented by these dominant companies.

Originality/value

The results will help managers and executives when they make strategic and tactical decisions on electronic business in the credit card issuing industry.

Details

International Journal of Accounting & Information Management, vol. 26 no. 1
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 1 January 2012

William A. Stadler

The purpose of this paper is to inform readers about pervasive “predatory lending” practices in the credit card industry and to explore the limitations of the…

Abstract

Purpose

The purpose of this paper is to inform readers about pervasive “predatory lending” practices in the credit card industry and to explore the limitations of the Congressional response to this problem.

Design/methodology/approach

National attention has been focused on illegal and unscrupulous behavior in the mortgage industry, but practices common to the credit card industry have been virtually ignored. This issue is explored through a description of the modus operandi of credit card lenders, details of regulator positions on predatory lending, and the recent Congressional response to this trend via The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.

Findings

“Predatory lending” is a fraudulent practice that presents serious financial risks to consumers. Recent attempts to minimize those risks by Congressional statute may be inadequate. This paper identifies some of the limitations of those regulatory provisions to raise awareness of the issue.

Research limitations/implications

While the response to predatory lending has been well‐intentioned, lenders are constantly findings new ways to circumvent current law and regulations. As a result, research must continue to properly investigate and address the issue.

Practical implications

Exploration of credit card lending practices is relevant in the context of the current economic environment. Further, investigation of the prevalence and impact of “predatory lending,” as well as the recent Congressional response, are necessary to determine if enough is being done to stymie this problem and protect consumers from continued economic marginalization.

Originality/value

This paper provides current information relevant to the pervasive issue of predatory credit card lending in the USA.

Details

Journal of Financial Crime, vol. 19 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 January 2004

Jeanne M. Hogarth, Marianne A. Hilgert and Jane M. Kolodinsky

Using data from the Survey of Consumers, this study focuses on consumer’s resolution efforts with credit card problems and the likelihood of “exiting” – that is…

Abstract

Using data from the Survey of Consumers, this study focuses on consumer’s resolution efforts with credit card problems and the likelihood of “exiting” – that is, discontinuing the use of a given credit card or of the financial institution associated with the card. Among all households with a problem, nearly two‐thirds (63 percent) were able to resolve their problem, while over half (55 percent) exited. Exit was associated with marital status, race, how dissatisfied the consumer was, number of problems related to credit cards, and attribution. Holding all else constant, consumers who were likely to resolve their problem were only half as likely to exit. Thus, credit card companies need to carefully and quickly address their customers’ problems and resolve their complaints.

Details

Journal of Services Marketing, vol. 18 no. 1
Type: Research Article
ISSN: 0887-6045

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Article
Publication date: 1 August 2004

Karin Braunsberger, Laurie A. Lucas and Dave Roach

The Federal Reserve Board has recently adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The first study investigates how…

Abstract

The Federal Reserve Board has recently adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The first study investigates how vulnerable consumers (i.e. college students) might respond to the revised credit card disclosure requirements and investigates credit card knowledge of college students. The second and third studies examine external validity issues, that is, whether urban college students are more knowledgeable about credit cards than rural students, and whether adult populations are more knowledgeable than student populations. These latter studies further investigate the relationships among objective knowledge, subjective knowledge and product usage. The results show that consumers in general are not very knowledgeable about credit cards. In order to avoid government regulation of the industry, it is recommended that credit card issuers become involved in educating consumers.

Details

Journal of Services Marketing, vol. 18 no. 5
Type: Research Article
ISSN: 0887-6045

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Article
Publication date: 1 December 1994

Steve Worthington

Japan has a large number of credit cards on issue and many of these areissued by Japanese retailers. Two such retailers, Saison and Daiei,illustrate why and by what means…

Abstract

Japan has a large number of credit cards on issue and many of these are issued by Japanese retailers. Two such retailers, Saison and Daiei, illustrate why and by what means Japanese retailers have entered the credit card market. This provides the backdrop to an explanation of how those major retail groups are now seeking to redefine the payment system supply chain to their own advantage. Makes reference to the worldwide competition between Visa and Master Card and how in Japan retailers have been able to play one card association off against the others. Also highlights the value of the information flows from the cardholder to the retailer and vice versa and draws attention to the potential of the retailer credit card in customer retention, recruitment and relationship building.

Details

International Journal of Retail & Distribution Management, vol. 22 no. 8
Type: Research Article
ISSN: 0959-0552

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Article
Publication date: 1 December 2000

Jacquelyn Warwick and Phylis Mansfield

Given the proliferation of the credit card industry in today’s US households, and the aggressive promotional tactics employed to get college students to sign on as…

Abstract

Given the proliferation of the credit card industry in today’s US households, and the aggressive promotional tactics employed to get college students to sign on as customers, this exploratory study takes a look at the credit card activity of college students at one Midwestern campus. The majority of students surveyed did not report knowledge of their credit card interest rate, although approximately half did report knowing their credit balance and credit limit. Students appear to have a realistic attitude toward the use of credit cards.

Details

Journal of Consumer Marketing, vol. 17 no. 7
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 1 May 2005

Karin Braunsberger, Laurie A. Lucas and Dave Roach

In the USA, the Federal Reserve Board (FRB) has adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The present study aims to…

Abstract

Purpose

In the USA, the Federal Reserve Board (FRB) has adopted a final rule amending the Truth in Lending Act's Regulation Z, effective October 1, 2001. The present study aims to use the elaboration likelihood model to explore how consumers might respond to the revised credit card disclosure requirements, focusing specifically on college students.

Design/methodology/approach

Each subject was randomly assigned to one of two financial scenarios and asked to choose, among competing offers, the credit card that presented the “best” match to the scenario. Subsequently, all subjects completed measures designed to test hypothesized relationships within the framework of the elaboration likelihood model.

Findings

College students possess a fairly low level of knowledge of credit cards and thus are not very well equipped to make educated choices concerning such cards.

Research limitations/implications

The use of a rural student sample is a limitation and future research should investigate different populations, including those in urban and international markets.

Practical implications

Since the variable APR information appears to distract consumers from taking into account other important cost information, credit card issuers should develop solicitations that aid consumers in making knowledgeable choices.

Originality/value

The present research is the first to investigate the impact of the FRB's recently adopted final rule amending the Truth in Lending Act's Regulation Z. The findings should thus be of interest to regulators, credit card issuers, and consumer advocates.

Details

International Journal of Bank Marketing, vol. 23 no. 3
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 6 July 2012

Hendi Yogi Prabowo

The purpose of this paper, which is based on author's PhD study, is to assess the efficacy of Indonesia's credit card fraud prevention from a strategic point of view…

Abstract

Purpose

The purpose of this paper, which is based on author's PhD study, is to assess the efficacy of Indonesia's credit card fraud prevention from a strategic point of view, using a model of payments fraud prevention practice developed by the author based on similar practices in the USA, the UK and Australia.

Design/methodology/approach

Primary and secondary data, particularly from the payments system of the USA, the UK, Australia and Indonesia were used. Such data were collected by means of literature reviews and in‐depth interviews with payments system professionals.

Findings

The author establishes that credit card fraud prevention practice in Indonesia is still at a lower level of robustness than those in the USA, the UK and Australia. Deficiencies in the credit card fraud prevention practice in Indonesia are indicated, inter alia, by a lack of reliable fraud data collection, management and distribution mechanisms as well as a lack of effective and efficient identity management practice. Deficiencies and weaknesses in the system should be identified and action taken to make it more consistent with credit card fraud prevention practices of other countries.

Originality/value

The paper sees credit card fraud prevention practice in Indonesia as a function of many factors which influence one another, based on which the analysis is built.

Details

Journal of Money Laundering Control, vol. 15 no. 3
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 27 January 2012

Sanjai K. Parahoo

In a fiercely competitive industry, credit card issuers need to develop a loyal customer base and motivate their card holders to use their cards at a sufficient level to…

Abstract

Purpose

In a fiercely competitive industry, credit card issuers need to develop a loyal customer base and motivate their card holders to use their cards at a sufficient level to assure profitability. The purpose of this article is to propose a consumer model of customer loyalty in the credit card industry.

Design/methodology/approach

A model of customer loyalty incorporating service quality, value and involvement is developed theoretically and validated empirically through SEM using data collected from a global sample of 114 credit card holders.

Findings

The loyalty model proposed was validated, showing that the independent variable, i.e. customer involvement, had path loadings of 0.32 and 0.26 on quality and value, respectively, while both service quality and value had direct effects on loyalty, with path loadings of 0.30 and 0.51, respectively.

Research limitations/implications

Customer involvement has been shown to directly influence both service quality and value, and it should be further investigated for its effect on sustaining relationships, as well as a variable for segmenting customers.

Practical implications

In order to develop sustainable relationships, marketers of credit cards should leverage involvement in their customers by employing strategies such as branding, positioning, and attractive and flexible frequent use benefits. Further, credit card customers desire high service quality, but at an affordable cost, therefore making value a prime consideration for achieving loyalty.

Originality/value

This study has identified “involvement” as an independent variable that provides stability and sustainability to the firm‐customer relationship. Despite its pertinence, this customer characteristic that may be also used to segment customers has not been investigated in prior quantitative studies.

Details

International Journal of Bank Marketing, vol. 30 no. 1
Type: Research Article
ISSN: 0265-2323

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