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Article
Publication date: 1 May 1989

Steve Worthington

The long‐awaited report of the Monopolies and Mergers Commission into the supply of credit card services came out at the end of August. Although its deals primarily with bank…

Abstract

The long‐awaited report of the Monopolies and Mergers Commission into the supply of credit card services came out at the end of August. Although its deals primarily with bank credit cards, nonetheless it has important implications for retailer credit cards — for example, will retailers start to charge fees for cards or will they continue to issue them free? This special feature examines in some detail the retailer credit card market in the UK and suggests that retailers would be better served if they saw their credit card offerings as part of their overall retail support service.

Details

Retail and Distribution Management, vol. 17 no. 5
Type: Research Article
ISSN: 0307-2363

Article
Publication date: 11 May 2010

Alhassan G. Abdul‐Muhmin

The purpose of this paper is to examine how the monetary value of a retail transaction (transaction size) impacts consumers' preferences for cash, debit and credit card payment…

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Abstract

Purpose

The purpose of this paper is to examine how the monetary value of a retail transaction (transaction size) impacts consumers' preferences for cash, debit and credit card payment modes.

Design/methodology/approach

Drawing on the analytical and empirical literature on retail payment mode choice and the related literature on differences in payment mode attributes, the author develops and tests a hypothesis that at retail point of purchase, cash, debit and credit card will be preferred payment modes for low‐, medium‐ and high‐value transactions, respectively. The hypothesis is tested in an experimental survey in which a sample of 477 respondents indicate which payment mode they would most likely use for each of ten products that vary systematically in list prices.

Findings

The results offer broad support for the hypothesis. They also show that preferences for debit and credit card payment modes are similar at low transaction values (both are less preferred), whilst those for debit and cash payment are similar at large transaction values (again, both are less preferred). This suggests that electronic payment modes are collectively a substitute for cash for low transaction values, whilst credit cards are a substitute for cash and debit cards for high transaction values.

Research limitations/implications

A key implication of the results is that it may be possible to persuade consumers in the study context to use electronic payments for small‐value transactions by invoking and making salient, convenience considerations that are purported to drive preferences for cash payment for such purchases.

Originality/value

The results also offer an alternative explanation for the continuing dominance of cash transactions in modern economies, and outlines implications for promoting consumer use of electronic payment modes at retail point of purchase.

Details

International Journal of Retail & Distribution Management, vol. 38 no. 6
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 1 July 1992

Steve Worthington

Only a small proportion of consumer borrowing is provided by bank andretailer credit cards. Discusses how recent changes in credit card terms andsocietal attitudes may further…

Abstract

Only a small proportion of consumer borrowing is provided by bank and retailer credit cards. Discusses how recent changes in credit card terms and societal attitudes may further reduce that borrowing. Suggests debit cards will become increasingly important as a means of payment in the UK – plastic cards in general will be used more as paper transactions decline. In Europe there may be convergence of plastic card usage with eventual reduction in the number of credit card issuers.

Details

International Journal of Retail & Distribution Management, vol. 20 no. 7
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 1 April 1987

Steve Worthington

Credit cards are in the news again. In 1986 there was a rise of 14% in the amount of outstanding consumer credit, more than three times the rise in prices and double the rise in…

Abstract

Credit cards are in the news again. In 1986 there was a rise of 14% in the amount of outstanding consumer credit, more than three times the rise in prices and double the rise in earning. Credit advanced in March 1987 was at a record level of £3.2bn. And retailer credit cards are doing excellent business. This feature looks at the background to the credit card explosion and then examines, in detail, the latest recruit to the fold, the Co‐op VISA card. We also take a look at the Connect card story, and conclude with a summary of the RMDP survey on retailers' attitudes to EFTPoS.

Details

Retail and Distribution Management, vol. 15 no. 4
Type: Research Article
ISSN: 0307-2363

Article
Publication date: 1 April 1990

Steve Worthington

Following a discussion of the total United Kingdommarket for plastic cards, detailed information isgiven about the number and nature of retailercredit cards (store cards

Abstract

Following a discussion of the total United Kingdom market for plastic cards, detailed information is given about the number and nature of retailer credit cards (store cards) currently issued in the United Kingdom. Retailers in the USA and Italy are already competing with the traditional financial institutions in the market for financial services, and comment is made on their strategies and their results so far. Retailers in the United Kingdom are also moving into the provision of financial services and they are using their well developed in‐house credit card databases to help launch these new products. They are also examining ways to enhance the attractiveness of their credit card offerings, to differentiate them further from the MasterCard/Visa credit cards and hence compete more effectively with the banks in the provision of credit.

Details

International Journal of Bank Marketing, vol. 8 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 1 July 1998

Nicholas Alexander and Mark Colgate

Retailing is traditionally defined in terms of the retailers’ place in the distribution of tangible products. However, the retail function may be more widely defined where the…

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Abstract

Retailing is traditionally defined in terms of the retailers’ place in the distribution of tangible products. However, the retail function may be more widely defined where the retailer concerned is involved not only in the provision of product distribution services but also in the management and provision of financial services. Retailers are rediscovering the impact financial services may have on organisational success. That is, they are increasingly recognising the direct contribution that financial services may make to profit margins and the indirect benefits which may accrue through increased customer loyalty. This article considers the framework within which innovation in the provision of payment systems and other financial services is occurring in the retail sector.

Details

International Journal of Retail & Distribution Management, vol. 26 no. 6
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 1 February 1980

Danica Ognjenovic

If the retailer was previously looking to credit to stretch the pockets of the consumer in these hard times, then he chose the wrong government under which to practice these…

Abstract

If the retailer was previously looking to credit to stretch the pockets of the consumer in these hard times, then he chose the wrong government under which to practice these tactics. Enforcement of the stern tenet of getting people to ‘live within their means’ is going to bite hard into the free‐spending habits of all credit card holders. In the mean time, what hopes does the retailer have for in‐house credit and what are the real possibilities it offers in the coming decades?

Details

Retail and Distribution Management, vol. 8 no. 2
Type: Research Article
ISSN: 0307-2363

Article
Publication date: 16 December 2022

Luis E. Arango and Ingri K. Quevedo

The authors estimate the determinants of the value of purchases of semi-durable goods using permanent and transitory income, and the demographic characteristics of customers. The…

Abstract

Purpose

The authors estimate the determinants of the value of purchases of semi-durable goods using permanent and transitory income, and the demographic characteristics of customers. The purpose is to identify whether individuals face remaining liquidity constraints, and how this friction affects their purchases.

Design/methodology/approach

This study uses anonymized data of 516,525 credit card holders, with more than 7,501,065 records of purchases between 2010 and 2015. The authors decompose the income of individuals into permanent and transitory components to test the prevalence of the life cycle–permanent income hypothesis (LC–PIH). Determinants of the value of purchases for constrained and unconstrained consumers are estimated, considering the period in which individual characteristics are valid, the decisions not to make purchases in some months, and the potential endogeneity of the interest rate and the transitory component of income.

Findings

The authors present evidence of liquidity constraints for individuals who have used a high percentage of the credit limit on their cards. For these restricted customers, the value of purchases is inelastic to the interest rate, whereas the response is sizable for customers who are less restricted. The restricted customers increase the value of purchases when faced with increases in their credit limit. The elasticity of the value of purchases of semi-durable goods to permanent income is less than that for transitory income; regardless of the constraints, this still supports the LC–PIH.

Research limitations/implications

This credit card is targeted at low- and middle-income individuals in Bogotá. Although the results might be considered as indicative of the behavior of those with similar characteristics in Colombia, the authors regard this work as the study of a particular case. A limitation of this work is that the authors do not have alternative sources of credit at an individual level.

Practical implications

The broad credit channel of monetary policy does not apply to the restricted customers. This should be considered not only by the monetary authority, to understand the true extent of this policy, but also by the financial institutions that use this business model. The monetary authority should be cautious not to overreact when intervening in the money market to try to prompt an adequate consumer response.

Social implications

Financial institutions have the policy of modifying the credit limits of their customers' credit cards which affects the well-being of restricted customers. Given that the card is aimed at low and middle income individuals, the credit limits of customers who use a high percentage of their credit limit might be increased.

Originality/value

This is the first paper to study liquidity restrictions with a retail credit card in Colombia and Latin America using information on customers' characteristics. The results are highly relevant for the implementation of monetary policy.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 September 1994

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu

In the light of increased competition and introduction of advancedtechnologies into financial service sectors, financial institutions feltthe need to apply marketing concepts and…

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Abstract

In the light of increased competition and introduction of advanced technologies into financial service sectors, financial institutions felt the need to apply marketing concepts and techniques. In particular, assessment and understanding of credit card customers′ needs and wants have become very important. It is known that people develop their first brand loyalties when they are between the ages of 18 and 25. Accordingly, college students as an important part of the youth market offer great opportunities for credit card companies. With this in mind, the purpose of this empirical study is to determine the important factors influencing credit card selection behaviour of college students via conjoint analysis. The results of this study offer important managerial implications for policy makers at the banks, financial institutions and other credit card dispensing retail outlets.

Details

International Journal of Bank Marketing, vol. 12 no. 6
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 1 February 1984

Erdener Kaynak and Ugur Yucelt

A number of insights are provided into the characteristics and attitudinal orientations of American and Canadian credit card users with indications that in both countries further…

Abstract

A number of insights are provided into the characteristics and attitudinal orientations of American and Canadian credit card users with indications that in both countries further growth in the development of credit cards is expected throughout the 1980s.

Details

International Journal of Bank Marketing, vol. 2 no. 2
Type: Research Article
ISSN: 0265-2323

Keywords

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