The Dawn of the Plastic Jungle: The Introduction of the Credit Card in Europe and North America, 1950-1975
Bernardo Batiz-Lazo and
Gustavo Del Angel
No 16107, Economics Working Papers from Hoover Institution, Stanford University
In this paper we discuss the genesis and early international expansion of the bank issued credit card. Empirical evidence documents the limits of a single firm building a proprietary network, because success came to a constellation of participants that combined three characteristics namely a critical mass of both retail customers and retail merchants; the capacity to adopt and implement new technological solutions; and the ability to forge resilient collaboration across national borders. This evidence provides further support to the importance of collaboration in retail financial services as means to appropriate network externalities. We also argue that initial conditions for this industry had greater implications for long-term success than has been acknowledged by other conceptual and empirical studies (in particular the literature around two-sided markets, which has focused attention on the determinants of the interchange fee).
Keywords: Credit card; payments; cashless; two sided markets; payment tolls; Bank of America; Barclays; Banamex; Bancomer; Banco de Bilbao; British banks; Mexican banks; Spanish banks (search for similar items in EconPapers)
JEL-codes: E51 L5 N1 N2 N8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-his, nep-ino, nep-mac and nep-pay
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