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Plastic MoneyConstructing Markets for Credit Cards in Eight Postcommunist Countries$
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Alya Guseva and Akos Rona-Tas

Print publication date: 2014

Print ISBN-13: 9780804768573

Published to Stanford Scholarship Online: September 2014

DOI: 10.11126/stanford/9780804768573.001.0001

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Payment Puzzles

Payment Puzzles

(p.53) Three Payment Puzzles
Plastic Money

Akos Rona-Tas

Alya Guseva

Stanford University Press

This chapter presents how card markets work. It lays out the puzzles encountered by the architects of credit card markets and explains why they pose challenges to standard understandings of market economics. In line with the argument that credit cards combine the features of two products, payment cards and consumer loans, here the focus is on two payment puzzles: two-sided markets and standardization. It is argued that these puzzles are such that they cannot be effectively solved by a self-regulating competitive market driven by the forces of supply and demand in the pursuit of ever-increasing profits. Instead, the solutions to these puzzles require some sort of nonmarket intervention. The chapter concludes with a short account of how each of the two puzzles was solved in the American payment card market, as well as gives a brief preview of solutions used in the postcommunist countries.

Keywords:   payment puzzles, demand for cards, two-sided markets, standardization, salary projects, coercion, role of the state

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