Cash or Card: Consumer Perceptions of Payment Modes - Scholarly ...

2.5: Payment Mode and Purchase Behaviour
The availability of credit and store cards predates the introduction of electronic payment
systems. Credit cards were first issued in the US by hotels at the beginning of the 20 th
Century. By 1914, large department stores and gas station chains were the first to issue store
credit cards. It was not until the 1950s that third party cards began, first as travel
entertainment cards and then as bank cards (Russell, 1975). During the 1960s Visa and the
MasterCard largely eliminated competition and established the bank credit card industry. In
consumer markets, the introduction and use of credit cards in the 1970s to facilitate exchanges
initiated social comment and research. There was a spurt of interest in understanding by
whom and how these cards were used but interest waned (Schreft, 2006). The advent of
automated teller machines (ATMs), the point of sale electronic payment systems and the
introduction of debit and smart cards rekindled interest in payment mode research.
2.5.1: Credit Card Research
The earliest work in the area of credit card usage is that of Mathews and Slocum in 1969 and
1970 and Plummer in 1971. These studies examined credit card use across socio-economic
groups. The studies show that credit card users were more likely to be in the upper
socioeconomic class and to use the their credit cards to buy luxury goods; lower socio-
economic groups use their credit card to buy durables and necessities and that they use them
to manage debt, whereas upper socio-economic groups use credit cards for convenience.
The Plummer study also reports that credit card users live in urban-suburban areas and have
many interests outside the home with studies by Goldstrucker and Hirschman (1977),
Hirschman, Alpert and Srivastava (1979) and Martell and Fitts (1981), reporting similar
findings. In the 1990s, some researchers examined the relationship between gender and
credit card use. Choe, Yoon and Johnson (1991) report that in the context of single parent
households, males were more likely to use credit cards, but that household income was also a
factor; higher earning females showed increased use of credit cards. Pahl (1999) reports that
males in the UK have more, and use more credit cards than females. She also reports that
where females have independent income, the difference is not significant. Later studies
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