Examining the alleged barriers to acceptance of credit cards Essay

Examining the alleged barriers to acceptance of credit cards - Essay Example However, in order to understand whether this is accurate, one must examine the characteristics of the cash-carry banking culture and also investigate how consumers determine risk in this area. It is somewhat of a bold statement to contribute the aforementioned factors as being legitimate barriers to credit card acceptance. Why is this? Schmith (2008) provides statistics of the explosive growth in credit card penetration across the world. In some countries, credit card usage has outpaced total national growth (i.e. GDP) and the trend in consumer credit card usage continues to escalate significantly (Schmith 2008). There is more evidence, rather, that disruptive innovations in the market place, such as mobile payment systems, are providing a new incentive for consumers to reject credit cards in favour of more modern technologies associated with payment and banking. A disruptive innovation is one defined as a product or service capable of supplanting or transforming an established marke t (Christensen and Raynor 2003). Hence, evolutions in payment systems, such as electronic banking or mobile banking, are transforming available options, making switching costs very low for consumers to select alternatives to credit cards. Do, then, risk perception and cultural characteristics of the cash-carry banking culture actually serve as barriers to credit card adoption? Research indicates that there are far too many explanatory factors for why consumers might reject acceptance of credit cards that are aligned with specific market beliefs and market needs. These factors include the appropriate design of advertising communications by a marketing business, competition...This is aligned properly with many consumer behavioural models that illustrate the processes of selection, organisation and interpretation that involves much psycho-social influence both inherent and stemming from the external environment. Thus, particular segments that do see risk associated with involvement in credit cards, either social, economic, or perhaps privacy related would have different motives from other markets that find trust and reliability in the rather mature credit card industry. The cash and carry consumer, one that values traditionalism in the financial services industry, might be adaptable to accepting credit cards if their evaluative criteria finds an appropriate match with the messages and other related stimuli provided by marketing entities. At least theory would seem to dictate this, but again without knowing exacting market characteristics, a well-justified hypothesis would be difficult to produce. However, there is ample evidence that credit card usage continues to explode and research did not uncover any legitimised data that cash and carry cultures and risk establish barriers to credit card adoption.