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Paying with Plastic: The Digital Revolution in Buying and Borrowing Paperback – December 17, 2004

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Product Details

  • Paperback: 360 pages
  • Publisher: The MIT Press; second edition edition (December 17, 2004)
  • Language: English
  • ISBN-10: 026255058X
  • ISBN-13: 978-0262550581
  • Product Dimensions: 6 x 0.8 x 9 inches
  • Shipping Weight: 1 pounds (View shipping rates and policies)
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (11 customer reviews)
  • Amazon Best Sellers Rank: #445,599 in Books (See Top 100 in Books)

Editorial Reviews Review

For better or worse, most of us have at least one of the 720 million little plastic cards that are used each year to complete $860 billion worth of purchases at 15 million incredibly varied merchant locations throughout the world. This is a far cry from the humble beginnings of these myriad credit, debit, and charge cards, which just a few decades ago were generally a perk offered only to elite customers for the acquisition of fine meals, hotel rooms, department-store goods, and oil-company products. They are now so common and such an integral part of our economy, in fact, that few pay them much mind--a situation that makes David Evans and Richard Schmalensee's Paying with Plastic all the more interesting. Evans, senior vice president of National Economics Research Associates, and Schmalensee, dean of MIT's Sloan School of Management, meticulously trace the history of these cards from both the consumer and merchant perspectives in this surprisingly appealing volume, which will prove enlightening to anyone who ever wondered how plastic money works. --Howard Rothman --This text refers to an out of print or unavailable edition of this title.


Authors Evans and Schmalensee have written the definitive book on the business of bank cards. The reader will come away an expert, with a clear understanding of the business drivers, the players, and the complex issues behind the business of bank cards. This should be required reading for anyone engaged in the bank card industry, from executives at the associations to systems integrators and vendors that service this market.

(John C. Gould, Director of Consumer Lending and Bank Cards Practice, TowerGroup)

An excellent treatment of the payment card industry's evolving structure and conduct.

(Daniel Pope Enterprise & Society)

Paying with Plastic examines a quiet revolution in the U.S. economy the steady transition from checks and cash to credit, debit, and charge cards. The authors describe the causes and consequences of this transition in terms of economics and law all in plain English that the nonspecialist can understand. This book has become an immensely valuable source on an important subject.

(Robert Pitofsky, Joseph and Madeline Sheehy Professor in Antitrust and Trade Regulation Law, and Dean Emeritus, Georgetown Law School, and former Chairman, Federal Trade Commission)

Paying with Plastic is a practical discussion about a complex industry that drives almost $3 trillion in worldwide purchases every year. Evans and Schmalensee illuminate the inner workings of an industry that many know by virtue of the cards we carry in our wallets, but few really understand. It is required reading for anyone who works in, works with, or studies payment cards.

(Timothy Muris, Foundation Professor of Law, George Mason University, and former Chairman, Federal Trade Commission)

This very readable book will appeal not only to policymakers and business executives, but also to the theoretically inclined economist. Evans and Schmalensee provide a rigorous analysis and deep insights about the credit card industry's fascinating institutional features. Paying with Plastic considerably advances the state of our knowledge and is a remarkable achievement.

(Jean Tirole, Institut d'Economie Industrielle, Toulouse)

Well-written and clearly presented.

(Tudor Marshall The Business Economist)

More About the Author

David S. Evans is an economist with a specialty in the study of high-technology businesses, especially those based on software and the Internet, and in platform-based businesses (also known as two-sided markets) that create value by bringing different groups of customers together. He holds academic appointments at the University of Chicago Law School, where he is a Lecturer, and at the University College London where he is the Executive Director of the Jevons Institute for Competition Law and Economics and Visiting Professor. He has authored or edited seven books and more than 100 articles many of which were published in peer-reviewed journals or books. He is the Editor in Chief of Competition Policy International at and Lombard Street at David is also a strategic advisor and board member for a number of ventures.

Customer Reviews

Job well done.
Randall R. Wheeler
Yet this is precisely what the authors have done for credit cards, the digital quantum leap in the evolution of payment instruments.
Andrei Hagiu
Overall, this is a book you read if you need to, but I can't imagine anyone outside the industry reading it.
Dion F. Lisle

Most Helpful Customer Reviews

33 of 33 people found the following review helpful By A Customer on December 25, 1999
Format: Hardcover
The authors bring disciplined methodology to the study of "industrial development," using credit cards as a case study. The book is useful not just for its anecdotal review of how credit cards got started & how they are used; and not just for the wealth of statistics it provides on how card & other payment usage has changed over the years; but most importantly, by putting some structure around all that material so that we can understand it coherently. So many books on banking & on industrial development (like things by guru Tom Peters) are just so many anecdotes strung together for 100s of pages, with no "system" for understanding what's being talked about. This book's strength is that it provides the reader with a way of interpreting not only what's in the book but with a way of understanding the incessant new developments in the industry that we read about in the trade press every day. I recommend this book highly to anyone in banking or interested in what's going on in the payments system.
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47 of 53 people found the following review helpful By M. McCormack on November 16, 2001
Format: Paperback Verified Purchase
The authors both are long-time consultants for Visa and it is very apparent in this book. The discussion of MasterCard, Discover, and American Express is limited. The treatment of various legal actions (Nabanco, US DOJ, WalMart, duality) is one sided. There is minimal study of the economics of the business from vantage points (consumer, merchant, acquirer, Issuer, co-branding partner, etc.) other than the card association.
It's clear from some of the statistical material prsented that Visa particpated in the book.
Ever see JAG? It's about a real portrayl of the Navy & Marine Corp as this is of the card industry.
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12 of 13 people found the following review helpful By Rolf Dobelli HALL OF FAME on May 9, 2005
Format: Paperback
In this history of payment cards, David S. Evans and Richard Schmalensee provide an amazingly lucid account of a couple of unusual business models: the "two-sided platform," which in the use of payment cards means walking a tightrope between the interests of merchants and consumers; and the "co-opetitive," in which the bank members of MasterCard and Visa cooperate in developing industry practices while competing for business. The authors, who are both former Visa consultants, sound like your favorite college professors - up to date and extremely sophisticated, yet friendly and anecdotal (at one point, they describe a Shell gas station near MIT to make a point about competition among cards). They typically begin chapters with easily understood notions from which they methodically build complex structures of ideas and information. Another virtue of the book is its concreteness - although that occasionally devolves into repetitiveness - starting with an explanation involving electronic signals and following the paper path of what happens when you hand your credit, debit or charge card to a cashier. The authors even consider the design and manufacture of the cards themselves. We recommend this book as essential reading for those in the banking or payment card industries; and it's not a bad idea for card users to read it - which these days means you...and just about everyone else.
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6 of 8 people found the following review helpful By Larry Chiang on October 24, 2005
Format: Paperback Verified Purchase
Paying with Plastic first edition has been revamped, rewritten and repositioned here with edition number two.

Most important, Paying with Plastic "2.0" addresses new developments of online payment processing. The authors correctly begin to question the requirement of a merchant set top box for reading "antiquated magnetic stripes".

"Old is new" item #1. Frank McNamara's Diners Club platform would cost about $50,000 to set up today. What's the next mutiny of merchants?

Old is new item #2. Sears starting up Discover and getting to more merchants tha American Express -all within 2 years. Moore's law (doubling within time) would suggest the next Discover would ramp up in less time.

Old is new #3. Industries in decline, lobby best. The payment industry's recently raised interchange rates. Does technology cost more?! No, but growth is stagnant.

Old is new #4. Whoops, John Reed (ex-ceo of Citibank) pulled their Visa membership (p14) and moved the Mastercard logo to the back. Why?! Pull the entire Citi into a closed loop - Citi wanted to be like Amex and Discover. There will be more banks doing this like Chase (Octogon) or MBNA (PayPass).

Old is new #5. Wal-mart as a bank. See Sears above in #2. Wal-marts pays fees to V/MC/D/Amex but they'd rather charge fees and lend money. Why just make $2.00 on the VCR when you can make $10 on the financing. By the way, I like the payment system name, "Wallycard"... just kidding.
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12 of 17 people found the following review helpful By Ng Chon Hsing on October 13, 2000
Format: Hardcover
I picked up this book because I have always been interested in the history of money and the power of gold as currency. If you are fascinated by the concept of money and how it makes the world go round, Paying With Plastic will whet your appetite.
To many a layperson, paper money has intrinsic value ostensibly because it is backed by gold. That, is furthest from the centre of gravity. Since Bretton Woods, paper money has not been backed by gold and has absolutely no value. The "value" of paper money is perceived and has "value" only because governments say so and because we believe in it. In fact, paper money forms only a very small portion of the money that is in circulation. These days, money is in the form of digits, bits and bytes - expressed as numbers in some computer harddisk.
Paying With Plastic explores a new form of money and how credit cards are the latest form of money - evolving from metal coins, bills of exchange, and paper money. The book traces the early and painful development of what was initially a clumsy mode of payment to what is today one of the most effecient, organised and widespread form of payment.
Paying With Plastic is the leading book of its kind - thorough, yet readable. If you are interested in the concept of money and how the credit card system works, then this book is for you.
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