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Abstract Credit cards are cards that are used by customers to make payments. The customer gets credit in his card with the promise that he or she will pay back the money to the company later after making purchases. The customer pays back the money with interest. This interest is the profit and revenue to the credit company. There are some customers who refuse to pay back the money, causing huge losses to the company. Studying the behaviour of the customers and capturing information related to the customers will help the companies determine who to give credit based on their behaviours and projected creditworthiness. Introduction Technology has grown rapidly over the last couple of decades, changing the way most things used to be done traditionally. Technology has made things easier and more efficient. The business world has been transformed greatly by the introduction of technology. Technology has facilitated innovation in business by increasing the efficiency, quality of services offered to the customers, as well as the profitability of businesses. On the other hand, technology has also affected the buying behaviour of customers in a positive way. Customers can now make payments using debit cards (Houghton, 2009). Customers can borrow money using credit cards. The customer is given an advance and expected to pay with interest. This method of payment has been met with a number of challenges in that some people default the debts and refuse to pay, leading to credit card companies making huge losses. Get your 100% original paper on any topic done in as little as 3 hours Learn More However, the companies are now developing new ways that they can use to track customers and make them pay the dues. This article will focus on the issues concerned with credit cards. Summary of the case The case is about the new credit card profiling methods that have resulted from the increase in the number of people who fail to pay their credits. All sales made using a credit card are recorded and stored in a database and the information is used by the credit company for various purposes. The records indicate the type of purchase the customer made. The information is used by companies to target promotions. For instance, frequent buyers of a given commodity can be targeted and given discounts. According to the case, the cards can also be used to guard users against fraud. This is possible when the company notices an unusual buying behaviour of the card user. Another use of credit cards is that they can be used to control users who charge more than their cards’ limits or have erratic spending habits. Finally, the cards are used for the purposes of tracking criminals. The case explains how the credit card companies make profits from the interests paid by card users. It also exhibits how users default their credits and cause huge losses for the companies. However, it goes on to explain how the companies can reduce the losses by studying the behaviours of customers and then determining the people who are creditworthy and those who are not. The case suggests that some behaviour indicate the inability of a customer to pay their balances. Finally, the case highlights the effort by the US Congress to investigate the use of profiling by credit card companies to determine the rates of interests charged on customers. The Congress is expected to pass a bill that will deter companies from raising interest rates for no valid reasons. We will write a custom Case Study on Credit Cards and Making Payments specifically for you! Get your first paper with 15% OFF Learn More Case Study Questions Competitive strategy The competitiveness of a business organization is very important in the bid to maximize its profit. It is important to note that every business organization is established with the primary goal of making profits. The credit card companies make profits from the interests they earn from giving customers advance cash for their shopping. Therefore, they have to come up with ways of minimizing the number of credit defaulters among their customers to gain a competitive advantage in their business. In so doing, companies are developing mathematical analyses to study and understand the behaviour of customers. Credit companies believe that understanding such behaviours will help them give money to customers who are more likely to pay. The information systems are important in supporting this strategy because they give more details on the behaviour of customers (Silver Lake Editors, 2005). Benefits of analysing customer purchase data and constructing a behavioural profile The system records the data related to a purchase when a customer purchases a good or a service using the credit card. This information is important in that the company can use it to prevent any potential fraud by the users. Frauds are likely to cause huge losses on the side of the company. The company is also able to use the data to detect any unusual purchases made by the customers, which could be an indicator of a lost card. The card could be stolen and used by another person. This increases the trust that customers have in the company since the company helps them to track their lost cards. Consumer trust is a competitive advantage to the company. Constructing behavioural profiles helps the company in determining the creditworthiness of the customers (Leonard
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