Marketing Ethics - Charge

1. What are the ethical implications of encouraging electronic payment methods compared to cash payments in Asian countries?

In America using a credit card to pay for purchases is nothing out of the ordinary; I cannot say the same for Asia. America is the leader in credit cards per capita 2.01. This is higher than many of the Asian countries, China is 0.15, and Taiwan is 1.81, South Korea 2.00 and Philippines 0.06. In Asia-Pacific, between 2004 and 2009 card transactions has grown 158% which makes it one-fourth of the global transaction volume. As electronic payments catch on, the Asian governments are encouraging this growth because of it potential to stimulate the economy and bring in more tax revenue. Retailer's embraces this because consumers spend more when using cards as opposed to cash. This trend is not without critics, however, given the historical dislike to debt exhibited by Asians (Chu, 2010).

2. Most stores have eliminated lay-away options for customers and encourage credit purchases. Should retailers encourage customers to rely heavily on credit?

A response of the financial service industry for the disappearance of the interest spread is to encourage individuals and businesses to view all of their liabilities and assets as a total package and to manage them as such. Service providers are using their credit products to increase the effectiveness fluidity of their assets held by the consumer, by offering credit cards they are creating lines of credit that is secured. A retailer perceives the cards that they created as creating and maintaining customer's loyalty and facilitate their impetuous spending within their store (OTA).

Lay-away allows customers to select items they want while paying for them over an extended period of time. Once you pay the items final payment, the merchandise is given to you. The difference between using a lay-away program versus a credit card is that there is no interest accruing on lay-away items. However with the creation of store credit cards there is not a need for lay-away. The pay over time, pick up your gifts later mindset has turned into pay later, take your gifts home now with the store credit card. Therefore, instant gratification has won the battle between layaway and credit cards. Credit cards are flexible when you cannot afford to pay off the balance quickly. The other difference is when you cannot pay off the balance you get a refund, whereas when you cannot pay the balance and start missing payments you get bad credit that has interest accumulations. One credit card late fee makes the credit card most expensive than lay-away with a seven to ten years damage to your credit score (Irby).

Works Cited

Chu, K. (2010, June 30). Asia-Pacific region embraces Use of Credit and Debit Cards. Retrieved from http://usatoday30.usatoday.com/money/world/2010-06-30-chinadebt30_cv_n.htm.

Irby,