... attributed to payments through checks and cash is smaller. Prospective credit card users also considered them risky, and thus they were rather uncertain about making their tangible cash vanish beneath the magnetic strip of the card. On the other hand, the benefits from credit card using are much greater since they do the same work checks do, but are more efficient, faster and cheaper. Almost every store (usually larger stores) accepts credit card from buyers and almost everywhere you go you can pay by using a credit card. Moreover, the credit card system enables consumers to purchase goods online, through e-commerce, which during the recent past has become extremely popular and widespread. Question: Why has the demand for credit cards increased so much during the past two decades? What economic theory can be used in order to explain this transition from paper-based methods of payment to credit cards? Analysis: The widespread use ...

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