Chapter 7, Problem 1DQ

To determine

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

To explain: Benefit of sellers from allowing their customers to use credit cards.

Solution:

The benefits to sellers from allowing their customers to use credit cards are:

• Since, a credit card is issued by a bank, the responsibility to pay for the credit remains with the bank and not with the customer. So, it reduces the risk of default by the customer from buying goods and services on credit.
• Since, credit card provides the benefit of payment of goods and services without the availability of cash, it results in immediate sale of goods and services for seller.
• Since, through credit card a customer gets the benefit of paying later, it results in more frequent sale of goods and services for seller.

Thus, there are various benefits of sellers from allowing their customers to use credit cards.