Editing Network effect (section)

=== Credit cards ===
For [[credit card]]s that are now widely used, large-scale applications on the market are closely related to network effects. Credit card, as one of the currency payment methods in the current economy,<ref>{{Cite book|last=Shy, Oz |title=The economics of network industries s|date=2001 |publisher=Cambridge University Press |isbn=0-511-03224-2 |location=Cambridge, U.K. |oclc=559215717}}</ref> which was originated in 1949. Early research on the circulation of credit cards at the retail level found that credit card [[interest rate]]s were not affected by macroeconomic interest rates and remained almost unchanged. Later, credit cards gradually entered the network level due to changes in policy priorities and became a popular trend in payment in the 1980s.<ref name="Jones, Garett"/> Different levels of credit cards separate benefit from two types of network effects. The application of credit cards related to external network effects, which is because when this has become a payment method, and more people use credit cards. Each additional person uses the same credit card, the value of rest people who use the credit card will increase.<ref name=":1">{{Cite web|title=Unit 21 Innovation, information, and the networked economy|url=http://www.core-econ.org/the-economy/book/text/21.html|access-date=2020-10-30|website=core-econ.org|language=en|archive-date=2020-10-30|archive-url=https://web.archive.org/web/20201030105611/https://core-econ.org/the-economy/book/text/21.html|url-status=live}}</ref> Besides, the credit card system at the network level could be seen as a [[two-sided market]]. On the one hand, the number of cardholders attracts merchants to use credit cards as a payment method. On the other hand, an increasing number of merchants can also attract more new cardholders. In other words, the use of credit cards has increased significantly among merchants which leads to increased value. This can conversely increase the cardholder's credit card value and the number of users. Moreover, credit card services also display a network effect between merchant discounts and credit accessibility. When credit accessibility increases which greater sales can be obtained, merchants are willing to be charged more discounts by credit card issuers.<ref>{{Cite journal|last1=Chakravorti|first1=Sujit|last2=To|first2=Ted|date=2007-06-01|title=A theory of credit cards|url=http://www.sciencedirect.com/science/article/pii/S0167718706000890|journal=International Journal of Industrial Organization|language=en|volume=25|issue=3|pages=583–595|doi=10.1016/j.ijindorg.2006.06.005|issn=0167-7187}}</ref>

[[Visa Inc.|Visa]] has become a leader in the electronic payment industry through the network effect of credit cards as its competitive advantage. Till 2016, Visa's credit card [[market share]] has risen from a quarter to as much as half in four years. Visa benefits from the network effect. Since every additional Visa cardholder is more attractive to merchants, and merchants can also attract more new cardholders through the brand. In other words, the popularity and convenience of Visa in the electronic payment market, lead more people and merchants choose to use Visa, which greatly increases the value of Visa.<ref>{{Cite web|title=How Visa Created a Network Effect|url=https://marketrealist.com/2017/06/visa-creates-network-effect/|access-date=2020-10-30|website=Market Realist|date=15 June 2017|language=en|archive-date=2020-11-02|archive-url=https://web.archive.org/web/20201102035128/https://marketrealist.com/2017/06/visa-creates-network-effect/|url-status=live}}</ref>