Here Is a Quick Look Into the History of Credit Cards

 

The term Credit Card was first introduced by author Edward Bellamy in his novel 'Looking Backward' in 1887. The term was 11 times in the novel but its meaning was very different from that of the credit card we use nowadays.

In the late 19th century, Charge Coins and various other similar items were introduced which were typically used by Department Stores and also sometimes by Oil Companies. The charge coin offered a simple and fast way to copy a charge account number to the sales slip, by imprinting the coin onto the sales slip. This speeded up the process of copying, previously done by handwriting. 

Early Credit Cards

Charge Plate

Charge Plate, also known as Charge-Plate was introduced in 1928 and was used from the 1930s to the 1950s. Charge-Plate was a trademark of Farrington Manufacturing Co. Charge-Plates was issued by large-scale merchants to their regular customers, much like department store credit cards of today. In some cases, the plates were kept in the issuing store rather than held by customers.


Air Travel Card

In the 1940s, American Airlines and the Air Transport Association simplified the process of air travel even more by issuing Air Travel Card. This allowed airline passengers to purchase tickets from various airlines on credit. With an Air Travel Card, passengers could "buy now, and pay later" for a ticket against their credit and receive a fifteen percent discount at any of the accepting airlines. 

Charge-It Cards

Bank-issued charge cards originated in 1946 when a Brooklyn banker named John Biggins launched the Charge-It card. Charge-It purchases were forwarded to Biggins’ bank, the middleman that reimbursed the merchant and obtained payment from the customer in what came to be known as the “closed-loop” system. Charge-It cards could only be obtained by bank customers and purchases could only be made locally. Five years later, New York’s Franklin National Bank followed suit, issuing its first charge card to its loan customers. 

Diner’s Club, Carte Blanche, American Express

In 1950, founders of Diner’s Club, Ralph Schneider, and Frank McNamara, expanded on the concept of using the same card to pay various merchants through a partial merger with Dine and Sign. They produced the first "general purpose" charge card and required the entire bill to be paid with each statement. This same was done by Carte Blanche and then by American Express in 1958 (these were charge cards initially which over time acquired features of Credit Card).

BankAmericard & Master Charge

In 1958, Bank of America launched the BankAmericard in Fresno, California, which would become the first successful recognizably modern credit card. Until then, no one had been able to establish a revolving credit financial system successfully. In 1970, BankAmericard was spun off into National BankAmericard, Incorporated, and an interbank card association that issued and managed credit cards. In 1976, National BankAmericard, Inc. became Visa.

In 1979, Mastercard was formed. Before it was called Mastercard, the company was formed as The Interbank Card Association in 1967. It then rebranded itself as Master Charge in 1968 before its final change in 1979.

Since then various features have been added to a standard Credit Card to make it more efficient and theft-proof. First, there was the addition of Magnetic strips on the back, which could be read by specialized computer equipment that was state-of-the-art at the time.

Then there were the credit cards with embedded computer chips are now making magnetic stripes obsolete. These embedded computer chips, called EMV smart chips aimed to make credit card transactions more secure. These chips generate unique, one-time codes to approve transactions and are considered more secure than static magnetic strip information.

However, it is the suggestion of some industry experts that the era of EMV may be relatively short, as wireless payment technologies are rapidly integrated into smartphones, watches, and other wearable platforms. 

Credit Cards In the Future

With the way developments are made nowadays, it will be of no surprise if Credit Cards will become obsolete in the coming years. Credit Cards may become virtual or may only require a customer’s biometric authentication for a transaction to go through rather than requiring an abundance of account information.

Written by - Sejal Nayyar

Edited by - Maryam Salim