FINANCE
MAY 4, 2021
a little story of credit card
Here is a little story of credit card. The word ‘credit’ comes from Latin, meaning ‘trust’. About 3.000 years ago credit was first used in Assyria, Babylon and Egypt. The bill of exchange was established in 14th century. In 1730 Christopher Thornton placed the first advertisement of credit for furniture that could be paid off weekly.
The first charge coins were issued in 1865 which started the modern credit card history. These coins were very popular in the farming industry as they allowed farmers to pay their bills after their harvest.
Between 1882-1891 American Express entered the credit game. Formed in 1850, American Express introduced both money orders and travelers; checks which gained popularity in the late 19th century.
In the 1920’s, a “buy now, pay later” system was introduced in the United States. This system could only be used in the shops which issued it that put that plate outside.
The Diner’s Club is considered the first widespread credit card. In 1949, a business executive Frank McNamara forgot his wallet, this trigger the launching of the card. It could be used for dining entertainment and travel expenses. A year after its introduction in 1950, there were already 20.000 Diners’ Club cardholders.
In 1958, American Express Company introduced a travel and entertainment card followed by introducing the first embossed plastic cards a year later in 1959. It greatly boosting the company’s popularity.
In 1958 the first bank credit card was introduced in California, by the Bank of America. The ‘Bank Americard’ was accepted by many merchants and was extended to other states in 1966. In 1976, the “Bank Americard” was renamed VISA. As merchants around the country started accepting credit cards, the popularity of VISA increased tremendously.
In addition, Chemical Bank in New York installed the first ATM in the US in 1969. This gave cardholders access to cash without bank teller for the first time. In 1970, IBM introduced the magnetic stripe for using with American Airlines and American Express. This innovation became a standard for all credit cards after that and made the credit card part of the information age.
Meanwhile, the birth of another major player in the credit card industry began in 1966 when a group of California banks joined forces to form the ‘Interbank Card Association’ (ICA). Along with a New York bank – Marine Midland Bank, they created ‘Master Charge: The Interbank Card’. In 1968, the ICA joined hands with the Eurocard, which boosted ICA relationships to the European markets and expanded Eurocard to American markets. In 1979, Master Charge change its name to MasterCard.
To replace the magnetic stripe and increasing security in transactions Europay, Mastercard and Visa joined together in 2015 to create the EMV chip in the credit card processing industry. Chips offer greater security due to the more advance technology used for code in transaction.
Today, forms of payment are growing rapidly. We have digital payment methods like Pay Pal, Apple Pay, Zelle that allow us to pay or receive money with just a few touch on mobile phones or computers.
These online payment methods will be develop more in the future and only merchants who stay on top and following the technology advancement would be steps ahead as payment methods evolve. Hope you get a better information about a little story of credit card now.
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