History of Credit Cards - Part 2
How about a metal token for a credit card? Don’t laugh at this because the first credit cards were not made of plastic. Some were even made of metal. Then they were made of paper. What we have now – a plastic card – had evolved from these early forms.
The earliest recorded use of credit was in the late 1800’s when pilgrims use credit tokens to speed up business transactions among them.
Credit cards were first introduced in the US in the 1920’s. The transaction was between oil firms and hotel chains that issued the cards to their loyal customers.
However, the honor is bestowed to John Biggins as the inventor of credit cards. In 1946 while working for Flatbush National Bank of Brooklyn, New York, he invented the “Charge-It” program enabling bank customers and local merchants a faster way to transact business. The systems entail deposit of sales slips from merchants to the bank, while the bank would bill the customers after every transaction.
Not long after, others copied the idea, and even improved on it.
In 1950, Diner’s Club introduced the first “modern” credit card to its customers primarily to pay for their meals. Diner’s Club customers can eat at any restaurants without paying and the company foots the bill. The company later bills the customer who pays Diner’s Club the full amount.
In 1958, American Express issued its first card. Bank of America followed suit and started issuing its card, which is now commonly known as Visa.
In 1979, credit card companies introduced magnetic strips on the back of the credit cards. The strip stores a myriad of information about the cardholder, thus speeding up the transaction. It also served as protection against credit fraud.
Nowadays, an average American carries eight credit cards. It would be foolish to leave home with it. A credit card automates transactions that were otherwise cumbersome. This goes without saying that having no cash is not a limitation. As long as you have the plastic, you can just swipe it. There are even cards that don’t require swiping at all. The internet adds to the convenience with its online services.
Some establishments prefer credit cards than cash transactions because of the charges they earn for every purchase. A credit card can now consummate even minor transactions. The new thing now is being cash-less. A recent survey conducted by MasterCard revealed that more Americans carry less cash in their pocket compared to five years ago.
The credit card business has ballooned into a multi-billion dollar business. Statistics as of December 2005 showed upward trends, with sales volume reaching $5.9 trillion, while the total purchase volume was recorded at $3.8 trillion dollars. Worldwide transactions have likewise increased from $51 billion in December 2005 to $57 billion in December 2006.
There is no sign of slowing down when it comes to use of credit cards to transact business. As technology makes the basic purchase and payment more hassle-free, there is no stopping the rise in the use and popularity of credit cards. The five more popular credit cards are Visa International, MasterCard, American Express, Discover, and Diner’s Club.