Evolution of Credit Cards

The global economy has witnessed the emergence of credit cards as a very useful service to businesses, merchants as well as individuals. The legacy of credit cards that we use today goes back to the nineteenth century when the term was first mentioned by Edward Bellamy. Bellamy described a concept to use cards for making purchases in his novel ‘Looking Backward’ which was published in 1888.

In the earlier days of 1920s, the modern day credit cards were particularly used at fuel stations to serve a rising number of automobile owners. By year 1938, many companies started accepting each other’s cards. In the period between 1930 and late 1950s, a concept called Charge-Plate was introduced in the United States. The Charge-Plate was a rectangular shaped sheet metal with the customer name, city and state embossed on it.

Large-scale merchants issued Charge-Plates to their regular customers in order to facilitate their purchases. Sometimes, the plates would be kept by the store with itself rather than the customer bearing them. In such cases, whenever a registered customer purchased something, his plate would be retrieved from the files and then the purchase was processed. But this meant that there would distinct plates for every different store. There wasn’t a common card which can be used to pay different merchants until the year 1950, when Frank McNamara and Ralph Schneider found the Diners Club. The Diners Club introduced a general purpose charge card so as to consolidate the use of multiple cards.

However, a working financial system based on revolving credit which could be accepted by majority of merchants hadn’t been created till 1958. September 1958 marked the revolution in credit cards when Bank of America introduced the BankAmericard which evolved later in the Visa system with the overseas affiliations. It was soon followed by Master Charge which was started by a group of Californian banks in 1966 and Citibank’s Everything Card in 1967. The two merged together in 1969 in their competition against BankAmericard.

The first credit card outside United States was launched by Barclaycard in UK in the year 1966. During the middle years of the twentieth century, the adoption and popularity of credit cards was high in US, Canada and UK. The others countries stuck to a cash-oriented system for a longer time before adopting the system of revolving credit gradually. In countries like Germany, Switzerland and France, it took 1990s for the credit cards to seep in the financial system on a large scale.

Even today, the use of credit cards still remains low in many places around the globe. The evolution of credit cards is among the biggest events that have taken place in the banking and finance sector during the 20th century.