Credit cards–embraced for their convenience, are both loved and resented. When used responsibly, they offer innumerable perks, but abuse them and, beware, interest-ridden troubles ahead! It’s hard to imagine a life without credit cards, so we decided to go back in time and see the history of how credit cards became a necessity in the modern consumer’s wallet.
The Origins
Credit cards originated in the 1920s when firms such as oil companies, hotel chains, and big department stores were issuing out their own purchase cards. These cards were similar to modern store cards and could only be used for purchases at those individual company outlets.
The first bank-issued charge card came in 1946 when a Brooklyn banker named John Biggins launched the Charg-It card, which allowed customers of the bank to use it at local merchants.
The next two cards that came out were the Diners Club Card in 1950 and American Express travel and entertainment card in 1958.
How It Worked
The original system charged cardholders an annual fee and then billed monthly, charging the store merchants a 7% service charge. Accumulating interest didn’t come until a few years after the first cards.
The first credit card machines relied on imprinting information from a card to a piece of carbon paper and getting the customer to sign it. This wasn’t always a secure method due to dumpster-divers finding old copies of credit card information in-store trashcans.
Major innovation on payment processing came in 1979, when MasterCard invented the magnetic strip and the point of sales system was invented. This was the beginning of the payment processing units as we know them today!
Rewards Systems
Credit card rewards systems did not come out until the 80s – this was due to credit card companies needing a more unique selling point for their cards. In the earlier years, the biggest selling point for a card company was how many merchants accepted them, but as all cards became accepted everywhere, more unique distinguishers were needed.
Present Day
Still, to this day, payment processing continues to evolve. Recently, the use of “tap” on machines has allowed consumers to use their credit cards more conveniently and sometimes not even at all when cards are swapped for phones with Apple Pay.
Don’t get left behind–help your business evolve with the latest payment processing trends. Inclera partners with you to provide payment processing, financial planning, and analytics solutions to take your business in the right direction. Want to learn more about what we can do for you? Follow us on social media!