Even though credit has been there since antiquity, the history of processing credit cards has expanded quickly since the late 19th century. The history of credit and debit cards is a little murky and rife with rivalry, much like the credit card processing industry itself.

It is difficult to envision a world without credit cards these days. The quickness and convenience of the credit card processing sector has become so ingrained in our culture that “card only” eateries and retail establishments are springing up all across the nation. However, the industry is still relatively new as it is now.

Even though credit has been used since antiquity, the history of processing credit cards today has expanded quickly sinceits establishment in the late 1800s. The history of credit and debit cards is a little murky and rife with rivalry, much like the credit card processing industry itself.

The History of the Credit Card,

1865–1877: First indications of credit “cards”

The history of contemporary credit cards began with the release of the first charge coins. These coins made it possible for clients to pay without cash at the time of purchase. Due to famersability to delay bill payment until after harvest, these were immensely popular in the farming sector throughout the westward expansion.

American Express joins the fray in 1882–1891.

American Express entered the credit market by introducing travelers’ checks and money orders. The company was first established in 1850 to compete with the US Postal Service. In the late 19th century, both became more well-known.

1914: Loyalty is sought after by department stores

Customers could purchase products on credit with proprietary cards offered by department stores and oil companies. Rather than providing ease of use for purchases, these forerunners of the current store card were much more concerned with maintaining consumer loyalty.

These cards needed a drawn-out, laborious manual credit card transaction, as did all cards similar to them up until the 1970s. Before sending the customer’s card through a credit card imprinter to make a carbon duplicate, the sales clerk would take the card and manually copy down the information.The customer then signed a form which the sales clerk would mail to the bank.

Phones automated this transaction process a little bit, but busy signals frequently caused customers to wait a long time before the salesperson could get through to their bank to finish the transaction. Because of this, the majority of retailers saved phone transactions for bigger ones.

1946: The first credit card, err…

The Charg-It card was invented by Brooklyn banker John Biggins. The card operated on a closed-loop, local basis, and requiring Biggins’ bank to handle every transaction. The consumer used their account with Biggins’ bank to pay for the purchase after it was approved by the bank. Franklin’s National Bank introduced a comparable card five years later.

1950: The first widely used credit card for personal use

Following business executive Frank McNamara’s wallet mishap during a client lunch, the Diners’ Club card was introduced. You may pay for meals, entertainment, and travel expenditures using the cardboard card. The Diners’ Club card functioned similarly to a charge card, requiring full payment at the end of each month even though it is regarded as the first widely used credit card. Additionally, the Diners’ Club card was the first to require interest payments from its members. In less than a year following its launch, there were over 20,000 Diners’ Club members.

1955: A patent contains the first usage of the phrase “credit card.”

The first gas pump to take credit cards was made possible by the patent.

1958: There is rivalry for “T&E”

Although American Express issued their travel and entertainment card targeted for business travelers, Diners’ Club may have been first to market. This spared them from having to carry about big amounts of cash in order to cover all of their company expenses.

1958: The business introduces bank cards

WhenBankAmericard distributed 60,000 unsolicited credit cards through the mail in California, they initiated the practice of banks providing cards with revolving credit. The early versions became what we know as credit cards today with the introduction of revolving credit. For a charge, customers might roll over their leftover monthly bills. The card was the first general-purpose credit card to receive a license by 1966.

1959: Plastic credit cards are introduced

American Express introduces the first PVC-based plastic card, significantly boosting the company’s profile.

1966 saw the founding of MasterCharge, the current MasterCard.

To prevent BankAmericard from controlling the whole market, the Interbank Card Association was established. The organization aimed to establish the first credit card system in the country. The MasterCharge was a card they themselves issued.

1968: Globalization

The Interbank Card Association was the first international credit card corporation, having introduced credit card systems to Europe, Mexico, and Japan. The corporation also adopted a new name as a result of this change: MasterCard.

1969: Quickly get your money!

The first ATM in the United States was established by Chemical Bank in New York, allowing cardholders to access cash for the first time.

1970s: Magnetic stripes and competition

In an effort to compete with MasterCard, BankAmericard founded National BankAmericard Inc. The first lawsuit in the history of the credit card business was filed by a small Arkansas bank against National BankAmericard in 1970 for refusing to accept the new MasterCard. The lawsuit brought “duality” into the credit card market, allowing associations to offer credit cards from several different card companies, thereby giving customers more options.

Along with American Airlines and American Express, IBM unveiled the magnetic stripe in 1970 as well. After almost 50 years of use, this type of data transfer is gradually being phased out to make room for contactless payment methods and EMV chips.

1973: Innovations in technology

For the purpose of processing credit cards, MasterCard and National BankAmericard created their own electronic authorization systems. These systems paved the path for the modern, highly technologically advanced industry.

What the heck is BankAmericard, 1976?

After growing internationally and rebranding as Visa, BankAmericard become the most well-known credit card brand today.

1981: To begin earning points, swipe.

The first credit card-based frequent flyer rewards program was provided by American Airlines.

In addition, the Hawaiian business Verifone created the first point-of-sale (POS) device in 1983, which was followed by the well-liked ZON terminal. Their device introduces POS systems to a large portion of the nation.

1986: Discover throws its hat in the ring At Super Bowl XX, Sears introduced the Discover Card, an all-purpose credit card that quickly became popular nationwide and established itself as a fourth major card brand.

2002: Cards get mini

Although they are not as popular as they once were, the early 2000s saw several noteworthy credit card innovations, most notably mini keychain credit cards. Mastercard’sSideCard and the Discover2Go card attempted, but ultimately failed, to remove wallets from American pockets.

2007: Cards get personal and a little more futuristic

By letting consumers select the graphic on the card’s front, Capital One created the first credit cards that could be personalized. The majority of businesses did the same. Interactive cards featuring LED screens were also introduced by MasterCard and Visa.

2008: Buyouts In an attempt to gain market share (and reduce the number of card brands), Discover, the little brother of the card business, purchased the renowned Diners’ Club International.

2014: Digital cards are introduced

Apple Pay, a digital wallet for mobile payments that was first unpopular, was released. Throughout the 2010s, more mobile and contactless payment solutions emerged; these included Samsung Pay, Google Pay, Android Pay, and others.

2015: Chip, welcome; goodbye, stripe

The EMV chip was developed in collaboration by Europay, Mastercard, and Visa and is now considered standard procedure in the credit card processing business. Chips provide more security due to their single use transaction codes.

What comes next?

Credit cards started off as a useful way for farmers to buy supplies ahead of harvest, and they have since evolved into the main form of payment in modern society. With these cards, people can shop almost anywhere and at any time. Of course, with the advent of internet apps like Venmo, Zelle, and PayPal that let users send and receive money with a few taps, these capabilities are only now being further extended.

As we speak, the landscape of credit card processing is expanding and changing. The days of physical cards are quickly coming to an end thanks to Apple Pay and other related technologies. Recent developments in technology are leading us toward biotechnology, which will enable implanted chips, fingerprints, or even DNA to function in place of credit cards as we know them. What the future holds in anyone’s guess, but merchants who stay on top of industry developments are guaranteed to have a leg up on the competition as payment methods evolve.

How Do Credit Cards Operate?

It is decided whether you have enough credit remaining on your card to complete the transaction, whether the transaction should be authorized, and other technical details needed to complete the transaction during a brief back-and-forth conversation between the banks of the merchant and the issuing bank of your card when you dip your chip-enabled card into a payment terminal or wave your card information to make a contactless payment. The reason this information is encrypted is so that clever scammers can’t access it and use it to try and obtain permission information.

Credit Scores and Credit Cards

A credit score is possessed by every individual who has a bank loan or credit card. Everything from the rates you’ll be offered to your chances of getting approved for a new loan can be found out with that three-digit number. This may have an impact on the interest rates you pay on other loans, such as mortgages, auto loans, and student loans, in addition to your credit card APRs.

Based on your past loan handling behavior, credit scores and credit reports are utilized as a form of financial identification to determine your trustworthiness. This covers variables like how much debt you have compared to your credit limit, how consistently you have made your payments on schedule, and how many new loans you have started recently.

The adoption of contactless payment technology, which increased as a result of COVID, is expected to continue to rise as consumers begin to substitute wearable technologies and mobile wallets for traditional credit cards.

When evaluating a credit card application, issuers will likely continue to use artificial intelligence more and more in their decision-making process. It will probably continue to move away from the narrow set of information found in credit reports and toward more comprehensive data about the applicant.

Credit Cards’ Future

Credit card innovations continue to influence customer behavior and issuer offerings, as they do in any technology-driven sector. A recent development in the payment space integrates credit cards and blockchain technology in multiple ways.

As an alternative to cash back or points, several credit cards include bitcoin as a rewards option. Some bitcoin shares may occasionally be bought with a credit card. Furthermore, from a commercial perspective, issuers’ current methods of recording transactions may be superseded by blockchain technology’s indelibly reliable recording ledger.

The adoption of contactless payment technology, which increased as a result of COVID, is expected to continue to rise as consumers begin to substitute wearable technologies and mobile wallets for traditional credit cards.

When evaluating a credit card application, issuers will likely continue to use artificial intelligence more and more in their decision-making process. It will probably continue to move away from the narrow set of information found in credit reports and toward more comprehensive data about the applicant.