How Has Credit Card Technology Changed Throughout Time?

Published: 11 April 2023Updated: 29 January 2024

From metal plates to Charge-It cards to the plastic card we know today, credit card technology has undergone significant changes since its introduction.

This change has, in turn, affected the way we manage our finances and make purchases.

How Has Credit Card Technology Changed

In this article, we dive into the history of credit card technology and how the system has changed over the past years.

History of Credit Cards

Credit cards have been used since the 19th century. American novelist Edward Bellamy should be credited for his concept of credit cards as seen in his novel “Looking Backward” written in 1887.

The idea was presented as a card that would be used to receive dividends from the government which sounded more like a debit card.

Soon after, in 1918, the credit system underwent significant changes when a small number of Western Union clients received metal plates, sometimes known as “Metal Money.”

Metal Money

These plates allowed the customers to delay payments on items bought, but they were limited since the plates could only be used on certain transactions.

In 1920, some hotels and oil companies devised the same method and offered some of their customers a form of credit card that could be used to transact.

This card also had its limitations, as it could only be used at the company’s locations.

Time flew by, and after almost 30 years, in 1946, these metal plates and other forms of cards got put out of business. This change came as a result of what is called the Charge-It card.

The Diner Club’s cardboard cards

This dawn can be credited to the founders of “Diner Club,” Frank McNamara and Ralph Schneider. They made possible the concept of customers paying different merchants at different establishments.

It all started with the club offering cardboard cards to select members to use across 27 partnering restaurants. The club’s membership grew from just 200 in its founding year to a staggering 42,000 in two years.

This growth brought about international success as it became the first credit card that could be used internationally. The card was used in countries like the U.K., Cuba, Canada, and Mexico.

The first bank-issued credit cards

The widespread recognition and desire for credit cards brought about a shift in the financial space, and the first bank to take risks in that space the Bank of America

In 1958, it sent out the first batch of credit cards to its California customers while in 1966, it released the BankAmericard.

The BankAmericard was one of the first credit cards in the US and the first credit card to be accepted by numerous merchants across the country.

Despite the high scam and default rate, the corporation did not give up and with the help of some companies, made BankAmericard America’s first credit card to allow revolving debts.

10 years later, BankAmericard and Bank of America split and the former became what is today known as Visa.

In 1966, a group of Californian banks banded together to create an association called the Interbank Card Association (ITC). The organization created what is today, Visa’s greatest competitor, Mastercard.

Mastercard was originally named Master Charge, but this name was changed in 1979.

The plastic credit cards

After American Express introduced the plastic card in 1959, several other organizations, including Bank of America, Diner’s Club, and Carte Blanche picked up the pace and followed suit.

Forest Parry, an IBM researcher, invented the magnetic-stripe card in 1969. He discovered a technique to iron a metallic strip onto a plastic card.

One of the benefits of Sofi’s Credit Card is that this concept is actively being used alongside many other credit card companies.

EMV and contactless credit cards

According to the Federal Trade Commission (FTC), there were over 65,000 credit card fraud reports in 2021, leading to the demand for an increase in credit card security. Fortunately, a solution was found, and it was called an EMV.

The solution was the EMV, which stands for Europay, MasterCard, and Visa, and is a credit card that employs the use of pins and chips instead of a magnetic strip.

This card’s chip tightens the card’s security by generating a different encrypted code each time you use your card for transactions. Europeans were the pioneers of the EMV card, and the US only adopted its use in 2010.

The use of contactless cards has also been on the rise due to their quick and convenient nature. It employs NFC technology and only requires you to hover your card over a payment terminal.

Brian Golding

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