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Originally, the credit card is an automatic way of offering credit to a consumer. Therefore, a credit card is associated with two facts: first, with the acquisition of a good or a service by a customer; and second, to the automatic granting of financial credit in the transaction. Today every credit card has an identification number that speeds up transactions and automatically records information such as the buyer’s identity, billing address, and payment terms.
Credit cards began to be used in the United States in the 1920s, when small and large companies began issuing them to their customers. However, there are references to the use of credit cards in Europe since 1890. These first credit cards implied a transaction restricted to a customer and the business or company that issued the card. Around 1938, businesses began accepting other companies’ credit cards. Today the use of credit cards has become widespread in such a way that they allow transactions in all types of commerce and for the payment of very different types of services, regardless of the country of issuance of the card.
Brief timeline of credit cards
Credit cards weren’t always made of plastic. Throughout its history there have been in the form of metal credit tokens, metal plates, fiber and paper. The inventor of the first bank-issued credit card was John C. Biggins of Flatbush National Bank of Brooklyn, New York . John Biggins developed the Charge-it program among bank customers and local merchants in 1946, which is considered a direct precursor to today’s credit card.
The Diners Club issued its first credit card in the United States in 1950. The invention was the brainchild of Diners Club founder Frank McNamara as a way to pay restaurant bills. The system was as follows: A customer could eat at any restaurant that accepted Diners Club credit cards without having cash. The Diners Club then paid the restaurant, and the credit card holder in turn refunded the money to the Diners Club. Originally, the Diners Club card was technically a consumer card rather than a credit card, as the customer had to repay the full amount when billed by the Diners Club.
American Express issued its first credit card in 1958, and Bank of America subsequently issued the BankAmericard (now Visa) bank credit card, also during 1958.
In the early 1960s many companies offered credit cards, advertising them as a time-saving device rather than a form of credit; at that time, American Express and MasterCard credit cards spread rapidly.
In the mid-1970s, the United States Congress began regulating the credit card industry, prohibiting practices such as mass mailing of active credit cards to those who had not applied for them. However, not all regulations were favorable to consumers. In 1996, the United States Supreme Court, in Smiley v. Citibank , removed restrictions on the number of late fees a credit card company could charge. Deregulation also allowed very high interest rates to be charged.
Sources
Tarjetas-online.net Contactless card. Advantages and Security. Accessed November 2021.
BBVA Mexico. What is a digital card and how does it work? Accessed November 2021.
Time Magazine. Now You Know: What Was the First Credit Card? Accessed November 2021.
