History of Credit Cards
Below is a MRR and PLR article in category Finance -> subcategory Credit.
The History of Credit Cards
Summary
Credit cards have become an essential part of modern life, with some experts predicting that paper currency is becoming obsolete. Let's explore the origins of these indispensable financial tools.The Evolution of Credit Cards
Although the concept of "buy now, pay later" dates back to the 1700s, it wasn't until the early 20th century that banks began offering credit protection in the form of overdrafts. In 1914, Western Union introduced a metal card that enabled customers to defer payments without interest, allowing them to spend beyond their immediate means.
The true innovation of the credit card, however, can be attributed to Frank McNamara. After forgetting his wallet during a dinner with friends, McNamara was inspired to create the "Diner's Club Card." Initially intended for business meals and retail purchases while traveling, it quickly became popular. By the end of the 1950s, this card had expanded from 200 customers and 27 restaurants to nationwide use with 20,000 customers and a variety of retailers joining as credit providers.
Diner's Club charged a seven percent fee for each transaction, and subscribers paid a three-dollar annual fee. Businesses welcomed this change as it encouraged higher spending than upfront cash payments.
Around the same time, the General Petroleum Corporation introduced one of the first true credit cards for fuel and automotive repairs, allowing employees to use a card and pay off purchases through paycheck deductions.
The Rise of New Contenders
Diner's Club's initial dominance was short-lived. McNamara left the company in 1952, and soon after, new players emerged. American Express and Bank of America launched their credit cards?"American Express in 1958 and the BankAmericard (now known as VISA) the same year. MasterCard followed in 1966. These new entrants quickly surpassed the early leader.
While McNamara is recognized for his role in popularizing credit cards, John Biggins is credited with inventing the bank credit card. In 1946, working at the Flatbush National Bank of Brooklyn, Biggins introduced the "Charge-It" program. Local merchants accepting the card deposited sales slips at the bank, which in turn billed the customer.
In conclusion, from its humble beginnings to the ubiquity it enjoys today, the credit card has transformed the way we handle transactions, driven by continuous innovation and adoption across the globe.
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