The History Of Credit Cards
Below is a MRR and PLR article in category Finance -> subcategory Credit.
The History of Credit Cards
The concept of credit has deep roots, dating back over 3,000 years to ancient Egypt and Babylon, where merchants traded goods and services, often charging what we now refer to as interest on late payments. However, the credit cards we recognize today didn't emerge until the early 1950s.
The Pioneers: American Express and Diners Club
American Express and Diners Club were trailblazers in the world of credit cards. They introduced the first cards to fewer than 200 people in New York City, primarily for restaurants and entertainment. Though popular in New England through the late 1960s, these early cards required immediate repayment of balances.
The Rise of Bank Americard
In 1959, Bank of America launched the Bank Americard in California, marking the first card widely accepted across different venues. This card laid the groundwork for the future of credit cards as a universal payment method.
Innovations of the 1970s
The early 1970s saw the introduction of the magnetic strip, revolutionizing credit card use. While the technology appeared in England in the early 1960s, it wasn't standardized in the U.S. until the 70s. Bank Americard eventually rebranded as Visa, while Master Charge, formed in the late 60s, evolved into MasterCard. Both companies led in adopting the magnetic strip and offered cards that allowed incremental debt repayment.
Expansion and Collaboration
As the bankcard industry expanded, financial institutions partnered with Visa or MasterCard, enabling even small banks to offer credit cards by sharing costs and solutions. In the late 80s, new bylaws allowed single institutions to provide both Visa and MasterCard, broadening consumer access.
Streamlining and Fraud Prevention
By the late 80s, processing companies emerged, helping Visa and MasterCard streamline processes and combat credit card fraud. These companies provided mediation services, resolving disputes efficiently and cost-effectively.
American Express's Transition
Until 1987, American Express primarily targeted business elites, requiring immediate payment. However, adapting to new market trends, it expanded its offerings to include average consumers, becoming a major player in the credit card industry.
The Advent of Discover Card
In the early 90s, Discover Card entered the scene as an alternative for consumers. Originally part of Sears, and now owned by Morgan Stanley, Discover challenged Visa and MasterCard by offering unique benefits. It has since become one of the most widely accepted cards, rivaling American Express worldwide.
Continuing Evolution
Over the past forty years, credit cards have evolved significantly and will continue to do so with technological advancements. Enhanced fraud prevention and identity theft measures have been implemented, and credit card companies are providing increasing benefits to consumers. The competition among Visa, MasterCard, American Express, and Discover remains intense, benefiting the public and driving further innovation.
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