Credit Card History
What Is Credit Card?
A credit card is a method or system of payment that is named
after the small plastic card issued to service users of
that system. At the specification of the ISO 7810 standard, you
will find that most of these cards are the same shape and size.
It is a very powerful piece of plastic that can be
regarded as a compressed form of cash. It can be defined as a
credit system that allows the consumer to borrow money on the fly
from a bank or a financial institution and use it to make payments
to merchants - (stores, shops etc).,
Credit Cards v Debit Cards
Credit cards differ from debit cards in one distinct way.
That is, the former does not remove money from service users'
accounts following each transaction - as is the case with debit
The primary function of the card is, that the system that
issues it, lends money to the customer or service user. The value
of the card to the Issuer - is in the customer's usage of the
Do not confuse this form of credit with charge cards either. They too are
different. A charge card requires the entire balance to be repaid
in full each month, where as a creditcard allows the user to
revolve his or her balance. For this privilege the user is charged
There are differing opinions when it comes to the history and date of the first card. It is said however that a card was invented back in 1887 by Edward Bellamy.
From 1914, Western Union had apparently been issuing charge
cards to their regular users, even though the concept of
paying merchants via credit did not come into fashion until 1950.
This is supposed to have been pioneered by a Ralph Schneider and
Frank McNamara, with a view to being able to consolidate multiple
cards. For instance, a merger of The Diners Club and Dine and Sign,
produced the first 'charge card'; which, though similar, required
payment in full settlement of each statement. Shortly thereafter,
both American Express and Carte Blanche followed suit.
The Evolution Of Creditcard
The Visa card as we know it today, evolved out of the Bank of
America - BankAmericard in 1958; as did Mastercard in 1966,
when a group of banks established Mastercharge.
Owing however, to the apparently fractured nature of the US banking system at that time, cards became an effective means of portable credit.
This in effect allowed people who travelled around extensively, to move their credit around with them and to places where they could not directly access their own banking facilities.
Barclaycard UK, incidentally launched the first card outside the US, in 1966.
As you can see, today's card has its pioneering roots in
various forms of merchant credit schemes in the US, dating back
to the 1920's. It is reported that the card's original use
was for selling fuel to the increasing number of car owners but
progressed onto companies accepting each other's cards from
There are now countless variations on the basic concept of
revolving credit, which are issued by banks and honoureed by
a huge network of financial establishments as well as
organisational-branded credit cards, corporate-user,
store cards etc.,
The design of many of these creditcards have in recent years become
a major selling point. And since the real value of the card for the issuer, lies in
how much it is used by the consumer, this has seen a significant
rise of Co-Brand and Affinity cards - where the card design is
related to the Affinity (a University for example), leading to
higher card usage.
It comes as no surprise therefore, how creditcards have found
their way into our lives. These flexible friends have gradually
turned into becoming a necessity rather than a luxury, by the very nature of how these cards work.
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