INDUSTRY MILESTONES
Decade
Event
Description
1730s
First credit sales
The first “credit” sales began in the furniture
industry in 1730.
1910s
Western Union cards
In 1914, Western Union started providing cards to
preferred customers giving free, deferred-payment
privileges. These cards, constructed of metal, came
to be known as “metal money.”
1920s
General Petroleum Cards
In 1924, General Petroleum Corporation issued the
first metal money for gasoline and automotive
services to employees, then select customers and
later to the general public.
Retail credit cards appear
Retail stores recognizing the value in customer
loyalty began offering their own branded credit
accounts in the 1920s and 30s.
First ATM machine
The first ATM was actually created in 1939 and
called “a hole in the wall machine” but there was
little demand so the idea was abandoned after six
months.
Bell System Credit Card
In the late 1930’s American Telephone and
Telegraph introduced the “Bell System Credit
Card.” Soon after, railroads and airlines began
introducing similar cards.
1940s
Charg-It Bank Credit System
The earliest form of the bankcard was Charg-It, a
system of credit developed by John Biggins in 1946
that allowed customers to charge local retail
purchases. The merchant deposited the charges at
Biggins’ bank; the bank then reimbursed the
merchant for the sale and collected payment from
the customer.
1950s
First exclusive credit card
A gentleman by the name of McNamara recognized
the value in creating credit with exclusivity and
founded the Diners Card (later branded the Diner’s
Club Card) in 1950. The card was made of
cardboard.
First modern bank credit card
In 1951 the Franklin National Bank in NY began
issuing the first credit cards using a credit
screening process very similar to the one we use
today.
Here, the customer submitted an application for a
credit loan and was screened for credit worthiness.
The approved customer was issued a card which
could be used to make retail purchases.
During a purchase, the merchant would copy the
customer information from the card onto a sales
slip. Each merchant was required to call the card
issuer for approval of transactions that were over a
1930s
certain amount, determined by the financial
institution.
The issuer would then credit the merchant’s
account for the sale, minus a discount to cover the
costs of providing the loan.
1950s
MasterCharge
The late 1950s was the beginning of the real credit
card industry with MasterCharge appearing on the
scene. However, cards had regional boundaries
and could not be used nationally or internationally.
Then in 1967, four California banks changed their
name from the California Bankcard Association to
the Western States BankCard Association (WSBA).
WSBA opened its membership to other financial
institutions in the Western U.S. Its bankcard
product was known as MasterCharge.
1960s
Revolving Credit
By now, many card issuers were offering an added
service: revolving credit. With this new service,
the cardholder could maintain a balance on the
account. The customer’s monthly payment
included a finance charge on the unpaid balance.
BankAmericard: First national credit
card
Bank of America was the first bank to actually issue
national credit cards.
In 1960, Bank of America introduced its own
bankcard, the BankAmericard. Beginning with a
small group of cardholders and merchants, the
bank began licensing regional financial institutions
to act as the BankAmericard bank for their region.
The BankAmericard plan grew and in the next few
years more and more communities all across the
U.S. became serviced by a regional member
representing BankAmericard.
1970s
1980s
ATMS make a comeback
ATMs and Debit Cards became popular between
1967 and 1971.
The trend spread to Europe and now over 85% of
the people use debit cards as opposed to 66% of
the people using credit cards.
BankAmericard became Visa
In 1977, BankAmericard changed it’s name to Visa
USA / Visa International Today Visa, located in San
Francisco, CA has approximately 4.6 million global
sales
MasterCharge becomes MasterCard
MasterCharge eventually became MasterCard.
Today, MC is located in Purchase, NY has 1.7
million global sales.
Discover Card
It was inevitable that other cards would join the mix
and Sears brought forward their own card in 1981 –
the Discover Card.
Today
American Express
The American Express Company we know today
actually began in 1850 as an express delivery
service; adding money orders in 1812 and travelers
checks in 1958. Eventually credit cards were also
added.
Third party processors
As the system became more complicated, outside
service companies (third party processors) began
to sell processing services to MasterCard and Visa
members and member associations, reducing the
cost of the card program for issuers and acquirers
and expanding the ranks of participants in the
bankcard industry system.
MasterCard and Visa dominant
Eventually, financial institutions interested in
issuing cards in the U.S. became members of
either BankAmericard or MasterCharge - bank
associations with members sharing card program
costs, making the bankcard program available to
even very small financial institutions.
Interbank (MasterCharge) and Bank of America
(BankAmericard) emerged as the leaders in the
bankcard systems . They developed rules and
standardized procedures for their bankcard
systems. The two associations also created
international processing systems to handle the
exchange of money and information and
established an arbitration procedure to settle
disputes between members.
MasterCard and Visa, taken together, are second
only to cash and checks as a payment system,
generating hundreds of billions of dollars in charge
volume annually. This is substantial growth for an
industry that has only existed for about 50 years.