| Paying with a credit device can be dated back to | | | | small-across the nation. These licensing agreements |
| around 1914. Western Union did a test and gave some | | | | allowed other banks to issue BankAmericards and to |
| of their customers a metal credit card to be used in | | | | interchange transactions through issuing banks. |
| deferring payments. At the time the credit was interest | | | | By 1969, most independent bank charge cards had |
| free and mostly on the honor system. | | | | been converted over to either the BankAmericard or |
| As time progressed so did the charge card. Befre the | | | | Master Charge cards. |
| start of WWII, retailors, travel companies and gas | | | | Eventually, charge card issuing and processing |
| stations offered this service to their special customers. | | | | became too large of a task for the banking industry to |
| These company based charge cards were limited by | | | | handle. That is what lead to the emergence of credit |
| their use exclusively through the issuing company. | | | | card associations such as Interlink Association, |
| These companies issued the cards, processed the | | | | Western States Bank Card Association, and National |
| transactions, and collected the debts from the | | | | BankAmericard Inc. Current associations include Visa |
| customer. | | | | and Master Card. |
| In WW II, the use of credit and charge cards was | | | | The next major changes in the credit card industry |
| prohibited. | | | | involved streamlining transaction processing and |
| After WW II, credit cards became more accessible to | | | | reducing credit card fraud. Electronic authorizations |
| the general public After seeing trends indicating | | | | were developed in the early 1970s which allowed |
| increased travel and spending among those who held | | | | retailors the ability to check a customers credit limit 24 |
| charge cards, banks became interested in credit | | | | hours per day. |
| cards-after all they were in the business of lending | | | | By the mid 1970s, the credit card industry started |
| money, and they saw the profit potential behind | | | | exploring international waters, but had some difficulty |
| attaching interest to the cards. | | | | because of the name association; "America" in |
| When banks first got into the credit card business, | | | | BankAmericard, for instance. This lead to the renaming |
| they were only issuing cards to local consumers. In | | | | of BankAmericard to Visa and Master Charge |
| 1951, the Franklin National Bank in New York, issued the | | | | followed suit by changing its name to Master Card. |
| "Charge It" card. Which allowed consumers to make | | | | By 1979, electronic processing was improving. |
| charges at local retail establishments. This charge card | | | | Electronic dial up terminals and magnetic strips on the |
| system worked much like credit card systems work | | | | back of credit cards allowed retailers to swipe the |
| today. The customer would make a purchase with the | | | | customer's credit card through the dial up terminal, |
| card; the merchant performed a credit authorization | | | | which accessed issuing bank card holder information. |
| from the network, then completed the sale. The bank | | | | This process gave authorizations and processed |
| would reimburse the retailer and collect the debt from | | | | settlement agreements in a mater of 1-2 minutes. An |
| the consumer at a later date. Other banks across the | | | | added benefit was paper reduction. |
| nation were impressed with the success of this | | | | The early 1980s, gave birth to the first Automatic Teller |
| process that within several years after the "Charge It" | | | | Machines (ATMs), which allowed consumers access |
| card they offered their customers similar services for | | | | to cash, and to make deposits, 24 hours a day across |
| making purchases at local retail establishments. | | | | our nation and in other countries as well. Account |
| In the 1950s the first charge card was developed that | | | | users could obtain cash in many different currencies. |
| allowed consumers to make charges for services and | | | | Since its existence, Visa has been a leader in credit |
| goods from a variety of retail outlets. This innovation | | | | card innovation. Because of this they have emerged |
| was the Diner's Club charge card, which was | | | | as the world's leading credit card association with over |
| established for business men to use for travel and | | | | 1-billion cards being issued, and carrying over 50% of all |
| entertainment expenses. The Diner's Club card gave | | | | credit card transactions conducted world wide. |
| its members up to 60-days to make payment. | | | | "Visa (International) is a "not for profit" organization |
| The first "revolving-credit" card was issued in the State | | | | comprised of over 40,000 member Banks and |
| of California by the Bank of America. The card, | | | | MasterCard is a for "Profit" company who issues |
| BankAmericard, was marketed all across the state. | | | | credit cards and sets and maintain rules for credit card |
| This card set another milestone in the development of | | | | acceptance and processing. They are both run by |
| the credit card industry. The BankAmericard was the | | | | board members who are mostly high-level executives |
| first card to give cardholders payment options. | | | | from their member banks and industry heavy hitters." |
| Payment options like today's cards, let consumers pay | | | | There are five leaders in the credit card industry: Visa |
| the debt in whole or they could make monthly minimum | | | | International, MasterCard, American Express, Discover |
| payments while the banks charged interest on the | | | | and Diner's Club. There are others trying to penetrate |
| remaining balances. | | | | the industry like check processing companies, Euro |
| By the 1960s, bank card associations begun to | | | | Card, JCB and ATM companies but credit cards still |
| emerge. In 1965, Bank of America issued licensing | | | | account for over 90% of all e-commerce transactions |
| agreements to other banks-both large and | | | | ! |