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