The History and Evolution of Credit Cards

TLDR Credit cards have a long history, dating back centuries, but it wasn't until the late 19th and early 20th centuries that paper cards and tokens were introduced. The universal credit card we know today was born in 1949, and advancements in technology have since improved security and convenience.

Timestamped Summary

00:00 Credit cards are one of the most common forms of payment worldwide, but their origins and functionality are explored in this episode of Everything Everywhere Daily.
02:06 Credit has a long history, with the concept of extending credit to someone based on trust and belief in their ability to pay back originating centuries ago, but it wasn't until the late 19th and early 20th centuries that major department stores like Macy's and Wanamakers introduced paper cards and brass tokens for their wealthiest customers to use as a form of credit, with the amount having to be paid in full at the end of each month.
03:51 In 1935, the Charger Plate System and the Air Travel Card were introduced, but they both had limitations and could only be used at specific stores or airlines, so the need for a universal card that could be used anywhere arose in 1949.
05:31 The Diners Club and American Express cards were initially charge cards, not credit cards, and the first bank to issue a payment card tied to a line of credit was the Franklin National Bank in Long Island, New York.
07:21 Bank of America launched the Bank America card in Fresno, California, giving cards to anyone and everyone, resulting in high rates of delinquency, but they eventually solved the problem by licensing the card to different banks and consolidating it under the brand Visa, while other banks created MasterCharge, later renamed MasterCard, and Barclays issued the first credit card outside of the United States, the Barclay card.
09:06 Advancements in credit card technology, such as the introduction of magnetic stripes and EMV chips, have helped to reduce credit card fraud and verify the validity of cards, while the development of the FICO score in 1989 allowed credit-issuing agencies to assess someone's credit history.
10:53 Smartphones with systems like Apple Pay and Google Pay offer increased security and convenience for processing credit cards, while frequent flyer programs have been a major incentive for people to get credit cards.
Categories: History Education

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