History of Credit Cards
Credit is over 3000 years old!
Credit Card History
Credit was first used in Assyria, Babylon and Egypt 3000
years ago. The bill of exchange - the forerunner of banknotes - was established
in the 14th century. Debts were settled by one-third cash and two-thirds bill of
exchange. Paper money followed only in the 17th century.
Christopher Thornton, who offered furniture that could be
paid off weekly, placed the first advertisement for credit in 1730.
From the 18th century until the early part of the 20th,
tallymen sold clothes in return for small weekly payments. They kept a record or
“tally” of what people had bought on a wooden stick - one side of the stick
marked with notches to represent the amount of debt, and the other side was a
record of payments. In the 1920s, a shopper's plate - a "buy now, pay later"
system - was introduced in the USA, but it could only be used in the shops which
issued it.
In 1951, Diners Club issued the first credit card (invented by Diners Club founder Frank McNamara) to 200
customers who used it to settle their bills at 27 selected restaurants in New
York. The concept soon caught on with travelling salesmen and, by the end of
the year, 20,000 people were using the Diners Club credit card – and making the
company a second year profit of $60,000. McNamara, though, thought that the
concept was just a fad and, in 1952, he sold his shares in the company to his
two partners for about $200,000! How wrong could he be…
The Diners Club credit card continued to grow in
popularity and, in 1958, American Express and the Bank Americard (later called
VISA) were launched in competition. As the idea of a universal credit card took
root and spread across the world, by the early 1960s more and more companies
were offering credit cards, often advertising them as a time-saving device
rather than a form of credit.
However, with the establishment of standards for the
magnetic strip in 1970, credit cards helped to forge the information age, in the
process making American Express and MasterCard the
massive success stories we know today. And with our lives now revolving around
the use of credit cards, the rest, as they say, is history…
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