If you've used one of those glistening, brand-new metal credit cards to pay for a cappuccino or an airline ticket, here's some information that you may not be aware of: Metal was also used for the construction of the very first credit cards ever produced. 

Those early playing cards, on the other hand, were cumbersome and were not generally adopted. Today, you can make speedy payments with a credit card practically anyplace, and you don't even have to give it a second thought; that's part of its current design. However, just like the majority of other things that we take for granted, the credit cards that you carry have a lengthy history behind them.

Let's take a look back at the evolution of credit cards so that we may have a deeper appreciation for this practical and sometimes even lucrative method of making financial transactions.

The Earliest Types of Credit

Transactions comparable to credit have been carried out by humans for thousands of years. For instance, retailers might agree to lend farmers seeds on the condition that they would pay them back when the crop was harvested.

The Code of Hammurabi, which was a series of rules named after the monarch of Babylon from 1792 to 1750 B.C.1, has one of the oldest documented instances of a credit system. This early system of credit defined regulations for loaning and repaying money, as well as how interest may be charged, and it was also the system that allowed for interest to be paid.

Fast forward to the late 1800s, when consumers and merchants began trading products based on the concept of credit, utilizing what was referred to as "credit coins and papers" as a kind of temporary money.

This first appeared in the realm of tiny retailers, but the concept of accepting credit payments rapidly extended to other fields.

Around the year 1885, regulars at hotels and department shops began getting what may be termed the first paper store credit cards as a perk for their business. In most cases, the credit lines were exclusively valid at a single location; but, in certain cases, they could also be used at rival businesses.

Coins, cards, and charging plates are all types of metal money.

In 1914, Western Union provided some clients with metal plates that enabled them to postpone payment until a later date. This promotion took place in the year 1914.

Three more oil companies followed suit in the next decade by developing similar customer loyalty cards that could be used to pay for petrol and maintenance services at the stations owned by those businesses.

Next came the Charga-Plate, a metal card that was invented as early as 1928 and could fit in wallets. It was customized with embossed information about the cardholder, similar to how a military dog tag would be, and it had paper on the reverse for the cardholder to sign. The embossed card enabled sales clerks to produce impressions of the data more rapidly, which facilitated the completion of the transaction. During the 1930s and 1950s, these cards were typically supplied by bigger merchants for usage inside their shop networks. They were used during those decades. 

The Original Debit Card, Known as Charg-It

The next year, 1946, saw another significant step forward for credit cards when a banker named John Biggins from Brooklyn, New York, presented the world with the first bank card system. This one was dubbed "Charg-It."

The Charg-It concept functioned in a manner that was quite similar to that of current credit cards. First, a client would use the card to make a purchase at a shop, and then the issuing bank would refund the store before asking the user for payment.

At that time, Charg-It cards could only be used at businesses that were situated quite near to the bank that had issued the card. These early credit cards were not yet widely accepted as a method of national payment.

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The Diners Club Card was first issued.

In the year 1949, a guy named Frank McNamara was enjoying his meal at Major's Cabin Grill in New York City when he suddenly recalled that his wallet was back at his house. He was able to find a solution to the problem, but he vowed to never let anything like that happen again. McNamara and his business partner Ralph Schneider came up with the idea for the first cardboard Diners Club Card in 1950 after McNamara recounted his event, which Diners Club called "The First Supper." It was a charge card that was made available to customers who wished to make travel and entertainment purchases but pay for them at a later date. It was the first card of its kind that was accepted by several retailers located in different regions of the world.

The Diners Club Card had meteoric growth in popularity, and only one year after its introduction in 1950, the organization already counted more than 42,000 members, and acceptance of the card had extended to all of the main cities in the United States.

More Card Issuers and Networks Come Together to Create

As a result of the success that Diners Club had, other banks and participants in the financial industry decided to get in on the activity.

The American Express Company

In the year 1958, American Express launched its own own credit program.

As was the case with the initial Diners Club Card, it started off as a charge card that could be used to pay for things like traveling and entertainment, and the balance on the card was due in full at the end of each month. In 1959, American Express was the company that first offered plastic credit cards to the market. After that, in 1966, the issuing bank introduced a corporate credit card program tailored to the needs of business clients.

BankAmericard

Bank of America was the company that, in 1958, issued the first credit card that could be used for any purpose whatsoever; it was called the BankAmericard and it was quite similar to the credit cards that are in use today.

At first, it was made of paper, but shortly afterwards, it was changed to plastic. It allowed cardholders to roll over balances from month to month for an additional cost and had a spending limit of $300. Any retailer who was willing to take it might accept it as payment for their goods or services.

Prior to that time, the majority of banking and financial services in the United States were provided on a regional rather than a national scale. Bank of America started selling licenses for its credit cards to be used by other financial institutions in 1966. 

This move was made to improve the company's ability to compete in the rapidly expanding credit card business. In 1970, Bank of America joined a group of other banks to create National BankAmericard, Inc., which would ultimately be renamed Visa a few years later in 1976. This was done to improve the network.

Put Yourself in Charge

To compete with BankAmericard, which was situated in California, a small number of banks on the east coast came together in 1966 to join the Interbank Card Association (ICA). 

The "Master Charge" card scheme was the International Credit Association's (ICA) response to the BankAmericard. In 1973, the organization built a central computer network that linked retailers with card-issuing banks. This was the first step in the organization's revamping the payment authorisation process. The term "Master Charge" was changed to "MasterCard" in 1979.



Discover

In the late 1980s, Dean Witter Financial Services Group, Inc., a subsidiary of Sears, Roebuck and Company, was the company that initiated the card issuing business and network that would later be known as Discover. Sears workers in Atlanta and San Diego used the Discover card to make early purchases at the retailer's shops in 1985 so that Sears could test the system. 

After then, the Discover credit card was introduced to the general public with an advertisement that aired on national television during the Super Bowl XX. Decades later, in 2008, Discover purchased Diners Club International in order to broaden the scope of its card offerings around the world.

The development of the magnetic stripe as an invention

Forrest Parry, an IBM engineer, came up with the idea for the black stripe that is seen on the back of credit cards in the early 1960s.

In the beginning, 12 Parry's magnetic tape was used to store information for CIA identity cards. Later on, it evolved into a straightforward and low-cost method of storing account information for payment cards and point-of-sale terminals.

Credit card transactions had been more physical than digital up to the invention of the magnetic stripe, which is often referred to as a "mag stripe." Therefore, this was an important stride forward in credit card history. Instead than relying on humans for the processing of payment transactions, computers might be used instead.

In 1969, magnetic stripes became the de facto norm for payment cards in the United States, and in 1971, they were ratified as the worldwide standard.

The First Regulations of Industry

During the 1960s, the credit card business saw fast growth; yet, there were still a number of basic challenges that needed to be resolved. For instance, card issuers used a variety of methods to calculate interest rates, and there was no uniformity or openness in the process. There was an issue with fraudulent charges, and in most cases, women couldn't qualify for a card on their own without a male co-signer. What are the terms and conditions of the card? They weren't actually there at all.

Beginning in 1968, legislators took action by enacting the Truth in Lending Act, which would later become a component of a more comprehensive bill known as the Consumer Credit Protection Act. Because of the Truth in Lending Act, banks and card issuers are now required to compute annual percentage rates in a consistent manner (APRs).

The decade of the 1970s saw the passage of further legislation, many of which established the foundation for the restrictions that assist safeguard credit card users today

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The Appeal of Loyalty Programs Continues to Grow:

Diners Club introduced its "Club Rewards" program in 1984, and in 1987 Citibank established a credit card reward program with American Airlines that allowed customers to earn free or discounted airfare by using their cards. Both of these programs allowed customers to earn rewards in the form of free or discounted airfare.

In the course of the 1990s, reward programs gained traction, and card issuers started luring clients with sign-up bonuses, cash back incentives, and co-branded discounts, all of which contributed to the increased popularity of credit cards over their predecessors. For instance, American Express first introduced its Membership Rewards program in 1991 (at the time, it was known as Membership Miles), and by the year 2001, it had grown to become the most popular card-based rewards program in the whole globe.

Payment Methods on the Go: Mini, Mobile, and Contactless New Technologies

Following the turn of the century, credit cards continued to advance, particularly in terms of the technology that underpinned them.

The first "micro card" was issued by Bank of America in 2002, marking the beginning of a new trend that saw some issuers roll out keychain-sized copies of conventional credit and debit cards. The kidney-shaped Discover 2GO credit card, which could be stored in a case that could be attached to a keychain, was one of the products that made it into Time magazine's list of the Top 10 of Everything in 2002.

The Mastercard Side Card, a small credit card that was introduced in 2003, featured innovative technology that enabled cardholders to complete a transaction by simply hovering the card over a contactless payment terminal. Previously, cardholders had to manually enter their payment information into the terminal. In more recent years, contactless credit card payments have also been made via wearables like watches, bracelets, and even rings.

The first generation of mobile wallets appeared in 2008, not long after the introduction of smartphones and around the same time that Apple launched its App Store. Google Wallet was the first software to save payment card information such that it could be used in lieu of a real card, and it was released in May of 2011.

To begin, there was very little engagement from banks and retailers, which made it difficult for Google Wallet and its rivals, such as CurrentC and Softcard, to win over customers. When Apple Pay was first introduced in October 2014, there were already 220,000 retailers set up to accept purchases via digital wallets. 

Additional Regulations Required Under the CARD Act of 2009

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009, also known as the "CARD Act," was signed into law on May 22, 2009, by President Barack Obama. This act represented a comprehensive effort to crack down further on harmful card issuer practices and is also known by its other name, the "CARD Act."

One of the most notable effects of the CARD Act is that it has led to a reduction in the prices of credit cards for customers of more than $100 billion over the course of the previous decade. The Consumer Financial Protection Bureau (CFPB), which is responsible for enforcing the legislation, provides many safeguards for consumers as follows:

Cost savings achieved by the prevention of unexpected rises in interest rates, the capping of late penalties, and the need of more uniform invoicing methods, often known as "upfront pricing."

Clarifications on the statement: It is required that credit card statements include penalty disclosures such as due dates, late penalties, and penalty APRs. Statements must also include information indicating how long it would take customers to pay off their balances if they only make the required minimum payments.

It places restrictions on marketing to young adults by preventing issuers from offering tempting gifts on or near college campuses in an effort to attract prospective applicants. Additionally, it lowers the age threshold for applicants.

Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010, further assuring that customers are not overcharged for the use of credit cards. This act followed in the footsteps of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act).

Following the Great Recession, when many customers were submerged in credit card debt, the legislation was amended to place more restrictions on card access.

Concerns Regarding Security and Possible Solutions

Do you recall the major data breach that occurred at Target? The information that more than 40 million card and debit account credentials had been taken from Target's payment database was verified by a statement made in December of 2013. That was only one of many incidents involving credit card security that made news within a very short amount of time. 

Card skimmers, another kind of cyber criminal, have taken advantage of the equipment that processes credit card payments. Skimmers are able to duplicate credit cards and swiftly rack up a variety of fraudulent charges by replicating the card information that is recorded in the magnetic stripes that are found on credit cards. The most susceptible targets of these security breaches have been automated teller machines and self-service gas pumps. As a result, the United States Secret Service has taken measures to reduce the prevalence of gas pump skimmers.

While cardholders were dealing with an increasing number of security concerns, the United States started to use EMV payment technology in order to encrypt payment information and counteract the use of counterfeit credit cards. The procedure was initiated in 2011, and the transition was officially implemented throughout the country on October 1, 2015.

The encrypted smart chip used by EMV payment technology replaces the magnetic stripe that was previously used to store account information and carry out payments. Customers are adapting to a new method of payment at retail registers, which requires them to enter their credit cards rather than swiping them. Nearly all credit cards manufactured now have EMV chips in silver.

The majority of credit cards still have magnetic stripes on the backs of them, just in case a retailer is unable to accept chip cards. However, the United States is working toward a future in which magnetic stripe payments are completely phased out in favor of more secure payment methods that can be used at cash registers, gas pumps, and automated teller machines.

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Credit Cards in the Present:

In the present day, consumers in the United States have access to a wider variety of credit cards than ever before. This is due to the fact that card issuers now offer cards with a wide variety of perks, including travel rewards that appeal to high-spending consumers and secured cards that assist others in establishing credit.

Although the concept of credit cards will likely never go away, the actual cards themselves may soon become little more than an interesting footnote in history. In addition to a rise in the popularity of mobile wallets, industry projections point to the use of biometric payments as the next significant step for credit card payments. These biometric payments include the use of selfies, fingerprints, and retina scans to authenticate the account holder.

After all, we already have the ability to unlock our phones just by glancing at them. Perhaps in the not-too-distant future, when it comes time to pay for our lattes, we won't grab for our credit cards but rather our sunglasses to take them off.