Who invented Credit Cards?

John Biggins, 1946

Today ‘plastic money’ or credit cards have transformed the handling of money, impacting retailing and personal finance heavily. The idea is at least a century old. In the 1890s in Europe, merchants began using cards to administer credit offered to valued customers. The practice gained popularity through the 1920s. Such ‘store cards’ did not involve the banks directly and could only be used at the issuing organizations, such as merchants, hotels chains or petrol retailers.

History of Invention:

John Biggins of the Flatbush National Bank is usually acknowledged as inventing the bank issued credit card in 1946. His ‘Charge-It’ system allowed merchants to bill the bank, the bank then debiting the account of the card user. The practice spread rapidly through the 1950s. Banks collaborated to develop the widely accepted cards now known as Visa (1966) and Master Cards (1967). In 1950 Diners club issued 200 customers with a card that could be used to pay bills at restaurants, with the customer later repaying Diners. American Express, already profiting from the issuing of travelers cheques, followed in 1958.

Further advances were sparked by new technology. The introduction of magnetic stripes on cards allowed them to stroe important identification details. IBM had pioneered this in the 1960s and they were first used to speed ticketing at airports. By the early 1970s, the used of magnetic stripes had been standardized, with resulting improvement in security and efficiency, all cards still have tem , though there is increasing use of embedded memory chips to supplement or replace the strip, as they hold much more information.

Rapidly advancing information technology has further boosted the credit card industry. Most credit card readers are now online, linked into central computers that can instantly check the customer’s status and issue approvals. Fraud has decreased, paperwork has been decimated. Debit cards and EFTPOS (electronic funds transfer at point of sale), available since the 1980s, allow people to use their own money for cashless purchases, with funds moved from their account to the merchants. We have not yet reached the long promised cashless society, but we have certainly moved a long way down that path.