In 1946 a New York banker, John Biggins, introduced his ‘charge-it’ card. When this card was used to buy goods from a shop, the sales slip was sent on to Biggins’s Bank. The bank then paid the money to the merchants and got their customers to pay them in return.
In 1951 Franklin National Bank in New York issued its first bank credit card, which could only be used by that Bank’s account holders. At the same time, Frank McNamara was developing the Diners Club Card.
In 1949, McNamara dined in New York’s Major’s Cabin Grill, and when the bill arrived, realized he had left his wallet behind. Deciding an alternative to cash was needed, he came up with the Diners Club Card, used mainly for entertaining and travel. For this reason, the Diners Card is recognized as being the first credit card in general use.
It was not until 1958 that American Express launched its first credit card, made from cardboard or celluloid. A year later production switched to using plastic. Momentum built and American Express launched local currency cards in other countries. Within five years, approximately one million cards were in use, accepted at about 85,000 establishments in the USA and elsewhere.
For many retailers, a branded credit card with various incentives and cash back offers are being developed. In some instances, these credit cards also serve as loyalty cards. As security has become a critical issue, credit card issuers have focused on fraud prevention by converting to chip enabled cards versus magnetic strips. In addition, fingerprint and facial recognition identification and authorization is also being developed.
Contribution to Retail History
The proliferation of credit cards encouraged a ‘buy now, pay later’ consumer mindset and so powered more retail spending. With the explosive growth of online shopping, the credit card and debit card have become the default form of payment. The credit card streamlined the transaction and checkout process making it faster, more secure and providing incentives and discounts for shoppers which increased overall usage and sales. Other types of payment services have also streamlined the process and improved security.