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The History of Bankcard Processing

Using credit has become second nature in today’s society. Simply swipe and confirm to make payments of any size. When did cashless purchases become so effortless?

Let’s take a look at the history of bank cards to discover how they have become so prevalent in today’s fast-paced era of technology.

1887 – The first written mention of the concept of using a card to make purchases arises and is described in the novel, Looking Backward by Edward Bellamy. In this fictional novel, a young man falls into a deep hypnosis in the late 19th century. Upon waking, he finds himself in the year 2000, in an American socialist society. The term “credit card” can be coined back to Bellamy as he uses the term 11 times throughout his work.

1914Western Union issues the “metal” card to some of its employees. This card was used solely to make purchases in company-owned stores.

1920s – Oil companies and hotel chains began issuing cards to customers to promote customer loyalty. Cards could only be used at that chain in select locations.

1946 - John Biggins, a banker in Brooklyn, New York at Flatbush National Bank, introduces the first official banking card, “Charg-It.” When consumers made a purchase, the bills would be forwarded to the bank and the merchant would then be reimbursed after receiving those purchase statements.

1949 – The Diners Club introduces the modern idea of a credit card with their Travel and Entertainment Card. The card was intended to be used at restaurants by businessmen who didn’t want to carry cash. Customers would use the card, and the Diners Club would pay the bill owed to the business. Then the carrier would make monthly payments to Diners.

1958 - American Express issues their first card, marketed for travel and entertainment use.

1960’s – Widespread popularity among Americans ignite the industry. In 1960 Bank of America issues and licenses banks across the U.S. the use of their BankAmericard. The Interbank Card Association (ICA) is formed in Buffalo by 14 banks in 1966, forming an association with the ability to exchange card transaction information.

1969 - The first Automated Teller Machine (ATM) is installed in the U.S. in Rockville Centre, New York.

1975National BankAmericard, Inc. introduced and upgraded traditional paper-based transactions with the electronic authorization system, cutting down on overhead costs and lost transactions.

1979 – Point-of-Sales (POS) systems, created by Visa and magnetic information stripes on cards are issued.

1987 – American Express allows customers to make payments over extended periods of time rather than end of the month payments.

1994 - Lipman Electronics Engineering Ltd. creates the face of modern card processing with wireless terminals, the process that we utilize today.

2000s - With the constant innovation of technology credit cards have become a prevalent aspect of American consumerism. Today, we can make transactions, payments, and purchases all wirelessly by simply typing in a card’s numbers.

Making payments is now as simple as the click of a button or the waive of a phone. As we can see, the concept of paper money is quickly becoming a thing of the past– eerily similar to what Bellamy predicted in his work all the way back in 1887. Crazy, right? To find out how credit card processing works, download our free ebook here!

Evan Kilgore

Evan is a guest blogger for PayProTec

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