We accept credit cards as a fundamental component of our daily banking, but it was not all that long ago that credit cards were uncommon.
Today Australians have more than 14 million credit cards and we collectively owe more than $45 Billion. So how did the phenomenon start?
The first description of a credit card can be found in the 1887 novel 'Looking Backward' by Edward Bellamy. Bellamy uses the term 'credit card' eleven times throughout his utopian novel.
In the United States in the 1920s, financial institutions had begun issuing fuel credit cards for the steadily-increasing pool of automobile owners. Companies began to accept each other's cards by the last 1930s. Western Union released the first charge cards in 1921 to their exclusive customers, however these cards were made of paper and easily forged.
The Charga-Plate, made of a small rectangle of sheet metal, was used in the US throughout the 1930s and 1940s by large merchants to their regular customers, similar to the major department store credit cards of today. The card could only be used at the issuing store and was kept on the premises, rather than carried around by the customer.
It was not until 1950 that cards capable of paying multiple merchants were released. Ralph Schneider and Frank X. McNamara, the founders of Diners Club, produced the first 'general' charge card, which required the entire balance to be paid with each statement. By 1958, American Express had created a worldwide credit card network.
The first plastic card was issued in 1951 by Diners Club.
The Visa system began as the Bank of American BankAmericard in 1958. MasterCard began in 1966 as a joint venture between several credit-issuing banks. The first non-US credit card was released by Barclay in the UK in the same year.
Despite high adoption levels in the US, Canada and UK, it was not until the 1970s that credit cards arrived in Australia and the 1980s before they became mainstream. Even then, Australia remained a predominantly cash-based economy right throughout the 1990s. The credit card was introduced here by Bankcard in 1974 which dominated the Australian credit card market until the introduction of its international competitors, Visa and MasterCard in the mid-1980s.
