The concept of credit is not new. In ancient Egypt and Babylon more than 3,000 years ago merchants bartered with currency and services in order to maximize their spending processes, often collecting what we now call interest on payments that were late or past due. Credit cards themselves, however, didnt surface until the early 1950s.

American Express and the Diners Club were the forerunners in plastic money, and issued their first credit cards to fewer than 200 Americans for use in restaurants and entertainment venues in New York City. More of its kind were issued in New England until the late sixties, but none of these credit cards could be paid off over long periods of time their balances were due immediately. Bank of America issued the Bank Americard in California in 1959, and this was the first card to be accepted almost universally.

In the early 1970s, the first magnetic strip was developed, and this was what launched the use of credit cards as we know them today. Although the magnetic stripe system was used in England in the early 1960s, it was not standardized until the 70s in the United States.

The Bank Americard eventually became Visa, and a company called Master Charge (formed in the late 60s) eventually become MasterCard. These were the two most popular credit card issuers, as they remain today. They revolutionized the magnetic strip on credit cards and began to form credit card offers that allowed debts to be paid off incrementally.

As the bankcard industry became more widely spread, financial institutions that were interested in issuing credit cards began to align themselves with either the Visa Association or the MasterCard Association. Using this method, even small banks were able to make credit cards available by sharing program costs and offering universal solutions to consumers. In the late 80s, this was made even easier when bylaws were generated to allow any single financial institution to offer both Visa and MasterCard bankcards.

In the late 80s, processing companies began to emerge, which allowed both Visa and MasterCard to streamline their paper flow processes and to reduce the possibilities of credit card fraud. They offered mediation to credit card association members so that disputes could be resolved quickly and easily, with less cost to the financial institutions.

Until 1987, American Express had remained on the back burner, only offering credit cards that had to be paid immediately. Their target consumers were high-rollers in business industries who used the cars for entertainment purposes, and could then pay off the balances. But in keeping with the new trends exploding across the United States, they altered their business model to accommodate the average consumer, thus becoming another forerunner in the credit card industry.

Discover Card appeared in the early 90s as an alternative for consumers. Originally a division of Sears Corporation, now owned by Morgan Stanley, Discover Card sought to change the credit card industry by offering alternatives to the Visa and MasterCard traditions. Discover is now one of the most largely accepted forms of payment worldwide, and rivals only American Express internationally.

Credit cards have changed astronomically over the last forty-or-so years, and will undoubtedly continue to evolve as further technology is developed. In recent years, measures against fraud and identity theft have been implemented, and credit card companies are offering more and more benefits to consumers. The competition between Visa, MasterCard, American Express and Discover has proven a significant benefit to the public, and will likely continue to grow.

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