Curious about the history of the credit card? Trace the timeline from the first credit card and its origins, evolution, and the impact on modern finance.
At this point, it is hard to imagine a world without credit cards. Our culture is so dependent on the quick and convenient nature of the credit card processing industry that “card only” restaurants and retail shops are popping up across the country. But the industry as we know it today is relatively young.
Though the idea of credit has existed since ancient times, the history of modern credit card processing has grown rapidly since its inception in the late 19th century. In the late 1800s, merchants issued credit coins, which allowed consumers to make purchases on credit. Like the credit card processing industry itself, the history of credit and debit cards is a bit confusing and littered with competition. The evolution of bank issued credit cards began with major players like Bank of America, which launched pioneering credit cards that introduced revolving debt. This competitive landscape saw the establishment of the Interbank Card Association and the introduction of Mastercard. The first consumer credit card, the BankAmericard, was launched by Bank of America in 1958, introducing the concept of revolving credit.
The credit card was invented in February 1950 with the launch of the Diners Club card, founded by Frank McNamara. The idea originated after McNamara forgot his wallet during a business dinner in late 1949. Determined to create a cashless solution, he partnered with Ralph Schneider and Matty Simmons to form Diners Club. The card was initially a charge card, requiring full payment at the end of each month, and it could be used at 27 New York City restaurants.
Frank McNamara is credited with inventing the first credit card in 1950 with the launch of Diners Club. The idea came to him after forgetting his wallet at a dinner, prompting him to develop a new form of payment. His creation revolutionized how consumers paid for services and goods.
A credit card allows users to borrow money from a bank or financial institution to make purchases or pay bills. The borrower agrees to repay the amount with interest if not paid in full by the due date. Credit cards also offer perks such as rewards or cashback, incentivizing usage.
There are several types of credit cards, including standard cards, rewards cards, secured cards (used to build credit), and charge cards, which require full repayment each month. Each type is designed to cater to different financial needs and spending habits.
Businesses began widely accepting credit cards in the late 1950s and early 1960s. American Express and BankAmericard (later known as Visa) led the charge, making it easier for consumers to pay without cash and for businesses to handle transactions efficiently.
Visa was first introduced in 1958 as BankAmericard by Bank of America. It was one of the first general-purpose credit cards and rapidly gained traction due to its broad acceptance. In 1976, it was rebranded as Visa, and today, it’s one of the world’s largest payment networks.
American Express was founded in March 1850 as an express mail service by Henry Wells, William G. Fargo, and John Butterfield. Initially focused on transporting goods and valuables across the United States, the company expanded into financial services over time. By the mid-20th century, American Express had established itself as a trusted name in financial security and services.
In 1958, American Express launched its first charge card, aimed at higher-income consumers who sought a premium payment method. The card required full repayment each month, and it quickly gained popularity for its travel-related benefits and prestige. Today, American Express is one of the world’s leading financial services companies, known for offering exclusive rewards, travel perks, and premium credit card products.
MasterCard was founded in 1966 as Interbank, a cooperative of regional banks formed to compete with BankAmericard (now Visa). In 1969, the company rebranded as Master Charge to establish a more recognizable brand. The card quickly grew in popularity as it expanded its network of merchants and cardholders across the United States.
In 1979, the company officially became MasterCard and continued its rapid expansion globally. Over the years, it has evolved into one of the most widely accepted credit card networks, offering a range of consumer and business services. Today, MasterCard is a leader in global payments, known for innovation in credit card technology and secure transactions.
The 1970s and 1980s were transformative for credit cards. The introduction of magnetic stripe technology in the 1970s allowed faster, more secure transactions. By the 1980s, electronic payment processing was widespread, and consumer protection laws increased trust in credit cards. These advancements made credit cards a preferred payment method for consumers.
Credit cards became popular for their convenience, flexibility, and security. Unlike cash or checks, credit cards allowed for seamless, quick payments and later enabled online transactions. With the addition of rewards programs, cashback, and wide merchant acceptance, credit cards solidified their place as the go-to payment method for consumers.
The first charge coins were issued, kickstarting modern credit card history. These coins allowed
customers to pay at the time of the purchase without cash. These were tremendously popular in the farming industry during westward expansion as they allowed farmers to wait until after their harvest to pay their bills.
American Express—originally formed in 1850 to rival the U.S. Postal Service—threwtheir hat in the credit game by introducing both money orders and travelers' checks. Both gained popularity in the late 19th century.
Department stores and oil companies began offering proprietary cards to customers that allowed them to buy goods on credit. These predecessors to the modern store cards were much more about securing customer loyalty than offering purchasing convenience.
These cards—and all cards like them until the 1970s—required a long and tedious manual credit card transaction. The sales clerk would take the customer's card and manually copy down the information before running the card through a credit card imprinter to create a carbon copy. The customer then signed to form which the sales clerk would mail to the bank.
The Farrington Addressograph, an early card imprint machine.
Phones made this transaction process slightly more automated, but busy signals often kept customers waiting for long periods before the sales clerk could contact their bank to complete a transaction. As a result, most retailers reserved phone transactions for larger transactions.
John Biggins, a banker from Brooklyn, introduced the Charg-It card. The card worked on a local, closed-loop system, with all of the purchases being routed through Biggins' bank. The bank paid for the purchase and the customer paid for it through their account at Biggins' bank at a later time. Five years later, Franklin's National Bank offered a similar card.
The Diners’ Club card was launched after business executive Frank McNamara forgot his wallet during a client lunch. The cardboard card could be used for dining, entertainment, and travel expenses. Though it is considered the first widespread credit card, the Diners’ Club card operated like a charge card—at the end of each month the bill had to be paid in full. The Diners’ Club card was also the first card to charge interest payments to its users. Within a year of its introduction, Diners’ Club cardholders numbered more than 20,000 individuals. The Diners Club credit card held historical significance as a prestigious payment option made of cardboard, contrasting with American Express's introduction of a more durable plastic charge card in 1958.
The patent ushered in the first gas pump that accepted credit cards.
Diners' Club may have beaten them to the punch, but American Express released their travel and entertainment card geared toward business people who traveled for work. This allowed them to pay for all their business expenses without carrying around large sums of cash.
BankAmericard, one of the pioneering credit card issuers, kickstarted the practice of banks offering cards working on revolving credit when they sent out 60,000 unsolicited cards in the mail in California. The evolution of the first universal credit card began with the Diners Club card introduced in 1950, initially for restaurant payments, and later expanded to other services, becoming the first internationally accepted charge card by 1953. Credit card accounts played a crucial role in the evolution of credit cards, providing consumers with security, convenience, and rewards for spending. The introduction of revolving credit made the early iterations into what we know as credit cards today. Customers could carry their remaining monthly balances forward for a fee. By 1966, the card became the first licenced general-purpose credit card.
American Express launches the first plastic card made out of PVC, greatly increasing the company’s popularity. The plastic credit card, introduced by American Express in 1959, marked a significant milestone in financial transactions. Subsequent innovations, such as the introduction of the magnetic strip in 1969, further solidified the plastic credit card as a standard in modern payment methods.
The Interbank Card Association introduced credit card systems to Mexico, Europe, and Japan, making it the first global card company. This shift also ushered in a new name for the company: MasterCard.
Chemical Bank in New York installed the first ATM in the U.S., giving cardholders access to cash for the first time.
BankAmericard created its own association called National BankAmericard Inc. to keep up with MasterCard. 1970 also marked the first legal dispute in the credit card industry when a small bank in Arkansas sued National BankAmericard for not offering the new MasterCard. The lawsuit introduced the idea of “duality” into the credit card system—meaning associations could issue credit cards from multiple card brands leading to an increase in consumer choice.
Also in 1970, IBM introduced the magnetic stripe in conjunction with American Airlines and American Express. This form of credit card technology has prevailed for nearly 50 years, but is now being phased out to make way for EMV chips and contactless payment methods. Contactless credit cards, introduced in the US in 2004, have seen a significant rise in popularity since 2008 as major credit card companies began to offer these cards.
In 1974, the Fair Credit Billing Act was introduced as a key legislative measure designed to protect consumers by allowing them to dispute unauthorized charges on their bills.
MasterCard and National BankAmericard developed their own electronic authorization systems for credit card processing. These systems led the way to the technologically advanced industry we know today.
BankAmericard expanded outside the United States and changed its name to Visa, which is now the most widely recognized credit card brand.
American Airlines offered the first frequent flyer rewards program through a credit card.
Additionally, Hawaiian company Verifone developed its first point-of-sale (POS) machine followed by its popular ZON terminal in 1983. Their machine ushers in widespread use of POS systems across the country.
At Super Bowl XX, Sears launched its own all-purpose credit card called the Discover Card. Though a late-comer to the industry when compared to MasterCard, American Express, and Visa, the Discover Card quickly gained national popularity and solidified itself as a fourth major card brand.
Though not widely used today, the early 2000s brought about several interesting innovations to credit cards, most notably mini keychain credit cards. Mastercard's SideCard and the Discover2Go card both aimed to eliminate the wallet from America's pockets, but ultimately failed.
Capital One pioneered the first personalized credit cards, allowing customers to choose the image on the front of the card. Most companies followed suit. MasterCard and Visa also launched interactive cards with LED screens.
Credit card companies saw industry consolidation when Discover acquired the famed Diners’ Club International in an effort to increase market share (and consolidate the number of card brands).
Apple introduced its originally unpopular mobile payment digital wallet, Apple Pay. Similar mobile and contactless payment options expanded throughout the 2010s, providing credit card users with more ways to make transactions, including Google Pay, Android Pay, Samsung Pay, and others.
Europay, Mastercard, and Visa partnered to create the EMV chip which has become standard practice in the credit card processing industry. The Equal Credit Opportunity Act, enacted to combat discrimination against women and minorities in obtaining credit, marked a pivotal moment in establishing equal rights for consumers in the credit realm. The Credit Card Accountability Responsibility and Disclosure Act also played a significant role in improving security and consumer protection. Chips offer greater security due to their single use transaction codes.
Credit cards began as a practical solution for farmers to purchase goods before their harvest and have since become the primary payment method of our day. These cards allow individuals to make purchases anytime and nearly anywhere. Of course, these capabilities are only being further expanded today, with online applications like PayPal, Zelle, and Venmo that allow users to pay and receive funds with just a few taps.
The future of credit card processing is growing and shifting as we speak. With Apple Pay—and similar technologies—we are already moving away from the physical card. New technological advancements are pointing us in the direction of biotechnology that will allow for DNA, fingerprints, or even implanted chips to act in the place of credit cards as we know them. Additionally, credit reporting agencies play a crucial role in the evolution of credit scores and fair lending practices, influenced by regulatory changes.
What the future holds in anyone’s guess, but merchants who stay on top of industry trends are guaranteed to have a leg up on the competition as payment methods evolve. Clear regulations for calculating interest rates and ensuring transparency for cardholders are essential to protect consumers from unfair practices.
Looking to improve your payments setup? SwipeSum helps businesses of all sizes find their perfect payment processing solution at the lowest possible rate.
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Stephen Seaman
Stephen Seaman is the co-founder and COO of Swipesum, an ETA CPP in payments, known for spotting industry trends ahead of major media outlets. With a degree from Northern Kentucky University, Stephen hails from Bardstown, Kentucky, and has lived across the US, now residing in St. Louis since 2014 with his wife Hilary and their two dogs, Baxter and Bruce. Passionate about project management and improvements, he applies these skills at Swipesum and in his personal fitness and nutrition. He enjoys maintaining his pool, hosting visitors, and traveling with his extended family. As a true solutions architect at Swipesum, Stephen is involved in every aspect of the business, constantly implementing new systems and improvements.
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