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Who Invented Credit Cards?

July 03, 2018

Who Invented Credit Cards?

When you think about it, credit cards are actually a strange invention. Not just the fact that we use little strips of plastic to represent an abstract value like “money” — though that’s weird enough — but the overall concept of having a physical entity stand for the sentiment of “I’ll pay you back later” is quite strange, and that’s without even getting into cashback benefits, rewards, and so on.

Credit cards are so ubiquitous with contemporary culture that it’s hard to imagine that there was ever a day where they didn’t exist. That’s probably because the history of credit cards goes back further than you might think... and perhaps, some would argue, all the way back to the dawn of civilization.

To Mesopotamia, and Beyond!

While our ancient ancestors back in Mesopotamia certainly didn’t swipe plastic cards, historian Jonathan Kenoyer has argued that the overall concept is as old as money itself. For Mesopotamians, it seems that their form of “credit” was bulky clay tablets, used for trades between the Mesopotamians and Harappans. Basically, both civilizations would leave their seals on the tablet, which was a lot easier than making thousands upon thousands of coins.

These clay tablets don’t seem to have been around for the Roman Empire or the Middle Ages, but in the 1800s, a new form of credit appeared in the form of coins and “charge plates,” which merchants would issue to local farmers. These credit instruments made it so the farmers could push off their bills until their crops had grown, making it easier for everyone.

The 20th Century Introduces the “Credit Card”

The credit card that we know today started inching its way to life in the early 20th century, though they more closely resembled today’s loyalty cards: for example, a department store would issue you a card, and it would only work at that department store, thereby encouraging you to come back. It wasn’t until 1946 where banks started digging into the concept, when a banker named John Biggins released the Charg-It card, which then encouraged other banks to do the same.

As the economy boomed, credits cards also came out for dining and other forms of entertainment, rather than just shopping: the first major credit card to hit the mainstream in a big way was the Diners Club Card, which was made of cardboard. Unlike cards of today, customers were required to pay off their Diners Club balance by the end of the month, so carrying too high a balance wasn’t recommended.

While it’s nostalgic to imagine those cardboard cards of the past, it didn’t take too long for them to get an upgrade: by 1959, American Express released the first plastic card. Around the same time, Bank of America started mailing unsolicited credit card offers to customers in California. In other words, they’re the ones you can blame for clogging up your mailbox every day. Regardless, ever since then, credit cards have been a key part of the U.S. economy.

What Awaits Us in the Future?

We can definitely predict, with a lot of sureness, that the idea of credit isn’t going away anytime soon—however, it’s hard to say what form it will take in the future. After all, a decade ago, how many people could’ve predicted that all those plastic strips would be replaced by chips?

Mobile payment technologies are on the rise, however, it’s unlikely that they’ll eclipse physical cards anytime soon, particular as companies like Square and PayPal release their own credit cards. 100 years from now, it’s possible we might all be beaming payments across the world through microchips embedded in our brains, but for now, it seems like contemporary credit cards—or at least, something resembling them—will probably be around for a long time.