A bank card is as familiar as a smartphone: most people have it, and millions of people use it every day. However, it is the "card" that is gradually becoming a relic of the past, giving way to the same smartphones as a means of payment. But credit cards were not always plastic either. And what were they like? Let's go back to 1888 — to the very beginning.
This year, the American writer Edward Bellamy published his utopian novel Looking Backward: 2000-1887 (in Russian translations it has the names "In a Hundred years", "Future Century", "Golden Age" or "In 2000"), in which he described, among other things, the idea of a means of payment very similar to a bank card:
In 1891, American Express, then still engaged in the transportation of goods, developed and implemented its own international system of traveler's checks. Yes, these are not the first checks in history (the British from the London Credit Exchange Company launched their system as early as 1772), but many consider the Americans to be the founders. So people have the opportunity not to carry cash with them and at the same time have access to them in another city or even country.
First American Express check cashed in Munich
A cheque is a security-an order to the bank from the cheque giver (the person who issued the cheque) to pay the specified amount to the cheque holder (the owner of the issued cheque). To receive checks (in the form of a set of forms — a checkbook), you must contact the bank and enter into a check agreement. Checks can be issued either to the owner of the checkbook (registered) or to another person (order). There are also bearer checks. The receipt is "activated" by means of the endorsement signature — a transfer inscription certifying the transfer of rights to the check to the check holder. After that, you can't revoke the receipt before the payment deadline expires.
At the same time, many sellers provided an opportunity for regular customers and close friends to purchase goods on credit. The main disadvantage of this approach is obvious: you need to have a good relationship with each seller in each store of interest. This is difficult to implement even within the same city, not to mention the country. But the solution was found!
In 1914, Mobil Oil issued so-called "courtesy cards"for its paying customers. They were cardboard cards with the initials of the owner and allowed you to pay for fuel and purchase goods at any gas station. The cardholder could pay for their purchases later, for example, at the end of the month, without any interest (payment was guaranteed by their ability to pay and careful selection of program participants), becoming more loyal to the gas station network.
And five years later, in 1919, Western Union offered its own type of similar cards to American officials: with its help, it was possible to send telegrams on credit at the expense of the US government. But for ordinary people, this system was not available. The idea was actively picked up by other fuel companies and spread throughout the country.
But despite the convenience, cardboard cards quickly fell into disrepair. I had to figure out how to make them stronger. The solution, which seemed to lie on the surface, took a long nine years: in 1928, the Boston company Farrington Manufacturing introduced the world to the first metal cards-Charga Plates. They were stamped with the owner's details: his name and address.
Metal card Charga Plates. Source: www.digibarn.com
The use of data stamped on metal not only increased their safety during long-term use of the card. It also significantly accelerated service and reduced the likelihood of errors when filling out an invoice: you don't need to spell out your name to the seller and check the correctness — just make a fingerprint of the card using a special press-imprinter.
Charga-Plate advertising poster. Source: Buffalo News
Metal" cards " quickly gained popularity among other companies and were produced in various sizes and shapes: from very compact ones that can be hung on a keychain with keys, and up to quite large ones. In addition to the stamped information about the owner, some manufacturers made special cutouts and recesses on the ends or reverse side. In this way, they encoded the card's serial number, type, or expiration date. Many variants had a cardboard element on the back - for the signature. Now it has turned into a special rough strip, located not far from the CVV2 code. Some versions have existed for quite a long time, including even modern "credit cards".
However, all of these cards were more like loyalty cards. But the foundation of cards as a banking product was laid by D. S. Biggins, who worked as a credit specialist at Flatbush Bank in Brooklyn. He set up a new Charge-It consumer credit scheme: local stores accepted receipts as payment for small purchases. After the receipt was handed over to the bank, which paid the specified amounts, withdrawing them from the accounts of buyers.
And three years later — in 1949-the famous Diners Club system was created. The name is associated not only with the first enterprise involved in the system, but also with the place where the idea originated: A. Bloomingdale, F. McNamara, and R. Snyder came up with the system during a lunch and discussion of an entrepreneur who worked as an intermediary between stores and private buyers, especially those who could not get a loan from a bank. He used his finances as a guarantor of payment for the loan to the stores and for this took a certain percentage of the transaction.
The founders liked the idea, and they offered to implement it to the owner of the restaurant where they dined. To identify visitors, it was decided to use metal cards, which were very common at that time. The number of restaurants and customers connected to the system increased rapidly, revenues grew, and for more effective business development, the founders decided to merge their companies into one-Diners Club. A year later (in 1951), the name and scheme of work were licensed in the UK, opening the way for credit cards to Europe. By the way, another innovation was the subscription fee for using the card: the annual service was $ 3.
Despite the fact that many companies initially did not seek to connect to the Diners Club system, not trusting and fearing both data leaks and deterioration of relations with customers, the popularity of loans in America made it easier to popularize credit cards. And not the least role in this was played by the American Express plastic card, issued in 1958. Just a year later, about half a million people became card holders! This caused a noticeable increase in the number of cardholders, but ended the Diners Club monopoly.
Many American banks also entered the race, but one of the most successful was Bank of America, which issued the BankAmericard card. The growing popularity of the card in the country and the sale of licenses for issuing cards to other member banks of the association, including foreign ones, led to the need to use a more universal name that would not cause questions and associations, was easy to remember and did not have meanings in other languages. This is how VISA was created, with the first transaction made on July 26, 1976. A couple of years later, its European counterpart, MasterCard, appeared. By the way, Japan's Japan Credit Bureau (JCB) issued its first payment cards back in 1964.
JCB advertising photo. You may notice that in addition to the owner's name, the card also included a photo of the owner
As an additional popularization measure, Bank of America, together with Interbank, conducted a mass mailing of credit cards by mail. This happened in the late 60s and immediately increased the number of customers by several million.
By the way, the magnetic stripe on the" credit card " appeared in 1960 thanks to the engineer Perry and his wife. The idea of writing card data on a piece of magnetic tape was very logical and had many advantages (including checking and transmitting data to the bank immediately, and not in the form of a card impression after a long time) and one unpleasant feature: the tape did not want to stay on the plastic surface in any way. The engineer's wife suggested using an ordinary iron and melting magnetic media into the card. The first samples had a ribbon on the front side, and only after a few generations it "moved" to the back side.
And in 1967, the world's first ATM appeared in London. It was owned by Barclays Bank and was located in one of its branches in north London. Two years later, Chemical Bank is installing an ATM in New York. At that time, ATMs had no direct connection with banks and could not check the balance on the client's account, so they issued fixed amounts, and instead of cards, they used special checks that had to be received in advance from the bank. By the way, the PIN code already existed at that time — it was patented in 1966.
Opening of the first ATM in London, 1967. Source: Barclays
Here is a news story from 1969 about the first Australian ATM. It was possible to receive $ 25 at a time, for which a special card was used. It was issued by the bank's manager to the holders of checking accounts, and after using it, it was "swallowed" by the ATM. It was possible to return it only at the bank's branch after the credit institution received information about the operation.
ATMs learned how to work with plastic cards only in 1972: the English bank Lloyds began using IBM's Cash-Ponit devices that can connect to the banking network.
The next important step in the development of "credit cards" was the development of a card with a microchip inside-it was patented by Frenchman R. Moreno in 1974. There were several prerequisites for this: information on a magnetic stripe is encrypted less securely, it is easy to copy or simply damage it, much more data is placed in the chip,and each transaction is confirmed by a specially generated code. However, it has not yet been possible to fully switch to cards that have only a chip due to the unavailability of the infrastructure.
Prototype of Roland Moreno's" chiped " card. Source: Wikipedia
All this is happening against the background of rapid development and penetration of credit cards around the world. So the appearance of POS terminals in 1979 was quite expected, adding even more popularity to non-cash payments.
By the way, despite the appearance of POS-terminals, the main method of "processing" plastic cards remained imprinters. Over time, they have evolved: they have learned to record not only customer data, but also the date of sale and the price of the product. Moreover, they began to leave the market only recently: new cards no longer have numbers and names stamped on the front side, they were replaced by typographically printed data. But it is possible that somewhere else the old methods of "rolling" cards are used as backup in case of a communication or electricity outage.
By the way, the manual press for embossing, the method of applying text elements to metal plates, the press-imprinter for obtaining impressions, as well as the original Farrington OCR 7B font were promptly patented. And this point is considered the starting point of OCR (Optical Character Recognition) technology.
An example of the operation of a manual press-imprinter. The "slip" printed in this way was sent by the outlet to the bank that issued the "plastic", which then transferred the money to the seller's account:
A couple of years later, gold bank cards (MasterCard, 1981) and nationwide ATM networks appeared. In 1996, Europay, MasterCard, and VISA introduced the interbank EMV standard for microchip cards. ATMs have evolved to include wireless communication modules and touch screens. And in 2002, MasterCard started testing contactless payment using PayPass technology.
What happened in Russia? Cards of international systems appeared in the USSR in 1969: Diners Club and American Express signed an agreement with the State Committee for Foreign Tourism. A little later, VISA (in 1974), MasterCard (1975) and JCB (1976) came to us. On the part of the USSR, the calculations were organized by the All-Union Intourist Joint-Stock Company: it provided an opportunity for foreign tourists to buy goods in the Berezka store and hotels. Payments were made through the Bank for Foreign Trade of the USSR (Vneshtorgbank).
Plastic cards came to us in 1988, when an agreement was signed with VISA, which made Intourist a member of the organization with the right to issue. The concept of implementation was developed by Sberbank of the USSR in 1988-1989, and the first transaction on a card issued by a Russian bank was made on September 21, 1991 in a grocery store in Moscow. The VISA card issuer is Kredobank.
Today, we use less and less cash. In some places, in Sweden, for example, it does not remain at all. And right now we are seeing plastic cards disappearing from everyday life: soon they will be replaced by smartphones, and after some time the banking industry may switch to virtual cards altogether, leaving pieces of plastic in the past.
This year, the American writer Edward Bellamy published his utopian novel Looking Backward: 2000-1887 (in Russian translations it has the names "In a Hundred years", "Future Century", "Golden Age" or "In 2000"), in which he described, among other things, the idea of a means of payment very similar to a bank card:
However, the idea of cards was not implemented immediately.
In 1891, American Express, then still engaged in the transportation of goods, developed and implemented its own international system of traveler's checks. Yes, these are not the first checks in history (the British from the London Credit Exchange Company launched their system as early as 1772), but many consider the Americans to be the founders. So people have the opportunity not to carry cash with them and at the same time have access to them in another city or even country.
First American Express check cashed in Munich
A cheque is a security-an order to the bank from the cheque giver (the person who issued the cheque) to pay the specified amount to the cheque holder (the owner of the issued cheque). To receive checks (in the form of a set of forms — a checkbook), you must contact the bank and enter into a check agreement. Checks can be issued either to the owner of the checkbook (registered) or to another person (order). There are also bearer checks. The receipt is "activated" by means of the endorsement signature — a transfer inscription certifying the transfer of rights to the check to the check holder. After that, you can't revoke the receipt before the payment deadline expires.
At the same time, many sellers provided an opportunity for regular customers and close friends to purchase goods on credit. The main disadvantage of this approach is obvious: you need to have a good relationship with each seller in each store of interest. This is difficult to implement even within the same city, not to mention the country. But the solution was found!
In 1914, Mobil Oil issued so-called "courtesy cards"for its paying customers. They were cardboard cards with the initials of the owner and allowed you to pay for fuel and purchase goods at any gas station. The cardholder could pay for their purchases later, for example, at the end of the month, without any interest (payment was guaranteed by their ability to pay and careful selection of program participants), becoming more loyal to the gas station network.
And five years later, in 1919, Western Union offered its own type of similar cards to American officials: with its help, it was possible to send telegrams on credit at the expense of the US government. But for ordinary people, this system was not available. The idea was actively picked up by other fuel companies and spread throughout the country.
But despite the convenience, cardboard cards quickly fell into disrepair. I had to figure out how to make them stronger. The solution, which seemed to lie on the surface, took a long nine years: in 1928, the Boston company Farrington Manufacturing introduced the world to the first metal cards-Charga Plates. They were stamped with the owner's details: his name and address.
Metal card Charga Plates. Source: www.digibarn.com
The use of data stamped on metal not only increased their safety during long-term use of the card. It also significantly accelerated service and reduced the likelihood of errors when filling out an invoice: you don't need to spell out your name to the seller and check the correctness — just make a fingerprint of the card using a special press-imprinter.
Charga-Plate advertising poster. Source: Buffalo News
Metal" cards " quickly gained popularity among other companies and were produced in various sizes and shapes: from very compact ones that can be hung on a keychain with keys, and up to quite large ones. In addition to the stamped information about the owner, some manufacturers made special cutouts and recesses on the ends or reverse side. In this way, they encoded the card's serial number, type, or expiration date. Many variants had a cardboard element on the back - for the signature. Now it has turned into a special rough strip, located not far from the CVV2 code. Some versions have existed for quite a long time, including even modern "credit cards".
However, all of these cards were more like loyalty cards. But the foundation of cards as a banking product was laid by D. S. Biggins, who worked as a credit specialist at Flatbush Bank in Brooklyn. He set up a new Charge-It consumer credit scheme: local stores accepted receipts as payment for small purchases. After the receipt was handed over to the bank, which paid the specified amounts, withdrawing them from the accounts of buyers.
And three years later — in 1949-the famous Diners Club system was created. The name is associated not only with the first enterprise involved in the system, but also with the place where the idea originated: A. Bloomingdale, F. McNamara, and R. Snyder came up with the system during a lunch and discussion of an entrepreneur who worked as an intermediary between stores and private buyers, especially those who could not get a loan from a bank. He used his finances as a guarantor of payment for the loan to the stores and for this took a certain percentage of the transaction.
The founders liked the idea, and they offered to implement it to the owner of the restaurant where they dined. To identify visitors, it was decided to use metal cards, which were very common at that time. The number of restaurants and customers connected to the system increased rapidly, revenues grew, and for more effective business development, the founders decided to merge their companies into one-Diners Club. A year later (in 1951), the name and scheme of work were licensed in the UK, opening the way for credit cards to Europe. By the way, another innovation was the subscription fee for using the card: the annual service was $ 3.
Despite the fact that many companies initially did not seek to connect to the Diners Club system, not trusting and fearing both data leaks and deterioration of relations with customers, the popularity of loans in America made it easier to popularize credit cards. And not the least role in this was played by the American Express plastic card, issued in 1958. Just a year later, about half a million people became card holders! This caused a noticeable increase in the number of cardholders, but ended the Diners Club monopoly.
Many American banks also entered the race, but one of the most successful was Bank of America, which issued the BankAmericard card. The growing popularity of the card in the country and the sale of licenses for issuing cards to other member banks of the association, including foreign ones, led to the need to use a more universal name that would not cause questions and associations, was easy to remember and did not have meanings in other languages. This is how VISA was created, with the first transaction made on July 26, 1976. A couple of years later, its European counterpart, MasterCard, appeared. By the way, Japan's Japan Credit Bureau (JCB) issued its first payment cards back in 1964.
JCB advertising photo. You may notice that in addition to the owner's name, the card also included a photo of the owner
As an additional popularization measure, Bank of America, together with Interbank, conducted a mass mailing of credit cards by mail. This happened in the late 60s and immediately increased the number of customers by several million.
By the way, the magnetic stripe on the" credit card " appeared in 1960 thanks to the engineer Perry and his wife. The idea of writing card data on a piece of magnetic tape was very logical and had many advantages (including checking and transmitting data to the bank immediately, and not in the form of a card impression after a long time) and one unpleasant feature: the tape did not want to stay on the plastic surface in any way. The engineer's wife suggested using an ordinary iron and melting magnetic media into the card. The first samples had a ribbon on the front side, and only after a few generations it "moved" to the back side.
And in 1967, the world's first ATM appeared in London. It was owned by Barclays Bank and was located in one of its branches in north London. Two years later, Chemical Bank is installing an ATM in New York. At that time, ATMs had no direct connection with banks and could not check the balance on the client's account, so they issued fixed amounts, and instead of cards, they used special checks that had to be received in advance from the bank. By the way, the PIN code already existed at that time — it was patented in 1966.
Opening of the first ATM in London, 1967. Source: Barclays
Here is a news story from 1969 about the first Australian ATM. It was possible to receive $ 25 at a time, for which a special card was used. It was issued by the bank's manager to the holders of checking accounts, and after using it, it was "swallowed" by the ATM. It was possible to return it only at the bank's branch after the credit institution received information about the operation.
ATMs learned how to work with plastic cards only in 1972: the English bank Lloyds began using IBM's Cash-Ponit devices that can connect to the banking network.
The next important step in the development of "credit cards" was the development of a card with a microchip inside-it was patented by Frenchman R. Moreno in 1974. There were several prerequisites for this: information on a magnetic stripe is encrypted less securely, it is easy to copy or simply damage it, much more data is placed in the chip,and each transaction is confirmed by a specially generated code. However, it has not yet been possible to fully switch to cards that have only a chip due to the unavailability of the infrastructure.
All this is happening against the background of rapid development and penetration of credit cards around the world. So the appearance of POS terminals in 1979 was quite expected, adding even more popularity to non-cash payments.
By the way, despite the appearance of POS-terminals, the main method of "processing" plastic cards remained imprinters. Over time, they have evolved: they have learned to record not only customer data, but also the date of sale and the price of the product. Moreover, they began to leave the market only recently: new cards no longer have numbers and names stamped on the front side, they were replaced by typographically printed data. But it is possible that somewhere else the old methods of "rolling" cards are used as backup in case of a communication or electricity outage.
By the way, the manual press for embossing, the method of applying text elements to metal plates, the press-imprinter for obtaining impressions, as well as the original Farrington OCR 7B font were promptly patented. And this point is considered the starting point of OCR (Optical Character Recognition) technology.
An example of the operation of a manual press-imprinter. The "slip" printed in this way was sent by the outlet to the bank that issued the "plastic", which then transferred the money to the seller's account:
A couple of years later, gold bank cards (MasterCard, 1981) and nationwide ATM networks appeared. In 1996, Europay, MasterCard, and VISA introduced the interbank EMV standard for microchip cards. ATMs have evolved to include wireless communication modules and touch screens. And in 2002, MasterCard started testing contactless payment using PayPass technology.
What happened in Russia? Cards of international systems appeared in the USSR in 1969: Diners Club and American Express signed an agreement with the State Committee for Foreign Tourism. A little later, VISA (in 1974), MasterCard (1975) and JCB (1976) came to us. On the part of the USSR, the calculations were organized by the All-Union Intourist Joint-Stock Company: it provided an opportunity for foreign tourists to buy goods in the Berezka store and hotels. Payments were made through the Bank for Foreign Trade of the USSR (Vneshtorgbank).
Plastic cards came to us in 1988, when an agreement was signed with VISA, which made Intourist a member of the organization with the right to issue. The concept of implementation was developed by Sberbank of the USSR in 1988-1989, and the first transaction on a card issued by a Russian bank was made on September 21, 1991 in a grocery store in Moscow. The VISA card issuer is Kredobank.
Today, we use less and less cash. In some places, in Sweden, for example, it does not remain at all. And right now we are seeing plastic cards disappearing from everyday life: soon they will be replaced by smartphones, and after some time the banking industry may switch to virtual cards altogether, leaving pieces of plastic in the past.
