Credit Before Credit Card Scanning Machines, Part 1
Because credit cards are so adaptable to modern technologies such as magnetic stripping, the Internet, and wireless networks, we often think of credit as the payment solution of the future. But credit cards were in use long before modern credit card scanning machines were available.
Consumers and merchants have conducted business using the concept of credit since the late 19th century, when charge plates and credit coins were first used instead of actual currency. Around the turn of the 20th century, large department stores and oil companies began issuing their own proprietary credit cards, which were accepted only at the business that originally issued the card, and perhaps a few select other locations. Unlike today’s department store credit cards, which are tied to Visa, Master Card, or other major credit card companies, these early cards could not be used to make purchases from other businesses, so the convenience of the modern credit card was not yet part of the equation. Without credit card scanning machines networked to a centralized system, these cards could only be used as a means of improving customer service and creating customer loyalty at the specific business or institution that issued them.
The first bank card was not introduced until 1946, when a Brooklyn banker named John Biggins issued the “Charg-It” Card. When a Charg-It cardholder used his card to make a purchase, the seller would simply forward the bill to Biggins’s bank, which would pay the bill and obtain payment from the cardholder. The system worked, but was limited to local purchases, and customers had to have a bank account with Biggins’s bank in order to obtain a Charg-It card. In 1951 the Franklin National Bank of New York issued the first bank credit card for loan customers, who also had to be Franklin account holders to receive a card.
Continue reading on Credit Before Credit Card Swipe Machines Part 2.
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