THE HISTORY OF THE BANK CREDIT CARD
One of every thirteen commercial transactions in the world is done with a credit
card. However, despite their common usage, payment cards belong to a relatively new
The roots of the bank credit card can be traced all the way back to 1914, when the Western Union Company in the United States
issued, for the first time, a credit card which could be used to purchase a variety of
services, providing the advantage of deferred payment without finance charges.
During the first half of the century, several companies and commercial establishments - such as
hotels, department stores and gas companies - also began to offer the convenience of a credit card to their
clients. But it was not until 1950, with the introduction of Diners Club in the
market, that the concept of a merchant discount rate was first implemented.
Cardholders, in turn, began to receive account statements reflecting the amount of their
purchases, which had to be paid in full at the end of the month.
In 1951, Franklin National Bank of Long Island, New York, issued the first bank credit card which could be used at local
This novel idea was emulated by 100 other banks, which developed similar card issuing
These pioneer programs were based on a merchant discount rate, full monthly payment by the cardholder and a
However, the limitations inherent to the reduced number of transactions generated at local merchants resulted in low profit margins for the
Not surprisingly, the cards disappeared as fast as they had appeared in the
Bank of America capitalized on the initial advantage of its strong presence in the California market and accomplished a successful launching of its BankAmerica card in 1958.
BankAmericard offered cardholders a new element since its inception: credit
Instead of demanding full payment with the monthly account statement, Bank of America provided the option of deferred
payments, with a finance charge applied to the outstanding balance.
Cardholders in turn, could pay the full amount due to avoid finance charges.
In 1970, Bank of America made the decision of transferring control of its BankAmericard
By virtue of this move, all BankAmericard issuers established a joint operation named National BankAmericard
Inc. (NBI), an independent non-stock company founded by Member banks.
NBl's functions were to manage, promote and develop the BankAmericard system in the United
Bank of America continued its operations outside the United States through
franchises, expanding its issuer base to banks in 15 countries by 1972.
Finally, in 1974 - with the creation of a new entity called IBANCO, BankAmericard Member joined under a multinational umbrella company which managed the International card
Similarly to its predecessor, NBI, IBANCO was a non-stock company and its owners were participating Member
Outside of the United States, banks in certain countries resisted the idea of issuing cards related to Bank of
America, even though such association was restricted to printing the bank's name on the
plastic. To overcome this obstacle, it was necessary to find a universal name - unrelated to any particular financial
Finally, in 1977, BankAmericard adopted a new image under the VISA brand name, while retaining its distinctive
Blue, White and Gold colors.
NBI became Visa U.S.A. and IBANCO became VISA INTERNATIONAL SERVICE ASSOCIATION.
Our thanks to VISA for that information. We learn something every day
and, some days, we learn two things...