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Q: The first credit cards, bank cards and multi-bank cards ( Answered 5 out of 5 stars,   0 Comments )
Subject: The first credit cards, bank cards and multi-bank cards
Category: Business and Money
Asked by: cons-ga
List Price: $200.00
Posted: 09 Sep 2002 23:44 PDT
Expires: 09 Oct 2002 23:44 PDT
Question ID: 63353
When, where and by whom were... the first credit cards issued? ...the
first bank-issued credit cards? ...the first credit cards issued by
(through) multiple banks? I suspect the first one is American Express
Company around 1947, the second Franklin National Bank in 1951 or so,
and the third the Uni-Card offered variously by American Express,
Chase Manhattan and others from 1955. All these are US, and there may
have been earlier ones, these may not be correct either.
Subject: Re: The first credit cards, bank cards and multi-bank cards
Answered By: juggler-ga on 10 Sep 2002 11:32 PDT
Rated:5 out of 5 stars

Your question suggests that you are seeking
information about "universal" credit cards
rather than an earlier type issued by department
stores and gasoline companies. 

As you may know, various "credit cards" (paper or
metal charge plates) were issued by Western Union
(1914), numerous department stores, gasoline
companies, and hotels prior to the development of the
true "universal" credit card (i.e., a card that was
tied to neither a single merchant nor a single product).
With a universal credit card, a user can purchase many
types of goods from many different places.
Additionally, the concept of the universal credit card
is based on the idea that the issuer of the card will
make a profit from the transaction rather than the
underlying sale itself. 

Information on the web about the early history of
credit cards is scattered and somewhat contradictory.
As a result, I have consulted a book about the history
of credit cards:
"The Credit Card Industry: A History" by Lewis
c. 1990, G. K. Hall & Co.

According to Mandell's book:

"The first universal card plan, though quite limited
in scope, was developed by John C. Biggins, an
innovative banker and consumer credit specialist at
the Flatbush National Bank of Brooklyn, New York. In
1947, Biggins initiated a local community credit plan,
which he called Charg-It, for a two-square-block
neighborhood in the vicinity of the bank. Biggins'
plan was relatively successful and was later adopted
by the Paterson Savings and Trust Company of Paterson,
New Jersey, in 1950. His plan had much greater
significance, however, for the credit industry because
it ushered in the era of the third-party, universal
credit card-without a doubt, the most important
development in the history of credit cards." (Mandell,
p. 26).

"Following the limited efforts by the Flatbush
National Bank and the Paterson Savings Trust Company
to establish community credit plans, a number of other
banks, such as the Franklin National Bank of New York,
entered the credit card field on a limited basis."
(Mandell, p. 29).

Thus, Flatbush and Paterson Savings not only were the first issuers of
universal credit cards, they were also the first banks to do so.

Shortly thereafter, however, began the growth of what were called
"Travel & Entertainment Cards."

"Although Biggins was the first to develop a true universal credit
card, Diners Club... was the first to implement and market such a card
successfully on a large scale. Only a year after its formation in
1949, Diners Club had managed to sign up 285 establishments and 35,000
cardholders, who were each charged $3 per year for their cards... The
quick success of Diners Club caused it to expand rapidly not only
geographically but also in services. The company pushed to sign up
merchants in such industries as hotels, airlines, gas stations, retail
stores, and automobile rental agencies." (Mandell, p. 26).

American Express' entry into the credit card business was much later.
According to Mandell, "American Express... after studying the credit
card business for several years... issued its first credit card on 1
October 1958. Its first year of operation ended with some 32,00
establishments accepting the cards and more than 475,000 cardholders
signed up. In large part, its initial success was due to its takeover
of the Universal Travel Card issued by the American Hotel
Association." (Mandell, p. 28). The Universal Travel Card had operated
unsuccessfully in the mid-1950s before being purchased by American
Express in 1958. (Mandell, p. 27).

The Universal Travel Card should not be confused with the Uni-Card
that you mention in your question. The Uni-Card began in 1962 as the
successor to another card created by Chase Manhattan Bank. "Begun in
1958, the CMCP (Chase Manhattan Charge Plan) card had incurred
substantial losses before being sold to Uni-Serve in 1962 for $9
million. Renamed Uni-Card, it subsequently became a division of
American Express before being repurchased in early 1969 by Chase for
about $50 million." (Mandell, p. 40).

The concept of a card issued through multiple banks didn't take off
until the mid-1960s. "Because most bank card plans between 1959 and
1966 operated independently  of each other, a large network was
crucial to developing a sufficiently large cardholder and merchant
base." (Mandell, p. 30).

In 1958, California-based Bank of America issued its BankAmericard.
Although many banks issued cards in the 1950s, the BankAmericard was
one of the few success stories. After it became the most popular and
widely accepted card in California, Bank of America announced that it
would license the card to other banks. "In 1970, as a result of
pressure from its franchise holders, the BankAmericard operation was
spun off from Bank of America and placed under the control of the
newly formed organization National Bankamericard Inc (NBI)." (Mandell,
p. 31).

On January 19, 1972, NBI acquired Uni-Card from Chase Manhattan Bank.
"The prime motive for the association of Uni-Card and BankAmericard
was the latter's need for a strong outlet in New York City." (Mandell,
p. 40). "In 1976, as a sign of its growing commitment to
internationalizing its operations, NBI changed its name from
BankAmericard to Visa, a word recognized and understood in countries
around the world." (Mandell, p. 45).

Meanwhile, a competing multi-bank card system had developed. In 1966,
the Interbank Card Association formed the second national bank card
system. Shortly thereafter, a group of California banks formed the
Western States Bank Card Association to compete with BankAmericard.
This group's card was called "Master Charge." According to Mandell,
Interbank lacked a single, satisfactory identification device similar
to BankAmericard. As a result, in 1969, Interbank purchased the rights
to "Master Charge" from the Wester States Bank Card Association.
(Mandell, p. 31.). For more information about the formation of Master
Charge, see this 1992 interview with Bob Footman who was involved in
the early history of the brand (on a page hosted by

Mandell's book, "The Credit Card Industry: A History" contains a great
deal of information about the early history of Visa and Master Charge.
I highly recommend the book.

search strategy: credit card history

I hope this answers your question. If you require any clarification,
please do not hesitate to ask. Thanks.

Request for Answer Clarification by cons-ga on 10 Sep 2002 16:36 PDT
Your response deals only with the US. It aids me considerably, though,
since I did not have Mandell. Is there anything about the
international side? For instance, despite Mandell on Visa, the
pressure on Bank of America was jointly from Chase (which controlled
UniServ), Barclays Bank in the UK (with Barclaycard) and Sumitomo Bank
in Japan (Sumitomo Card) none of whom wanted to issue a BankAmericard,
but all of whom wanted the joint acceptance.

Specifically, I suspect that the first bankcards were actually in
Japan rather than New York. I thought maybe they predated all those
small joint merchant-block/shopping center cards on Long Island.

I am very satisfied with your response, so maybe this should be an
additional request.

Clarification of Answer by juggler-ga on 10 Sep 2002 18:39 PDT

I'm not sure how much information Mandell's book contains about the
history of credit cards in Japan, but I will check the book tomorrow
and get back to you. I did notice that the early chapters did have
some information about European credit cards. I will try to get back
to you on this within 24 hours.


Clarification of Answer by juggler-ga on 11 Sep 2002 14:34 PDT

According to the book, "The Banking System in Japan" (1994), published
by the Federation of Bankers Associations of Japan (Zenginkyo):

"Japan's first credit cards were issued by Nippon Diners Club (a
bank-affiliated credit-card company) in 1960. In the same year, some
of the larger retailers - department stores and supermarket chains -
followed suit. At the same time, banks were not allowed to issue
credit cards directly, so many banks, particularly city banks, began
to set up separate credit card companies. In 1966, the first credit
card issued by a credit company appeared." (p. 102).

Mandell has very little on the history of credit cards in Japan, but
he does have some information about credit cards in Europe. On page 27
of his book, he discusses how British and Swedish hotel and restaurant
associations started the BHR card in the 1950s. In 1965, this card
changed its name to "EuroCard." In 1974, EuroCard became affiliated
with Interbank (MasterCharge). (Mandell, p. 44).  Mandell does mention
that the formation of the "Visa" brand was an international decision.
He states:
"Visa signs replaced not only BankAmericard but also Chargex, Barclay
Card, Carte Bleue, Banco Credito, Bank Union, Sumitomocard and other
foreign cards." (Mandell, p. 45).

I hope this helps.
cons-ga rated this answer:5 out of 5 stars
This was an excellent answer, even though, like all such answers, it
raises new questions.

There are no comments at this time.

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