History of cards
Payment cards have changed the way that we pay for goods and services and today, most consumers pay for at least half their purchases with a payment card. The forerunners of payment cards are a long way from the sophisticated and widely-accepted cards that we are now accustomed to but, none-the-less, laid the foundations for the convenience and ease-of-use that we now enjoy.
Timeline and milestones
First credit voucher product introduced in the UK by Provident Clothing Group, a pre-curser to credit cards. Customers were issued with vouchers that they could use in shops on an approved list and payment was made to the Provident Clothing rep who called at the customer’s home.
In the US Western Union provide metal cards giving free deferred payment privileges to preferred customers, which became known as ‘metal money’.
In the US Diners Club issues payment payments cards aimed at diners; they operate as charge cards. Initial membership was 200 with the card being accepted in 27 restaurants. By the end of the year 20,000 people were using Diners Club.
When customers of New York’s Franklin National Bank submitted an application for a loan they were screened for credit. Approved customers were given a card they could use to make retail purchases.
First UK charge card available when Donald McCullough launches Finders Services after a trip to the US
American Express introduces its own charge card, and Bank of America introduces a credit card called BankAmericard.
Diners Club becomes the first major charge card company in Britain following the merger of Finders Services and Credit Card facilities.
American Express is launched in the UK with an annual fee of £3 12s (£49 in 2005) and a required income of £2,000 (£27,250 in 2005). The card is usable in 3,000 UK outlets and 83,000 overseas outlets. The only Bank of England constraint is a £75 limit on a single item for overseas transactions.
Bank of America develops licensing agreements with other banks enabling them to issue BankAmericards, becoming the first ‘scheme’.
UK’s first credit card issued by Barclays on June 29th. ‘Barclaycard’ was based on the BankAmericard that had been issued a few years earlier in the USA. The card originally offered very limited international operability.
First cash machine in the world installed by Barclays Bank in Enfield, Middlesex and launched in a press call on 27 June. Early dispensers were designed to receive hole-punched vouchers of £10.00 each purchased by the customer from the bank and used in the dispenser when needed.
UK domestic cheque guarantee scheme is established.
NatWest, Midland, Lloyds & RBS join together to issue the Access credit card under the Joint Credit Card Company (JCCC).
Lloyds Bank ‘Cashpoint’ is the first on-line verified ATM using payment cards with a magnetic stripe.
Consumer Credit Act (Section 75) provides protection to consumers buying goods costing between £30 and £10,000 (£100 and £30,000 in 2005) on their credit card: if the product turns out to be sub-standard, or fails to be delivered, the cardholder can claim compensation from the card-issuing bank. The Act (Section 84) also limits customer liability to no more than £50 if cards are stolen, and used by someone else.
Barclaycard issues the first UK company card – hitherto cards had been issued only to individuals.
Consumer Credit Act comes into force on July 1st 1977
The UK moves to ‘duality’, i.e. banks begin to issue both Visa and Access cards. Subsequently, the Access consortium begins to break-up, and disappears as a brand as MasterCard gains recognition in the UK. This move brings world-wide acceptance to UK-issued cards.
Early/mid 80s saw the introduction of electronic point of sale terminals.
LINK cash machine network established (33 members including Abbey National, Nationwide, Co-Operative Bank, Girobank etc), essentially enabled by the 1986 Building Societies Act.
Matrix cash machine network established (A&L, Anglia, Bradford & Bingley, Bristol & West, Leeds, National & Provincial, Woolwich etc)
1987 Debit cards introduced: Barclays were the first UK bank on the scene issuing the Visa Delta card under the Connect brand in June.
Four bank cash machine network established (Barclays, Lloyds, RBS, BoS)
Switch debit card launched by Midland, NatWest and RBS with the first Switch transaction occurring in October 1988.
Visa test the world’s first multi-function chip card, the SuperSmart card, in Japan.
£100 and £250 UK cheque guarantee limits introduced.
MINT cash machine network established (Midland, NatWest, TSB, Clydesdale, Northern Bank).
LINK and Matrix cash machine networks merge.
The early 1990s see increased competition, notably with an influx of card issuers from the USA.
Emergence of affinity cards and cards issued by non-financial institutions.
France introduces chip and PIN based upon France-only B0’ standard. (for French domestic use only)
Cashback emerges as a means of acquiring cash (7m transactions in 1990).
MasterCard launch the Maestro brand for its international debit card.
Half of UK adults are regular users of cash machines.
Half of UK adults hold a debit card.
UK debit card volumes exceed credit card volumes for the first time.
Mondex public trials start in Swindon on July 3rd
Product innovation leads to the issuing of gold cards and, eventually, other ‘status symbol’ cards with additional features.
One-billionth cash machine transaction processed by LINK.
The average UK cash machine withdrawal exceeds £50 for the first time.
Visa Electron launched and…
…the Solo card is introduced to offer a closer level of financial management. As every transaction is pre-authorised, banks are able to market the card to a wider range of customers, especially to younger card holders such as students, and to link cards to savings/investment products.1998 UK debit card payments exceed personal cheques, and account for more than half of all non-cash spending in supermarkets.
UK chip trials in Northampton and Dunfermline ran between October 1997, with over 117,000 cards issued, 535 terminals installed in 463 outlets, and 14 ATMs.
UK’s first cash machine not owned by a financial institution installed by Bank Machine.
UK debit card payments exceed personal cheques, and account for more than half of all non-cash spending in supermarkets.
Half of all UK adults hold a credit card. The average value of a credit card purchases exceeds £50 for the first time.
Internet card issuers (eg, Egg, Smile, Marbles) join the market place.
Euro comes into being, allowing euro-denominated transactions for the first time.
Aggressive pricing (eg, zero/low interest rate offers) position credit cards as a cheaper form of personal short-term borrowing than loans.
Cash machine networks consolidate at LINK.
General withdrawal of charges for using cash machines across the bank-owned cash machine estate.
First cash machines deployed by the Independent ATM Deployers (IADs).
More than half of UK retail spending is on payment cards. More than 100 million card payments are made online.
First year that cash machine withdrawals exceeded one billion during the year.
Debit card expenditure exceeds credit card expenditure for the first time.
Chip & PIN announced in the UK – biggest consumer change programme since, and including, decimalisation.
More than half of all cash acquired by UK adults is acquired through cash machines. Mobile-phone top ups become available at cash machines for the first time.
More than half of all UK adults regularly use debit cards. The average number of credit cards per adult exceeds two for the first time.
UK Chip & PIN trials in Northampton.
The mainland UK’s first cash machine dispensing Euro notes installed at Old Broad Street in the City by NatWest.
Switch is re-branded to Maestro.
UK card expenditure exceeds cash expenditure for the first time. The average debit card user spends over £100 per week.
HBoS launch the first cashback reward debit card.
The first contactless card transactions occur in the UK. This technology offers a quick and convenient alternative to cash for low-value transactions.
A mobile phone with built-in contactless payment card technology (and Oyster card functionality for travel) piloted in London
Additional security feature included - a unique chip security code to combat magnetic strip skimming
New minimum payments introduced to ensure cardholders’ debt is always reducing.
Annual statements brought in to help customers assess how they have used their credit card over the year, as well as any fees and costs incurred.
Contactless payments introduced on London buses.