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A history of payment cards - from clay tablets to EMV cards...

Estimated reading time: 5 minutes

We live in a transactional world – and always have done – with payment for goods and services having taken some interesting shapes over the years. 

The notion of credit as just about as old as those original payment methods, with early economies as far back as the Bronze Age seeing lines of credit extended because, for example the time between planting and harvesting a crop – and harvesting wealth too – was long.

The first recorded credit card of sorts was identified in ancient Mesopotamia, when that civilization’s people used clay tablets to trade with its neighbors. 

While those payment methods are now as much as 5,000 years old, the simple but meaningful act of payment evolved, with the most remarkable innovations having smoothed the paths of commerce at particularly great speed in the last 130 years. 
 

The pre-plastic era

It was in the late nineteenth century that stores began issuing paper loyalty cards, allowing customers to run up a monthly balance of debt, that was in turn collected by the store’s representative at month-end. 

The first clear precursor of the credit card, as we know it, was the ‘Charga-Plate’, a two and half inch by one and a quarter inch rectangular sheet of metal, not unlike a military ‘dog tag’ that came into circulation in the early 1930s. It was embossed with the customer’s name, city and state, and held a small piece of paper for a specimen signature. It was laid into an imprinting machine, underneath a charge slip, onto which an inked ribbon was imposed. 

Originally issued to regular customers by large-scale merchants, many of these cards were kept in the stores, rather than being carried around by customers, who called on a clerk to fetch their personalized card when they wanted to process their transaction. 

As the post-war economy started booming, so too did the need for alternative payment methods, with the first major innovation in the field arising out of a diner at a New York restaurant forgetting his wallet at home and having to ask his wife to pay the bill. A year later he returned to that same restaurant to pay with a small cardboard card, known as a Diners Club Card, at an event hailed in the industry as ‘the first supper’. 

Just one year later, Diners Club membership had grown to 42,000 in the US, and businesses in the United Kingdom, Canada, Cuba, and Mexico began accepting the cards, making them the first internationally accepted charge card. 

It’s also during this era that credit card sizes were standardized – with the generic size of a credit card based on the size of the first credit card issued by Bank of America, in 1958. The size of credit cards was later fixed by the ISO/IEC 7810 standard, with most banking cards being 85.6mm by 53.98mm, with rounded corners. 
 

The 1960’s:  Bank payment cards are born and evolve to plastic  

With the 1960s came the shift to more long-lasting payment cards, with banks issuing plastic cards to their customers after American Express started the trend in 1959, hotly followed by the Bank of America and Diners Club. 

The magnetic stripe (magstrip) developed by an IBM engineer, with the story going that he wanted to combine a strip of magnetized tape with a plastic identity card, for CIA officials. He couldn’t figure out how to get the two items together – until his wife suggested he use her iron to essentially melt the strip on. 

The magstripe, which stored the owner’s identifying information, combined with point-of-sale devices, data networks, and transaction processing computers accelerated the global growth of the credit card industry, which now processes trillions of dollars’ worth of transactions each year. 

Chip and PIN (personal identification number) cards were the next significant innovation, after two German engineers first incorporated a silicon integrated circuit chip into a plastic smart card in the late 1970s. It took a while for the chips to make it into payment cards, with the first smart, or chip and PIN, cards being issued by France's Carte Bancaire in 1986. Germany followed shortly afterwards, with other markets taking the Europeans’ lead soon after. 
 

Combating fraud with EMV technology

The next step in payments technology was the adoption of the EMV standard, which guaranteed the global interoperability of chip card transactions. Originally standing for Europay, Mastercard and Visa, the three largest payments processing companies, EMV enabled finer controls of ‘offline’ transactions, and improved user security. 

The only thing that could possibly make payments more convenient than a quick swipe of the card was to be able to pay with a tap – and that was made possible with the broad introduction of contactless smart payment cards in 2007 in the UK, after their initial introduction in the United States a few years before. 

Contactless payment is particularly convenient, and a quick tap to pay means shorter – or no – queues. 
 

2010’s:  The digital revolution begins

With the internet revolution having long taken hold, virtual wallets were first introduced in 2011, with Google Wallet and Android Pay allowing contactless payments to be made via smartphones rather than cards. Cupertino followed with Apply Pay three years later.  

These innovations were then extended to wearable devices with the 2015 introduction of payments via the Apple Watch offering even more convenient contactless payment technology – inspired only a little by James Bond… 

The next big innovation was the introduction of EMV biometric payment cards for both chip and contactless payments. Introduced by Thales and first chosen by the Bank of Cyprus, this standard uses fingerprint recognition instead of a PIN code to authenticate the cardholder. The card’s biometric sensor is powered by the accepting payment terminal, which means that it does not need an embedded battery. Users are securely authenticated with their fingerprint directly on their card and can enjoy the convenience of contactless payments for any amount – without the need for a PIN code.

With threats to the environment increasingly in the spotlight, sustainability started taking center stage in the payment cards industry. In 2020, Thales started the trend of cards made from recycled material with our Ocean Plastic Card. With banks signing up to the global Principles of Responsible Banking, which align with the Sustainable Development Goals and the Paris Climate Agreement, cards produced out of renewable bio-sourced resources, post-consumer plastic waste and recycled PVC, supported by a carbon offset programs, just make sense. 

As the world increasingly focuses on diversity and inclusion, a logical step was to overcome some of the barriers to secure payments experienced by disabled people. The introduction of voice payment cards means that visually impaired people have more control over their payments. These payment cards are paired with the user’s mobile phone, which, via an app, vocalizes the transaction details. 

This includes descriptions of each step – the amount, PIN validation or repudiation, and the successful conclusion of the transaction – helping these vulnerable consumers be sure that they’re being charged the correct amount. 

Payment cards may be small, but they play a massive role in our daily lives, making it possible to obtain credit, make payments safely and efficiently, and even, in pandemic times, enjoy the many advantages of completely contactless payments. 

Download our history of payment cards infographic.
 

History of payment card