The advancement of credit card technology in the United States of America has witnessed a lot of dynamics to the present days as innovation shifts the way of consumer and business transactions.
Ever since the beginning of issuance of charge cards to the introduction of chip technology, it has been surrounded by major highlights that form the basis of the modern world’s economy. This article covers the historical background of credit card technology and the innovation that has occurred through the duration of the credit cards taking root in the United States.
Early days of charge cards
Going back to the mid of 20th century, what can be considered as the emerging of the ideas of credit cards appeared in the shape of the charge cards. Some of the pioneers were Diners Club and American Express; the facility enabled card holders to purchase goods without cash.
At first, these cards were printed on paper or celluloid, and their application was only for some merchants. Credit cards were also an innovative payment medium, but it entailed the obligation to pay the entire outstanding balances at the end of the month.
Nevertheless, the reader is bound to notice that, with time, more similar products emerged and gained more popularity as well to leave room for further developments. The later development of the plastic cards in the late 1950s replaced metal and the card began to be accepted more frequently.
The credit card boom
Concerning the technology of credit card, the boom was experienced in the 1960s and 1970s. It can be said that after the emergence of big names such as MasterCard and Visa, the growth of the industry was quite fast. Retailers and banks started to offer credit cards as a product to the general public with extensive full credit facilities enabling the buyer to make the minimum monthly payment.
It was a revolution that looks at this point to have altered the spending modes of societies since credit card money was now part of the people’s life. The year of the 1970 brought the magnetic stripe which added to both security as well as convenience of credit card operations. Thus, was provided the possibility to process data faster and more effectively, thus cutting frauds that relate to single card imprints on counters.
Chip technology and EMV standards
Got to a little earlier and a little later, the credit card industry was faced with new issues in digitally and fraud. The shift to utilize EMV (Europay, MasterCard, and Visa) chip technology was the next step in the improvement of methods for protecting cards.
The chip immersed in the plastic produced a new code for every purchase compared to the simple stripe card that read the magnetic strip, making it almost difficult for the fraudsters to duplicate. This technology was already in use in other parts of the world, the application of the same in the United States entailed major infrastructural changes for both the merchants and the banks.
The digital revolution and contactless payments
The technological progress of the 21st century saw the introduction of budgets, mobile phones and mobile wallets revolutionizing credit cards. Services like Apple Pay, Google Wallet, and Samsung Pay go hand in hand with existing card payment networks and enabled consumers to use their Apple, Google or Samsung mobile devices for payment.
This innovation turned out to be faster, and much more secure and convenient than card swipes and card insertion. These transactions were enhanced by Near Field Communication (NFC) which created a secure link between the mobile device and the payment terminal.
The role of tokenization
Another major type of innovation in the field of credit card protection is tokenization. This process substitutes the actual card details with a token or identifier during transactions and thus actual card details are never given out. Tokenization helps improve security especially on mobile and online commerce since security breaches and fraud can be avoided.
Tokenization has been adopted as an essential element of security by most of the large credit card associations and digital payment processors. Thus, benefits of cardholder data protection promoted through tokenization result in consumers’ trust and further credit card implementation.
Future trends and innovations
Looking to the future, credit card uses have shown that card advancements lack any signs of stagnation. Other novelties include the use of more secure biometric such as fingerprint and face recognition in door locks.
Moreover, it is crucial to Emphasize that the emerging technologies such as the blockchain and cryptocurrencies have an impact on credit card services since they define new opportunities for secure and decentralized transactions.
Banks and IT organizations remain working on new approaches that take into consideration security as well as simplicity and usability. The history of credit card in the United States therefore denounces the dynamism of the industry that continues to innovate in emissary with the customer needs and innovations in technology.
