Transcript Topic: Credit Card

A credit card is a
payment card issued
to users as a system
of payment. It allows
the cardholder to pay
for goods and services
based on the holder's
promise to pay for
them.
• The issuer of the
card creates a
revolving
account and
grants a line of
credit to the
consumer (or
the user) from
which the user
can borrow
money for
payment to a
merchant or as a
cash advance to
the user.
• A credit card is
different from a
charge card: a charge
card requires the
balance to be paid in
full each month. In
contrast, credit cards
allow the consumers a
continuing balance of
debt, subject to
interest being
charged.
• A credit card also differs
from a cash card, which can
be used like currency by the
owner of the card. A credit
card differs from a charge
card also in that a credit card
typically involves a thirdparty entity that pays the
seller and is reimbursed by
the buyer, whereas a charge
card simply defers payment
by the buyer until a later
date.
History
The concept of using a card for purchases was
described in 1887 by Edward Bellamy in his utopian
novel Looking Backward. Bellamy used the term credit
card eleven times in this novel, although this referred
to a card for spending a citizen's dividend rather than
borrowing.
• The modern credit card was the successor of a
variety of merchant credit schemes. It was first
used in the 1920s, in the United States, specifically
to sell fuel to a growing number of automobile
owners. In 1938 several companies started to
accept each other's cards. Western Union had
begun issuing charge cards to its frequent
customers in 1921. Some charge cards were printed
on paper card stock, but were easily counterfeited.
• The Charga-Plate, developed in 1928, was an
early predecessor to the credit card and used
in the U.S. from the 1930s to the late
1950s. It was a 2½ in × 1¼ in rectangle of
sheet metal related to Addressograph and
military dog tag systems. It was embossed
with the customer's name, city and state. It
held a small paper card for a signature.
• In 1934, American Airlines and the Air
Transport Association simplified the
process even more with the advent of the
Air Travel Card. They created a numbering
scheme that identified the issuer of card
as well as the customer account.
• This is the reason the modern UATP cards
still start with the number 1. With an Air
Travel Card, passengers could «buy now, and
pay later" for a ticket against their
credit and receive a fifteen percent
discount at any of the accepting airlines.
• The concept of customers paying different merchants
using the same card was expanded in 1950 by Ralph
Schneider and Frank McNamara, founders of Diners Club,
to consolidate multiple cards. The Diners Club, which
was created partially through a merger with Dine and
Sign, produced the first "general purpose" charge
card, and required the entire bill to be paid with
each statement.
• That was followed by Carte Blanche and in
1958 by American Express which created a
worldwide credit card network (although
these were initially charge cards that acquired
credit card features after BankAmericard
demonstrated the feasibility of the concept).
In September 1958, Bank
of America launched the
BankAmericard in Fresno,
California. BankAmericard
became the first successful
recognizably modern
credit card (although it
underwent a troubled
gestation during which its
creator resigned), and with
its overseas affiliates,
eventually evolved into the
Visa system.
• In 1966, the ancestor of MasterCard was born
when a group of banks established Master
Charge to compete with BankAmericard; it
received a significant boost when Citibank
merged its proprietary Everything Card
(launched in 1967) into Master Charge in 1969.
Credit cards are the most
popular form of credit
today. Accounts for
these cards are set up by
banks, oil companies,
retail stores, or by
businesses that
specialize in extending
credit for special
purposes such as travel
and entertainment.
A special card, showing the person’s
name and account number and a place
for the person’s signature, is issued to
identify the customer as one having a
charge account. These charge cards
have become very popular.
MasterCard and VISA are
two of the best known.
There usually is an annual
fee that must be paid for
the privilege of using the
card.
• Bank charge cards are issued to people
whose credit ratings meet the bank’s
standards. A bank charge card, in effect,
indicates that the credit rating of the
cardholder is good. Agreements are made
between banks and various merchants to
accept the charge cards. The bank charges
your account for your charge purchases
and gives you a bill once a month for all
the purchases you made.
• Customers like bank
charge cards because
they are accepted by
many businesses in many
foreign countries.
Credit cards also
become popular in
Ukraine nowadays. Bank
charge card users like
the fact that they
receive only one
monthly bill rather
than many from various
businesses where they
charge purchases.
• The main disadvantage to bank charge
cards is that consumers often find it
too easy to use their “plastic” money
and may find themselves buying more
than they can afford.
The necessary details on the credit
card
"Smart card" credit card with embedded microchip.
Of the front in a typical
credit card:
1. Issuing bank logo
2. EMV chip on "smart
cards" (electromagnetic
vulnerability)
3. Hologram
4. Credit card numberCard
brand logo
5. Expiration Date
6. Card Holder Name
7. Contactless chip
Of the reverse side
of a typical credit
card:
1. Magnetic Stripe
2. Signature Strip
3. Card Security
Code