The first credit card was not a 1967 invention
The credit card did not appear in 1967. The Diners Club card dates from 1950, when it was launched in New York as a way to pay restaurant bills. BankAmericard, issued by Bank of America in Fresno, California, followed in 1958, and in Britain, Barclays launched Barclaycard in 1966. What 1967 offers is not a first but a stage in growth: the year when bank-issued cards spread quickly beyond their first markets and began to look like a normal part of consumer finance.
Charge cards and credit cards
The earliest cards were not what most people now call credit cards. The Diners Club card was a charge card: the member used it at participating restaurants and shops, and the card company paid the merchant and then billed the member, who was expected to pay in full. The company earned money from fees charged to merchants and members. American Express began its own charge card in 1958.
BankAmericard was a different idea. It allowed a cardholder to carry a balance from month to month, paying interest on what was unpaid, a feature called revolving credit. It was also issued by a bank, using a bank’s deposit and lending business, and it could be used at a wide range of retailers. Its launch in Fresno in 1958 was famously troubled, with early losses and fraud problems, but the model eventually proved workable.
The 1966-67 expansion
The mid-1960s were the period when the bank card model started to spread. Bank of America began licensing its card to other banks, first in the United States and then abroad. Groups of banks that did not want to depend on a competitor’s card formed their own networks in 1966 and 1967, and one of these, known at first as Master Charge, later became MasterCard. Banks in other countries launched or prepared similar cards. In France, the Carte Bleue is generally dated to 1967.
In Britain, Barclaycard was licensed from the American BankAmericard system when it launched in 1966. Barclays offered it to existing customers and to the public, and the number of cardholders and shops accepting it grew through 1967. Other British banks did not launch a rival until the early 1970s, so for a few years Barclaycard was almost the only bank credit card there.
How people used cards in 1967
For a shopper, a card in 1967 usually meant a paper sales slip, imprinted by a manual machine that pressed the raised card number onto carbon copies. The merchant would check the amount against a list or call for authorisation for larger sums, and then deposit the slips with a bank. There were no terminals or electronic networks, and processing relied on bank staff and, increasingly, on computers such as IBM mainframes, which handled billing and accounts in the back office.
Cards fitted a society that was already used to instalment buying. Department-store accounts and hire-purchase credit were widespread, and the new bank cards extended that habit by letting one card serve many shops. For some consumers, they were a convenience for travel and emergencies. For others, they were a way to spread the cost of purchases over time. Interest rates and fees were set by the issuers, and in the United States they varied by state under usury laws.
Mass mailing and fraud
To build up use quickly, some US banks mailed unsolicited cards to large numbers of people, a practice sometimes called a “mail drop”. It created problems. Cards were stolen from mailboxes, sent to people who had died or moved, or used by people who had never asked for credit, and the cost of fraud and uncollectable debts rose. These cases attracted press and political attention, and Congress began looking at consumer credit practice. The Truth in Lending Act of 1968 required clearer disclosure of credit costs. Restrictions on sending unrequested cards followed in 1970.
Cards and other new banking tools
The same year saw another change in bank service: the first cash machine, installed at a Barclays branch in Enfield in north London in June 1967. Cash machines and credit cards were separate products with separate histories, but both belonged to a wider move towards cheaper, faster and more automated banking. Early cash machines worked with special vouchers or tokens rather than the plastic cards used later.
What 1967 shows
The year does not mark the birth of the credit card, but it shows the American economy and its European and Asian counterparts beginning to rely on consumer credit in new ways. By the end of the decade, bank cards were an established part of retail finance in the United States and a growing one in Britain. The mix of convenience, debt and fraud risk that now surrounds them was already visible, and the first rounds of consumer protection law were a response to it.