Plastic, or polypropylene, is a material that’s easily shaped into various forms. It’s been used since the 1930s to make everything from water bottles to medical devices and consumer goods—but it took until 1950 for it to be used in credit cards. Here’s how plastic money came about:
The first plastic credit cards
Not many people know when credit cards were invented. According to the SoFi website, “Credit card history can be traced back to 1914 when Western Union rolled out the idea of “Metal Money,” which was granted to a handful of customers and allowed them to push back payment until a later date.
The next iteration of credit cards was introduced in 1946 when New York City banker John Biggins introduced the Charg-it card. These charge cards were usable within a two-block radius of Biggins’ bank. Purchases made by customers were forwarded to his bank account, and merchants were reimbursed at a later date.”
The magnetic stripe
Magnetic stripe technology, also called magstripe, is the common term for a track of magnetically coded data on the back of credit cards and ATM cards. It was first used in the 1950s to record bank account information. Magnetic stripes are extremely durable and can last up to 10 years before they need to be replaced.
Magnetic stripe technology uses a strip of ferromagnetic material (sometimes iron oxide) embedded with tiny iron particles that represent binary data as either magnetic north or south poles. The stripe is read by passing it over a reader’s head or by swiping or dipping the card into a point-of-sale terminal, which then processes the data using an electromagnetism technique known as magnetic recording.
Credit card standardization
In the 1970s, credit cards were a very different beast. The first card was introduced in 1950 by a local bank in New York City, but it wasn’t until 1967 that Visa and MasterCard began to be accepted as payment methods across America. This meant that there were still many different ways to pay with your plastic and that merchants had to determine whether or not they would accept your card before you could use it.
The rise of debit cards
The arrival of the debit card in the 1960s marked the beginning of a new era in payment technology. This piece of plastic was not only less expensive to produce than paper money but also more protective. The use of credit cards had been steadily rising since they were introduced during World War II, but concerns over fraud and identity theft slowed this growth. Debit cards were intended to mitigate these problems by allowing customers to pay for goods with their own money rather than ceding control over it to a third party or lending institution.
Plastic money is an invention that has changed the way we live. It helps us to be more efficient, and it’s made our lives easier. It also provides us with more security than cash does.