Invention of the Credit Card
When we are talking about money, we are essentially talking about trade — the trading of money for goods. The earliest system of trade was the barter system, where people exchanged commodities for one another. Of course, the barter system has its well-known limitations. Over time, we as humans went through several types of systems of exchanging things for other, more valuable things. There was something called animal money, where cattle and livestock were used as currency, followed by commodity money, which used commodities such as leather, wheat, etc. as money.
While for the people living in the 21st century it may seem quite weird to think about going to the market and trading one of your commodities for another commodity, this was the normal way of life centuries ago. Something familiar to us would probably be metallic money, which came soon after commodity money began to make its exit. Metallic money refers to the coinage system. The coinage system is possibly where the idea of international currencies probably came in, because when metals were melted into the round shape of coins, there were also certain engraving made according to whichever region of the world was producing those coins.
Following the coinage system was the paper currency system, which is still the most popular money system in the world. “Cash” as we call it is what we mean when we use the term ‘paper currency.’ Paper currency are also called promissory notes, meaning that they “promise” a purchasing power of a certain value of goods. For example, we know that a promissory note of Rs 10 can buy us something like a chocolate bar worth Rs 10. The concept of cash is based on the idea that once you hand over this note worth 10 rupees, the value of that 10 rupees is transferred to the person to whom you have given it, and in return, you get that chocolate.
However, what if you did not have that 10 rupees with you at the particular moment that you are craving for some chocolate? Here is exactly where the concept of credit comes in, when you buy something without having the money, but on the promise that you will pay for it later — credit is like taking a loan from someone. This became an increasingly important concept as it began to emerge, especially for the people who do not have enough money to buy food for their families due to poverty or other reasons. It enabled people to avail things without worrying about the money until later.
The way to do this was to go to the bank and ask for a loan to be paid back by you later. While taking loans is prevalent even today, what is also prevalent is the concept of “plastic money.” This sounds like a rather strange concept at the first glance — what could plastic money be? How does this work? The curiosity that has arisen in you hearing the term plastic money was probably the same curiosity that captivated the mind of John Biggins, the inventor of credit cards.
A credit card links directly with your bank account. A credit card is a plastic card with a personal identification number linked to its owner. All you have to do is swipe this card at a shop, eatery, or any other place you’re trying to spend money without having actual cash with you. John Biggins was an employee at the Flatbush National Bank in 1946 Brooklyn, New York, when he proposed a system where local merchants came and deposited sales slips, and the bank paid them for it — in turn, the customers who made these purchases with the local merchants were billed for it by the bank. Biggins called it the “Charge-It” system.
Followed by this, several other prominent banks of today created credit cards that functioned in the same way. Diners Club credit cards came out in the year 1950, American Express in the year 1958, and the Bank of America also in 1958. All banks across the world offer credit cards to their customers, massively increasing the purchasing power of the general public. TO think that this was all the result of the curious mind of John Biggins.
Imagine what you could discover and invent if you unleash your own curiosity! Click here to find out your Curiosity Type by taking the Curiosity Test.
