The History of Payment Processing

We can go back 5000 years to the ancient Mesopotamians who used clay tablets to conduct their trade, but let’s rather start in 1946 when a Brooklyn banker named John Biggins launched the first bank issued charge cards. The card was called Charg-It. There were three parties involved in each transaction: Biggins’s banking customers, Biggins’s bank, and the merchant’s business.  With the Charg-It card, purchases could only be made locally.

Fast forward to 1950 when the Diners Club Card made its appearance in what has been dubbed “The First Supper.” Another eight years later, the American Express card debuted. By this point, consumers had officially been introduced to the convenience of card payment.

Since those early days payment processing has gone through a massive evolution and is certain to continue to evolve as technology develops.

What happened next?

Major banks worldwide soon launched their own cards, and it wasn’t long before revolving credit made an intro to the world of consumer spending, and so the credit card was born. Bank of America led the way, followed by MasterCard and Visa.

The payment processing industry boomed in the 1970’s, and payment by credit card started to become commonplace. With that boom came legislation, and the first laws and regulations were put in place throughout the years between 1970 and 1977.

In tandem with changes to laws and regulation came developments in technology. Manual flatbed card machines were followed by magnetic strips, RFID, and now EMV and NFC technology. The greatest technological advances have been related to security to protect sensitive data and information and to prevent fraud.

Where to from here? 

Judging by how rapidly technology has evolved in recent years, payment processing will evolve to become integrated into consumers’ everyday lives via the online world, mobile apps, and even appliances. There are already indicators that physical credit cards will become obsolete, and it’s likely that more fraud-proof technology will make its appearance.

Current payment options like cards, e-wallets, and bank transfers will still be with us for a good time to come because automatic processing requires many features that only a few payment processing systems support at this stage.

The greatest threat to innovation in the payment processing sphere is security, so that’s where much of the focus will be. Every stolen card, data breach or account takeover negatively impacts consumer trust, so there is pressure is on to navigate away from a world where fraud and cyber-attacks still exist.

Fingerprint and face-recognition technology have already been developed to replace PIN numbers and passwords, and it’s only a matter of time before they make their appearance in the mainstream consumer market. Biometric authentication is now being used in certain areas of the banking sector as governments and business put pressure on payment processors.

Although banks and the card payment industry face major global challenges, payment processing companies can only improve, evolve and grow, because one thing is certain: consumers and businesses want multiple payment options and convenience.

For more information about the past and present of payment processing, or to sign up for a merchant account, please call (888) 924-2743 or go to





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