Not your father's credit card
April 9, 2012
By: Joe Taylor Jr.
Different versions of the tale offer various inspirations for Frank McNamara's brainstorm at the start of the 1950s. A personal loan business going stale, an embarrassing night out, and a nervous conversation with his wife all factor into the creation of Diners Club, the first general purpose credit card designed to work with multiple merchants.
More than 70 years later, it's hard to imagine doing business without the convenience of debit and credit cards. Yet, the past decade has seen some of the biggest changes in the credit card industry since merchants first started accepting the cards known originally as BankAmericard, Master Charge and American Express. Four credit card deals highlight how even the most familiar brands have evolved to meet the demands of today's economy.
American Express builds on a heritage of serving business
As a travel services company, American Express spent years hauling cash and securities across the nation's rail lines. The iconic Green Card changed the way that most companies manage their travel and entertainment expenses. Today, American Express helps cultivate a new generation of entrepreneurs with the OPEN Network, a hub of support and information for business owners and managers.
Paying with a credit card doesn't always require a card
A coalition of banks launched the "Master Charge" brand to fight off Bank of America's market dominance in the 1960s. The banks we now know as Wells Fargo, HSBC and Citibank launched a cooperative that would eventually include more than 25,000 issuers. As BankAmericard morphed into the Visa brand, MasterCard forged global alliances built on cutting-edge technology.
Speaking of cutting-edge technology, mobile wallets enable users to input their credit card data into their cell phone and pay with the simply flash of a screen. Thanks to clever “apps” such as Google Wallet, Isis, Square and a number of others, it’s possible to keep your card safely secured at home, stowed in your wallet, or buried in the bottom of your purse and still complete your transactions.
Customers benefit as Discover continues to innovate
Based on the idea that banks shouldn't have all the fun, Sears launched Discover Card in 1986 at Super Bowl XX. The "Dawn of Discover" forced new conversations about how credit cards could add value, security, and service to each transaction. Sears' retail perspective helped Discover's revolutionary cash back rebate take root, an idea that nearly every credit card company has copied since.
Chase builds on BankOne's affinity credit card strategy
Though the Chase name has graced neighborhood branches for more than 100 years, today's JPMorgan Chase & Co. grew from a series of mergers between old-guard finance companies and upstart marketers. Much of Chase's current dominance stems from the work of BankOne, a Midwestern credit card issuer that pioneered the practice of burying its own brand beneath those of marketing partners.
Capital One stays young
The youngest major credit card issuer in the United States built its brand on modern technology. Spun off from a regional bank in 1988, Capital One uses its internal database to model risk and to predict how prospective customers will handle their accounts. The same system enables the bank to offer highly customized deals to new customers, especially to applicants with limited credit. This makes Capital One a favorite issuer among the younger crowd, since these days few lenders have the risk tolerance to accept new cardholders under the age of 25.
Credit cards keep up with changing times
In their first 70 years, credit cards evolved into a way for banks to lock in customer loyalty across all their products. Loss-leading credit cards often tied back to home loan and personal checking accounts, until the 2008 financial crisis forced changes to the banking industry. As newly-frugal Americans expect more than ever from banks, credit card offers like these show how lenders intend to drive brand allegiance through standalone rewards and customer service.