The History of Merchant Processing
In a world where only an estimated 8% of the globe’s currency is physical cash, it’s hard to imagine a time when credit cards didn’t rule the economy. In fact, credit cards were only an idea until the 1970s, with some primitive forms of paperless payments appearing in the 1950s. Today, merchant processing, mobile payment, and other digital marvels make payments easier and more secure than ever.
The Diners Club issued its Travel and Entertainment card in 1950, which is today recognized as the first credit card. Meant to act as a substitute for cash for businessmen and travelers, the card was the first to charge merchants a discount rate (percentage taken from the sale as a fee) for each use. By the end of the 1950s, both “Charg-it” and American Express entered the game, each introducing their own forms of paperless payment. And by 1960, most financial institutions offered some form of “credit.”
During the 1970s, credit cards took a major step towards becoming the digital marvels we know them as today. The paper-based payment system of the decade caused tremendous losses and overhead, necessitating the switch to a more automated system, and electronic payments were born. In 1979, the all too familiar magnetic strip was introduced, which facilitated several POS (point of sale) updates to make credit cards more functional and less cumbersome.
In 1994 Lipman Electronics Engineering, Ltd. created the world’s first wireless credit card terminal, which not only became the face of credit card processing throughout the 1990s and 2000s, but revolutionized credit card processing. Since then, the credit card industry has seen smaller developments, including the introduction of NFC chip reading and pin technologies, which have worked to reduce the threat against credit card users and merchants alike.
Making credit card payments is easier than ever with the introduction of mobile payments, both for consumers and merchants alike. Mobile applications such as Apple Pay and Googe Wallet eradicate the need for plastic in the pocket and give the buying power to the smartphone. While it is still in its beginning stages, mobile credit card payments and processing is quickly becoming a burgeoning business that promises major advancements in the near future.
Get more out of your merchant processing account by learning about its roots. Contact Vision Payments today to understand where the industry is headed, and how you can take advantage of it for your business.