 Credit
card - a small plastic card issued by a bank or building society, allowing holder to make purchases on credit.
(South African Concise Dictionary 10th Edition)
Just about everybody has at least one of these indispensable
little plastic rectangles nowadays. But, although we know
what to do with it, very few of us know how credit cards
'hang together' and how this all popular form of payment
initially came about. Perhaps this will help fill the gap.
|
|
How Credit Cards 'hang together' |
The Credit Card Associations.
At the top of the heap, are the credit card associations:
Discover, American Express, Visa and MasterCard. Credit card
associations are in essence global payments networks that
support the issuing, acceptance, transacting and usage of
credit cards. By belonging to a credit card association,
banks are able to issue credit cards that are accepted by
hundreds of thousands of merchants and ATMs world wide. In
South Africa, the majority of the banks belong to Visa and
MasterCard. That is why either the Visa or the MasterCard
logo appears in the bottom right hand corner on most of our
credit cards.
The main difference in approach between Visa and MasterCard;
and Discover and American Express, is that Visa and
MasterCard don’t issue their own credit cards. Discover and
American Express are credit card associations who also issue
their own credit cards and charge cards.
|
|
The Card Categories, Sub-Categories and Types. |
| |
|
 |
The two main
categories of cards on the market today are credit
cards and charge cards. When you use a charge card,
you will need to settle your balance in full at the
end of every month. Credit cards, on the other hand,
allow you to pay off your balance over time.
|
|
|
Under the two main categories, namely credit cards and
charge cards, there are three subcategories: personal cards,
business / small business cards and corporate cards
|
|
|
In each one of the subcategories, there are several
different card types: Rewards cards, Basic cards,
Affiliation cards, Travel cards and Entertainment cards,
amongst others. |
Your credit card is essentially a revolving line of
credit that you activate each and every time you swipe
your card. This is not unlike the first credit card
that was launched in the post-World War II years.
|
|
|
The Birth of the Credit Card |
It was the Americans who invented the credit card fifty
eight years ago. In 1949, a New York businessman (Frank
McNamara) discovered that he had left his wallet at home
while hosting a dinner at Major's Cabin Grill. Embarrassed,
he offered the restaurant owner (whom he knew) his business
card as a promissory note. When the owner accepted the card,
it gave Frank the idea to create a kind of charge card, with
which well-to-do customers could pay for their expenses at
various establishments. Frank would pay the establishments
for the purchases made and, as compensation, keep a small
percentage of each sale as compensation.
In 1950, Frank and his partners, Ralph Schneider and Casey
Taylor, returned to Major’s Cabin Grill. After a quiet
dinner, Frank signed the bill and offered a small card made
from cardboard, as method of payment. He explained the idea
to the restaurant owner and asked him how much credit card
business would be worth to him. The reply was: "7%".
In later years, this day, which saw the birth of Diner’s and
the modern credit card, would become known as "The Last
Supper".
|
|
The Credit Card in South Africa |
All indications are that the first credit card found its
way into South Africa when the Netherlands Bank of South
Africa (now Nedbank), issued an American Express Gold Card
in 1967. This did not herald the start of a credit card rush
though. Wary of debt, the Baby Boomers who were entering the
job market, generally kept clear of this payment method. It
was only some ten years later, when the credit card industry
saw meaningful uptake.
Credit card use in South Africa has increased exponentially
since those early years. Projections are that 2007 may have
produced close on 100 million more credit card transactions
than during 2005, and that by the end of 2007, South African
credit card holders may have chalked up a massive R 40
billion in credit card debt.
Within the space of thirty short years, the South African
credit card industry has indeed become a colossus.
|
Adverts
|
|
|
 |
|
|
|
|
Information |
|
|
Advert
|
|
|
 |
|
