In 1914, Western Union issued metal identification plates to its best customers, allowing them to send telegrams now and pay later. Over the next 30 years, gas stations, department stores, railroads, and even AT&T began issuing similar charge plates, or cardboard charge cards, to either preferred customers or, more frequently, any customer who was willing to fill out an application. It was a convenience to customers, who didn't have to carry cash or a checkbook, but it also served to increase customer loyalty, since people were more likely to frequent a store for which they carried a charge card.
Following World War II, the parents of the baby boomers started buying just about everything on credit, and banks started to see an opportunity. Businesses were essentially giving their customers a short-term loan when the customers used a charge card, and banks already had a lot of experience with loans (and knew they could make money off them).
Banks began to sign up both their own customers and local merchants to participate in credit card programs that they would administer. The businesses were charged a small percentage of each amount charged by a customer, but, especially for small businesses, it was cheaper than setting up their own charge account program; meanwhile, bank credit cards were more convenient for customers, who could carry fewer cards and pay fewer bills. Beginning in the mid-1950s, banks began to add the revolving credit option to their credit cards, which allowed customers to carry a balance, albeit with a fairly high interest rate charged.
By the way, these postwar credit cards weren't made of metal or cardboard. Instead, they were made of thin plastic.
In 1958, San Francisco-based Bank of America introduced its credit card, BankAmericard. As one of the largest banks in the most highly populated state in the U.S., Bank of America had managed to sign up a whole slew of merchants statewide to accept BankAmericard, and the blue, white, and gold logo became nearly ubiquitous on store doors in California. Bank of America also welcomed applications for the card not just from its accountholders, but from anyone, a move soon copied by other banks.
Bank of America managed to use its might, and the might of the sheer number of BankAmericard holders, to persuade out of state merchants to accept the card, and to convince other banks in other states to issue BankAmericard themselves. (At the time, federal regulations prevented banks from operating across state lines under most circumstances, so Bank of America could only issue BankAmericard in California.) In 1966, Bank of America created a separate division, the BankAmericard Service Corporation, to manage the BankAmericard portion of the business. Four years later, the division was spun off entirely, becoming National BankAmericard Inc., an association of all the BankAmericard-issuing banks.
At around the same time, several of Bank of America's California competitors were forming a competing association, Interbank, and were similarly expanding nationally, eventually becoming Master Charge and then MasterCard.
In the early-to-mid 1970s, BankAmericard innovations included electronic authorization systems (previously, merchants would have to have to make a phone call to authorize large transactions), as well as what was at first called a deposit access card, but later became known as a debit card or a check card.
BankAmericard also began to expand internationally, forming the International Bankcard Company (IBANCO) in 1974. However, many banks were reluctant to issue a credit card with the word "America" in the name. The problem was solved in 1976 when BankAmericard became Visa, a name chosen because it was short and "worked" in just about every language, and because it had the positive connotation of "access" (a visa could give one access to another country, and a Visa card could give one access to things he or she wouldn't be able to buy otherwise). National BankAmericard Inc. became Visa USA, and IBANCO became Visa International.
From then on, things stayed pretty much the same. Visa remained a not-for-profit association of its member banks (14,000 in the United States alone), with Visa USA still headquartered in Bank of America's hometown of San Francisco. Post-1976 events included introducing the preferred card in 1982 (eventually becoming the gold card and the platinum card), introducing the stored value smart card in the mid-1990s, periodically updating its electronic transaction systems, and running frequent television commercials in an attempt to distinguish itself from MasterCard (and, to a lesser extent, from American Express, Discover, and other items people have in their wallets).
After the 1976 name change, Bank of America had continued to call its Visa cards "BankAmericard Visa," but, sadly, slowly phased out the name to match the recommended "(name of bank) Visa" style.
- "History of Bankcards" at www.cardpay.net
- The Bank of America Visa check card (not a BankAmericard) in my wallet