A century of payment innovation: the journey of payment cards

From store cards and charge plates to payment cards enabling contactless transactions, Amanda Gourbault from CompoSecure presents the evolution of payment innovation in the card realm over the last 100 years.

Card payments are on a path of tremendous growth: in 2022, global card networks processed a whopping 624 billion transactions, marking a growth of 7.5% compared to 2021. Today, payment cards reign supreme as the preferred method for in-store purchases worldwide, accounting for over 50% of all transactions, and cash is starting to disappear in certain parts of the world.

The backdrop for this transformation takes us back to the challenging days of the Great Depression in the 1930s. Faced with economic hardship, enterprising US merchants devised a solution by extending credit to customers through store cards and charge plates, where a single card operated exclusively within one department store or a specific gas station chain.

Fast forward to 1950 in New York, where businessman Frank McNamara's forgetfulness led to a pivotal moment. Left without his wallet during a restaurant dinner, McNamara's wife drove into town and settled the bill. This incident sparked the idea of creating a way to pay with a card at eateries, giving birth to the Diners Club credit card. Unlike its predecessors, this card offered credit to multiple merchants. In 1958, American Express followed suit, launching its inaugural credit card.

These early credit cards were not backed by banks, but in response to this new trend, banks began to launch their own credit card programs in the 1960s. Bank of America in San Francisco took the pioneering step with the BankAmericard. Realising the potential of a unified network, a group of California banks joined forces to create the Interbank Card Association in 1966, which later became Mastercard. Concurrently, other banks adopted BankAmericard, which eventually rebranded as Visa in 1976.

The initial Diners Club cards were crafted from cardboard with printed ink displaying the card details, and those details had to be manually written down by the merchants. American Express introduced plastic cards in 1959 and over time, card details were embossed onto the card's surface, and flatbed imprinting machines were introduced, enabling the recording of embossed card information on carbon paper. These devices became known as 'zip-zap machines' due to the distinctive sound they generated.

The 1960s brought another innovation as IBM recognised the potential of encoding information onto cards using magnetic tape. Legend has it that the idea of melting the tape onto a badge using a flat iron came from IBM engineer Forrest Parry's wife. This innovation led to the dominance of magnetic stripe (magstripe) cards in the market.

In the mid-1970s, Roland Moreno, a French engineer, introduced a revolutionary plastic card embedded with a microchip capable of performing complex calculations and enabling stronger security measures. The following year, he successfully demonstrated how this smart card could facilitate electronic financial transactions. By the early 1980s, French banks embarked on a pioneering journey to issue these chip cards. Banks worldwide followed suit, and today, a staggering 93% of all card-present transactions globally utilise EMV chip technology.

In 2003 the industry had another milestone as American Express launched its Centurion card in a metal form factor, made of titanium.

As we continue our exploration of the card's evolution, we arrive at the present, which has been notably shaped by the COVID-19 pandemic. This crisis has expedited the transition from traditional contact payments, which involve inserting or swiping the card, to contactless transactions that require simply tapping the card on the terminal. It is estimated that by 2026, 81% of all cards worldwide will be equipped with contactless technology.

As we contemplate the future, it’s fascinating to see how payment cards have continually adapted, reinventing themselves over nearly a century to accommodate technological and societal advances, and how in doing so, they have given birth to some of today's most iconic and prominent brands.

About Amanda Gourbault

Amanda Gourbault serves as the Chief Revenue Officer of CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards, security, and authentication solutions. She is responsible for leading the company’s sales, pricing, marketing, and revenue management activities. She is also focused on driving the adoption of the company’s revolutionary authentication and cold storage solutions, Arculus, using her 25 years of experience in the payments and security industry. 

Prior to joining CompoSecure, she served as Executive Vice President of the Financial Institutions Business Unit at IDEMIA, a global leader in payment cards and identity/security credentials. At IDEMIA, Amanda was responsible for a global division with more than 2,600 employees, comprising sales, marketing, and product development teams, as well as more than 30 card personalization centers worldwide. Before IDEMIA, Amanda was with Giesecke & Devrient, where she created and ran their UK subsidiary. Amanda holds a BA in Modern Languages from Durham University in England. She is also Chair of the Compass for Life Foundation, helping disadvantaged children achieve their dreams.

About CompoSecure

Founded in 2000, CompoSecure (Nasdaq: CMPO) is a technology partner to market leaders, fintechs, and consumers enabling trust for millions of people around the globe. The company combines elegance, simplicity, and security to deliver exceptional experiences and peace of mind in the physical and digital world. CompoSecure’s innovative payment card technology and metal cards with Arculus security and authentication capabilities deliver unique, premium branded experiences, enable people to access and use their financial and digital assets, and ensure trust at the point of a transaction. For more information, please visit www.CompoSecure.com and www.GetArculus.com.