Credit cards are so integrated into our daily lives that it's difficult to think of a time when they didn't exist. Swiping or tapping your credit card is now second nature, whether you're at the grocery store or paying the tab after a lovely supper. There's no need to carry around a large wad of cash anymore - just a small piece of plastic linked to your bank account is enough.

However, credit cards as we know them have an interesting and perhaps surprising history that dates back far further than you might assume.

How did credits cards in the USA come to existence?

The concept of credit goes back thousands of years, long before credit cards or even paper money existed. The earliest known use of currency dates back to 9000 BC, where people traded items like cattle, shells, and even food instead of money.

Interestingly, the idea of credit - buying something now and paying later - has also been around for ages. In ancient Mesopotamia, farmers would agree to pay taxes on their future crops, with everything written down on clay tablets. This was one of the first times debt was documented, setting the stage for modern economics.

Credit cards in modern history of economics

Farmers and merchants in the United States continued to use credit during the 1800s, although they did it with "credit coins" or "charge plates" at that time. These miniature metal tokens were promises to make payments at a later time, usually after the crops had been harvested.

Even though it wasn't the same as the widespread credit system we have today, it made transactions between farmers and nearby retailers simpler. Although Western Union adopted this idea and began providing metal plates to a restricted group of clients for credit transactions, the system was far from being as open and widely used as it is today.

The most authentic breakthrough for modern credit cards took place in 1949, and the argument behind it is as relevant as ever. Frank McNamara, a New York businessman, went out to dinner at a luxury restaurant but discovered at the end of the evening that he had forgotten his wallet.

In a state of hopelessness, he negotiated with the eatery, vowing to return and pay the next day. That lightbulb moment made him wonder, "Wouldn't it be great if I could carry something that promises payment without cash?"

Thus came the existence of Diners Club. McNamara and his business partner Ralph Schneider launched a card that could be used at 27 eateries in New York City. It was not plastic, however, but rather a cardboard card that permitted users to dine without cash and settle their debts later.

The revolutionary notion quickly grew from 200 to over 42,000 members in a few of years.

US credit card industry's history from the 1950s onward

The first plastic credit card was introduced by American Express in 1959, replacing the previous cardboard one, and it entirely changed the course of the match. Plastic credit cards quickly gained popularity because it was more durable and portable.

At this point, credit cards also became widely accepted since other companies began adopting them, turning them into a standard financial tool.

This was the moment when Bank of America unveiled the BankAmericard, the first credit card to offer "revolving credit," which allowed you to avoid having to pay off your entire sum each month. Does this sound familiar?

With time, this card evolved into what is today known as Visa, and other well-known brands like Mastercard quickly followed suit.

But one of the most iconic innovations came from a rather simple household solution.

In the late 1960s, Forrest Perry, an IBM engineer, was entrusted with figuring how to connect a magnetic strip to credit cards so that they could be quickly scanned. After several futile efforts, his wife recommended he iron the strip onto the card.

To Perry's surprise, it worked! This magnetic strip became the common feature that allowed credit cards to be swiped at terminals, and it is still used today.

Fair credit system with advanced security regulations

As credit cards became more widely used, security compliance and regulations had to evolve too.

In the 1970s, laws such as the Fair Credit Reporting Act and the Equal Credit Opportunity Act were enacted to protect consumers and ensure that everyone had equal access to credit, regardless of race or gender. These laws and allied regulations served to restore faith in the credit system, ensuring that people were not unfairly targeted or exploited by financial institutions.

A string of additional technological developments came next. Cards were embedded with microchips in the mid-1980s, first in Europe and then rapidly spreading to the United States. These chips made cards far more secure than the previous magnetic strips, which could easily be reproduced.

In recent years, contactless payments (tapping your card at a terminal) have made transactions faster and easier.

Companies such as Apple and Google have gone even farther, allowing you to keep credit card information right on your smartphone. With Apple Pay and Google Pay, you no longer need to carry a card; your smartphone can handle all transactions with a single tap.

Concluding things up!

It's not difficult to think of a time when credit cards are fully digital. This is already beginning to manifest with the rise in popularity of mobile payments and virtual cards. You might not even require a physical card in the near future.

Future transactions may require biometrics like fingerprints, eye scans or facial recognition. However, for the time being, from Mesopotamian clay tablets to the state-of-the-art technology in your pocket, that tiny piece of plastic in your wallet bears the weight of thousands of years of human history and invention.

However, all of these conveniences bring fresh challenges too. Credit card fraud has become more prevalent and sophisticated over time, particularly with the rise of online commerce and digital payments. While credit card issuers have implemented extra security measures such as verification codes and fraud alerts, protecting our financial information remains a constant challenge.