Credit cards today are an integral part of everyones. About 80% of all families have some form of credit card.
Many people believe that credit card processing is a rather recent invention…but Credit Card Processing actually dates as far back as the early 1800s. Even though plastic wasn’t used at that time, merchants and financial intermediaries did extend credit on products and goods. At about the early 1900s the bigger chain hotels and department stores commenced to issue paper cards to their most valued customers.
Diners Club launched the first general merchandise charge card in 1949. It was used mostly entertainment and travel expenses. Diners expanded their network across the nation and charged a 7% fee per transaction to its members.
Bank of America launched the first general credit card in the mid 1950’s.
Issuing credit cards and credit card processing has turned into big business. All financial institutions that issue cards make money through annual fees, late payment fees and outstanding balance fees. The fees that banks charge when credit cards are used for to make a purchase are known as Interchange. These Interchange prices are fixed regardless of volume. Banks / Institutions make an average of about 2.00% on each transaction..