The evolution of payment cards – what’s next?

Last updated: 31 October 2019

Card payments have come a long way. Over 65 years ago, the world saw the first ever multipurpose charge card come into service in the US. The idea was the result of businessman Frank McNamara forgetting his wallet while dining out at a New York City restaurant. After the embarrassment of not being able to pay, McNamara thought of a multipurpose charge card as a way to avoid similar situations in the future. Made out of cardboard, with printed ink displaying the card details, the Diners Club International charge card wasn’t the most high tech innovation, but for 1950, it was a significant step forward; one which would eventually lead to where we are now – over 390 billion transactions (payments made with debit and credit cards) were made last year around the world.

The cardboard payment card proved to be highly successful, and was adopted by over 10,000 people in its first year of business, and by over 42,000 by the end of 1951. By the mid-1960s, the Diners Club has over 1.3 million members. The cardboard revolution wasn’t over and done with quickly either; even the first magnetic strip credit cards were cardboard. It’s too late to bid on it now, but the world’s first ever magnetic strip credit card, made by IBM, was up for auction a few years ago in New York, drawing tens of thousands of dollars’ worth of interest.

After this card was developed, the cardboard versions became plastic rapidly; American Express in 1970 became the first company to use the new design, issuing 250,000 plastic magnetic stripe cards, which allowed customers to transact directly with banks and airport kiosks.

The rise of magnetic stripe payment cards was meteoric – by 2003, more consumers relied on magnetic stripe credit and debit cards than cash for their in-store purchases. However, magnetic stripes weren’t to remain as the dominant form of payment forever. Chip cards have since taken over, using ever more processing power to secure the transactions and comply with the EMV (Europay, MasterCard and Visa) specifications, enabling issuers to implement a sophisticated risk management approach for in-store transactions. Furthermore, Visa and MasterCard have also led the way in developing standards for using EMV cards with devices to enable CNP (card not present) transactions, which in turn has enabled the incredible rise of online commerce over the last decade.

The proliferation of EMV has been complemented further since by the introduction of NFC technology. NFC cards first came into play in 2005 – these secure contactless payment cards, using short-range radio frequencies, were the next big step in the evolution of payment cards, and continue to be compatible with mag stripe and EMV standards. In particular, NFC technology is highly complementary to EMV – for more information on this, download the Smart Card Alliance’s whitepaper here.

It’s clear card payments have come a long way; the evolution has certainly been impressive and fascinating to follow. However, we must not forget that from the first printed cardboard cards, to increasingly sophisticated technologies, the purpose has always been to make payments more convenient, and secure. So, the question now is: what is the next step in the evolution of cards? How can we make payment cards even more secure, and more convenient? And what happens when more and more payments go online? The answer is coming, soon. Tomorrow, we’ll reveal the next step in the evolutionary chain, a dynamic solution that will change the game. To see how we’ve got to this point, see our infographic below.

What do you think the next step will be? Let us know by tweeting to us @Gemalto, or leave a comment in the section below.