At present, there is a notable change in relation to the credit and payment mechanisms used in commercial activity. During primitive times when man did not have a certain good to satisfy his needs, he resorted to bartering, exchanging a real value for another of the same nature. This transaction is maintained until a common measure of values (currency) was invented, which made it possible to exchange a real value for a representative one, thus giving rise to the sale.
It was at a more advanced stage of the development of commercial activity when it began to use representative documents of money or titles whose essential function consists of paying an amount of money, thus allowing the exchange in the strict sense of representative values for others of the same character.
Since the beginning of the 20th century, the use of checks instead of money to settle pecuniary obligations became widespread in the Western world.
The bill of exchange precedes the appearance of the other titles of credit, by incorporating into it a service consisting of paying a sum of money, generally, at a time fixed in the document, facilitating the granting of credit and the discount that converts the benefit future in present.
Despite the fact that in our days the use of the check, the bill of exchange and the promissory note continues to be a regular practice in the trade to satisfy payment and credit needs, respectively, it has emerged, from about five decades to this part, a different form of credit: the credit card, whose use is becoming more and more massive, which justifies our concern to discover its legal nature in order to facilitate knowledge of it. The vision and goal of credit card issuers in the future is to replace checks and cash, thus becoming the primary global consumer payment system. One in three commercial transactions in the world is carried out using a credit card. However, despite its widespread use,payment cards belong to a relatively recent industry.
Legal life, in its constant evolution, is creating new contractual figures that adapt to the new technical and economic needs that arise every day.
The purpose of this thesis is a complex payment instrument born from the needs of today's consumer society, developed in all industrialized nations, disseminated and used in practically all countries.
Cards - and especially credit cards - have become a payment system that is almost obligatory for the purchase of goods and compensation for services and, as some authors point out, it has been the last step in the historical evolution of the media. payment, understanding this expression generically as a mobilizing element of wealth.
Law as a technique born from social reality faces this challenge. It must assume and incorporate the possibilities of new technologies that have revolutionized the legal operating methods in some aspects, such as the case of electronic documents and remote data transmission.
The growing and unstoppable spread today has made credit cards an indispensable instrument in the execution of all kinds of transactions. And, for that very reason, it is an important object of study.
ORIGIN AND HISTORICAL EVOLUTION OF THE CREDIT CARD
The last link in the chain credit card that began with the barter of precious metals, money, bills, checks, letters, transfers, bank orders, etc., has become, in developed countries in recent times, in the middle usual payment both nationally and internationally.
The origin of the credit card is debatable. There are those who argue that it dates back to the early twentieth century and that it emerged in Western Europe, especially in France, England and Germany, although with a very limited application, having subsequently spread and gained popularity in the United States of America (USA). Precisely a sector of the doctrine maintains that it was in this country where this institute was born and reached its real height in the sixties.
The emergence of the credit card is linked to the development of commercial activities, the rise of the consumer society and mass contracting, also, as a means to avoid the mobilization of cash, and to simplify the activities of customers. consumers.
It arises as an instrument whose presentation allows to defer payment obligations in certain transactions. The exhibition of the card will credit its holder to dispose of goods or services without immediate delivery of cash. It thus performs, in an economic sense, a function similar to that carried out by the letter of credit order for centuries, for the delivery of money or certain goods to the designated person in it.
DRURY & FERRIER cite two visionaries of the cards, which emerged as their first antecedents at the end of the last century; first to Edward Bellamy, a New England American, a journalist by necessity, but actually a lawyer, in his Book Looking Backward, published in 1888, and which was one of the three best sellers of his time, he explains an imaginary story of the future, dreamed of by one of the book's characters, Julian West. He dreams of discovering in the year 2000 a society in which the State can provide its citizens with everything they need, a society without money, in which every beginning of the year the government gives everyone what they need and more for the whole year. And to obtain those of more immediate consumption, or perishable goods, not distributable annually in warehouses,the Government gives them cardboard payment cards in exchange for a few dollars, with which they can get whatever they want; second, to Joshua Kelly Waddilove, an Englishman from Bradford, born in 1840, a man deeply concerned with social problems with a genuine horror of Victorian social abuses. When he was 40 years old, he created a kind of checks that he gave to needy mothers for a weekly cost of a few pence. Those checks previously agreed with local commercial establishments were accepted by them. That system became popular and Waddilove opened his first office in Bradford by founding the Provident and Clothing Supply Company, which was a pioneer in offering consumer credit through those documents or checks. The noted authors say, citing DG Hanson,that Waddilove was the pioneer of credit cards in two aspects: that the payment was made in a document other than money and that customers felt satisfied with the revolving credit, that is, as they paid off their In debt to the Waddilove company, it provided them with new checks to make new purchases.
Its birth occurs for reasons or reasons of various kinds and with a functioning of different nuances, with respect to its current and majority structuring as a payment system. BELLANGER wonders the why of credit cards and especially the reason for their wide development, and points out that the main reason for the creation of these instruments in the US was the specific structure of the banking networks or systems in that country.
The earliest history of the current card dates back to 1914, in the United States, the General Petroleum Corporation of California (which later became Mobil Oil) issued a credit card intended for its employees and for selected clients. In 1915, the telegraph company issued cards designed to identify its main customers and authenticate their telegrams
It is used first by several hotel chains to identify preferred customers anywhere in the country; and to pay their bills, without the need to make any cash payment, in legal tender, but simply by conforming the stays or consumptions, which were subsequently settled by the employer's central offices. Its use in the US takes a great boom in the mid-twenties, issued by some oil companies (such as Texaco and Standard Oil) and department stores, which delivered it to their best customers for the acquisition of products, as a means of payment of your purchases.
His employment fell during the crisis of 1929, with the credit restriction and the increase in delinquencies caused by the collapse of the Stock Market in October of that year (Crack of 29). However, starting in 1932 with the new presidential era marked by Franklin D. Roosevelt - in that year he was elected President of the United States, which would print a new air of optimism and prosperity to American society - the cards are relaunched as a business sales promotion instrument. And in 1936 its extension to other types of issuers began, such as airlines and railways.
Again its use declines, this time because of the Second World War. Cards almost disappear due to the enormous limitation of access to credit during the war economy and as a consequence of the restrictive measures adopted by the US government.
Until that moment, we can consider that we are saying MUGUILLO in the first step of the evolutionary stage of the credit card, where it is used only in the US market and practically unknown outside the US. Until that moment it had a simple bilateral character, mediating between the businessman who sold goods or provided services, which also facilitated financing, and the consumer customer of the same. The client paid the settlement amount monthly or satisfied pre-established periodic fees. The credit would not be reopened until it had just paid what was due, however, some American companies then made some attempts at revolving credit, consisting of opening a loan to the user, setting a limit proportional to their resources.The cardholder carries out all kinds of operations with it and at the end of the month receives the detailed invoice that he can pay in full, in which case he still has the initial credit, or pays only in part (generally a percentage of the debt), then decreasing your credit for the next period. At present, the advancement of electronic systems allows rotation practically on a daily basis.
After the Second World War, the use of cards was relaunched and their use on a trilateral basis appeared for the first time. The issuer's role is separated from the supplier of goods and services, other than the issuer. This supplier delivers the goods or provides the services to the holder, charging the price to the card issuer. The issuer becomes a company specialized in the issuance of card administration of a certain brand, in principle its own. Give the cardholder the card by opening a credit account that pays monthly. These cards already have the essential characteristics for which they are recognized today; According to MUGUILLO, we are in the second stage, the "adulthood" of the system
The first specialized card issuing company was Diners Club, which was established in 1950, only issued it in 1951. In 1952 it had issued 20,000 cards and a few years later, in 1959, it had reached one million cards.
As its name suggests, it was originally used to pay at a restaurant chain. It all started in 1949 when Mr. Frank McNamara invited several of his friends to a fancy New York restaurant. When he was presented with the account, he realized that he did not bring any money with him, so he had to agree with the establishment a promise of future payment. This incident prompted McNamara to think of a system by which a person could demonstrate credit respectability wherever they visited. Around the same time, but on the other American coast, in California, Alfred Bloomingdale (son of the founder of a department store of the same name) had an identical idea, launching a "Dine and Sign" card ("eat and sign"). McNamara and Bloomingdale met and decided to join forces, this merger was born the Diners Club card,which was established nationally in the US. It was the first accreditation card in the world, of the Travel & Entertainment type. Originally, adherents did not provide a real card. The holders received a cardboard card with a check book, which contained the establishments that gave credit to the bearers of these check books. On the covers of the checkbook he had designated the name and identification number of the bearer, data that the merchant collected at the time of payment. In this regard, BULLRICH tells us that the card emerged as a flash of talent from an American millionaire who accidentally peered into the anguish that affects us when at the time of paying something we notice that our wallet has been lost. The journalist María SOLANÍ in the article Les credit cards,the plastic business in Diari de Girona on November 29, 1992 reproduces the origin of credit cards. He points out as inventor of the same the also billionaire Robert Maxwell, with the same anecdote of the restaurant. Everything seems to indicate that the restaurant's anecdote is true, since it always coincides in the sources consulted, but we are faced with serious doubts about the names of the participants in the business lunch that originated the idea of creating the cards. CHULIÁ cites the "Rockefeller billionaire" as the one who, together with a group of other businessmen, devised the card. In any case, most of the antecedents examined lead us to refer this anecdote to Frank McNamara.He points out as inventor of the same the also billionaire Robert Maxwell, with the same anecdote of the restaurant. Everything seems to indicate that the restaurant's anecdote is true, since it always coincides in the sources consulted, but we are faced with serious doubts about the names of the participants in the business lunch that originated the idea of creating the cards. CHULIÁ cites the "Rockefeller billionaire" as the one who, together with a group of other businessmen, devised the card. In any case, most of the antecedents examined lead us to refer this anecdote to Frank McNamara.He points out as inventor of the same the also billionaire Robert Maxwell, with the same anecdote of the restaurant. Everything seems to indicate that the restaurant's anecdote is true, since it always coincides in the sources consulted, but we are faced with serious doubts about the names of the participants in the business lunch that originated the idea of creating the cards. CHULIÁ cites the "Rockefeller billionaire" as the one who, together with a group of other businessmen, devised the card. In any case, most of the antecedents examined lead us to refer this anecdote to Frank McNamara.But we are faced with serious doubts about the names of the participants in the business lunch that originated the idea of creating the cards. CHULIÁ cites the "Rockefeller billionaire" as the one who, together with a group of other businessmen, devised the card. In any case, most of the antecedents examined lead us to refer this anecdote to Frank McNamara.But we are faced with serious doubts about the names of the participants in the business lunch that originated the idea of creating the cards. CHULIÁ cites the "Rockefeller billionaire" as the one who, together with a group of other businessmen, devised the card. In any case, most of the antecedents examined lead us to refer this anecdote to Frank McNamara.
Diners Club paid merchants for transactions made with the card, deducting a small percentage as a "discount" to compensate for the role played in the sale by the card. Users were charged for their fees, and required to pay the full amount due to the receipt of the account.
Very soon it was spreading to a wide spectrum of purchases, covering headings such as entertainment, travel and tourism; until it was admitted to pay for all kinds of goods and services, not only nationally (USA) but also internationally.
Competitors for this brand quickly emerged, so much so that some bilateral issuers rushed to sign adhesion agreements with establishments supplying goods and services. Other companies, originally also a provider of tourism services, also began to incorporate the new card operating system.
American Express Company, which until then had been exclusively dedicated to the travel agency business and issued traveller's checks for its customers, created its own brand of cards in 1958, within the line of "Travel and Entertainment". It is followed by Carte Blanche created in 1959 by the Hilton hotel chain. However, the extraordinary development and drive of American Express stands out. It seemed as if their incumbents had a need to line up to relaunch America economically. traveling abroad, especially to Europe, either on business or on vacation, in order to use their American Express card, which in the 1980s began to displace Diners Club.
At the end of the decade of the fifties it can be observed as in the USA. Credit card issuers are the main retail store chains, the Air Lines Association and the ATT (main telephone company). In 1958 the Sears Card was created by the Sears Roebuck Co. group in the USA. It was used in all the group's commercial establishments (mainly warehouses, spread over many countries), to make purchases and even financial operations, in the group's CIs. This card is the leader among the retail cards; in 1992 it had a turnover of more than 20 billion dollars. The largest American card issuer does not have the category of bank, it is Greenwood Trust, owned by the Sears Roebuck chain of stores, which issues the Discover card.It is at that moment when the system's development stage begins, producing its international expansion, with the incorporation of banks to the issuance and operations in general.
The bank is incorporated as a card administrator and in some countries guarantees its best clients. Indeed, as of 1951, North American banks opened up to this market. The first card issued by a financial institution was that of the Flatbush National Bank of New York, in 1947 it created the Charge-it card, with a monthly charge of the amounts accumulated in the account, and that was reserved for Flatbush customers, who had of businesses affiliated with the system. But it soon stopped serving them, because in 1951 another bank came up with the idea of issuing cards that can be used by clients of other CIs; that bank was the Franklin National Bank.
The first to issue a card usable by clients of other financial institutions was the Franklin National Bank of New York, specifically in August 1951. In 1957 there were 26 banks that offered their card to almost 750,000 cardholders, which was accepted by more than 11,000 business establishments. Transactions exceeded $ 40 million.
To further encourage this expansion of the payment system, in the mid-1960s, American banks used the technique of sending cards to customers without their prior request, so that the federal financial authorities had to intervene to stop this practice. There was abuse from banks and criticism from customers, who even refused to accept the charges for not having applied for the card. And the federal courts gave them the reason, ruling that if the card had not been requested by the client, the charge in account does not proceed, despite having used it. This situation caused problems and numerous losses for some North American banks. With the development of the system, fraud also proliferated. All this accompanied by the lack of previous studies of solvency in the deliveries of the cards,put them through a bump for a few years. Banks even stopped offering the payment card service. Subsequently, and gradually, the bank was reestablishing the service, forced in part by the dynamics of the market.
Despite everything, in the US. In 1968, 95 MM of payment cards circulated, issued by airlines, banks, oil distribution companies and others dedicated to tourism, hotels and some specialized ones; in addition to 101 MM of cards issued by retail stores. At this time the card was not standardized, although the sizes and identification procedures were being unified or approached. A Commission is created within the American National Standards Institute for the production of credit card standards and specifications. The year 1968 was declared by the Bank of America in California, as "the year of the credit card."
Precisely, the Bank of America in California issued the most widely accepted bank card at that time, the BankAmericard, created by that bank in 1959. In 1961 it had placed 1 million cards, with a business volume of 75 million dollars, than in 1967 they had gone to 2.7 MM of cards and 335 MM of business dollars. This brand was transferred, in 1966, to a specialized company, BankAmericard Service Corporation, created by the Bank itself. Later called National BankAmericard Incorporated (NBI), with full independence from that initial bank and in which several banks would already participate. This banking association (NBI) tried unsuccessfully to prohibit its members, the issuing banks of the BankAmericard brand (later Visa), from joining other card systems. The legal battle lasted six years, but finally, in 1976,an Arkansas Court declared the practice of the NBI discriminatory and an attack against free competition.
In this way, it was extended to several North American states, giving a better service to cardholders when they traveled, who could use the card in a larger territorial area. In 1969 this company had 3,000 associated banks, and it was the predecessor of the current Visa. The international development of the brand had its origin in 1974, creating the international organization IBANCO, which in 1977 adopted the name Visa Internacional. The NBI became Visa USA and IBANCO became International Visa. The Visa name was adopted because it was internationally understandable and acceptable.
The major banks in California followed the same formula. Wells Fargo Bank, United California Bank, Bank of California and Crocker National Bank also formed a non-profit association to issue a common card brand, they called it California Bank Card Association, they acquired the First National Bank of Louisville (Kentucky) the name and design of the MasterCharge card and launched it. In 1966, 17 banks that had their own card systems met in Buffalo (New York) to also form a federation in order to reciprocally accept their respective payment cards in the different offices and representations. In this way they could offer their clients a valid money exchange service between the different states. They created the Interbank Card Association.However, they wanted each to maintain their own identity and only announced the federation by means of a small white "i" in a black circle that appeared on the cards, in the lower right corner of the cards. The design was unfamiliar and they had difficulties with commercial establishments for its acceptance. In 1969 they acquired all rights to the MasterCharge trademark and logo from the California Bank Card Association. They gave a quick turn to events by recovering the establishments that had stopped accepting their old card with the "i", and even new card-issuing banking associations, such as the South East Bankers Association of Atlanta and the Mountain States, aligned themselves with that federation. Bankcard Association of Denver.
In 1970, almost every state in North America had representation for BankAmericard or MasterCharge cards, through banks that promoted them. As of 1979, MasterCharge was renamed MasterCard and the "i" symbolizing the Interbank federation disappeared from the cards. In 1981 MasterCard introduced the first gold card program in the payment sector and in 1983 it was the first to use the laser hologram as an anti-fraud device. In 1989 he introduced the first bank card with a tamper-proof signature panel. The BankAmericard and the MasterCard, as well as other cards with a smaller scope, introduce the system of adhesion of issuers to a brand, with the commitment of admission of the cards of that brand in any of the banks that enjoy the license,system that will finally become general as a means of worldwide expansion of the major card brands.
One in three commercial transactions in the world is carried out using a credit card. However, despite their widespread use, payment cards belong to a relatively recent industry.
Thanks to the constant technological development in the field of cybernetics, the legendary "good customer" identification plastic has been able to incorporate a magnetic strip that allows access to ATMs to more than 1.2 billion cards that circulate throughout the world. world. Process that began in the US first, then in Europe later in Asia and finally to the rest of the world, intervening in the development of companies of very diverse sizes and perspectives, contributing to the development of the world economy.
As of December 31, 2000 in the United States. of the cards in circulation, 72% are credit cards and 28% are debit cards.
According to Visa USA Business Research and Reporting, the card market is divided as follows: 50.5% belongs to Visa; 25.8 to Mastercard; American Express owns 17.1%; Discover with 5.6% and Diners Club with 1%.
Regarding the Visa card market as of June 30, 2001, there are a billion cards in the world, which have made a total sales volume of $ 1.9 trillion, with 718,486 visa ATMs.
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