3rd October 2013

The matter of the credit card

3

An early plastic American Express card

The [credit] card was no more than a device bearing symbols for the exchange of monetary value. That it took the form of a piece of plastic was nothing but an accident of time and circumstance. We were really in the business of the exchange of monetary value.[1]

This quote from Visa’s founder, Dee Hock, in its marginalisation of the importance of the plastic in the plastic credit card sums up the challenge faced by those of us interested not just in exchange, but in transaction: the frequent disregard, sometimes even by those within the payment industry, of the mechanics of payment itself.

This tendency is being countered by a variety of researchers, as well as by an important new online collection of a variety of payment devices and practices: the Transactions Archive, on which a version of this piece is co-posted. It attends to the very material, very consequential role of the materials and practices that surround the sometimes quite intimate and messy moment when value is moved from one person or entity to another. To this, I’d like to add some reflections on the history of the plastic credit card and on the role played by its quite specific material presence – its matter, in other words. This draws on a chapter exploring in more detail what I call the ‘enduring presence’ of the credit card, extending into the contemporary management of consumer credit default, that appears in a recently published book exploring the material politics of plastic in a diverse range of settings. To read more about this, see Gay Hawkins’ recent post on Charisma.

Already in the first of the archive’s transactions galleries, we can see how important the device that does the moving of value really is in the history of consumer credit. Top right in the gallery is a charga-plate. These devices were introduced into select Boston department stores in 1928 and continued to play an important role in the US credit market well into the 1950s.[2] The embossed plate would be inserted into an accompanying ‘imprinter’, which would transfer the customer’s details, via carbon paper, on to the sales draft. These metal plates were thus able to carry individualized information in (effectively) three dimensions – and, crucially, this information became transferable when inserted into an accompanying technological infrastructure. In this context, the particular problem that the metal used in these cards moved towards solving was a problem of translation.

It is these same problems that the plastic credit card itself later solved, initially by being able to host customer details, including a unique signature, and later by the gradual addition of machine readable numerical information, magnetic stripes and, most recently, electronic chips.[3] In part, then, the success of plastic is its malleability: its willingness to hold its shape, to live more or less happily alongside a diverse range of other elements and materials, and to help to gather these together into a neat, robust, whole.

In the early days of the credit card industry there were three more qualities that plastic offered that made it the material of the moment: its cheapness, its associated disposability, and its lightness. It was these three qualities that, in the late 1950s and 1960s, led plastic cards to be mailed, unsolicited, to vast numbers of the US public, often without anything in the way of a credit check. So for example, in a period from around 1966 to 1970 – until the practice was eventually made illegal – around 100 million plastic credit cards were mailed, unsolicited, to potential users, in what the president of the Bank of America, Rudolph Peterson, called ‘the great credit-card race’[4].

These transactional devices had, therefore, partially morphed into marketing devices. The reason for this was that the very act of getting these seemingly insignificant objects into the hands of borrowers really mattered. An experiment conducted by a New York bank in the late 1960s showed that when credit application forms were mailed out, they received responses from only 221, or 0.7 per cent. But when cards were sent directly to 731 recipients, 19 per cent were actively using them within 60 to 90 days.[5]

Like many other plastic objects, these unsolicited cards were clearly coded as disposable; they could be thrown away by the recipient. However, the issuer was not only hoping, but banking on the fact, that in many cases they wouldn’t. The expectation was that, after their arrival through the letterbox, these millions of cards would materially endure in US citizens’ drawers and homes, until a moment came when their promise of being able to move future value into the present became relevant enough to prompt their use. What’s more, it was only after the United States had been saturated with credit cards that the next important set of innovations – the widespread adoption of customer-profiling technologies such as credit scores – began to shape the consumer credit industry.

In a piece being co-hosted by the Transactions Archive, I feel myself tempted into making a provocation: that when casting around for the key ingredients that went into making up the global consumer credit market as we recognize it today, we should look first of all to the mechanism of transaction.

Acknowledgements

This piece is co-posted on the Transactions Archive.


[1] Hock, D. (2005) One from Many: VISA and the Rise of the Chaordic Organization. San Francisco, CA: Berrett-Koehler, p 143.

[2] Hyman, L. (2011) Debtor Nation: the history of America in red ink, Princeton, NJ: Princeton University Press.

[3] See David Stearns’ (2011) excellent book for more on the precise devices involved: Electronic Value Exchange: origins of the Visa electronic payment system, New York: Springer.

[4] Nichols, R.E. (1967) ‘B of A’s Peterson cautions banks on “credit-card race”’, Los Angeles Times, 17 March: C14.

[5] Bailey, T.L. (1968) ‘Statement of Thomas L. Bailey on behalf of the American Bankers Association’, in US Senate Committee on Banking and Currency (ed.), Bank Credit-card and Check-credit Plans: Hearings before the Subcommittee on Financial Institutions of the Committee on Banking and Currency, United States Senate, Ninetieth Congress, Second Session, on Credit Cards, October 9 and 10, 1968, Washington, D.C.: US Government Printing Office.

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