The history of credit and debit cards is a fascinating narrative of innovation and progress. This account explores the key technologies behind their functionality, focusing on the magnetic stripe, chip and pin technology, CVV numbers, and contactless payment antennas. These advancements have revolutionised the way we conduct transactions and have left a lasting impact on the financial industry and society.

In 1958, the “Fresno Drop” marked the birth of the modern credit card. Bank of America mailed 60,000 preapproved BankAmericard credit cards to Fresno, California residents as part of a bold marketing campaign. While this experiment laid the groundwork for the credit card revolution, it also highlighted the need for a more secure and efficient payment-processing system.

The first major technological innovation came in the form of the “mag stripe”, invented by IBM for the Central Intelligence Agency in the 1960s. The mag stripe is a thin strip of magnetic material that stores data, allowing cards to be read quickly and efficiently by electronic card readers. The CIA needed the stripe for staff authentication. Commercialised for banks, the mag stripe enabled the rapid expansion of credit card use and set the stage for today’s electronic payment-processing system.

The 1980s saw the introduction of chip and pin technology, which embedded microprocessor chips into credit and debit cards for more secure data storage and processing compared to mag stripe cards. The chip and pin system also required users to input a personal identification number during transactions, adding an extra layer of security and reducing the risk of fraud. French inventor Roland Moreno took inspiration from ancient authentication methods, such as signet rings, and turned it into one of the most successful technologies of the 21st century. This chip system was made mandatory in France and eventually adopted by countries worldwide.

The rise of e-commerce in the 1990s necessitated further innovations in card security. Card Verification Value was introduced as a unique security feature on the back of credit and debit cards. This three-digit number ensures a card’s authenticity during online transactions, as it is not stored in the mag stripe or chip data and must be manually entered by the cardholder.

Finally, the contactless payment antenna emerged as a groundbreaking technology with roots in Cold War-era wireless transceiver technology. The Russian inventor Leon Theremin, who designed the antenna, originally intended it for spy purposes — called “The Thing” — and also made significant contributions to the development of other musical instruments. The contactless payment antenna allows the activation of EMV — Europay, Mastercard and Visa — card chips without direct contact, significantly quickening the payment process. The antenna inside the card is picked up by the handset or card machine, providing enough electricity to power the chip for authentication and send back out through the antenna to be read by the card reader. The process for card payment is incredibly quick, taking just 300 milliseconds — for context, a blink of an eye is 150 milliseconds).

Contactless payments have become increasingly popular, particularly in the wake of the Covid-19 pandemic, owing to their convenience and the reduction of physical contact. This technology is not only used in credit and debit cards but also in concert tickets, airline tickets, metro tickets, and other applications.

The evolution of credit and debit card technologies has had a profound impact. Chip and pin technology further advanced card security, while CVV numbers provided a crucial safety feature for the booming world of e-commerce. The contactless payment antenna has revolutionised the payment process by providing a fast and efficient alternative to traditional card swipes and inserts.

The history of credit and debit card technologies demonstrates a continuous drive for innovation and improvement in the realm of electronic payments. From the mag stripe to contactless payment antennas, these technologies have transformed the way we conduct transactions and have become an integral part of modern society. As technology continues to advance, it is likely that further innovations will emerge to shape the future of electronic payments and redefine the way we interact with our financial systems.

• Christian Chin-Gurret is a Bermudian writer with a Master of Science in Innovation and Entrepreneurship and a Bachelor of Science in Product Design, who offers a unique perspective on shaping the future of business through innovation, disruption and technology. He can be reached at https://www.linkedin.com/in/christianchingurret/