Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange — the forerunner of banknotes — was established in the 14th century. At this time, debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century.

Christopher Thornton, a furniture retailer, placed the first advertisement offering credit in 1730. He gave his clients the option of paying off their furniture on a weekly basis. From the 18th century until the early part of the 20th century, "tallymen" sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record, or tally, of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the debt and the other side was a record of payments.

The concept of credit cards began just before World War I when Western Union offered a deferred-payment service to its preferred customers.

It was only in 1951, however, that Diner?s Club founder Frank McNamara invented the first plastic money. Diner?s Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. American Express followed in 1958 with a card aimed at travellers. Bank of America issued the BankAmericard (now Visa), the first bank credit card later, in 1958. The card was aimed at travelling salesmen for use on the road. By the early 1960s, many more companies were offering credit cards, advertising them as a timesaving device rather than a form of credit.

As the concept took off, banks started providing cards to their customers, and merchants began accepting them for payment. These early cards required payment in full within a short period of time, usually less than 90 days. The income possibilities soon became apparent to the bankers. The financial institutions could simply extend the repayment time, attach an interest rate, and over night create a new profit centre.

One bank; one card was not enough for consumers, so Bank of America entered into licencing agreements with banks outside California allowing them to issue BankAmericards and interchange transactions among licencees.

A bankcard association was started in order to increase the usage of credit cards. The association chose a new name — Visa — so that it was not associated with any one bank. In 1977, the Visa name was adopted, a membership corporation was formed, and Visa, USA was started. At the same time, three different groups of banks that were not franchisees of Bank of America began activities that would later merge to become today's MasterCard International.

Both organisations originally signed up member banks to issue cards, enrol merchants, and/or both. Competition was fierce. Banks that offered one card could not handle the other. Importantly, merchants were forced to turn down sales from customers who did not carry the card the merchant accepted.

In 1978 the MasterCard and Visa organisations agreed to a concept of duality, in other words, banks could honour and issue both credit cards.