Understanding Credit Cards

Introduction

• Credit cards were introduced in America in the 1950s.
• Initiated by companies conducting business with petrol stations, grocery stores, and retail, instead of banks.

Bank of America

• Bank of America introduced credit cards in 1958.
• A manager named Joseph Williams proposed the idea.
• At this time, the bank implemented an 18% interest rate.

Earning Through Credit Cards

• It's important to understand how Bank of America earns money through credit cards.
• With every payment made, the company earns a commission.
• 33% of the total income from 36% of payments comes to banks as services.

Payment Infrastructure

• Bank of America has to develop the payment infrastructure.
• Other banks also took licenses to use these services.
• This system will set the footprint for the bank's future.

Establishing a New Entity

• Bank of America established a new entity named "National Bank of America."
• This new entity needed a brand name for unique recognition.
• 3.4 billion cards were issued under the name "MasterCard."

Summary

• Developing the payment network in the credit card system is very important.
• Banks need to follow this system.
• This system becomes a good pathway in the banking sector.