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The History of Debit Cards

written by: M Lambert•edited by: Donna Cosmato•updated: 7/6/2011

Debit cards are now used every day in place of cash. Debit cards have made having a bank account much easier. Debit cards are safer than carrying cash and more convenient than using a checkbook. Read this article to find out more about the history of debit cards.

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    How Did It All Begin?

    The history of debit cards is an interesting one. Debit cards helped to change the way that people used money and bank accounts. Debit cards are used to pay for purchases at stores and other locations around the world. A debit card works by debiting the money from your checking account. For many people debit cards have taken the place of cash and checks. However, debit cards are still a relatively new banking tool.

    Credit cards paved the way for debit cards. Many people used credit cards to pay for transactions. This also put in place the infrastructure that debit cards needed to be practical as a method of payment. Seattle's First National Bank offered the first debit card to business executives in 1978. Initially they were like a check signature or guarantee card, with which the bank would guarantee that the fund would be paid, but you did not need a check to do the transaction. They also required a large savings account be kept at the bank to cover the funds. These cards were only issued to people who had a long and good standing with the bank, because the funds were not directly debited from the account. These types of cards generally come with the Visa or MasterCard symbol on them.

    In 1984 Landmark created the first nationwide debit system, using ATMs and other networks that allowed debit cards to be used nationwide. This allowed the smaller banking systems within states to connect with banks systems outside of states. As technology improved the debit cards moved to a system that was able to directly debit the money from a checking account. When this happened the debit cards became available to more and more consumers. These types of debit cards may have the Plus symbol or other similar symbols on them. However many banks will also use the Visa or MasterCard symbol for a direct debit card because they are accepted at so many different places around the country.

    In 1998 debit card transactions first outnumbered the use of checks around the world. This number has continued to grow over time. Debit cards are now commonly used for most transactions at stores in the United States. Debit cards are more convenient to use than a check. Debit cards speed up transactions at stores. Additionally debit cards are safer than carrying cash, because banks can stop fraudulent purchases and consumers are not held liable for purchases made when the card is stolen. Debit cards have made banking a much easier process for many people.

    In the future transactions will continue to move away from cash and check. Debit cards may be left behind as well as banks move to using one card that you can quickly scan at a variety of locations. This will speed up transactions as well as virtually eliminate the need for cash in the future. Over time the history of debit cards may be one step to moving to a completely cashless system.