Inovation on action Essay Example | Topics and Well Written Essays - 3500 words

Inovation on action - Essay Example Credit cards also changed from single purpose to multi-purposes in which they can be used for even hundreds of services as long as the limit allows. Use of credit cards is very convenient and secure which is the main selling point of the cards. Individuals as well as businesses prefer the use of credit cards for this purpose. However, there are a number of risks associated with these cards. Fraud and security risks have increased especially with the introduction of internet. At the same time, the use of credit cards has been associated with controversies. Most credit cards allow people to borrow money they do not have and with the debt ceiling limits, they are thought to contribute to high debt. Addressing the challenges associated with the credit card use can make them very sustainable, convenient and safe Use of plastic cards for payments is one of the best innovations in the payment industry, having many benefits appreciated by individuals but also has some risks History First Gen eration Unlike what most people would expect, the use of cards goes back to the 19th century. The first credit card was produced in 1880 in the United Kingdom. Customers would be issued with the voucher which they could use to shop from certain shops. After shopping, a person who was responsible for collecting the money used from the clients would go to their homes to collect the money. The method was convenient and offered the clients the security they deserved. The use of these vouchers is not well documented and it is not known for how ling it was used (Longemann, 2012). A few decades later, companies in the United States started to use credit cards as way of maintaining customers. In this case, customers were issued with loyalty cards which would allow them to buy goods and pay later. The cards were limited to the stores issuing them and clients could only use the cards at those particular stores or their branches. Oil companies also issued cards to their employees every three t o six months for entertainment. These cards improved business as the issuing businesses knew that the clients they provided the cards would always go back to those stores. At the same time, clients were happy that they could be allowed to make purchases only to pay later. It was convenient for the customers as they did not have to carry money around all the time they were to make purchases. In addition, they could make purchases even when they did not have money at hand (Sienkiewicz, 2001). About a decade later, Western union started to offer metallic cards to their clients. The cards gave the customers with the cards certain preferences over customers who did not have those cards (The U.K Cards Association, n.d). These cards can be termed as the first generation cards but had a lot of limitations. Second generation The next generation cards were much better compared to the first ones. This generation of cards was started by a banker at Flatbush National Bank of Brooklyn, New York, John Biggins. Biggins realized there were many people using the ban and needed something unique to retain the customers. He invented credit scripts which would be used by the consumers to make small purchases at selected merchants. Customers would present the script to the merchant who would copy the information on the script on the payment slip which would later be deposited to the bank. The customers and the merchants had to be members of the Flatbush bank for transfer of money between accounts to be completed