Pieces of plastic that do very nicely

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The Independent Online
Live television pictures were beamed from the Moon, England won the World Cup and Twiggy earned 10 guineas an hour. And in those heady days of 1966, one of the most significant changes in our relationship with money occurred - the introduction to Britain of the credit card.

Thirty years on, it is hard to imagine a life without flexible friends - nearly 40 per cent of adults in the United Kingdom hold a credit card, and the market is getting ever more competitive. In the last week alone Hello! magazine was said to be planning its own Visa card and the Prince's Youth Business Trust launched its card.

The first example of paying by plastic dates back to the Twenties in the United States, where the Shoppers' Plate was launched, a card roughly equivalent to today's chargecard with the amount in full being settled at the end of the month.

But the credit card as we know it came into existence in the mid-Sixties, again in the US, with BankAmericard, which later became Visa. Today there are gold cards, debit cards, charge cards, cashpoint cards and affinity cards.

In 1966 seven Barclays Bank staff spent six months in a disused shoe factory in Northampton preparing for the plastic revolution of 29 June. It was followed by one of the largest ever press advertisements. Barclays promised to publish the name and address of every person accepting the new card; 30,000 did and the advert extended over eight pages of the Daily Mail.

By the end of 1966 there were a million cardholders and 30,000 retailers accepted the card. Today, according to APACS, the UK payment industry body, there are 26.8 million cards in existence and the last available figures suggest that money spent on them comes to more than pounds 36bn a year.

Early advertisements concentrated on explaining to the British public how a credit card worked using the line "You can buy almost anything with a Barclaycard". One of the first, called "Travelling Light", featured a girl with a Barclaycard tucked in her bikini bottom shocking passers- by as she walks down a busy shopping street.

Barclays was not challenged until NatWest, Midland, Lloyds and Glynn (now Royal Bank of Scotland) formed Access after six years. Five years later the "flexible friend" slogan was created.

Barclaycard remains Britain's biggest credit-card issuer with more than 9 million cards. Now pounds 1,137 is spent every second with a credit card - 12p of every pound spent on the high-street.

Credit-card usage is recovering after a dip in the early Nineties as the recession bit. Payment volumes rose by 9 per cent in 1994, the largest increase since 1988. It is forecast that there will be 1.2 billion credit card transactions by 2000. Competition is hotting up, as more companies enter the market with the "no frills" card - low-interest rate, no annual fee.

While the major banks offer interest rates of around 20 per cent, the Royal Bank of Scotland, Save & Prosper, MBNA, Beneficial and the People's Bank of Connecticut are undercutting these by as much as 6 per cent and dropping the annual fee.

Credit cards also face competition from debit cards. These - Switch and Visa Delta - were introduced in 1988 mainly as replacements for cheques. However, the number of debit transactions overtook credit cards for the first time in 1994 and by 2000 volumes are forecast to more than double to 1.8 billion transactions compared with 1.2 billion for credit cards. The amount spent on credit cards is still higher, however, with pounds 43bn spent on credit a year compared with pounds 28bn on debit cards. Fraud is a major problem for industry, although it fell by 20 per cent between 1994 and 1995.

However, despite all this, cash still accounts for well over two-thirds of all payments over pounds 1 in value, thanks mainly to the National Lottery.

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