1886 and all that

I’m very interested in the history of the card business, because I can’t help but feel that an understanding of how it got to where it is should provide some insight into where it is going next, so I am always on the lookout for old references to non-cash retail payments. In particular, I’m always curious about the first reference to the credit card in literature. The oldest I’ve found so far is in a long-forgotten text from 1886 called “Looking Backward, 2000-1887” by one Edward Bellamy. I picked up a 1947 edition from the Amazon marketplace, which suggests it must have been reprinted a few times. Indeed, the dust jacket claims it to be one of the best selling utopian fantasies of all time.

Technorati Tags: credit cards, debit cards, predictions

It’s a fairly standard “guy falls asleep under hypnosis and awakes 114 years later to find a model society, then finds it’s all a dream” kind of book. It’s difficult to read with modern eyes, because the perfect society that Bellamy imagines is a communist superstate that looks like Disneyland run by Kim Il Sung. The central conceit is “the industrial corps”. Everyone is drafted into the army, essentially, but the army runs the factories instead of fighting wars. Since everyone works for the government, and since government planners can optimise production, all of the “inefficiency” of the free market can be removed. If I accidentally put it next to my copy of Hayek’s “The Road to Serfdom”, I imagine the tomes would immediately be annihilated in a burst of pure energy.

Yet the book has special place in my canon because the time-traveller is told by his host, the good Doctor Leete (who has a daughter called Edith: E. Leete, geddit?), that there is no such thing as cash in the year 2000. Instead, he says, the populace use “credit cards”. He then goes on to describe what are in fact offline pre-authorised debit cards (which ruined the book for me: to a payments nerd that’s as big a blunder as the highlanders wearing kilts was in Braveheart to, well, anyone really). Hey, if someone can run a web site complaining about typographical mistakes in movies, I think I’m going start my own version of Movie Mistakes called Money Mistakes.

Anyway, an amount is taken from your account (there’s only one bank, of course, and that’s run by the government too), and you are given a card that is good for that amount. Shops accept this card in payment: Dr. Leete explains how they are used at the point-of-sale (POS):

“The value of what I procure on this card is checked off by the clerk, who pricks out of these tiers of squares the price of what I order”.

That’s a pretty imaginative prediction a generation before the Western Union charge card. In fact, given that Bellamy failed to predict television, computers, airplanes and the knowledge economy, he makes a couple of other really insightful predictions about the evolution of money. When talking about an American going to visit Berlin, the future sage notes how convenient it is to use cards instead of foreign currency:

“An American credit card,” replied Dr. Lette, “is just as good as American gold used to be”.

He also reflects on the nature of the currency itself:

‘“You observe,” [Dr. Lette] pursued as I was curiously examining the piece of pasteboard he gave me, “that this card is issued for a certain number of dollars. We have kept the old word, but not the substance. The terms, as we use it, answers to no real thing, but merely serves as algebraical symbol for comparing the values of products with one another.”’

The most fascinating question on the topic comes later in the book, when Edward asks his 21st century host

‘“Are credit cards issued to the women just as to the men?”

and is told

“Certainly.”

This is a wonderful example of how science fiction isn’t really about the future, but about the present: the retort “certainly” is clearly intended to surprise the Victorian reader as much as the glass tunnels that surround pavements when it rains.

So are we on track to Edward’s payment utopia? Actually, we may be. The figures are irrefutable: consumers prefer debit cards and there’s some evidence that given a choice, consumers will opt for pre-paid cards (eg, payroll cards), even if they have a bank account. And of course it would be much cheaper if the POS didn’t have to gone online every time. Of course, we’d want to go a bit faster than pricking holes out of bits of cardboard, so we’d use contactless technology. Edward didn’t come up with a good name, so that’s down to us. What about, oh I don’t know, some kind of sea creature? Octopus, oyster or something like that.?