Plastic fantastic - the future of credit cards

Shortly before Bobby Moore lifted the World Cup at Wembley 40 years ago, a small team of people in a converted Northampton shoe factory realised they were about to change the way people shop in the UK - with the credit card.

Last week Barclaycard celebrated its 40th birthday as the UK's first credit card company. It wasn't the first company in the world to distribute credit cards - that happened in 1958 when Bank of America launched the BankAmericacard, which later became the Visa card. And even further back in the 1920s a number of companies accepted each others' corporate cards as a form of payment in the US.

Today, Barclaycard is battling it out with hundreds of credit card companies in a UK market.

We might not ever have a completely cashless society but we are fast approaching a point where it will be perfectly possible to survive without ever needing to keep money in our pockets.

-- Fran Heeran, CTO, Valista

As a report from analyst the Lafferty Group points out: "the outstanding new retail banking product of the past 25 years is undoubtedly the credit card".

Technology has led to some big changes in the way credit cards are used and sold - the internet being one of the biggest influences. People can now use online accounts, text alerts and telephone support to manage their credit. And with chip and PIN and the UK's recent launch of the SkyCard (a credit card designed to fit the interactive slot on a Sky TV box), credit cards are evolving beyond their original limitations.

Tony Schofield, director of retail banking at Deloitte, said: "Different payment methods are becoming available, such as pre-paid and contactless cards, which will have a huge influence over purchasing patterns in the next 40 years.

"Driven by the internet, many of these new payment forms will fill the void left by credit cards. With no charge for low value goods, consumers will be buying goods in more volume and at a lesser value than previously encouraged by credit cards."

Industry body Apacs reports there are 31.6 million credit card holders in the UK today. But with contactless payment projects from the likes of MasterCard and Visa, and Transport for London - which uses the Oyster smartcard ticketing system - looking to move into contactless payments, could it spell the end for the credit card?

Fran Heeran, CTO of mobile payment specialists Valista, said: "Some people think this means the days of the credit card are numbered but that is not the case.

"What's important about plastic is the payments infrastructure it has created - it doesn't matter if a purchase is made on a mobile phone, over the internet or wirelessly in a shop - your flexible friend is at its heart.

"Many projects aimed at replacing the physical elements of the credit card with your mobile phone are already underway. In Japan all new handsets come with a built-in chip designed to hold your bank debit details, and the facility has proved wildly popular as a means of paying for the country's transport system."

He added: "We might not ever have a completely cashless society but we are fast approaching a point where it will be perfectly possible to survive without ever needing to keep money in our pockets. We've come a long way since the credit card first appeared."