NOVEMBER - 20228MY OPINIONINTHE GROWING IMPORTANCE OF CARDS By William Kniering, SVP, Head of Commercial Card, Texas Capital BankAs Shakespeare said, "A Card is a Card." Well, sort of. But these days we all need a card for so many aspects of our lives. You need a card to rent a car. You need a card to reserve a hotel. Cards did not come into their own until 70 years ago. Up until that point, they were used for specific purchases such as department stores and gas stations. That all changed in 1950 when the Diners Club card became the first "multi-use" charge card. Though initially intended as a card to facilitate meal purchases, it soon expanded to hotels, airlines, and car rentals. It was such a good idea that it soon spawned imitators like American Express (1958), BankAmericard (1958), and MasterCharge (1966). Today's standards antiquated early cards. They were made of cardboard with Amex issuing the first plastic card in 1959. Transactions were processed manually with the traditional "knuckle breaker" card imprint machine. Paper charge slips, aka "chits," were batched, mailed to the card issuer, and processed on conveyor belts by people. Cardholders would get copies of their charge slips in their statements until the late 1980s. Cards focused solely on the consumer segment for the better part of 30 years until Amex and Diners Club dipped their toes in the commercial pond and ushered in the commercial card market. The first corporate card programs focused on central travel "ghost" accounts (CTA), which were reconciled by the travel agencies using large reel to reel mag tapes. These CTAs sometimes had thousands of subaccounts to facilitate reconciliation. Plastic Travel cards were also centrally billed to the company as well and were reconciled on mass. As the travel programs gained popularity and size, companies felt the crunch of reconciling large central billed statements and lack of employee engagement whose attitude around reconciliation was "out of sight out of mind." So they pushed the reconciliation to the cardholders by shifting to individual billing and shifting responsibility. Corporate travel cards were used for standard categories such as air, hotel, car rental, meals, etc.William Kniering
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