Did you know American Express was the pioneer of metal credit card?

Debt can be dangerous, warns William Shakespeare in his play ‘The Merchant of Venice’. The perils of succumbing to the wiles of easy capital are manifold. Loans can go sour. The cost of repayment can exceed the amount borrowed. But four centuries since his passing, the Bard’s exhortations seem to have fallen on deaf ears. Credit cards, the modern manifestation of the guarantor’s bill, are more popular than ever. And metal, a key ingredient in the minting of low-denomination coins, now holds pride of place in people’s wallets.

In 1999, American Express debuted the Centurion card, an invite-only credit instrument that was made of metal. Card holders were required to spend over six-figure sums each year. Nicknamed the ‘Black Card,’ it became associated with the opulent decadence of fin de siècle America, even finding mention in a Lil Wayne song. The exclusivity it afforded meant the card was restricted to the wallets of a select few. Meanwhile, dark clouds were gathering on the economic horizon, threatening to corrode the fortunes of the moneyed class.

The dot com bubble burst in 2000. A mortgage crisis in the U.S. spurred a global recession in 2008. Loan defaults caused a liquidity crunch, forcing the government to bail out banks that were deemed too large to fail. In Shakespeare-speak, neither borrower nor lender was spared. Two decades on, metal is making a comeback, with more financial institutions issuing such instruments to tap into people’s enduring obsession with social capital. The Black Card was hailed as a revolutionary product designed for the age of consumerism. But the use of metallic cards as tokens of credit can be traced back to the previous century.

In the late 1800s, department stores in the U.S. kept a record of lines of credit issued to patrons by using a ledger. Non-payment would entail a visit from the debt collector. But crime was rampant in the American badlands, and physical currency was an encumbrance. The first credit cards were issued by general stores to track user’s spending against the credit available to them. Metal charge plates, the precursor to the modern credit card, took the form of dog tags or metallic tokens. They were often sheathed in leather, with the user’s spending tabulated on a paper imprinted with special ink.

However, there were limitations to charge plates as they were restricted to local businesses. When people traveled to other parts of the country, the convenience associated with these cards were lost, as they were not accepted as legal tender for purchases made elsewhere. On the contrary, issuing charge plates proved to be a masterstroke for small stores, enhancing customer loyalty. Companies operating in the transportation sector soon joined the bandwagon. With the expansion of roadways, gas stations started offering cards of their own to capitalize on commuters’ need to refuel on long journeys.

Texaco, a subsidiary of oil major Chevron, started producing independent credit cards, albeit with tweaks to the charge plates used by general stores. They were the size of playing cards, and were made of paper. The then nascent passenger airline industry also played a pioneering role in the evolution of the credit card. American Airlines piloted its Air Travel Card in 1936. Unlike conventional credit instruments, it was a charge card that required users to pay the balance amount in full at the end of each billing cycle. A subsequent version of the Air Travel Card, released in 1969, became the first to feature a magnetic strip. The technology was developed by IBM in the 1960s.

Wall Street was late to the credit card game. The banking industry did not venture into issuing portable cards as credit instruments till 1958. Bank of America instituted the BankAmericard, the first pan-America credit card that included in its ambit, participating banks from across the country. A standalone card service that was spun off from this venture in the 1970s eventually became Visa. Similarly, Mastercard came into existence in 1966 as the Interbank Charge Association. Credit cards, the size of calling cards, soon went mainstream. The typical credit card had plastic body that was girdled by a magnetic strip. More importantly, they were interoperable, working as legal tender in most countries.

American Express was the first to adopt metal-body luxury cards, but the trend was popularized by Chase, which offered similar cards, but with more lenient spending rules. The Chase Sapphire Reserve, which was announced in 2016, was so much in demand that they ran out of metal to make it at one point. Other lenders like Citi and Wells Fargo started adopting metal cards to lure users. Another factor that enhanced its desirability was the self-expressive benefit: how the product influences the perception of its user. Scott Galloway, professor of marketing at NYU Stern, drew an analogy with the Apple Watch to explain this phenomenon.



“This is not a timepiece. I haven't wound it in five years. It's my vain attempt to say to people, ‘If you mate with me, your children are more likely to survive than if you mate with someone wearing a Swatch watch,’” he said in a TED Talk. The same holds true with metal credit cards. They do not hold a distinct advantage over their plastic counterparts, but serve to complement the holder’s perception of affluence. With modern finance becoming more intertwined with technology, companies like Amazon and Apple are diversifying into payments companies.
The Apple Card, the Cupertino-based tech company’s latest foray into finance, includes both digital and physical components. The credit card, which was showcased in May, will feature a titanium body and have the bearer’s name laser-etched on its monolithic frame. However, a gradual transition from plastic cards could democratize the metallic credit card and diminish its self-expressive benefit. Environmental activists caution against the use of plastic cards as they are not recyclable and end up in landfills.

American Express, which pioneered the metal credit card, has demonstrated that exclusivity can bear rich dividends. The business plan was simple: make people feel good about themselves on account of their high purchasing power. Other payments companies that have focused on discounts and low fees, have also tasted success, but to a lesser degree. A penny saved will draw in a transient base of loyal customers. However, thrifty users are likely to flock to other options if presented with cheaper deals. Metal credit cards, which are the realm of the well-heeled, have succeeded in retaining customers with a simple premise: make them feel exceptional, and they’ll be loyal forever.