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In the mid 1980s, the credit card business provided significant profits for the retail banking
industry in the United Kingdom (U.K) the bulk of these profits came from two sources
interest charged to card holders on unpaid balances and fees paid by the retailers that
honoured the cards.
Mr peter Ellwood, chief executive of Barclaycard, the credit card of Barclays Bank, said, ³ I
think it is quite possible the pricing of credit cards in the U.K may well have to change, and
this may indeed mean that some form of charge may have to be introduced within the next
year or so´

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j credit card is a plastic card issued by a retail bank ( called an issuing bank) to a customer
(card holder) whenever a card holder obtains a cash advance the issuing bank always
charging interest even when the previous balance has been fully paid , the issuing banks are
free to set the term of the card each bank sets a credit limit for each of its cash holder as well
as the rate of interest for all outstanding balances the bank also sets a grace period for the
payment of the monthly bills typically about a 25-days, with this grace period a card holder
get a 255 days of interest free money by always paying the monthly balance.
Credit cards provide the card holders with two main benefits; they provide a mechanism for
the cash free purchasing of goods and services including purchases by telephone and provide
a source of easy credit.
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›hirty two years later the flat bush national bank became the first bank to issue a credit card,
in 1981 the Franklin National Bank became the first bank to issue credits cards to non-
customer, in following years over a hundred banks issued cards but many cards failed due to
an inability to covered transaction cost. Finally in 1966 bank of jmerica became the first
bank to license its cards the bank jmericard (later card visa) to other banks. ›his was the
formal beginning of the multi-bank credit card network.
In the mind 1960s merchants started accept cards from different banks. However, they were
prohibited by NBI and ICj from carrying cards from both systems, during the 5-years of
delayed entry it did not appeared that Barclay¶s credit cards operations were profitable; some
U.S banks still had unprofitable credit Card operations as wellc
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›he credit cards industry has five types of participants, the card holder, merchants, issuing
banks; merchants acquired banks and card associations.
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^uring the 1980s credit card usage increase by virtually all measures the number of cards
issued by average transaction per card and the average outstanding balance per card, the rate
of growth in credit card credit 19.1% per year was comparable to the rate of growth in total
consumer credit 17.6% per year.
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›he number of merchants accepting the visa or access cards double between 1980 and 1988,
virtually all of the merchants accepted both cards each merchant negotiate the MSC rate with
the merchant acquire for the credit card. For merchant using Barclay as the merchant acquire
the rate typically has the ranged from 1.22 to 3.22 percent for transaction volume depending
upon the business of the merchant.

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›he two major s cards associations Visa and jccess do not issue credit cards than selves
rather they hold the trade mark rights to the Visa and jccess names. ›he card association
also provides authorization and international interchange services. ›hrough the authorization
services issuing bank can track credit card usage and minimize credit card fraudc
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Issuing banks try to capture profits in two ways. ›heir primary source of income is interest on
credit card debt. ›he secondary source of income is the MSC income from the merchants.
›he major cost associated with this income is the fee levelled by the merchant acquirer,
namely the ^IF rate or the JCCC costs.
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Barclays was a leader in technology in the 1950s and 1960s.It was the first British bank to
use a computer in its accounting, the first to use cash machines, and the first to issue credit
cards.jdditionally, it was a leader in developing international branches, a process which was
started before the start of the First World War.
In 1970s, Lloyds installed a common, computerized accounting system for all its branches,
the first British bank to do so. In 1979 Lloyds became the first clearing bank to offer home
loans, previously the exclusive province of building societies.
Midland expanded little during the 1940s and 1950s.during this time, midland found that it
was lagging behind its major competitors in establishing and overseas presence. ›o remedy
this fact; it made several acquisitions, the largest one being the 1981 purchase of 57 percent
share for $820 million in Crocker national bank.
In 1968, the national provincial bank and the Westminster bank merged to form the national
Westminster bank(Nj›WES›)this policy did not include a prohibition against mergers, but
no one expected two of the largest banks to be allowed to merge.
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Various products duplicate credit card functions. ›he cashless transaction function could be
obtained through the use of debit cards. ^ebit cards were almost identical to credit cards;
expect that cardholder¶s could not obtain credit. j purchase by debit card resulted in a
withdrawal against the cardholder¶s bank account.
Store cards were another form of credit card, but these were limited to use at the stores that is
issued them.
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