A BankAmericard is among the exhibits at the Smithsonian.
On this day 64 years ago, Bank of America launched a marketing campaign in Fresno for an event that would revolutionize the consumer relationship with money.
It was known as the “Fresno Drop,” when 60,000 customers in the Fresno area were mailed — completely unsolicited — a new product. It was 1958, and while the BankAmericard wasn’t the first credit card ever, it helped fuel the rise of the middle class.
The story of the “drop” — credit card lingo for a mass mailing of cards — has also captured the imagination of the media. Veteran business journalist Joseph Nocera wrote a definitive story about the event for “The Washington Post” back in 1994. Popular design-focused podcast 99% Invisible devoted an episode to it in 2016.
An article titled “Carry Your Credit in Your Pocket” was published in the academic journal “Enterprise & Society” in 2000. It fills in some of the details.
The story continues to capture imaginations all over the world. I was recently asked by French journalist and filmmaker Elsa Libaux to do an interview for a piece she is producing for French television about the “Fresno Drop.” It’s a dense story, but here are some of the highlights I found particularly interesting
— Fresno was selected because if the credit card program failed, it wouldn’t have garnered the negative press as if it were Los Angeles or San Francisco.
— Fresno was also picked because Bank of America had a 45% share of the market. The 60,000 credit cards — with limits of $300 to $500 — represented the number of customers in the market.
— Starting in March until the Sept. 18, 1958 “drop” date, local Bank of America representatives recruited 300 Fresno businesses to accept the BankAmericard. With a 6% merchant fee on each transaction, it wasn’t the easiest sell. Large retailers (Sears, Montgomery Ward, Woolworth, etc.) had their own charge account programs. They saw the credit card as competition and bristled at the 6% fee.
— One local pharmacist saw the light, telling a Bank of America rep the card would save his business. He used Burroughs bookkeeping machines, each handling up to 1,500 accounts, to keep track of customer charge accounts. He had to send out monthly bills on accounts valued at $4.58 and $12.82, getting paid maybe three or four months later. The card could replace his accounts receivable headaches.
— Florsheim Shoes was the first chain store to accept the BankAmericard. In 1958, it had an address inside the Helm Building on Fulton Street in Downtown Fresno. Out of curiosity, Fresnans would reportedly gather at the store to watch people charge goods
— After five months, the number of merchants accepting the card in Fresno grew by 800.
— After three months, fearing a smaller competitor was about to release its own credit card, Bank of America expanded outside of Fresno into Modesto and Bakersfield. Los Angeles and San Francisco weren’t far behind. Within 13 months of the Fresno Drop, some 2 million credit cards were in circulation in California, accepted by more than 20,000 merchants.
— Joe Williams, the Bank of America executive who created the program, resigned his position about a year and a half after the Fresno Drop. With no experience in installation lending, he didn’t think to build up a collections or fraud department ahead of time. By the time he quit, the bank had lost $8.8 million on the program. The real figure — factoring in marketing and overhead — was closer to $20 million.
— By 1961, Bank of America made a profit of $179,000 from the program. By 1968, it was $12.7 million.
— The Bank America officially becomes Visa in 1976.
As our concept of money continues to evolve into scary and exciting new forms, Fresno can always pride itself on being the true birthplace of the consumer credit card.