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This Piece of Cardboard Launched a Trillion-Dollar Industry

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The auction house Sotheby’s is selling a piece of modern financial history: a prototype of the first magnetic credit card.

The card, developed by IBM in the late 1960s, is literally just a piece of cardboard with a strip of magnetic tape that’s affixed with Scotch tape. It led quickly to the kinds of plastic cards that are ubiquitous today.

Until recently, the prototype was being carried around in the wallet of Jerome Svigals, one of the IBM employees who developed it. Svigals wrote about the invention earlier this year in an article that was published by a tech industry trade publication.

IBM Prototype

This piece of cardboard is one
of two remaining IBM prototypes of
the first mag-stripe credit card.
Image: Sotheby's

At the time IBM developed the card, credit cards were becoming more popular, but the only existing cards required the merchant to write out a charge slip and make a phone call to receive authorization for the purchase, Svigals wrote. The magnetic stripe changed the landscape.

“IBM did the work for free and didn’t even patent the machine-readable card it came up with,” he wrote. “Rather, it offered its solution gratis to all comers, assuming that the more transactions conducted using machine-readable media, the more computers would be sold to process them. The strategy worked beyond anyone’s dreams.”

According to Sotheby’s, the prototype for sale is one of only two that were developed. The other belongs to the Computer History Museum in Mountain View, Calif.

Sotheby’s estimates the card’s value at $10,000-$15,000. The centuries-old auction house accepts cash, check or bank transfer—but only certain credit cards.

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