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Home » Articles » The History of Prepaid Phone Cards

The History of Prepaid Phone Cards

Article Posted On Date : Thursday, May 21, 2009

The History of Prepaid Phone Cards

In 1975 the idea of a prepaid phone card was first brainstormed by SIDA; a vending machine manufacturer and distributor located in Italy. In the fall of 1975 SIDA sought alternative means to using coins to operate pay phones. At the time there was a shortage of medal coins in Italy and pay phone vandalism was becoming overbearing. Phones were often being destroyed, or stolen.

Just a few months later, in early 1976 came the release of the first phone card. Cards were printed on thin cardboard with a magnetic strip as result of dealing with the coin shortage. Pay phone users would insert the card into the pay phone and it would start deducting minutes from your card. Like many new products, problems arose from the first batch of phone cards. They were to thin and consistently jammed the pay phone.

Just one year after the introduction of phone cards, their novelties had spread across the continent. By 1977 Austria, France, Sweden and The United Kingdom were among the first in Europe to adapt to the new phone card system.

About five years later in 1982, prepaid phone cards were introduced in Japan. Similar to Europe, Japan was also having a coin shortage problem. Therefore, using a calling card was an easy solution to their problems. Nippon Telephone and Telegraph, a prominent telecommunications company in Japan, was the first company to release phone cards. They were sold throughout the subway in Tokyo and Osaka.

Since the invention of phone cards, companies throughout Europe and Japan continuously worked to improved the quality. In 1984 the first chip-based "smart cards" were introduced in France.

Almost ten years after, the eastern world had been successfully using phone cards they were introduced to the United States in 1987 by World Telecom Group. Siemens and General Electric were responsible for the distribution of the cards. Using their own technology they created a magstripe, which was an upgrade from the European version of smart cards. The magstripe is commonly seen today on the backside of credit cards, the magnetic strip. The magstripe contains a variety of information, including your name, card number, address and more.

The development and practicality of calling cards continued to grow. In 1988 Dr. Steve Hiscocks assembled the first calling card catalog. It was distributed in England to prepaid phone card collectors.

The following year, major United States telecom provider AT&T joined the prepaid calling card world. They began to mass product phone cards.

Just two years after calling cards have become prominent (1989) in the contiguous United States they were released in Hawaii.

In 1990 New York's Regional Bell Operating Company (RBOC) created the first non-magstripe phone card. These newly invented phone cards work similar to phone cards today. They require dialing a toll free access number and using a PIN (Personal Identification Number) to place charges on your account. The new system provides more versatility with phone cards. Allowing use any phone nationwide.

For the next few years phone cards continue to prosper. By 1992 most major telecommunication companies had released their own brand of phone cards. Cards were no longer using the magstripe and had completely switched over to an access number and PIN.

Like the dot com boom, the phone card market exploded. Industry-wide revenues reached 12 million dollars. While sales for future years were expected to double. Just one year later in 1993 calling card sales reached an unpredicted high of 25 million dollars. Sales continued to grow through the mid 90s reaching 650 million dollars by 1995.

Between 1996 and 2000 sales continued to rise exponentially soaring over 3 billion dollars.

With a diverse marketing and unlimited client potential the calling card industry continued to skyrocket. By 2000 even smaller based telecommunication companies had released their own calling cards. They could be found on the Internet or in the post office, super market, convenience store and gas stations.

Then in 2001 the industry changed again with the release of the first prepaid cell phone. These phones work similar to calling cards. The entire phone and minutes are prepaid. Prepaid cell users purchase recharge cards for their phones.

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