Phone Cards - A Little Bit of History

I always get asked the question, how long has the prepaid calling card business been around and who invented it so I thought I would give a brief history to help shed some light on this little known subject.

The first phone card was introduced in Italy in 1976 by a pay phone operator, SIDA, who created a mag stripe card to use in their phones instead of change. Pay phones were being broken open by thieves and the company needed to find a way to reduce this problem.

Phone cards floated around Europe for years but did not come to the United States until World Telecom Group introduced them in 1987. Distributed by GE and Siemens they were mag stripe cards and did not see much mass distribution. It was not until AT&T introduced their own calling card in 1989 that the product really started to hit the mainstream market.

A year later NY Bell released their own calling card that was the first of it's kind in the US where the user dialed an access number and entered the pin printed on the card (turned out to be the most popular form of calling card). Over the next few years all of the major telecom companies followed suit and released their own cards.

By 1993 the calling card market in the US was generating 25 million annually and most of the companies by this time had dropped the mag stripe technology and switched to the access number and pin format. Two years later (1995) the phone card business in the US had grown to a 650 million dollar business and by the close of 2000 it was around a 3 billion.

The end of the 90s brought about most of the smaller companies but with the decline in the domestic market brought about by the surge in the cellular phone business, many of these smaller companies could not survive and most were gone by 2003 and 2004.

The market continues today and while more ethnically focused than before continues to bring in billions of dollars a year.