The history of the credit card is quite interesting. The origin of the credit card is associated with the USA. At first, bank cards were issued as commodity cards, as well as courtesy cards. These products were most often used in American hotels, retail outlets, and oil companies.
Back in 1914, one of the organizations (Western Union) developed and released a new card model, which was the first client credit card to which a non-renewable loan was credited. Initially, cards were made of cardboard, but a few years later metal cards appeared with the owner’s data embossed on them. Quite popular at that time were commodity cards, which made it possible to check the status of a client’s balance and accounts, and also thanks to which it was possible to organize data on purchases made.
Sales centers and trading enterprises began to issue special cards, thanks to which they were able to attract and bind the wealthiest citizens as clients. No less famous in those days were loan books, where all the receipts of a wealthy and profitable consumer audience were collected. A little later, cards in the form of plates began to appear on the market, on which the address was stamped. In the lending business, such concepts as monthly payment for lending services, as well as deferred payments, have appeared. Such changes were undergone in the credit and financial sector in 1928.
The 50s - a new era in the credit business
In 1949, the head of a financial company, Frank McNamara, along with lawyer Ralph Snyder and the founder of a famous store brand, Alfred Blungmindale, went to dinner at a good New York restaurant. At the end of dinner, F. McNamara decided to pay for the restaurant’s services, but he did not have the required amount in his wallet. As a result, the financier had to call his wife so that she would urgently bring the missing amount and pay the bills.
After this incident, F. McNamara firmly decided that such a situation would not happen to him again. He came up with a universal credit book that could be used not only by one retail establishment, but also by many other stores. The novelty of this financial concept was that it used an intermediary company between consumers and sellers. Although at the beginning of the 20th century there was already a system of credit books or credit cards, as they were also called, but for a long list of purchases it was necessary to use a whole bunch of cards, since a certain card was valid only in one place of trade.
The genius of the financier's idea was to use one credit card at all points of sale.
It is believed that the main credit for introducing this innovation into the consumer world belongs to Diners’ Club. It was he who issued credit cards for the purpose of a simpler form of payment for the client audience in restaurants. It is worth noting that it was not the restaurants that received the funds from the borrowers, but the Diners’ Club itself, which issued such card loans at 7%. Credit card holders had to pay about 3 dollars per year for comfortable payment terms and convenience when making payments with a credit card.
At first, the credit card from the Diners’ Club company was not very popular, but by the end of 1950, credit cards became widespread among the population of New York, bringing its inventor approximately $60 thousand in profit by the end of the year.
Improving the lending system
In 1951, the financial institution Franklin National Bank introduced a new, more improved card, which could be accepted for payment by almost all local stores and retail establishments. Quite a high result from the released product encouraged many other financial institutions to get into the business of issuing and servicing credit cards.
In 1958, American Express and Bank Americard popularized credit cards that could be used not only in the United States, but also in other countries around the world. And although the global expansion of credit cards in different parts of the world developed differently, over time this financial project has become one of the largest manifestations of the world globalization process.
It was thanks to the fifties of the last century that credit organizations entered a new era of lending, which differs from old trends in the speed of financial transactions, as well as comfort and convenience for the clientele.
Additional information
It's hard to imagine now, but the first credit cards that appeared in the United States at the beginning of the twentieth century were made of cardboard. However, not everyone could get such a card; only the elite were their owners. Later, credit cards began to actively develop, they began to be made from metal, and they became much more affordable. Accordingly, suppliers of goods and services, in order to keep up with progress, began to install reading machines in their offices, and soon it was possible to pay with a card almost everywhere.
It is worth noting that when making cards from metal, their cost was too high, in turn, cardboard cards wore out too quickly. Therefore, when the popularity of this payment instrument grew, issuers faced a serious question about how to make cards both durable and cheap, so that the client could use one card for a long time. And here, as in many other industries, such a modern material as plastic came to the rescue.
Today's cards
Today we use convenient plastic cards everywhere. They have a special magnetic tape and a chip with encrypted data that allows us to instantly carry out any transactions.
Yes, modern credit cards are made of plastic, but the manufacturing process itself has remained virtually unchanged since the days of metal cards. The thing is that the main meaning of the card lies in the letters and numbers embossed on it, which are created on a special imprinting machine. Although, of course, machines have now become more modern, and little human manual labor is now involved in the whole process.
Now all credit cards issued by banks must meet several criteria, these are:
- Safety
- Environmental friendliness
- Standard dimensions and corner radius
As for the most modern chip cards, their level of information security is much higher, and the amount of data that can be written to the chip is very large. Such cards are considered the best option.
Also, to increase the protection of cards, issuers personalize them by applying special barcodes to the card, as well as the client’s first and last name in a special way. Such cards are called “embossed” and have the highest level of security.
Often, card issuers, such as industry leaders such as Visa and MasterCard, turn their logo located on the card into one of the security features.
Also, all cards are covered with a special film to increase their wear resistance. Thanks to this, they can serve for more than ten years without significant damage, but banks advise changing cards more often to avoid incidents.
Resume
Based on the above facts, it can be understood that the process of making a credit card is not at all simple. Now even art designers are taking part in it, so that when choosing a card for yourself, you can choose the image that will improve your mood. And on some types of cards there is a photograph of its owner.
If you find an error, please highlight a piece of text and click Ctrl+Enter.
Today, when we are bombarded with offers to take out a loan, a car loan or even a mortgage at every corner, it is difficult to imagine that credit cards were originally invented to simply go to restaurants.Restaurants, probably from the day of their existence, began to feed regular customers on credit - this was the era of credit books, where restaurant owners wrote down who owed them and how much. And no one made money from this, except the restaurant owners themselves.
Everything changed when, in 1949, Frank X. McNamara, head of the financial company Hamilton Credit Corporation, went to dinner with Alfred Bloomingdale (grandson of the founder of the famous Bloomingdales store) and lawyer Ralph Snyder. Sitting at a table in a New York restaurant, they discussed the affairs of one of the clients who was in a difficult financial situation. This man had several credit books from stores where he had opened a loan when several of his friends asked him to borrow money. He did not give them money, but allowed them to use his credit books for a fee, which his friends promised to pay him in addition to repaying the debt. As a result, the credit on the books increased significantly, and the debtors became insolvent. This unpleasant situation forced the unfortunate owner of the loans to borrow money from the Hamilton Credit Corporation, that is, from Frank McNamara.
At the end of dinner, Frank reached for his wallet to pay for his meal. However, there was not enough money there, so he had to call his wife and ask her to urgently bring cash. After this incident, McNamara vowed that a similar situation would never happen to him again. After thinking about two topics for a memorable dinner (the ability to borrow his credit and the lack of cash to pay for food), Frank came up with a completely new idea - the idea of a credit book that would be used not by one store, but by many retail establishments. The particular novelty of this concept was the use of an intermediary company between the seller and buyers.
Credit books, or cards issued by a specific store or gas station, were very popular in the early 20th century. This helped companies ensure customer loyalty - the debtor would be more likely to return to the store to buy something else. Credit cards were usually distributed to customers whose solvency was known for certain. For a long list of purchases, a whole stack of credit cards was needed, a separate card for each place of sale. The genius of McNamara's idea was that he envisioned using only one single card for all points of sale. In addition, with the spread of the automobile and airplanes, people began to travel and, naturally, they wanted to buy things not only in their hometown.
McNamara discussed his idea with Bloomingdale's and Snyder, and in 1950 they opened a new company called Diners Club, which would serve as an intermediary between customers and businesses. Now it was no longer individual companies offering their own credit, but Diners Club offering to open credit to customers for many companies. The collection of money from debtors, holders of Diners Club credit cards, was carried out not by the companies themselves, but by Diners Club. Previously, companies benefited from using credit cards by creating a loyal clientele that generated high levels of recurring sales. But Diners Club couldn't make money that way. It was decided that for each purchase made using a Diners Club card, the company would pay 7% of its value, and cardholders would pay an annual fee of $3.
First credit card - Diners Club
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The first Diners Club cards were distributed to two hundred people, mostly friends and acquaintances of the company's owners. The cards were accepted at several dozen New York restaurants. They were printed on a rectangle of thick paper with a list of all the restaurants on the back.
At the beginning things were not going well. Restaurant owners didn't want to pay their 7% interest and feared Diners Club cards would compete with their own credit books. Potential Diners Club customers were reluctant to buy Diners Club cards because they initially did not offer a wide enough choice of places that accepted the cards. However, by the end of 1950, approximately 20 thousand New Yorkers were paying for restaurant dinners with pieces of paper from the Diners Club. By the second year of its existence, the company had already made a profit of $60 thousand, which left no doubt about the financial success of the new enterprise.
Diners Club continued to grow in an uncompetitive space until 1958, when the American Express and Bank Americard credit cards (later to become part of Visa) appeared on the horizon of American business.
Visa credit card
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According to Nilson, in 2007, Visa accounted for 46% of the US market, MasterCard - 36%, American Express -12%, Discover - 6%. The position of these cards in the international arena was somewhat different: Visa had 60% of the world market, MasterCard - 28%, American Express - 10.5%, JCB - 0.9%, Diners Club - 0.5%.
The credit card is, albeit not the only, but the most significant invention of mankind. It gave us freedom in our desires, but at the same time added debt dependence. The process of “evolution” of the credit card was quite long and, probably, credit card history will be of interest to modern plastic card holders.
These are the first “swallow cards”.
America, of course, this country is the birthplace of the first plastic cards. A country where the economy is developed and the desire for a luxurious life is present.
It will be interesting to know that the initial stage in the development of credit cards was without the participation of banks. The credit card idea was pioneered by Edward Bellamy, an American writer. In his book Looking Backward, written in 1914, Bellamy described something similar to this payment instrument.
Where did the history of credit cards begin?
To be specific, the actual sculptors of the first credit card would be Mobil Oil, a company that in 1914 issued cards for goods, they were issued to wealthy clients as a guarantee of payment, made of cardboard with written or even embossed information about the owner of such a card.
Continuing the baton of Western Union, the system issued a card in 1919 that made it possible to send telegrams to senior officials at the expense of the US government. The program can be considered the first loan in this way.
Continues its development. The next evolutionary step for credit cards is metal. The idea was picked up by the Boston company Farrington Manufacturing. All client data was stamped onto the card using the so-called embossing method. Using a special imprinter device, a payment card imprint appeared on the check, after which the check signed by the owner could be paid at the bank. But this luxury was available only to selected individuals.
At the beginning of the twentieth century, there were quite a lot of companies that used credit cards in their activities, and transferring them could take a long time. To retain the client, almost every company or trade enterprise used plastic payment cards. But there was a problem and it was that such cards could only be used in those companies that issued them, and the owner of such payment instruments had to carry many different cards.
Many American films give us ideas about why credit cards appeared. Everyone has probably seen a shot where a visitor to a restaurant or cafe, leaving, threw the phrase “Frankie, put it on my account” to the waiter and left.
But in fact, this could only be done in a place where they know you. On this occasion, in 1946, one of the employees of the National Bank, John Buggins, developed the “Charge-it” scheme, which became the predecessor of the modern payment card. Under this scheme, the client gave a receipt, and the seller went with it to the bank and received money from it.
The dinner that became fateful
An incident that turned out to be fateful for credit card history occurred in 1949 and the culprit was none other than the head of the financial company Hamilton Credit Corporation, Frank McNamara. It was a dinner where McNamara himself and two of his friends were present: lawyer Ralph Snyder and the grandson of the founder of Bloomingdales, the famous store, Alfred Bloomingdale.
After discussing business and having dinner, McNamara wanted to pay for dinner, taking his wallet, he discovered that he did not have enough money. A famous banker had to ask his wife to bring him the missing amount of money. Finding himself in such an awkward situation, Frank McNamara seriously thought about the problem of lack of cash. And he managed to come up with an idea that was completely new at that time. The idea was a credit book that could be used not in a water store or restaurant, but in many institutions. The highlight of this brilliant idea will be the presence of an intermediary between the buyer and seller. McNamara's idea was simply brilliant, it involved using one single credit card for all businesses and retail outlets. Thus began the history of credit cards.
The world moved forward tirelessly and with the advent of the airplane and the automobile, traveling became popular and naturally people wanted to buy goods not only in their own city.
In 1950, after consulting with his friends, Frank McNamara opened the Diners Club company, the same company as an intermediary between business and client. Diners Club gave the client the opportunity to pay with other companies. From that moment on, money was collected from debtors not by the company (owners of the goods), but by the company itself, the creditor of Diners Club. It was also decided that the lending side of Diners Club, credit card holders, would pay a $3 annual fee, and the company 7% of the purchase price.
The first Diners Club credit cards
The history of Diners Club credit cards began with just 200 holders, mostly close friends and select business owners. These credit cards were valid for several dozen New York restaurants.
The Diners Club credit card was in the shape of a triangle made of thick paper, with information about the restaurant owner on one side and a list of restaurants on the other.
The Diners Club company's business progressed with varying degrees of success due to distrust of the innovation, but at the end of 1950, about 20 thousand New Yorkers were already paying with these credit cards. By 1951, the company's profits grew to $60 thousand. And it was a complete success
b until the end of 1958 for Diners Club.
In 1958, the American Express organization appeared with its credit cards and great financial capabilities. Joint-stock banks were not left out either.
Visa credit card
But credit card history It didn't end there. Their improvement and struggle with competitive companies was only heating up. Both Diners Club and Visa companies opened the door to a new era, and made their brainchild the property of not only America.
The Baclaycard was launched in the UK, the first credit card outside the US.
Globalization and expansion of credit cards in different countries developed differently due to the different localization of banking systems. The development of credit cards has almost reached its peak and, as a result, nowadays you can pay with a credit card almost everywhere.
According to the latest data, more than 80% of issued plastic payment cards in the world are controlled by Master Card and Visa.
And it all started with simple cardboard...
Credit cards, produced by a certain store or oil company, were very popular already in the first half of the 20th century. They helped companies ensure customer loyalty, a greater likelihood that the debtor would return to the store to buy more on credit.
In order to make purchases at several retail outlets, the buyer needed to have a large number of credit cards with him, that is, a separate card for each retail outlet, which created some inconvenience. So, in 1949, the idea of creating an intermediary company between sellers and buyers that would issue universal credit cards that would be accepted in many retail outlets arose from a New York businessman Frank McNamara(Frank McNamara), Chairman of Hamilton Credit Corporation.
In the same year Frank McNamara and Co created a new enterprise called Diners Club, and this event is considered the beginning of the history of the card industry. The new company began lending to customers for a small percentage. Now, instead of individual companies offering each their own credit card, Diners Club opened credit to clients simultaneously for several companies. And the collection of money from debtors, credit card holders, was carried out not by the service companies themselves, but by McNamara and Co.
McNamara focused his attention on businessmen. They were the most frequent visitors to restaurants and, therefore, they were the ones who could be interested in Diners Club services. Therefore, the first Diners Club cards distributed to two hundred people, mostly friends and acquaintances of the company's owners. Diners Club Cards were accepted in fourteen New York restaurants. They were printed on a rectangle of construction paper with a list of all 14 restaurants on the back.
Using Diners Club credit cards, the companies benefited only in that they received regular customers. In turn, the founders of Diners Club decided that companies would pay the club 7% of the amount of each purchase made using the universal credit card. In addition, cardholders are required to pay an annual club fee of US$3.
At first, things did not go very well, because restaurant owners did not want to pay the established 7% and were afraid of competition between the new cards and the credit cards of the establishments. Potential Diners Club customers were reluctant to buy club cards because they only used this payment method at a few retail outlets. However, by the end of 1950, 20,000 New Yorkers were paying for restaurant dinners with pieces of paper from the Diners Club.
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Diners Club credit card in 1951 |
By mid-1951 the company had a turnover of $325,000 and had approximately 42,000 customers, charging $3 per year for card use. It worked with 330 service businesses in New York, Los Angeles, Chicago, San Francisco, Boston and Miami. Diners Club's net profit by the end of the year was $60,000.
The company developed rapidly, facing virtually no competition. In 1952, the annual membership fee was already $5. The card was accepted in 400 restaurants, 30 hotels, 200 car rental agencies and 5 flower shops.
Status international Diners Club card received in 1953 and is accepted in trade and service enterprises in Great Britain, Canada, Mexico, France and Cuba. Diners Club franchise organizations have opened in the UK, Spain, Brazil and Australia. A new period began in the history of Diners Club International.
 Diners Club credit card in 1955 |
In 1958, the IRS (Internal Revenue Service - the federal organization that collects income taxes) requires detailed reports on all types of corporate expenses, which leads to an increase in demand for Diners Club cards. Travel agencies in New York, Chicago, Boston, Cleveland, Los Angeles and New Orleans begin accepting Diners Club cards to pay for air tickets, ship tickets and cruise tours. In the same year, Diners Club offers insurance for cardholders on tourist trips and introduces the first program on the market for guaranteed hotel reservations.
 Diners Club credit card in 1961
And here is the Card from 1974. The design of the 1982 Diners Club card has been changed quite dramatically: |
DINERS CLUB card issued in 1967 in Britain (this card shows a signature ribbon on the front)
In 1961, the annual fee for membership in the Diners Club increases to $8, the use of paper (cardboard) cards is stopped, which are replaced by plastic ones, and an agreement is signed with Dashew Business Machines for the supply of imprinters leased to retail outlets.
The annual membership fee rises to $10 in 1963.
In 1965 Diners Club card begins to be accepted in Czechoslovakia, becoming the first payment card to appear within the former socialist bloc. It was this year that computer programs were introduced, automating the payment process.
In 1967, Diners Club actively penetrates the tourism services market, acquiring the third largest travel company in the United States by turnover ($ 60 million) - Fugazy Travel. Currently Diners Club cards accepted in 130 countries around the world.
In 1969, Diners Club - the first of all international payment systems - appears in the former Soviet Union. The service agreement was concluded with Intourist OJSC. The card is starting to be accepted in the best hotels, restaurants, Berezka stores and car rental agencies in Moscow and Leningrad. In 1972 Diners Club card is expanding its geography in the territory of the former Soviet Union: Odessa, Yalta, Kyiv, Yerevan, Sochi, Tallinn and Tbilisi. And by the end of 1973, the card began to be accepted in 21 more cities of the Soviet Union.
In 1975, Diners Club, the first of all payment systems, offers customers corporate card, and in 1976 offers its customers the opportunity to receive a loan of $ 15,000, as well as an extensive travel insurance program, provided that the plane or train ticket purchased under Diners Club credit card.
The General Services Administration elects the Diners Club in 1983 official credit card for federal employees, and already in 1987, Diners Club cardholders gain access to the network ATMs all over the world.
Since 1991, joint cards have been issued with British Airways and Scandinavian Airline Systems. The World Bank transfers all of its corporate card accounts to Diners Club in 1994.
Russian franchise " Diners Club" was founded in 1995, and already in 1996 the first Diners Club card International Russian bank.
In February 1998, the company granted Privatbank the exclusive right to enter into agreements on acquiring elite cards Diners Club systems on the territory of Ukraine.
A 1998 survey by the International Management Association of the United States found that Frank McNamara's creation of the Diners Club card and payment system was one of the "75 Biggest Decisions." Therefore, it is not surprising that for two years in a row (1998 - 1999 pp.) Diners Club was awarded the prestigious Freddie Award as the best payment/credit card for travelers.
With the development of the service network, the Diners Club card was increasingly introduced into the field of banking services, or rather, the banks themselves showed interest in the development of Diners Club. Now this international universal card has hundreds of issuers (including banks) and millions of acceptance points in more than 200 countries, including Ukraine.
The main card issuers and owners of exclusive rights to conduct Diners Club International business in a particular country are independent companies - “franchises”, which today number 85 companies.
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In Ukraine, cards from the elite Diners Club system are not widely used, since they are aimed at very wealthy citizens.
Perhaps very few corporations can boast of such a meteoric rise that has befallen Diners Club International. Back in 1950, when DCI began its work by distributing 200 free cardboard payment cards, no one could have imagined that less than half a century later it would receive the status of one of the “75 Greatest Business Solutions.”
The Brilliant Forgetfulness of Frank McNamara
The world's first issuer of payment cards owes its birth to a seemingly trivial story. It all started with the fact that one businessman from New York, the owner of a small credit company, Frank McNamara, forgot his wallet at home. And since that day he invited his wife to lunch at a restaurant, she had to pay the bill, and he had to listen to an unpleasant lecture about his absent-mindedness. The resulting charge of emotions was enough for the businessman to wake up the next morning with a ready-made plan for a new payment system, which would allow equally forgetful restaurant visitors to spend more on lunch than they currently have in their pockets, and then reimburse these expenses.
By the middle of the 20th century, the stable state of the US economy, which had long since ended the “Great Depression,” and the rapidly growing incomes of the population made it possible for the owners of shops, hotels, gas stations and the same restaurants to sell goods and provide services on credit. But, quite naturally, such benefits extended only to long-standing and well-known clients. The New York financier came up with the idea of creating an entire company that would provide loans to any buyers, and at the time of payment for the purchased goods (initially it was only about restaurant visitors). And, as history has shown, he succeeded brilliantly.
Essentially, the whole innovation was to persuade restaurant owners to serve on credit not only their familiar customers, but any of McNamara's clients. In this way, restaurateurs would receive new clients, the company’s clients would receive the opportunity to visit restaurants on credit, and the company itself would receive interest that restaurants would willingly pay for new visitors. And McNamara was going to identify his clients by providing them with cards.
To create a new company, McNamara decided to involve his lawyer Ralph Schneider, as well as his longtime friend Alfred Bloomingdale. The proposal to start a new business was accepted, as they say, “with a bang” - by this time, things were going pretty badly for all three. The previous company created by McNamara and Schneider, Hamilton Credit, was literally on the verge of bankruptcy, making unsuccessful attempts to collect debts totaling $35 thousand from its clients. Things were not going well for Bloomingdale either: his career as a Hollywood filmmaker was decidedly unsuccessful , and he was out of work, deciding what to do. However, it was he who found $5 thousand in cash to create a new business.
McNamara and Schneider's share of investments was Hamilton Credit, with an office in the Empire State Building and huge accounts receivable. Thus, at the beginning of 1950, a new company, called “Diners Club” (the name fully reflected the purpose of its creation), was registered and began to exist. From this event, insignificant at first glance, experts count the beginning of the era of the global card business.
Image is a loan guarantee
The first 200 payment cards issued by the company were received by employees of companies whose offices were located nearby, all in the same Empire State Building. The card was issued free of charge, and those who wished to receive it only had to work in the same building and look decent (which indicated their ability to quickly pay off the debt). The world's first payment card was a small cardboard plate with a pressed (embossed) number, which was assigned to each client.
Card holders could get lunch on credit at any of the 14 nearby restaurants (the company's owners entered into corresponding agreements with them). The client presented to the owner 
restaurant his card and after dinner signed the bill, the Diners Club company paid the bill to the restaurant owner, and some time later the client repaid his debt by paying directly to the company.
The new business lived up to the expectations placed on it and immediately went well. In the first month of operation, the company's turnover amounted to 2 thousand dollars, and the net profit received by businessmen was 140 dollars. But in the next three months, the new enterprise began to develop at a gigantic pace.
By the end of the same 1950, 20 thousand people had already become cardholders of the company. The number of personnel growing literally by the day required more and more space. And the company was forced to change three offices one after another. Already at the beginning of the next year, 1951, cardholders had the opportunity to receive credit services not only in restaurants, but also in eight car rental agencies. It is not surprising that in the first three months of 1951 the number of Diners Club clients doubled and already amounted to 40 thousand people.
The first step towards global expansion
It was at this time that Alfred Bloomingdale decided to leave for California and left the business to his partners. In Los Angeles, he is launching a similar project, calling it Dine&Sine. The new company also began to develop at a rapid pace - three months of work and an agreement with 25 local restaurants was enough for the first competitor of Diners Club to increase its turnover to $150 thousand per month. But Dine&Sine was not destined to have a long life.
Just a few months later, Bloomingdale's company faces financial difficulties. The business needs third-party investment, because Bloomingdale and his new partner provide loans to cardholders from their own pockets. And business development is no longer as rapid as before. It was then that Diners Club developed a plan to take over its first competitor.
Businessmen from New York offer Bloomingdale and his new partner to sell Dine&Sine. Upon completion of the transaction, Bloomingdale returns back to Diners Club, and for further development Diners Club receives his share of the sold Dine&Sine - $25 thousand. Together with Bloomingdale's money, the company also acquires something more valuable - clients of Dine&Sine in Los Angeles. Angeles and Boston, and with them the status of a national company.
The year 1951 amazed businessmen with successful results. The number of enterprises accepting cards is already 330, the number of card users is 42 thousand, the company’s turnover has grown to 325 thousand dollars, and net profit to 60 thousand dollars. The company begins to charge money for using the card - first 3 dollars per year, and a little later - 5 dollars annually.
However, next year McNamara makes a decision that is unexpected even for his partners. He goes out of business and sells his stake in the company, which at that time amounted to 70%, to his partners for $200 thousand. And after some 6 years, Frank McNamara passes away.
However, this fact does not negatively affect the company’s activities - what could prevent the only card issuer in the world from further developing? And indeed, the next 10 years became a period of enchanting takeoff for the company.
National DC goes international
Also in 1951, the company opened a branch in the UK, acquiring international status. A little later, franchises opened in Spain, Brazil and Australia. Over the next three years, the card will begin to be accepted by merchants and service providers in Canada, Mexico, Puerto Rico, France, Spain, Finland, Denmark, Belgium, Germany, Holland, Greece, Norway, Syria, Egypt, Iraq and Venezuela.
In 1955, Diners Club shares began to be listed on the American Stock Exchange, and later on the NYSE. This brings the company the investment it needs to lend to cardholders. It also provides financial opportunities to absorb competitors emerging on the market.
So, in 1956, she bought the company Trip-Charge Inc., which is engaged in servicing cards in service centers. The acquisition adds 22 thousand people to Diners Club's customer base. After another 2 years, a controlling stake in the US national payment system Esquire Club comes into its possession - this means another 100 thousand cardholders and 6 thousand partners. The next purchase, Sheraton Credit Corporation, adds 800 thousand people to its customer base.
Thus, by the end of the 5th decade of the 20th century, the Diners Club client base around the world exceeded one million people, and the number of points accepting the card for payment amounted to 20 thousand in 76 countries.
From monopoly to competitiveness
1958 marks the end of Diners Club's monopoly on the world market. That year, American Express issued its first card. And just a year later, this company manages to attract about 475 thousand cardholders - that is, almost as many as Diners Club was able to acquire in almost 7 years. An even stronger blow to the company was dealt by Bank of America, which in the same 1958 issued the first bank card - Bank Americard, the predecessor of the Visa card. The banking product seemed so interesting to the public that after some 3 years Bank of America had 1 million cardholders, 35 thousand trading and service enterprises in the card service network, and the volume of transactions with bank cards amounted to $75 million 10 years later, in 1968, Bank American Service Corporation will create the world's first banking payment system, selling licenses to issue bank cards to other banks, which will later be called Visa International. And almost immediately after it, another payment system will enter the market - Interbank Card Association (in the future - MasterCard Association). With the advent of payment associations, the number of bank cards on the market will increase many times over.
Already at the end of the 50s of the 20th century, with the emergence of the first serious competitors, the management of Diners Club decided to develop some other profitable business in parallel with the card business. Moreover, the need for some changes is simply inevitable, since the company begins to lose profits in its core business. After all, with the advent of competitors, commissions from retail outlets have to be reduced from the initial 7% to 5.5%. The first attempt in this direction - the company intended to master factoring (buying up other people's debts) - turns out to be of little success. However, the next one – introduction into the tourism business – brings considerable success. Also in 1958, Diners Club attracted several US travel agencies to service cards. And after a year, the company’s cardholders have the opportunity to use a new service - guaranteed hotel reservations. In 1964, the company became a sponsor of the Transportation and Travel Pavilion at the New York World's Fair. And in 1967, he acquired one of the largest travel companies in the United States - Fugazy Travel - with a turnover of $60 million. By the mid-70s, Diners Club provided travelers with the opportunity to receive a line of credit of $15 thousand and take advantage of a wide range of good program if they purchase a plane or train ticket using its card. Despite the active development of additional services, Diners Club is increasingly inferior to competitors in sales volumes.
By the mid-70s, 40 million people had already become Visa card holders, and there were only about 2 million Diners Club holders. And by the end of the 70s, Diners Club was faced with the question of not just staying ahead of competitors, but of survival. There is nothing left to do but sacrifice independence.
“Elite” secret of success
In 1981, the Citicorp financial group gained control of the company. It was during this period that the image of an elite company was created and finally assigned to Diners Club, providing its clients, especially corporate ones, with the most extensive service package. The company's card product is now positioned as accessible to a fairly narrow circle of people who lead a certain lifestyle, earn a lot and spend a lot on vacation, travel and related goods and services.
The new market position allowed the company to acquire numerous employees of well-known global corporations as corporate clients. For example, in 1983, the Diners Club card was chosen as the official payment card for federal employees of the General Service Administration. In 1984, the company's card was awarded the prestigious Freddie Award for the first (but by no means the last) time as the best card for travelers.
It was in that year that the company offered its customers the world's first rewards program - Club Rewards. Now cardholders who frequently use airline services can earn miles and use them to purchase airline tickets or upgrade their class. And active customers, depending on the amount spent on the card, collect points and use them to receive various goods.
In 1990, Frank McNamara was named by Life magazine as one of the hundred people who had the most significant influence on the fate of America in the 20th century.
Co-branding: time to shoot doublet
From the very beginning of the 90s, Diners Club began implementing co-branding programs with other companies. Their advantages are obvious - holders of such cards receive, in addition to the extensive Diners Club service program, additional benefits and discounts. In 1991, two joint Diners Club cards were published - with British Airways and Airline Systems. In 1993, the company supplemented its existing Club Rewards loyalty system with the ability to use accumulated points to purchase savings bonds, pay restaurant bills, and purchase goods from catalogs. In 1996, Diners Club opened its website on the Internet.
According to the results of a survey conducted by the International Management Association of the United States in 1998, the new calculation system invented by McNamara receives the status of “one of the 75 greatest business decisions.” In 1999, the company received the Freddie Award for the second time. In the fall of 2000, the structure of Diners Club changed again. The Italian financial holding GTP Holding S.p.A. announced the purchase from its owner, the financial group Citi-group, of the rights to 8 franchises in Western Europe and a number of other franchises operating in 30 African countries. Experts explain such a large deal by the weakening interest of the Citigroup group in the markets of Western Europe, which require large financial costs to promote products. However, the Italian holding's interest in Diners Club International is quite understandable.
Back in 1997, he acquired the rights to the Italian franchise. The new business management team managed to make significant progress on the Italian market in terms of the number of cards, the development of a network of retail outlets, as well as the variety of services provided. Thus, in three years the number of cards in Italy has tripled and amounted to almost 400 thousand. This success convinced GTP management that the business positioning they had chosen for Diners Club was correct. And the franchise branches of Western Europe that have come under his control will also switch to a new business strategy, namely the promotion of a club lifestyle among wealthy segments of society.
In 2000, the company celebrated its golden anniversary - half a century of work in the card market. The results with which DCI arrived at this milestone eloquently indicate that the legendary forgetfulness of its first ideologist, Frank McNamara, was fully justified. As of the end of 2001, the Diners Club International club system included 143 franchises, more than 8.2 million cards in circulation, more than 35.8 thousand cash points, more than 250 thousand ATMs and over 6, 7 million card acceptance points in more than 200 countries. At the same time, the volume of transactions in 2001 amounted to more than $36 billion.
