Sunday, April 19, 2015

Early history of Diners Club International

In 1949, Frank McNamara and Ralph Schneider formed the first T&E payment card system, known as Diners Club. McNamara, a businessman came up with the idea of a universal charge card, designed the system mainly for the businessmen like himself.

Instead of carrying a lot of cash, they would be able to pay for their travel and dining expenses with their cards and pay their total bill at the end of each month.

Diners Club started modestly, Alfred Bloomingdale contributed $5000, more a gesture of friendship than a serious business investment, and McNamara took the $5000 and secured a loan for $35,000.

McNamara and his partners began issuing their fist cardboard charge cards in September 1950, which they distributed to tenants in the Empire State Building.

Within one year, the membership increased to 10,000. Another 100,000 applied for the membership but got rejected because of their poor credit ratings.

Cardholders agreed to pay a five dollar annual fee to use the card, and Diners Club charged merchants 7 percent for the convenience of their patrons and promotional benefits.

Diners Club enjoyed little competition throughout most of the 1950s and its yearly charge volume grew to nearly half a billion dollars. By the fall of 1953, the monthly billings for Diners Club were over $2.2 million and rising steadily.

Diners Club’s most effective marketing tool was the Dinars Club Magazine. The magazine was merely a glossier version of the directory that Diners distributed with its first cards, which had performed the pedestrian function of infirming cardholders of those establishments with accepted the card.

By mid 1960s, all the national car rental agencies accepted the Diners Club card.
Early history of Diners Club International

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