The first payment card

Credit cards first emerged in the United States with retailer Cooperwaite ad Sons of New York just before the turn of the century.

Western Union introduced “metal money” in 1914, a metal plate given to select customers allowing them to defer payment.

By 1924 gas credit cards appeared on the scene, the first cards that could be used at merchants all over the country.

This was an important advance, because as automobiles became more common so did traveling, and a gas card that was not accepted away from home had limited value.

The General Petroleum Corporation of California, later Mobil Oil, issued metal cards to employees and customers cards for gas and repair services in 1924 that could only be used the company’s sales outlets. This was the first store cards.

The idea proved so popular that the company extended it to preferred customers and eventually to the general public.

In 1939 AT&T rolled out the Bell System Credit Card, which was essentially a calling card for business travelers.

The first universal credit card, which could be used at a variety of establishments, was introduced by the Diners’ Club, Inc., in 1950.
The first payment card

Discover Card

A new credit card was actively marketed with a major advertising campaign initiated in January 1983. Sears, Roebuck and Company began distribution of the Discover Card.

In 1985 the company continued to offer a traditional charge card good only at its store, but its nonbank financial company - the Dean Witter subsidiary Greenwood Trust – launched a new credit card network, called Discover to compete with Visa, MasterCard and American Express.

The credit card was administered by the Greenwood Trust Company. Greenwood was banking entity within the Sears Financial Group.

Following its acquisition of the Caldwell Banker real estate and the Dean Witter brokerage company in the 1980s, Sears was looking for another opportunity to expand its financial services.

By mid-1986 Sears had issued 4.7 million Discover cards, but only two in five cardholders had actually used their cards. By the following year it had established a new subsidiary, Discover Credit to run the business which had outstripped the ability of Greenwood Trust to fund with deposits.

This orange-on-black card became one of the greatest business success stories of the 1980s, helped by Sear’s seventy-plus years of experience with MasterCard and its decision to offer the card to twenty-five million creditworthy Sears cardholders.

By 1991, the Discover Card was accepted by more merchants than the American Express Card.

In 2004, Discover entered the debit card business by purchasing Pulse EFT, and electronic network previously owned by 4,100 banks.
Discover Card

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

American Express Company

In 1850, Henry Wells (Wells & Company), William G. Fargo (Livingston, Fargo & Company), and John Warren Butterfield (Wells, Butterfield & Company) consolidated their delivery services into American Express Company, capitalized at $150,000.

Henry Wells and William Fargo, the president and company secretary respectively, created what was to become one of the country’s largest shipping and financial services firms.

Accordingly by 1862, the company had nearly 900 offices and more than 1,500 employees.

American Express extended its reach nationwide by arranging affiliation with other express companies, railroads and steamship companies.

In 1882, American Express started its expansion in the area of financial services by launching a money order business to compete with the United States Post Office’s money orders. As American began to travel overseas in ever growing numbers, American Express was there offering services throughout Europe and Asia.

The turn to credit cards in 1957 was a natural progression for American Express. The company had already been in the business for extending credit in the form of travelers checks and money order and has a national as well as an international network of offices.

By the 1980s, American Express was hailed as a ‘financial supermarket’ one of the strongest diversified financial companies in the world.
American Express Company