In 1950, the Diner’s Club card became the first widely used store card after its founder, Frank McNamara, was inspired to leave his wallet at home while dining out. He and a partner, Ralph Schneider, launched the first Diner’s Club card, widely considered the birth of the modern credit card. Customers who had the card loaded their food on it and the restaurant sent the bill to Diner’s Club. In turn, Diner’s Club sent the payment directly to the restaurant’s bank, taking a small commission for the transaction. Cardholders would have to pay the entire bill each month to Diner’s Club.
In its first year of operation, Diner’s Club had more than 10,000 members and had 28 restaurants and two hotels that accepted its select clientele on a monthly basis.
Although McNamara’s story is well known, the truth is that the credit cards was not his invention. According to a working paper from the Philadelphia Federal Reserve, credit cards began to be issued in the first decade of the 20th century. Initially they were issued by gas station companies and department stores, but they were not very successful since they could only be used in specific geographical areas and establishments.
Indeed, the origin of credit cards can be found in 1914 when the Western Union company offered a card only to its most select customers. With it, not only could they enjoy preferential treatment, they also had a line of credit free of charge.
In the year 1924, the North American company General Petroleum Corporation launched its first credit card for the purchase of gasoline ONLY at its gas stations.
Similarly, in 1929 the company American Telephone & Telegraph (AT&T) issued the so-called Bell card, which was used to pay for its telephone services.
FIRST BANK CARDS
Although it started as a freight forwarding company, American Express ended up focusing on its money order and traveler’s check business, which offered a secure substitute for carrying large sums of cash. Over time, American Express developed its first credit card in 1958, which allowed customers to pay their bill monthly in exchange for an annual fee. Merchants that accepted the card paid American Express a percentage of the amount charged, a precursor to the practice widely used today known as interchange fees.
That same year, California-based Bank of America went a step further, issuing a paper BankAmericard card with a pre-approved limit of $300 to 60,000 Fresno customers, and extending the card statewide in 1966. This first The attempt turned out to be a costly error in judgment, with delinquency rates in excess of 20% and fraud rampant.
However, the concept of a revolving credit card with which you can carry a balance from month to month proved to be a success, as America’s growing middle class took a liking to this new financial product that offered convenience and an instant personal loan. . Later, in 1976, BankAmericard changed its name to “Visa”, a word that sounded the same in almost all languages.
THE FIRST INTERBANK CARDS APPEAR
In response to the success of the BankAmericard, in 1966 a group of California banks formed an association known as the Interbank Card Association (ITC) and launched the second most popular credit card, first called the Interbank Card and later changed to Master Charge. , which eventually became MasterCard in 1979.
THE CARDS BECOME INTERNATIONALIZED
According to Diners Club, in 1953, their card was the first internationally accepted charge card when merchants in the United Kingdom, Cuba, Canada and Mexico began accepting payments from Diners Club cardholders.
In 1970, BankAmericard was so successful that the International Bankcard Company (IBANCO) was created to introduce the payment card worldwide.