How restaurant bills became a debit card.
In 1950, Diners Club offered restaurant visitors something unusual - one cardboard card for payments in various establishments. You can use it to eat dinner and pay expenses later on your joint monthly bill.
Buying on credit existed long before that. Stores maintained accounts for regular customers and issued their own bills. With Diners Club, one gained access to several independent establishments at once. It was convenient for business trips and business dinners - the expenses were collected in one place.
The company has a famous story about Frank McNamara, who allegedly forgot his wallet after dinner and thought of a new payment method. Diners Club still tells it as its origin story. We will leave the beautiful chapter in the status of a corporate legend. The design of the card is interesting even without it.
The customer presented the card at a factory that participated in the system. The expenses were added to the general account, which had to be paid in full at the end of the month. This model did not give the possibility to transfer the balance of the debt for months, as with a traditional credit card.
how did you earn money Cardholders paid an annual fee, and establishments paid a fee on purchases. According to history, in the 1950s the commission was $5 and business commissions were 7-10%. Restaurants paid to participate in a system that potential guests used.
The model quickly expanded beyond New York restaurants. In 1953, Diners Club was already hosted in Great Britain, Canada, Cuba and Mexico. One card connected the customer with factories in different countries.
This story clearly shows where the difference between a card with mandatory full payment and a credit card with which you can transfer debt comes from. Externally, both allow you to pay now. How much you need to repay by the due date and how much the balance will cost is determined by the terms of the specific card.
A history of money.