Dining In

Mastercard and Visa. US$850b in market cap between them, built millions on credit card transactions daily. As successful as they have been, neither were initially innovators in the space. The first credit card was in fact Diners Club, a relic of the past today but a pioneer of the payments industry in its heyday.

33 West 33rd Street, New York City in 1949. Home to Major’s Cabin Grill, preferred steakhouse of marketing manager Frank McNamara. Out to dinner one evening, McNamara forgot his wallet at home. Embarrassed, he set out to create the first “general purpose charged card”. A universal IOU used at all venues: Diners Club.

That’s the romantic, serendipitous story the company’s PR team came up with anyway.

In reality, months of research and planning went into setting up the business. McNamara and his business partners Schneider and Bloomingdale went to scores of restaurants around Manhattan convincing them to accept delayed payments. Within a year, Diner’s Club had 42,000 members using their card at 330 venues. Merchants were paying a 7% fee. Credit had gone from something for those struggling to pay their bills, to something luxurious. Anyone with “a credit card can rent a plane or boat or car, live it up in nightclubs, take a safari to Africa” as TIME put it in 1958. Within 5 years, their membership had grown to 300,000.

Today, the company handles less than 1% of global transaction volume.