A Brief History of Payment Cards
The general-purpose payment card industry will celebrate its golden anniversary in 2001. Diners Club was the first general-use charge card, born in March 1951 as the brainchild of Frank McNamara who once ran out of cash and couldn''t pay his tab at a New York restaurant. He and his partners set out to create a universally-accepted card, primarily for use at restaurants.
Building on the ideas behind the success of department store charge cards which were firmly in place at the time, Diners Club''s bylaws established that its cardholders receive an interest-free 30 day float (loan) for their charges as long as they paid their balances in full each month. Diners Club considered its cardholders as members who paid an annual membership fee for the privilege. The growth of the Diner''s Club franchise made it the first successful Travel and Entertainment (T&E) card, with 250,000 members by 1956.
In 1957, American Express decided to enter the payment card business as a natural extension of their money order and travelers check lines of business. Through significant marketing, by the time the American Express Card launched in October 1958, they had already built up a network of 17,500 merchants and 250,000 cardmembers ready to shop, travel, and spend. Like Diners Club, American Express charged an annual fee of $5.00 -- $2.00 more than Diners Club with a special appeal of prestige to the traveling and affluent segments of the public.
Also launched in 1958, BankAmericard from the Bank of America, appeared on the scene as the first general-use credit card. Throughout the 1960s, Bank of America licensed the uses of the BankAmericard Brand to banks across the US. During this time, member bank associations began to form both within and outside the US. In 1966, 14 Eastern-US banks formed the Interbank Card Association (ICA) and absorbed the MasterCharge Bank Association, which later became MasterCard International, Inc. Meanwhile, Bank of American renamed the BankAmericard to the VISA Card, and what became VISA International was formed as a result of banking associations from the Western US. Later on, MasterCharge was renamed MasterCard and its name remains today.
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