Diners Club International

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Diners Club International (DCI), founded as Diners Club, is a charge card company owned by Discover Financial Services. Formed in 1950 by Frank X. McNamara, Ralph Schneider, Matty Simmons, and Alfred S. Bloomingdale, it was the first independent payment card company in the world, and it established the concept of a self-sufficient company producing credit cards for travel and entertainment.[3] Diners Club International and its franchises serve individuals from around the globe with operations in 59 countries.[4]

Diners Club International
Subsidiary of Discover Financial
IndustryFinance
Founded1950; 70 years ago (1950)
FounderFrank X. McNamara
Ralph Schneider
Matty Simmons
Alfred S. Bloomingdale
Headquarters,
Area served
Worldwide
Key people
Eduardo Tobon
(President & CEO)[1]
ProductsCharge and Credit cards
ParentDiscover Financial
Bank of Montreal[2] (North American operations)
Websitewww.dinersclub.com

HistoryEdit

 
Diners Club Card issued in Japan, 2016

The idea for Diners Club was conceived at the Majors Cabin Grill restaurant in New York City in 1949.[5] Diners Club cofounder Frank McNamara was dining with clients and realized he had left his wallet in another suit.[6] His wife paid the tab, and McNamara thought of a multipurpose charge card as a way to avoid similar embarrassments in the future.[7] He discussed the idea with the restaurant owner at the table,[8] and the following day with his lawyer Ralph Schneider and friend Alfred Bloomingdale.[8]

McNamara returned to the same restaurant the following February, in 1950, and paid for his meal using a cardboard charge card and a signature.[9][10] The story became well-known,[7][11] Diners Club official history referring to this meal as "The First Supper" even though, as stated following, some disputed accounts refer to it actually having been a lunch, and is credited by historians as the beginnings of contemporary credit.[12] Various versions of the story differ about whether it was a lunch or dinner at which McNamara forgot his wallet,[7] and whether the bill was paid on loan or McNamara waited for his wife to drive his wallet to him.[13][14] Some journalists later credited Alfred Bloomingdale with the idea for Diners Club.[7]

McNamara and his attorney, Ralph Schneider, founded Diners Club International on February 8, 1950,[15] with $1.5 million in initial capital.[7] Alfred Bloomingdale joined briefly, then started a competing venture in California before merging his California-based Dine and Sign with Diners Club.[11] McNamara's original conception was to make a card that could have been used as a means of payment in restaurants around New York City; however, he later expanded its usage to other establishments as well including hotels, car rentals, and flower shops. The company started building its customer base by offering their cards to prominent businessmen. Shortly afterward, Matty Simmons, the company's first press agent, started advertising the card in newspapers, magazines, and by sending personal mail to potential customers.[16] Diners Club International was named for being a "club of diners" that would allow patrons to settle their bill at the end of each month through their credit account.[17] When the card was first introduced, Diners Club listed 27 participating restaurants, and 200 of the founders' friends and acquaintances used it.[17]

Diners Club had 20,000 members by the end of 1950[18] and 42,000 by the end of 1951.[19] At the time, the company was charging participating establishments seven percent and billed cardholders $5 a year.[20] In 1952, McNamara sold his interest in Diners Club to his partners for $200,000.[21] The first plastic Diners Club card was introduced in 1961;[22] by the mid-1960s, Diners Club had 1.3 million cardholders.[23]

Towards the end of the 1960s, Diners Club faced competition from banks that issued revolving credit cards through Bank of America's BankAmericard (later changed its name to Visa), and Interbank Master Charge (renamed to MasterCard). Starting in 1968, the American Oil Company, or Amoco, also launched its own co-branded Diners Club cards called American Torch Club[24] (later renamed Amoco Torch Club), and Sun Oil Company issued its version called Sun Diners Club Card starting in 1977.[25]

In 1981, Citibank, a unit of Citigroup, bought Diners Club International, including the franchisor that holds rights to the Diners Club trademark. Despite this, a majority of the franchises abroad remain independently owned.[26]

FranchisingEdit

International franchiseEdit

In a transaction completed July 1, 2008, Discover Financial Services purchased Diners Club International from Citibank for $165 million.[27] The deal was announced in April 2008 and approved by the U.S. government in May 2008. By merging the North American Discover Network with the international Diners Club Network, Discover created a global payment processing system. Discover Bank has no plans to issue Diners Club-branded cards, which continue to be issued by Diners Club International licensees.[26]

In 2011, Discover started incorporating its logo on Diners Club cards. Several payment processors, like PayPal, can process only new Diners Club cards, which include the Discover logo.[26]

Australian franchiseEdit

In July 1974 Ansett Transport Industries purchased a 50% shareholding in the Australian franchise.[28] In January 1999 Ansett sold its shareholding to Citigroup.[29]

BrazilEdit

On November 21, 2018, it was announced that Diners Club International and Brazilian card association Elo extended their partnership and they launched Elo Diners Club International Cards in Brazil. The cards run via the Discover Global Network, and are accepted at 42 million merchant locations and 2 million ATMs in over 190 countries and territories.[30]

China and Hong KongEdit

In September 2017, Diners Club International signed a deal with Allinpay, a Chinese payment provider to be the exclusive carrier of all the cards that are part of the Discover Global Network. Apart of that, Allinpay set to increase the card acceptance in Hong Kong, especially, with the "travel oriented merchants".[31]

KazakhstanEdit

In September 2016, Kazkommertsbank became the official Diners Club card issuer in Kazakhstan. In a statement, Managing Director of Kazkommertsbank, Nurlan Zhagiparov said, "Our collaboration with Diners Club is another step toward the integration of Kazakhstan into the global economy, which increases the tourism potential in our country."[32]

Nordic franchiseEdit

In the Nordic countries, the franchisee was SEB Kort AB, a subsidiary to the Swedish bank Skandinaviska Enskilda Banken. [33] The franchisee closed the service May 31, 2019 citing increased competition and regulatory pressure in the payment card market and the card is no longer issued in the Nordic countries.[33]

North American franchiseEdit

MasterCard allianceEdit

In 2004, Diners Club announced an agreement with Mastercard. Diners Club cards issued in the United States and Canada then featured a MasterCard logo and 16-digit account number on the front and could be used wherever Mastercards were accepted. Cards from other countries continued to bear a 14-digit account number on the front, with the Mastercard logo on the back. However, since the takeover of Diners Club International by Discover Financial Services, these cards have had the Discover logo on the back.[citation needed]

Carte BlancheEdit

Carte Blanche began in 1958 when the Hilton Hotels travel & entertainment card was renamed. Hilton sold Carte Blanche to First National City Bank in 1966. Regulatory challenges forced First National City Bank to sell Carte Blanche to Avco in 1968. In 1978, Citicorp (parent company of First National City Bank which was renamed Citibank) reacquired Carte Blanche without regulatory opposition.[34][35] The 1960s- and 1970s-era Carte Blanche cards were considered more prestigious worldwide than their competition, the American Express and Diners Club cards, though its small cardmember base hindered its success. In 1981, Citicorp acquired the Diners Club card, and by the mid-1990s the Carte Blanche card was being phased out in favor of Diners Club. Parent company Citigroup was formed in 1998 with the merger of Citicorp and the Travelers Group. Citigroup issued a premium Diners Club card in 2000, naming it the Diners Club Carte Blanche card. It was an upper-level charge card on par with the American Express Platinum Card. The card carries a US$300 annual fee as of April 2015 and offers an extensive menu of perks.[36]

enRouteEdit

Diners Club expanded its customer base in Canada by acquiring the enRoute credit card from Air Canada in 1992. It marketed the card under the combined name for a period of time as the "Diners Club/enRoute Card".[37] The enRoute business was valued at over $300 million at the time of acquisition.

Acquisition by BMOEdit

In November 2009, Citibank announced that Diners Club International's North American franchise has been sold to Bank of Montreal (BMO). The deal gives BMO exclusive rights to issue Diners cards in the U.S. and Canada. At the time, BMO said the Diners Club fits well with its existing commercial card business, adding that commercial cards are one of the fastest-growing segments in the credit card business.[38]

PhillippinesEdit

In October 2016, Diners Club International announced that they signed a deal with BDO Unibank to become the exclusive provider of the Diners Club in the Phillippines.[39]

RussiaEdit

In December 2010, Russian Standard Bank and Diners Club International entered into an agreement for settlement of transactions in Russia. Under the agreement, Russian Standard Bank will process settlement transactions of other banks acting as acquirers of Diners Club in Russia.[40]

Slovenian franchiseEdit

In 2013, Tomaž Lovše, who owned Diners Club Slovenia, was one of three people investigated in Slovenia regarding unpaid debts that his franchise owed to merchants.[41] In May, the Central Bank of Slovenia revoked Diners Club Slovenia's license for payment services, which meant 80,000 local members could not use their card.[42][43] Diners Club International transferred the franchise to a subsidiary of Austria's Erste Bank group, Erste Card Club, and agreed to repay the franchise's debt to merchants.[41][44] An Erste press release in August 2013 stated that Diners Club services were once again available in Slovenia.[45]

South East AsiaEdit

In December 2016, Diners Club International and 2C2P, announced in a statement that the latter is a global provider of cards running on Discover Global Network and that it will increase the number of merchants who use the card in the region of South East Asia.[46]

Swiss and German franchiseEdit

In a transaction that closed on August 6, 2010, Citibank sold the Swiss and German franchises to a private investment group headed by Anthony J. Helbling.[47]

United Arab EmiratesEdit

Diners Club UAE, Egypt, Lebanon and Jordan is owned and operated by Network International subsidiary of Emirates Bank.[48][49]

United Kingdom and Ireland franchiseEdit

On August 7, 2012, Citigroup announced the sale of its Diners Club franchise in the United Kingdom and Ireland to Affiniture Cards, a private investor group.[50]

VietnamEdit

On January 23, 2018, it was announced that Vietinbank has entered into a partnership with Diners Club International to be the exclusive issuer of Diners Club cards (both standard and contactless) in Vietnam.[51]

In popular cultureEdit

In 1963, the film The Man from the Diners' Club was released,[52] and the Ideal Toy Company created the board gamed titled The Diners' Club Credit Card Game.[53][54]

Australian band Client Liaison feature Diners Club cards and logos in several of their retro themed music videos.[55]

See alsoEdit

ReferencesEdit

  1. ^ "Believe Belong Blog". Diners Club International. Archived from the original on May 2, 2016. Retrieved June 30, 2013.
  2. ^ http://www.newswire.ca/news-releases/bmo-financial-group-announces-agreement-to-acquire-the-diners-club-northamerican-franchise-from-citigroup-539032171.html
  3. ^ "Diners Club Review". CasinosBanking. Retrieved 2011-05-26.
  4. ^ "Diners Club: Local Sites". Diners Club International. Archived from the original on 2013-06-22. Retrieved 2013-06-30.
  5. ^ Klaffke, Pamela (1 October 2003). Spree: A Cultural History of Shopping. Arsenal Pulp Press. pp. 22–24. ISBN 978-1-55152-143-5. Retrieved 8 February 2013.
  6. ^ Beauchamp, Marc J. (June 2003). How to Survive & Thrive in the Merchant Services Industry. Survive & Thrive. pp. 37–38. ISBN 978-0-9741884-0-9. Retrieved 7 January 2013.
  7. ^ a b c d e Evans, David Sparks & Schmalensee, Richard (2005). Paying With Plastic: The Digital Revolution In Buying And Borrowing. MIT Press. pp. 54. ISBN 978-0-262-55058-1. Retrieved January 7, 2013.
  8. ^ a b Levine, Jonathan (2008). Credit where it is Due: A Social History of Consumer Credit in America. pp. 184–205. ISBN 978-0-549-81953-0. Retrieved 8 February 2013.
  9. ^ Bear, David (November 19, 2006). "Who Deserves the Credit for Credit Cards?". Pittsburgh Post-Gazette. Retrieved February 6, 2013.
  10. ^ Liberman, Sherri (31 August 2011). American Food by the Decades. ABC-CLIO. pp. 131–132. ISBN 978-0-313-37698-6. Retrieved 7 January 2013.
  11. ^ a b Schnaars, Steven P. (April 29, 2002). Managing Imitation Strategies. Simon and Schuster. p. 81. ISBN 978-0-7432-4265-3. Retrieved January 7, 2013.
  12. ^ Hyman, Louis (January 12, 2011). Debtor Nation: The History of America in Red Ink. Princeton University Press. p. 98. ISBN 978-0-691-14068-1. Retrieved 8 February 2013.
  13. ^ Steinberg, Neil (March 13, 2000). "The Card that Started it All". Chicago Sun-Times. p. 6.
  14. ^ Sobey, Edwin J. C. (1 March 1999). Young Inventors at Work!: Learning Science by Doing Science. Good Year Books. p. 100. ISBN 978-0-673-57735-1. Retrieved 8 February 2013.
  15. ^ Roberts, Bryan & Berg, Natalie (3 April 2012). Walmart: Key Insights and Practical Lessons from the World's Largest Retailer. Kogan Page Publishers. p. 8. ISBN 978-0-7494-6274-1. Retrieved 7 January 2013.
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  23. ^ Voorhees, Donald A. (October 1, 2004). Why Do Donuts Have Holes?: Fascinating Facts About What We Eat And Drink. Citadel Press. p. 209. ISBN 978-0-8065-2551-8. Retrieved February 7, 2013.
  24. ^ Edmands, Michael J. (September 16, 1968). "Raising the Cuff; Credit Card Plans Are Growing More Numerous, Profitable". Barron's. p. 11. Last Monday, the flood of U.S. mail was swelled by over 12 million letters from American Oil Co., informing its credit customers of a chance to get in on the ground floor of the brand-new American Torch Club. By enrolling in the group, Amoco's present clientels will enjoy the charge privileges of the 275,000 establishments all around the globe which honor the cards of the Diners' Club. Link via ProQuest.
  25. ^ "Majors Seek Ways to Cut Credit Card Costs to Zero". National Petroleum News. 69 (6). June 1977. p. 49. Sunmark is offering a new Sun/Diners Club credit card to its customers with an annual membership fee of $17. Link via ProQuest.
  26. ^ a b c "Accept Diners | cards in your Ecommerce Shop". About Payments. Retrieved July 12, 2020.
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  28. ^ Diners club shares: ANI Canberra Times July 2, 1974 page 14
  29. ^ Revised loyalties Australian Financial Review December 20, 2001
  30. ^ "Elo Extends Partnership with Discover to Launch Elo Diners Club International Cards in Brazil". Business Insider. November 21, 2018. Retrieved July 12, 2020.
  31. ^ . Diners Club International. September 10, 2017 https://www.dinersclub.com/about-us/press/Allinpay-to-Grow-Acceptance-for-Diners-Club-International-in-Hong-Kong. Retrieved July 14, 2020. Missing or empty |title= (help)
  32. ^ "Kazkommertsbank Becomes Exclusive Acquirer of Diners Club Cards in Kazakhstan". The Astana Times. October 27, 2016. Retrieved July 14, 2020.
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  36. ^ "Carte Blanche". Diners Club International.
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  38. ^ BMO to buy Diners Club franchise (requires subscription) Archived November 27, 2009, at the Wayback Machine
  39. ^ "BDO Unibank Inc. is the Official Diners Club International Franchise in the Philippines". Diners Club International. Retrieved July 14, 2020.
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  41. ^ a b "Judge Orders Detention for Financial Magnate". STA. September 8, 2013. Retrieved September 25, 2013.
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  46. ^ "Press detail". Diners Club International. December 6, 2016. Retrieved July 14, 2020.
  47. ^ "Diners Club Press Release Transition of DC Switzerland and DC Germany to New Ownership" (Press release). Diners Club International.
  48. ^ http://www.network.ae/en/news/view/discover-cards-now-accepted-by-all-network-international-merchants-in-uae
  49. ^ http://www.network.ae/en/contents/view/who-we-are
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  51. ^ "VietinBank becomes sole provider of Diners Club cards in Vietnam". Verdict UK. January 23, 2018. Retrieved July 12, 2020.
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  55. ^ Cormack, Lucy (2017-04-01). "Client Liaison review: An ode to Australiana, in all its tacky glory". The Sydney Morning Herald. Retrieved 2019-01-20.

External linksEdit