Diners Club International
|Type||Subsidiary of Discover Financial|
|Founder(s)||Frank X. McNamara
|Headquarters||Riverwoods, Illinois, U.S.|
|Key people||Eduardo Tobon
(President & CEO)
|Products||Charge card, Credit Cards|
Diners Club International, founded as Diners Club, is a charge card company formed in 1950 by Frank X. McNamara, Ralph Schneider, and Matty Simmons. When it first emerged, it became the first independent credit card company in the world and established the concept of a self-sufficient company producing credit cards for travel and entertainment. Diners Club International and its franchises service affluent and well-travelled individuals  from around the globe, with operations in 59 countries.
- 1 Origins
- 2 History
- 3 Acquisition by Discover Financial Services
- 4 North American franchise
- 5 Switzerland and Germany franchise
- 6 United Kingdom and Ireland franchise
- 7 Slovenian scandal
- 8 In popular culture
- 9 See also
- 10 References
- 11 External links
The idea for Diners Club was conceived at the Major's Cabin Grill restaurant in New York City in 1949. Diners Club cofounder Frank McNamara was dining with clients and realized he had left his wallet in another suit. His wife paid the tab, and McNamara thought of a multipurpose charge card as a way to avoid similar embarrassments in the future. He discussed the idea with the restaurant owner at the table, and the following day with his lawyer Ralph Schneider and friend Alfred Bloomingdale.
McNamara returned to the same restaurant the following February and paid for his meal using a cardboard charge card and a signature. The story became well-known and is credited by historians as the beginnings of contemporary credit. Various versions of the story differ about whether it was a lunch or dinner at which McNamara forgot his wallet, and whether the bill was paid on loan or McNamara waited for his wife to drive his wallet to him. Some journalists later credited Alfred Bloomingdale with the idea for Diners Club.
McNamara and his attorney, Ralph Schneider, founded Diners Club International on February 8, 1950, with $1.5 million in initial capital. Alfred Bloomingdale joined briefly, then started a competing venture in California before merging his California-based Dine and Sign with Diners Club. 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. When the card was first introduced, Diners Club listed 27 participating restaurants, and 200 of the founders' friends and acquaintances used it.
Diners Club had 20,000 members by the end of 1950 and 42,000 by the end of 1951. At the time, the company was charging participating establishments seven percent and billed cardholders $5 a year. In 1952, McNamara sold his interest in Diners Club to his partners for $200,000.
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Diners Club's monopoly was short-lived, as American Express and Carte Blanche (which later partnered with Diners Club) began to compete with Diners Club in the travel and entertainment (T&E) card market. American Express now dominates the "member card" arena, providing thousands of customers with cards that require the monthly balance to be paid in full.
Towards the end of the 1960s, Diners Club also faced competition from banks that issued revolving credit cards through BankAmericard (later renamed Visa), and Interbank MasterCharge (later renamed MasterCard). Diners Club began early on to allow franchises of the Diners Club name, at first in Europe and later throughout the world, for many years eclipsing the BankAmericard or Interbank MasterCharge networks abroad. Amoco also issued for a time its own co-branded Diners Club cards called American Torch Club, and Sun Oil Company issued its version called Sun Diner Club Card.
In 1981, Citibank, a unit of Citigroup, acquired Diners Club International, the franchisor that holds rights to the Diners Club trademark, and many of the largest franchises worldwide. A majority of the franchises abroad remain independently owned.
Acquisition by Discover Financial Services
In a transaction completed July 1, 2008, Discover Financial Services purchased Diners Club International from Citibank for $165 million. 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.
North American franchise
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.
Carte Blanche originated as a T&E card owned by Hilton Hotels, and competed with American Express and Diners Club. Hilton sold the company to Citibank for a brief period during the 1960s, and repurchased it in 1979. The card was phased out of service in the late 1980s.
Throughout most of the 1960s and 1970s, the Carte Blanche card was considered a more prestigious worldwide T&E card than American Express or Diners Club, though its small cardmember base hindered its success. Carte Blanche also was the first to implement a "Gold Card" program, but initially only as a means to recognize cardholders who were frequent users and paid their bills on time. In 2000, the Carte Blanche name was revived in the United States when Diners Club, which was also acquired by Citibank in 1981, introduced an upscale version of its card: the Diners Club Carte Blanche Card. It is an upper-level charge card on par with the American Express Platinum Card. The card carries a US$300 annual fee, offers an extensive menu of perks geared toward spendthrift travelers, and is accepted wherever regular Diners Club cards are accepted. Although Diners Club requires payment in full within 30 days, corporate accounts can pay within 60 days without penalty..
Diners Club expanded its customer base in Canada by acquiring the enRoute credit card from Air Canada in 1992, and marketed the card under the combined name for a period of time as the "Diners Club/enRoute Card". The enRoute business was valued at over $300 million.[when?] Diners Club remains a minor player in Canada.
Acquisition by BMO
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.
Switzerland and Germany franchise
In a transaction that closed on August 6, 2010, Citibank sold the Switzerland and Germany franchises to a private investment group headed by Anthony J. Helbling.
United Kingdom and Ireland franchise
On August 7, 2012, Citigroup, Inc. announced the sale of its Diners Club franchise in the United Kingdom and Ireland to Affiniture Cards Ltd., a private investor group.
In 2013, Tomaž Lovše, who owned Diners Club Slovenija, was one of three people investigated in Slovenia regarding unpaid debts that his franchise owed to merchants. In May, the Central Bank of Slovenia revoked the Diners Club Slovenije's license for payment services, which meant 80,000 local members could not use their card. 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. An Erste press release in August 2013 stated that Diners Club services were once again available in Slovenia.
In popular culture
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- "Diners Club Review". Retrieved 2011-05-26.
- "Diners Club Merchant benefits".
- "Diners Club: Local Sites".
- Pamela Klaffke (1 October 2003). Spree: A Cultural History of Shopping. arsenal pulp press. pp. 23–. ISBN 978-1-55152-143-5. Retrieved 8 February 2013.
- How to Survive & Thrive in the Merchant Services Industry. Survive & Thrive. June 2003. pp. 36–. ISBN 978-0-9741884-0-9. Retrieved 7 January 2013.
- David Sparks Evans; Richard Schmalensee (2005). Paying With Plastic: The Digital Revolution In Buying And Borrowing. MIT Press. p. 54. ISBN 978-0-262-55058-1. Retrieved January 7, 2013.
- Jonathan Levine (2008). Credit where it is Due: A Social History of Consumer Credit in America. ProQuest. pp. 184–. ISBN 978-0-549-81953-0. Retrieved 8 February 2013.
- Bear, David (November 19, 2006). "Who Deserves the Credit for Credit Cards?". Pittsburgh Post-Gazette. Retrieved February 6, 2013.
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- Louis Hyman (January 12, 2011). Debtor Nation: The History of America in Red Ink. Princeton University Press. pp. 98–. ISBN 978-0-691-14068-1. Retrieved 8 February 2013.
- Steinberg, Neil (March 13, 2000). "The Card that Started it All". Chicago Sun-Times. p. 6.
- Edwin J. C. Sobey (1 March 1999). Young Inventors at Work!: Learning Science by Doing Science. Good Year Books. pp. 100–. ISBN 978-0-673-57735-1. Retrieved 8 February 2013.
- Bryan Roberts; Natalie Berg (3 April 2012). Walmart: Key Insights and Practical Lessons from the World's Largest Retailer. Kogan Page Publishers. pp. 8–. ISBN 978-0-7494-6274-1. Retrieved 7 January 2013.
- Michael St. Clair (August 31, 2011). So Much, So Fast, So Little Time: Coming to Terms with Rapid Change and Its Consequences: Coming to Terms with Rapid Change and Its Consequences. ABC-CLIO. p. 88. ISBN 978-0-313-39276-4. Retrieved January 7, 2013.
- Edmund Lindop; Sarah De Capua (September 1, 2009). America in the 1950s. Twenty-First Century Books. pp. 47–. ISBN 978-0-8225-7642-6. Retrieved January 7, 2013.
- Gordon, Marcy. "Credit Card at 50". Associated Press. Retrieved February 8, 2013.
- Boyle, Hal. "How to get a $1,000,000 Idea". Associated Press. Retrieved January 7, 2013.
- Paul Holper; Paul. Inventing Millions. Orient Paperbacks. pp. 58–. ISBN 978-81-222-0458-2. Retrieved February 8, 2013.
- "Diners Club History". Kommersant Money. December 13, 2010. Retrieved February 23, 2013.
- Donald A. Voorhees (October 1, 2004). Why Do Donuts Have Holes?: Fas. Citadel Press. pp. 209–. ISBN 978-0-8065-2551-8. Retrieved February 7, 2013.
- Rome Levine, Daniel (June 20, 2005). "Credit card pact props up Diners". Crain's.
- Stempel, Jonathan (April 7, 2008). "Discover to buy Citigroup's Diners Club". Reuters. Retrieved February 9, 2013.
- Press Release Discover Financial Services Completes Diners Club Acquisition Jul 01, 2008
- COMPANY NEWS; Air Canada Sells Credit Card Unit New York Times
- BMO to buy Diners Club franchise (requires subscription)
- Diners Club Press Release Transition of DC Switzerland and DC Germany to New Ownership
- "Citi Sheds Diners Club UK Ireland Biz". Community.nasdaq.com. Retrieved 2012-08-20.
- Judge Orders Detention for Financial Magnate, STA, September 8, 2013, retrieved September 25, 2013
- "Central Bank Bans Services by Diners Club". The Slovenia Times. May 17, 2013. Retrieved September 24, 2013.
- "Diners Club One Step Closer to Reclaiming Licence". The Slovenia Times. July 5, 2013. Retrieved September 30, 2013.
- "Erste Card Club Collecting Diners Claims". The Slovenia Times. July 23, 2013. Retrieved September 24, 2013.
- "Diners club services enabled again in Slovenia".
- BOSLEY CROWTHER (April 18, 1963). "The Screen: A Slapstick:Kaye in 'The Man From the Diners' Club'". The New York Times.
- Jim Hinckley; Jon G. Robinson (October 6, 2005). The Big Book of Car Culture: The Armchair Guide to Automotive Americana. MotorBooks International. p. 248. ISBN 978-0-7603-1965-9. Retrieved February 7, 2013.
- Douglas J. Goodman; Mirelle Cohen (2004). Consumer Culture: A Reference Handbook. ABC-CLIO. pp. 156–. ISBN 978-1-57607-975-1. Retrieved February 7, 2013.
- Diners Club International
- Diners Club USA
- Diners Club Canada
- Discover gets antitrust OK for Diners Club buy, Reuters