Who Invented Credit Cards

An article by Peter Pierce    Comments Off on Who Invented Credit Cards

Although individual store credit cards were common in the twentieth century, a credit card that could be used at multiple locations came into existence in 1950 when Frank McNamara invented the Diner’s club credit card.

The beginning of the twentieth century marked a steep rise in the automobile and travel industry enabling easy accessibility to a variety of shopping spots. Many stores and gas stations hence introduced the concept of shopping on credit accounts in an attempt to secure customer loyalty. However this meant that people had to carry a dozen of credit cards to swipe at each store .In order to overcome such inconvenience, Frank McNamara came up with the idea of having a single credit card which could be used at multiple destinations like restaurants, gas-stations and store.

McNamara along with two of his friends started a new company known as the Diners Club in 1950.The Diners club assumed the role of a middleman, who offered credit to individuals on behalf of many companies. The initial credit cards did not bill any interest charges to the subscriber; instead they charged 7% for each transaction to the company to make their profit.

The first lot of Diner’s credit card was distributed to two hundred people and was accepted by fourteen restaurants of New York. Initially, credit cards were not well accepted as the companies didn’t want to pay the Diner club’s fees and individuals hesitated due to the small number of companies accepting the card.