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> Within a few weeks of publication, there were more than 8,000 Diners Club cardholders. By the end of the year, membership was near 100,000. It sounds like a

> Within a few weeks of publication, there were more than 8,000 Diners Club cardholders. By the end of the year, membership was near 100,000. It sounds like a success right from the get go. But I don’t understand the motivation of those early adopters. Don’t compare it to today’s impossibility of renting a car without a credit card, the growing hostility to cash in Western countries, and the normalcy of buying all your stuff online. None of that applies to 1950. Remember that this was only for restaurants at the time. And this was a charge card that requires you to pay your bill in full every month, meaning that you could afford those restaurants. You could not spread your bill over a period of months or years. > We went over all the good points of the idea: You don’t have to carry a lot of cash. And perhaps most importantly, you have a receipt for a tax write-off if you take out a potential customer or client. You don’t need to crazy amounts of cash for dinner for one night. Besides, carrying cash was normal. In 1950, it was not unusual to buy a car with cash. You could always get a restaurant receipt even if you paid cash. None of the justifications in the article makes sense to me. My theory is that those early adopters signed up because the card gave the illusion of status or eliteness. You show this magic card to the waiter, sign your name, and you walk out without paying any money. All the other use cases and benefits (and detriments) of credit cards came in later years.

XorNot 7y ago
A restaurant is kind of the ideal use case for this though: you don't know what you want in advance, or how much it'll cost. So here's this magic card which means you can go in and never worry about being caught short on the bill. Like, there was definitely a status element to it but I think that's overlooking some real advantages which were uniquely applicable to that experience.
systemtest 7y ago
I can see the convenience of not having the "hassle" of cash and having a single receipt at the end of the month. I recently switched to a public transport card that stores all my trips and gives me a single invoice at the end of the month that is automatically debited from my bank account (SEPA Direct Debit). Before I had to constantly top up my card with money (prepaid) or buy individual tickets. I really like this system!
billfruit 7y ago
I do think that ditching cash for some type of electronic payment has some positives in current political climate: if people and businesses become utterly dependent on internet based payments, then it becomes harder for governments to do internet block-out, without doing serious damage to economy and crippling normal life.
- fungicide 7y ago
  Surely you mean easier. It's easier for governments to control electronic money than cash. The government knows nothing about all that cash under that mattress.
  - deleted 7y ago
    [deleted]
  - billfruit 7y ago
    If it comes that people are going to starve because internet is cut, then governments would not decide to cut internet on so light grounds.
    - Mountain_Skies 7y ago
      Wholesale, yes, but targeted harassment of groups out of political favor would be possible.
    - scarface74 7y ago
      Most of the governments that would cut internet don’t care of the ordinary people starve as long as they can keep the military - ie the people who can either kill them or protect them fed. This is also the reason that sanctions don’t work.
      - billfruit 7y ago
        Well internationally I suppose, people starving will prompt stronger reactions, that people merely lacking internet connectivity.
chrisseaton 7y ago
You need quite a lot of cash to dine out. If you’re getting wine and things for a few people it can easily be many hundred of dollars in today’s money. Even people who normally carry cash don’t carry that much. What are you going to do in the evening? Go to a bank? They're closed. And if you’re travelling with work and dining out each night, maybe with clients, how much is this adding up to over a month? What other expenses are similar to that? Hotels at the time would invoice or take cheques so you didn’t need cash for those. Paying for restaurants probably seemed a real pain point at the time.
- selectodude 7y ago
  Hence the name Diners Club.
- sportslife 7y ago
  That might be today's perspective, but if you take a look at seniors paying for groceries you'll sometimes see grannies with a few hundred on them. Anecdotally, I work with a 50-something who told me that when he was in his late twenties in a high-ish role where in he had to sometimes corral wilder co-workers he as a rule carried a couple thousand on him. That's something like $5000 today. He thought it was a lot, but not crazy.
pjc50 7y ago
Partly the status thing, yes ("club"), but absolutely for the convenience of expense accounts. If you're on expenses and paying cash, then you're fronting the money out of your own pocket in the expectation of reinbursement. If you're on a card, you can just take the bill you've been given by the card company to your expense department.
jeffwass 7y ago
You also didn’t have ATM’s in the 50’s, which meant a fancy dinner required planning ahead to visit a bank branch during working hours. But yes, I think the cool factor of taking some friends or clients to a restaurant and walking out without paying contributed as well.
grecy 7y ago
> Don’t compare it to today’s impossibility of renting a car without a credit card, the growing hostility to cash in Western countries It's interesting, I have no idea what you're talking about. I just rented a car in the UK three days ago without a credit card, and I still use cash for every single purchase except plane tickets online, which is the only reason I even have one. Note, I live in Canada/Australia, spent the whole summer in the US and I'm just visiting the UK.
- chrisseaton 7y ago
  > I just rented a car in the UK three days ago without a credit card Did they give you a discount for cash? If not, why on earth would you ever throw away the free extra insurance that you get with a credit card?
  - lotsofpulp 7y ago
    Not all credit cards offer a rental car insurance benefit. Many credit cards have trimmed all those extra benefits in recent years.
  - grecy 7y ago
    Credit cards with fringe benefits like that (and massive points back, etc.) are really an American thing. They're few and far between on the ground in other countries. Also, keep in mind, you're paying for it one way or another. There is no such thing as free.
    - jki275 7y ago
      Someone is paying for it. In this case it's people who keep a balance and pay interest. If you never do that, you're getting those benefits mostly for free.
      - notable_user 7y ago
        Merchants have to pay a decent sized fee on every transaction, and that fee is definitely passed on to the consumer via higher prices. But it’s also (arguably unfairly) equally passed on to consumers paying cash.
ginko 7y ago
> The cardholders would be charged nothing, the restaurant would receive 93 percent of the total, and Diners Club would get the rest. I personally found this a bit more startling. How did they convince restauranteurs in 1950 that this was a good value proposition for them?
- dsfyu404ed 7y ago
  Probably something to the tune of "people who regularly expense meals for business make up a large portion of our membership so what you lose in margin you more than make up for in volume."
  - lotsofpulp 7y ago
    Also, the people paying with card are less likely to care about pricing, so they can simply charge higher prices.
- jacquesm 7y ago
  Reduction of theft from the till risk.
- ceejayoz 7y ago
  "Let's order another few bottles of wine." "Can't, we didn't bring enough cash with us."
fujimotos 7y ago
The "Diners' Club" story is fun to tell, but it's really a fictional story created for advertisement. * Actually, there were a lot of "credit cards" when Diners Club started the business. One of the oldest such cards is one issued by Shell (oil company) circa 1920, predating more than a decade. * The real innovation of Diners Club's card was that it was general purpose. It could be used for multiple merchandises, while other cards were very purpose-specific (e.g. Mobil card for purchasing gas from the store, Western Union card for its telegraph service). A good resource to read about the origin of credit cards is "The credit card industry: A History" By Lewis Mandell. > My theory is that those early adopters signed up because the card gave the illusion of status or eliteness The primary motivation to own diners cards was post-pay. To put it simply: you can eat a dish without paying for it now. That was appealing for people who just started to enjoy consuming stuffs. Yes, you still need to pay the full amount every month, but minimum monthly payment (a.k.a. revolving credit) was an innovation yet to be conceived...
- mattm 7y ago
  I'm part way through "The Credit Card Catastrophe" right now. It was written by the author of the article and is also worth a read.
_JC_Denton 7y ago
Status definitely played a part. Because the methods for determining creditworthiness were less sophisticated at the time, the bar to clear was high, and being approved for the card signaled status, wealth, and trustworthiness. In addition to some of the card’s unique features mentioned by other posters, being able flaunt a status symbol to friends, customers, and business associates played no small part in the success of the card. Electronic Value Exchange (https://www.springer.com/gp/book/9781849961387 https://www.springer.com/gp/book/9781849961387) is a great book on the history of card payments. Well researched and very thorough. I’m told its commonly recommended internally at Stripe.

XorNot 7y ago

A restaurant is kind of the ideal use case for this though: you don't know what you want in advance, or how much it'll cost. So here's this magic card which means you can go in and never worry about being caught short on the bill. Like, there was definitely a status element to it but I think that's overlooking some real advantages which were uniquely applicable to that experience.

systemtest 7y ago

I can see the convenience of not having the "hassle" of cash and having a single receipt at the end of the month. I recently switched to a public transport card that stores all my trips and gives me a single invoice at the end of the month that is automatically debited from my bank account (SEPA Direct Debit). Before I had to constantly top up my card with money (prepaid) or buy individual tickets. I really like this system!

billfruit 7y ago

I do think that ditching cash for some type of electronic payment has some positives in current political climate: if people and businesses become utterly dependent on internet based payments, then it becomes harder for governments to do internet block-out, without doing serious damage to economy and crippling normal life.

fungicide 7y ago
Surely you mean easier. It's easier for governments to control electronic money than cash. The government knows nothing about all that cash under that mattress.
- deleted 7y ago
  [deleted]
- billfruit 7y ago
  If it comes that people are going to starve because internet is cut, then governments would not decide to cut internet on so light grounds.
  - Mountain_Skies 7y ago
    Wholesale, yes, but targeted harassment of groups out of political favor would be possible.
  - scarface74 7y ago
    Most of the governments that would cut internet don’t care of the ordinary people starve as long as they can keep the military - ie the people who can either kill them or protect them fed. This is also the reason that sanctions don’t work.
    - billfruit 7y ago
      Well internationally I suppose, people starving will prompt stronger reactions, that people merely lacking internet connectivity.

chrisseaton 7y ago

You need quite a lot of cash to dine out. If you’re getting wine and things for a few people it can easily be many hundred of dollars in today’s money. Even people who normally carry cash don’t carry that much. What are you going to do in the evening? Go to a bank? They're closed. And if you’re travelling with work and dining out each night, maybe with clients, how much is this adding up to over a month? What other expenses are similar to that? Hotels at the time would invoice or take cheques so you didn’t need cash for those. Paying for restaurants probably seemed a real pain point at the time.

selectodude 7y ago
Hence the name Diners Club.
sportslife 7y ago
That might be today's perspective, but if you take a look at seniors paying for groceries you'll sometimes see grannies with a few hundred on them. Anecdotally, I work with a 50-something who told me that when he was in his late twenties in a high-ish role where in he had to sometimes corral wilder co-workers he as a rule carried a couple thousand on him. That's something like $5000 today. He thought it was a lot, but not crazy.

pjc50 7y ago

Partly the status thing, yes ("club"), but absolutely for the convenience of expense accounts. If you're on expenses and paying cash, then you're fronting the money out of your own pocket in the expectation of reinbursement. If you're on a card, you can just take the bill you've been given by the card company to your expense department.

jeffwass 7y ago

You also didn’t have ATM’s in the 50’s, which meant a fancy dinner required planning ahead to visit a bank branch during working hours. But yes, I think the cool factor of taking some friends or clients to a restaurant and walking out without paying contributed as well.

grecy 7y ago

> Don’t compare it to today’s impossibility of renting a car without a credit card, the growing hostility to cash in Western countries It's interesting, I have no idea what you're talking about. I just rented a car in the UK three days ago without a credit card, and I still use cash for every single purchase except plane tickets online, which is the only reason I even have one. Note, I live in Canada/Australia, spent the whole summer in the US and I'm just visiting the UK.

chrisseaton 7y ago
> I just rented a car in the UK three days ago without a credit card Did they give you a discount for cash? If not, why on earth would you ever throw away the free extra insurance that you get with a credit card?
- lotsofpulp 7y ago
  Not all credit cards offer a rental car insurance benefit. Many credit cards have trimmed all those extra benefits in recent years.
- grecy 7y ago
  Credit cards with fringe benefits like that (and massive points back, etc.) are really an American thing. They're few and far between on the ground in other countries. Also, keep in mind, you're paying for it one way or another. There is no such thing as free.
  - jki275 7y ago
    Someone is paying for it. In this case it's people who keep a balance and pay interest. If you never do that, you're getting those benefits mostly for free.
    - notable_user 7y ago
      Merchants have to pay a decent sized fee on every transaction, and that fee is definitely passed on to the consumer via higher prices. But it’s also (arguably unfairly) equally passed on to consumers paying cash.

ginko 7y ago

> The cardholders would be charged nothing, the restaurant would receive 93 percent of the total, and Diners Club would get the rest. I personally found this a bit more startling. How did they convince restauranteurs in 1950 that this was a good value proposition for them?

dsfyu404ed 7y ago
Probably something to the tune of "people who regularly expense meals for business make up a large portion of our membership so what you lose in margin you more than make up for in volume."
- lotsofpulp 7y ago
  Also, the people paying with card are less likely to care about pricing, so they can simply charge higher prices.
jacquesm 7y ago
Reduction of theft from the till risk.
ceejayoz 7y ago
"Let's order another few bottles of wine." "Can't, we didn't bring enough cash with us."

fujimotos 7y ago

The "Diners' Club" story is fun to tell, but it's really a fictional story created for advertisement. * Actually, there were a lot of "credit cards" when Diners Club started the business. One of the oldest such cards is one issued by Shell (oil company) circa 1920, predating more than a decade. * The real innovation of Diners Club's card was that it was general purpose. It could be used for multiple merchandises, while other cards were very purpose-specific (e.g. Mobil card for purchasing gas from the store, Western Union card for its telegraph service). A good resource to read about the origin of credit cards is "The credit card industry: A History" By Lewis Mandell. > My theory is that those early adopters signed up because the card gave the illusion of status or eliteness The primary motivation to own diners cards was post-pay. To put it simply: you can eat a dish without paying for it now. That was appealing for people who just started to enjoy consuming stuffs. Yes, you still need to pay the full amount every month, but minimum monthly payment (a.k.a. revolving credit) was an innovation yet to be conceived...

mattm 7y ago
I'm part way through "The Credit Card Catastrophe" right now. It was written by the author of the article and is also worth a read.

_JC_Denton 7y ago

Status definitely played a part. Because the methods for determining creditworthiness were less sophisticated at the time, the bar to clear was high, and being approved for the card signaled status, wealth, and trustworthiness. In addition to some of the card’s unique features mentioned by other posters, being able flaunt a status symbol to friends, customers, and business associates played no small part in the success of the card. Electronic Value Exchange (https://www.springer.com/gp/book/9781849961387 https://www.springer.com/gp/book/9781849961387) is a great book on the history of card payments. Well researched and very thorough. I’m told its commonly recommended internally at Stripe.