Diners club was the first modern credit card. Yet the basic concepts underlying the new industry had been in existence for some time. In fact, the credit card has been with us, with minor changes, for nearly the entire twentieth century. The founders of Diners Club introduced no radically new ideas. Rather, they combined a number of well-known and widely used techniques for extending credit and changed the way credit service was delivered to the consumer. The key to their success was their recognition of the need and untapped demand for a mobile credit vehicle, coupled with their ability and fore¬sight in turning that realization into a viable and profitable enterprise.
Innovations in the credit card industry have developed slowly and have generally conformed to the expressed needs of society. Little of the sophisticated technology currently used in the credit card industry, such as switching networks, computer authorization, and satellite transmis¬sion, was developed specifically for it. Existing technology has usually been adapted to fit the needs of the developing industry.
It is also important to remember that the credit card industry developed almost entirely as an American innovation designed to fit certain economic, social, and technological characteristics of this coun¬try. Even today, much of the worldwide credit card industry is still controlled by American companies and their subsidiaries or licensees.
In the United States, the primary reason for the success of the credit card has been its credit feature rather than its convenience. When I asked a representative cross-section of American families in a 1970 survey (conducted through the auspices of the Survey Research Center of the University of Michigan and published in 1972 as Credit Card Use in the United States) what they considered the advantages of credit card use, the largest proportion responded that credit cards enabled them to buy without having the cash. This response was common among both users and nonusers of credit cards. The survey also revealed that it was only among higher income families that the credit function of credit cards was not a primary factor motivating their use.
The credit use of credit cards has also been of paramount importance to card issuers, particularly banks, which have charged a low annual fee (or no fee at all) and depended upon interest charges for up to two-thirds of their total revenue. It is not difficult to see why the credit card industry has flourished in the United States, where consumer credit has always been looked upon much more favorably and, consequently, has been used much more extensively than in other countries.