World Of Cashless Marketing

In this world of cashless transactions and e-transfers, it may be interesting to know about the invention of credit cards and how it came to be marketed as it is today:

First entry:

The first credit card was invented by Mr. Francis McNamara of NewYork. While dining at a restaurant called Major Cabins Grill in Newyork, he observed that there were a lot of cash transactions going on and often, businessmen ran out of money and had to send word thro’ someone else to fetch money to pay the bill. Since he devised the idea at the dining table of the restaurant, he called his card Diners Card. It was made of cardboard and had the name and account no of the person written on it, along with a list of the twenty-eight restaurants and Manhattan nightspots which accepted it on the back. The annual fee for the card was $5. His attorney, who helped him with the business, hired a publicity agent to draw together more restaurants and cardholders for the network. From this, Diners Club grew into the first national credit card.

Reaction of competitors

1.Market follower strategy:

The interest amount accrued out of the transaction drew in a whole host of competitors to follow suit, with very mild alterations in the product offered (because the target markets were huge)

In 1951 Franklin National Bank of New York created a credit card which could be used at many different types of merchants (at this time Diners was limited to restaurants, hotels, and air travel expenses).

In the same year,Diners Club changed all its cards to plastic, to position itself better in the minds of its existing clientele of 20,000 members.

Later the very large Bank of America in San Francisco started its own card, the BankAmericard, (which has evolved into the modern-day Visa card.)

Other California banks implemented their own programs, which later became the MasterCard of today

In 1958 American Express noticed the profits of Diners Club and started its own credit card program for paying entertainment and travel costs

2.Market-Nicher strategy:

By this time,banks realised that carving niche segments might have to be done to standout in the proliferated growth of the credit card businesses:

In 1959, Bank of America issued a "revolving credit" card that could be used for a greater range of purchases and paid off over a longer period of time, with interest. But due to federal banking regulations, the card was only valid in California.