Matty Simmons: The Man Who Sold The World On Credit Cards
When Matty Simmons first heard about multipurpose credit cards in 1950, he was not impressed.
At the time, Frank McNamara, who came up with the idea, and Ralph Schneider, his business partner, were trying to persuade Simmons to join their new company, Diners Club. The concept of a credit card didn’t seem particularly useful to Simmons, who was doing public relations for restaurants and nightclubs at the time.
“What worried me the most was that I was being asked not only to publicize this new design, but also to persuade restaurants to honor it,” Simmons wrote in his 1995 book. “The credit card disaster”, a first-hand account of the beginnings of Diners Club and the evolution of the credit card industry.
But make known and persuade that he did it. Simmons eventually joined Diners Club full time as executive vice president. He led sales and marketing, and edited and published the company’s popular magazine. His efforts contributed to the success of Diners Club and paved the way for the credit card industry as we know it today.
Diners Club was just one of Simmons’ adventures. Now 90 years old, he is the author of eight books; a producer of successful films and television such as “Animal House” and the series “National Lampoon’s Vacation”; and the founder of the publishing company which produced Weight Watchers Magazine and National Lampoon. He currently splits his time between Los Angeles, New York and Pompano Beach, Florida, and is working on a new screenplay and comedy book.
NerdWallet spoke to Simmons about Diners Club and what he thinks about credit cards today. This interview has been edited for brevity and clarity.
How Diners Club started
What were your first impressions of the dinner clubs?
I was a public relations guy. And among other things, I have managed many restaurants and nightclubs. The original idea of the Diners Club was to have dinner. You would go to restaurants all over the New York City area, bill them, and get billed once a month. Frank’s partner Ralph Schneider ran into a reporter and asked him, “Who’s the best guy to deal with in public relations and in nightclubs and restaurants?” And this guy immediately said, “Matty Simmons.” They called me and I came to see them.
Their office was in Frank’s company in the Empire State Building. It was called Hamilton Credit. … Ralph was a lawyer. Frank worked in the provision of commercial loans. They told me about their idea and held up a little handwritten card that said “The Diners Club”.
Frank said, “Our idea is to take this card everywhere,” and so on. … And I said, “I don’t think that’s a very good idea.” I had never billed anything in my life. I had always used cash. They wanted me to come with them, and I said, “Let me think about it.” And I forgot it. A week later, Schneider called me. We had lunch and became very good friends. He finally convinced me, after about a year, to [going] full time at the Diners Club. I entrusted the advertising to my brother who was my partner. …
What I first realized is that [McNamara and Schneider] I had no marketing manager and I was doing all the sales and marketing. And I had never done anything like this before. But I just used common sense, and it worked. I did mailings. … We kind of made the “take out box”, you know, these little boxes where you took a folder out of it and you could buy something to join. It was a good way to get memberships.
And of course the publicity was huge. The first big story was in Business Week. Right from the start, we got thousands of members.
[In his book, Simmons recounts that he “had to glamorize the creation of the credit card plan” to publicize the product, so he invented a story: McNamara was short on cash after taking a colleague out to dinner. While his wife was driving over with the money to cover the meal, he came up with the idea of a credit card, which would effectively allow a “responsible businessman” to open a restaurant tab anywhere. That apocryphal story has since been repeated countless times, and it even appears on the Diners Club website today.]
We didn’t charge when we started. Then we were losing money. … And I said, “You have to charge the card.” [At the time, Diners Club charged merchants a fee for each credit card transaction, but it didn’t charge cardholders an annual fee. It also didn’t charge interest, as it required payment in full each month.] And Frank said, “No one will pay for a credit card.” And I said, “Well, nobody’s gonna be nobody if we don’t charge, because we’re going to lose money and go bankrupt.” So Ralph agreed with me and we charged $ 3. …
Then I created a newsletter in the same envelope as your invoice. The guy doing my printing was a salesperson, so I said, “Want to make more money? Go out and sell ads, and I’ll post them in the newsletter. “So he went to restaurants and they bought ads. And there was such a demand for the ads that I made a magazine out of it. It was Diners Club Magazine first. changed to Signature: The Diners Club Magazine. It was very successful. …
We finally took charge of the magazine. You paid $ 3 more to get the magazine. … Almost everyone, like 90% of the members, has subscribed to it.
What was your biggest challenge in the early years?
We didn’t really have a lot of problems. We had competition, but they didn’t stay. In fact, Alfred Bloomingdale was part of the group that formed the Dine and Sign Company. But they did very badly, and Bloomingdale bought Frank McNamara’s stake in the Diners Club, and he became president of the Diners Club. Ralph Schneider was president and I was executive vice-president. …
We had no real competition until the arrival of American Express [in 1958]. While I was at the Diners Club, until 1967, we were still the world’s first credit card. …
Our credit losses were about three-quarters of 1%. Today, they are 3 or 4%. … Now people have big bills that they can’t pay, that’s what I said in “The Credit Card Catastrophe”. We were really more credit card. You had to pay your bill in 30 days. You were supposed to do it, anyway.
Credit Cards Today
Do you still have credit cards?
I have five. I don’t have a Diners Club card.
The first number on a Diners Club card was 1000. Frank McNamara had that. Schneider had 1001 and I had 1002. I would have liked to keep it. It’s probably worth a lot of money now. But I don’t have it. I never keep anything.
Have you closed this account?
The year after I left, they went to a computer system. Everything was by hand when I was there. They lost [millions] in the next two years. [This was partly because of “computer problems which had swallowed millions of dollars in charges that were never billed,” Simmons writes in “The Credit Card Catastrophe.”]
And they sent me a card with 19 different numbers on it, like a typical credit card. Then they sent me an invoice [for the card’s annual fee]! I was so insulted that they sent me, one of the founders of the company, an invoice for a credit card. I just sent them back and said, “You can have this.” And I never used it after that. …
Now I have a MasterCard, bank cards, and American Express. … I don’t use them often. … The card I use most often is a MasterCard from one of our banks. It’s only like, when I was in LA, I dined out a lot.
How did you get past credit cards in Hollywood?
How it happened, the Diners Club was acquired by a major insurance company [Continental Insurance], and I was not very happy with the new property.
I resigned in 1967 and started my own business. It was originally called Twenty First Century Communications. My first magazine was Weight Watchers Magazine, which still exists and is still very successful. My second magazine was National Lampoon. It got so huge that I changed the name of the company to National Lampoon Incorporated. It was a public enterprise. And the Diners Club, of course, was on the New York Stock Exchange.
[Simmons produced “Animal House” and the “Vacation” movies under the National Lampoon brand.]
In your book, you are critical of how credit cards can trick people into overspending. Do you still feel this way?
Yes. I think too much credit is given to people who overspend. And they have to spend half of their life paying.
Most of the time, the interest rates, to me, are highway thefts. It’s ridiculous that they charge people 17%. 100, 20 p. 100 or more on interest rates. It’s just profit. It’s ugly to charge people so much interest. I am totally against it and I said it in my book “The Credit Card Catastrophe”. That’s why it’s called “The Credit Card Catastrophe”!
Payments of the future
Are you planning anything to replace credit cards?
I don’t think they will replace the idea of the credit card or the credit card service. But everything will be computerized. Everything will be computerized. So you won’t be carrying cash – you will be carrying your computer, a small computer.
You can load … anything now. … I remember going to the annual meeting of all the baseball teams and general managers, asking them to accept Diners Club cards for ball park tickets. And the general manager of the Chicago White Sox, his name was Frank Lane, stood up and said, “[Credit cards are] only a passing thing. It will never last. Baseball is American like apple pie, and it’s just a passing fantasy. “
Has he ever taken that back?
I don’t think he did. But surely you can buy tickets to ball games, movie theaters, everything now [with credit cards].
What do you think will happen with credit cards in the next 10 years?
There’s no doubt in my mind it’s gonna get bigger, because people will become more and more addicted [on credit cards] over the years. And population growth. … And the simplicity of the pocket computer.
looks like mobile payments. Do you think these will become more popular?
I think everything like that will become more popular. The world is becoming so computer aware and so automated in every way that things like cash and invoicing will be made as easy as possible. Your whole life will be on your computer.
How do you feel about this?
I am worried about this. I think it makes spending too easy. I think cash, like I said in the book, makes people a bit more careful. You say, “Do I have enough money to buy this?” You know? Then the checks, of course, made it easier. But not as much as credit cards.
Diners Club, yesterday and today
After being bought by Continental Insurance, the American activity of Diners Club changed hands a few times. Today it belongs to Discover.
Frank McNamara sold his stake in the Diners Club in 1952, believing it would stabilize at 250,000 members. He died in 1957. Two years after his death, Diners Club grew to 1 million members.
Ralph Schneider, who ran the Diners Club for years after McNamara left, died in 1964. Al Bloomingdale later took over the management, but he and Simmons “were constantly at odds” over business plans, according to the book by Simmons, and Simmons left the company a few years. later. Bloomingdale ran the business for several years and eventually sold his stake for a profit of $ 13 million. He died in 1982.
When Simmons left Diners Club for the publishing and entertainment world, he mostly stopped following the credit card industry, he says. But he still marvels at his enduring success.
“I wasn’t expecting this when it started,” he says. “I didn’t know if it would work or not. But that’s how life is. … It just happens.