Diners Club vs American Express

1 September 2016
What are the differences between American Express and Diners Club, and why such intense rivalry?

The differences between American Express (or AMEX) and Diners Club are quite marked in comparison with Visa and MasterCard.

American Express and Diners Club are payment systems but they also issue cards directly to the consumer, finance payments, and process the transfers. Since they lend money to customers while the transfer is going through, they make most of their money from interest and fees. In contrast, Visa and MasterCard don’t actually issue any credit cards themselves. They are both simply methods of payment.

How the Diners Club vs. AMEX rivalry began

Both Diners Club and American Express have a rich history in the establishment and popularity of paying by card, initially creating charge cards that developed into credit cards.

Diners Club is credited with issuing the world’s first charge card in 1950. This came about after businessman and co-founder of Diners Club, Frank McNamara forgot his wallet while dining out at a New York City restaurant. Luckily, his wife came to the rescue and paid the bill – but it was an embarrassment Frank resolved would never happen again. And so a small cardboard card, the Diners Club Card, entered the scene as the world’s first multi-purpose charge card. In its first year of business, Diners Club grew to 10,000 members from New York’s business elite, with 28 restaurants and two hotels prepared to accept monthly billing from this select clientele.

Source: Diners Club International

American Express, on the other hand, existed as a company well before this. It was founded in 1850 by Henry Wells and William Fargo, who went on to establish Wells Fargo Bank two years later. AMEX was the first to market with a plastic charge card.

Source: American Express Australia

Until 1987, AMEX and Diners Club didn’t allow revolving payments because they only offered charge cards, so they required customers to pay their balance in full at the end of each month.

Competition between AMEX vs. Diners Club today

Naturally, things have progressed for both Diners Club and AMEX in line with changing consumer expectations. With both companies, you can still operate a traditional charge card, but both companies now also offer credit cards as well.

You can view a snapshot of the rewards cards currently available from both Visa and Amex in the tables below, with links direct to the providers’ website. Please note that these tables have been generated based on an average monthly spend of $2,000 and sorted by points per $1 (highest first).

Rewards program differences

Where these two brands pack a real punch is with their exclusive rewards schemes. They tend to aim for the higher end of the credit card rewards market, such as luxury concierge services, rare tickets to concerts and sporting events, fine dining, etc. They are also generous with their rewards points, typically issuing three points per dollar spent.

The lure of attractive rewards is a double-edged sword, though. Many retailers in Australia add a heftier surcharge (up to 3%) for payment by Diners Club or American Express, effectively reducing the value the card holder receives for rewards points gained. This surcharge will be advertised at the point of sale and savvy card holders have learned to look out for this trap.

The major banks here have partnered with AMEX to offer higher earn rates for Qantas and Virgin Velocity flights. Diners Club Australia has a standalone card that also appears in our top 10 list for the highest earn rates for Virgin Velocity rewards.

The credit card rewards landscape is constantly changing so it’s worth your while to keep tabs on any changes that may benefit you. As for the difference between American Express and Diners Club, there’s no doubt they add diversification to the market by offering their own separately-branded rewards credit cards and co-branded credit cards offered through leading banks.

Credit card surcharges

And what about those annoying surcharges? This has been overcome with the addition of companion cards. The American Express offerings from the big four banks came out on top in Canstar’s latest ratings of credit card rewards, thanks to their high earn rates. These cards come with a MasterCard or Visa in addition to the higher earning American Express. This is useful because not every retailer has an arrangement to accept American Express cards, or they may charge an additional fee (which may not be worth paying just to earn extra points). It’s worth remembering, however, that the companion cards may not attract the same rewards earning rates.

Acceptance: How many places can you use each card?

Diners Club has partnered with MasterCard for wider universal acceptance, so that 38 million MasterCard locations worldwide will now also accept Diners Club cards. In contrast, AMEX is accepted at tens of thousands of merchants across Australia – and although they don’t publish their worldwide figures, they are reported to be accepted at a mere 15 million merchants worldwide.

The choice of whether to go with Diners Club vs AMEX is entirely personal and depends on which card provides the best value to you. Check out the Canstar website to find a credit card for your situation.

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