Credit Cards Come A Full Circle

Legend has it that the credit card was invented in the ‘fifties when one Mr. Frank McNamara had forgotten his wallet at home and had no cash to pay for a party he’d thrown for his important customers at a restaurant. Being a senator, he had enough clout to survive the incident but decided to do something so that neither he nor anyone else should have to go through such an experience again. Enter, Diner’s Card, the world’s first credit card.

Fast forward to today.

In describing a new service from MasterCard called inControl, this article in the New York Times uses restaurant as an example – in fact, the article’s very first – to illustrate how cardholders can set limits on different categories of expenses and inControl will ensure that their credit cards will be declined when those limits are breached. Point to  note is the transaction will be declined even if the cardholder is well within his or her credit limit.

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From its invention as a tool to bail out someone without cash at a restaurant, to blocking a food bill even if they have the money, it looks like credit cards have come a full circle!

Commercial cards have had such a feature for long. However, this is the first time it’s entering the domain of retail consumer cards. Unlike commercial cards which are used by corporations for ordering goods or services for their businesses or by their employees for incurring business-related travel and entertainment expenses, consumer credit cards are almost always used after the purchase has been made. In certain cases, as a matter of fact, the product or service is even consumed before the credit card is presented to the merchant. In such scenarios, I can’t help visualize what would happen when the buyer reaches the checkout counter, presents his or her credit card, and, lo and behold, MasterCard does its duty to protect its cardholder by declining the transaction.

Let’s take restaurants first. Does MasterCard expect the restauranter to laud diners for their exemplary financial self-control and waive their bills when inControl kicks in and declines the diner’s transaction? Or, does MasterCard concede that diners wouldn’t have a choice but to pay by cash or another card? If the latter, the basic purpose of the service, namely to exercise budgetary control, would be defeated.

In the not so distant past, when diners couldn’t pay their bill, restaurant owners in India would make them compensate by grinding rice to make batter for idli and dosa – two South Indian snacks – in a heavy, hand-operated stone-made equipment guaranteed to break their backs so that they never repeat their misdeed.  With electric grinders having replaced the old relics, what recourse will the restauranter have when faced with a diner whose transaction is declined by MasterCard’s inControl? Given that electric dishwashers and vegetable cutters haven’t made much headway in India, will the restauranter tell the miscreant customer to wash a hundred dishes or peel a quintal of potatoes?

Consider gas stations next. Barring the most state-of-the-art gas stations having ‘pay at pump’ infrastructure where the estimated charge to the credit card is preset at the dispenser before the fuel is dispensed, motorists or attendants tank  up first, then the motorist presents the credit card to the cashier located inside the store or at a central location on the forecourt. What if MasterCard inControl again serves its customer by declining the transaction, with a friendly message, “Hey Joe, we’ve helped you stay within your fuel budget for the month”? Will the fuel dispenser work in reverse and use a vacuum pump to suck out the freshly-dispensed fuel from the vehicle?

inControl is a service that would surely be found useful by people needing help with exercising self-control over their finances. However, some of its usage scenarios do appear quite hilarious!

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