Diners Club Loses Its Meal Ticket As Government Picks Competitor

Diners Club, a credit card pioneer that forged its image as the trademark of big-spending businessmen and jet-setters, lost its biggest account Friday, prompting industry analysts to question the future of the 43-year-old card.

Diners Club officials were disappointed at losing a federal contract to provide charge cards to nearly a million traveling bureaucrats, but they said the outlook remains vibrant for their core business: catering to traveling executives.

However, analysts pointed out that the government contract amounted to about 25% of Diners Club’s annual domestic business.

Diners Club lost out to American Express Co., which waged an intense battle for a client that provides $2.5 billion in annual charge volume and much prestige. The winner called it “the largest commercial card account in the world.”

American Express, which is aggressively expanding its travel services business, spent two years and about $1.5 million to win the five-year contract.

Diners Club recognized the loss of the contract posed a setback--the account meant 10% of its worldwide charge volume--but insisted the blow isn’t serious.

The General Services Administration, which awarded the contract, would not describe specific shortcomings of the Diners Club bid, except to say that there was “very, very keen competition for the account.”