Payments

In September 1958 Bank of America mailed about 60,000 unsolicited credit cards, BankAmericards, to residents of Fresno, California (reported). Losses and fraud were heavy at first, but the card worked. From 1966 Bank of America licensed it to banks outside California, and in 1968 Dee Hock, a banker at the National Bank of Commerce in Seattle, persuaded the licensee banks to form a committee to fix the system. In 1970 they created National BankAmericard Inc., a member-owned association, with Hock as chief executive; in 1976 it was renamed Visa. Hock called the design "chaordic": a network owned by thousands of competing banks, cooperating on rules and technology while competing for customers. Rival banks had formed the Interbank Card Association in 1966, whose Master Charge brand became MasterCard in 1979.

Fifty years later the cooperative was one of the most profitable companies in the world. Visa went public on 18 March 2008, raising about $17.9 billion in the largest US IPO to that date, in the middle of a financial crisis. In its 2025 fiscal year it processed about $14.2 trillion of payments volume and about 257.5 billion transactions, reported net revenue of about $40.0 billion and net income of about $20.1 billion; fiscal 2026 net revenue was about $45.9 billion. Mastercard reported about $32.8 billion of net revenue in 2025. Neither lends a dollar to cardholders. This chapter explains who earns what when money moves, why the card networks are so profitable, and why banks and the Federal Reserve are building rails that bypass them.