Origins of the VISA Electronic Payment System

In 2011  David L. Stearns of Seattle Pacific University wrote a book called – Electronic Value Exchange: Origins of the VISA Electronic Payment System.

I haven’t read the book but read its review on EH.net. Looks quite an interesting book. Goes into history of how this VISA payment network came up.

Chapter one gives a brief history of merchant and bank charge cards as a way to understand context for Visa’s formation in 1970.  From the appearance of the first credit card in 1914 to the mid-1950s, it was common for cards only to be issued to the best customers and their use restricted in terms of location and dollar amount.  In 1958, Bank of America issued the BankAmericard, the first credit card developed for middle-class consumers that could be used at a variety of merchants.  Its success led Bank of America to license the card to other financial institutions, and by the mid-1960s BankAmericards could be used across the country and internationally.  While improvements in technology were central to this growth, Stearns contends that the use of a common design and marks were also important in generating early acceptance by consumer and merchant for the cards. 

Chapters two and three outline why Visa was created and the work of Visa’s first CEO Dee Hock in shaping the organization until he left in 1984.  Visa (originally called National BankAmericard Inc.) began as a cooperative of BankAmericard issuers whose mission was to make processing credit card transactions faster and more accurate.  Stearns identifies Hock as critical to the early success of Visa by helping determine the social dynamics of the new organization.  This included the creation of operating regulations regarding card design, interbank fees and dispute resolution procedures that all card issuers would follow.  These rules allowed competing bank members to “trust” each other enough to coordinate their activities, which in turn enabled Visa to process information between banks in the system more effectively.

Should be a good read to understand what happens when you swipe your card…