What’s the point of Visa and Mastercard if it’s always from a bank? AmEx cards are produced and processed by them only and not any other processor, so why can’t banks make credit cards without Visa or Mastercard, or vice-versa?
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A lot has to do with the history.
In the beginning people would buy things, and not always have enough money on hand to pay for those things. So the store would provide credit. They would keep a ledger of who bought what, and owned how much. Based on history and personal knowledge one man might have $40 of credit available and another might have $140. It was up to the merchant to decide.
Then cities became a thing, and merchants had multiple employees and multiple locations and rather than just trust all the managers, they created applications for those who wanted credit, and at first the owner reviewed the credit applications, but eventually he hired specialists to do this work.
Some merchants had really good credit departments and others had bad ones. Owners would hang out together at country clubs or social clubs and brag or complain about their credit departments. Eventually someone with a great credit department, and not so great product offered to run the credit department for another store. They both made alot of money and so other merchants signed on.
Then the banks saw all that money moving around and offered to do the accounting and financing for very cheap. Knowing that if they took over enough of these networks they would have a monopoly.
Unfortunately banks back then were limited in that they could only operate in one state at a time. But the really large retailers did not. So rather than tell the Manhattan based Macy’s customer that they needed a new account to shop at their Connecticut or New Jersey store, they created their own super credit network. A “Master Card” that would work with all the little regional cards. This legally could not be operated by a bank, because banks could only work in one state. They hired a lot of lawyers to make it legal to just the credit processing across state lines, but do the individual accounting from a state based bank.
source: my mother’s father was a store owner from 1935 to 1970. When i became employed by MBNA, my mother gave me a history lesson on how credit cards came to be.
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