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?

Question

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?

In: 942

Answer 1

Even a large bank like BoFA or Citibank would spend tens, if not hundreds of millions of dollars replicating the systems that Visa/Mastercard has developed. On top of that each vendor that accepts Visa/MC signs an agreement with them and gets services, guarantees and a cost structure. The network of merchants, protection systems, verification, contracts takes DECADES to put in place.

Do you think that even a not-small bank would be willing to spend all this time, money etc just to get a most likely inferior and more costly system that would take many years to become commercially profitable?

I guess you know that EVERY SINGLE MERCHANT that accepts Visa/MC must have a contract with Visa/MC. And this is a worldwide network of merchants.