Why do most banks not make their own payment systems instead of relying on Visa and Mastercard like American Express does? Chase, BOA, and Citigroup are all much larger than AE.

Question

Why do most banks not make their own payment systems instead of relying on Visa and Mastercard like American Express does? Chase, BOA, and Citigroup are all much larger than AE.

In: 2

Answer 1

Visa and Mastercard aren’t simply brands that extend credit, but really massive networks. Think of every consumer with a card to use, every payment processing machine, every vendor that uses those machines, every bank that has an account for those vendors, every state and country who is regulating those banks. Its a huge and complex operation, which you can’t just reconstruct without years and years of work, an army of people, and building a lot of trust with a LOT of different kinds of organizations.