It's not "a trick" or "a paradox" that people use a Visa card and don't know about the company's origin. The same is true of almost all common objects.
@@nialfrancis5728 They be like "Ugh, rich people avoiding taxes amiright?" These days and It's like yeah, I would too. And they would too, why don't socialists just donate all excess money to the State if its so good 🙄 A lot of people in the comments are angry at companies for bringing them a service and making profit of making your life easier. Its incredible.
An interesting footnote at the most modern of credit card history: most credit card issuers track where you shop, what you buy, and your general spending habits. That information is aggregated, and then sold to health insurance companies, among other corporate entities. My Amex has a section on this in the ToS. This practice is illegal in nearly all of the developed world. But not in the US.
@rtsp how does inflation benefit your government? Maybe another government that your government borrowed from might benefit from your government's inflation. Inflation devalues the currency of the operating government .
And now it's become so entrenched in the system that the entire retail economy gives these companies 3% of every sale. Even when there's other payment methods that don't require a fee. Edit: I'm not talking about cash. I 'm talking about other online payment options that don't require fees.
This, would create a competitive opportunity IF the capital-intensive infrastructure needed to run these business wasn't such a monopoly. But commoditisation will happen there too, even if it may take decades.
i usually pay cash and if i buy in small store i have chat with owner,pay cash and they are happy to lower price for 3%,they still benefit by getting money immediately
@@danieleverywhere132 they get the money immediately with a card as well. I get direct deposit every midnight for the previous day. And I dont have to make a deposit at the bank. So the 2% fee is almost worth it, for the convenience... Its the 3.5% + cards that are an issue, for me... the reward cards get over 3%
no visa keeps 0.2% of that. Most of that goes to issuing bank and acquriing bank. Usually out of a 2.5% take rate transaction. Visa/Mastercard keeps 0.2% the issuing bank keeps 1.8% then the rest of it is split in a plethora of ways with other parties like the the processor, payment gateway, acquiring bank etc. Visa doesnt issue any credit and only keeps roughly 0.2%
I worked for a credit card processor business for years and years. This video is very good at explaining the process and industry. Almost no one outside of the intdustry even knows it exists, let alone who accepts the risk, who gets the money, etc.
They're too powerful. There needs to be checks on this. Our culture pushes against industry oversight for some reason, and we keep getting screwed by whales.
@@watamatafoyu BankBoston switched over from clearing credit cards internally (and they were a very smart shop, but that was probably why it was too expensive to go on) to using FDR. The day came for the switch over on the home banking system (see below). We threw the switch, and thousands of credit cards fell on the floor. This was 1996, and BankBoston (very smart shop) was Y2K compliant... and FDR, which handled 40% of credit card clearances at the time, was not. So VISA cobbled the system together to bypass the problem (temporarily), threw the switch, and thousands of credit card FRAUD fell on the floor (oops). A mountain of paperwork to work through with Treasury...
Do you think they run a risk of being ousted? I can imagine Apple doing it (Apple Pay, Cash, the new phone-to-phone; it's kinda like a high-tech version of the mobile money that is taking over Africa). Currently they are building on top of Visa/MC but that could change, couldn't it? I mean, Apple could run its own blockchain even.
But we should know. It's important to know how things work and the origin of the things we use all day every day. Doing so allows us to think for ourselves.
DUDE. You are a dynamo. I listened to this via bluetooth in my car TO and FROM a furniture store, where I was to buy a new sofa. The very fact I could purchase it in mere seconds was not lost on me during the transaction. I even told the salesperson how hard that would have been back in the day (he wasn't as impressed as I was.) Thank you for spelling all of this out, I'm going to listen a couple of more times. Bravo!
you paid at least 3% more for it even if you pay in full when the bill comes, the credit charge is built into every single thing you buy even if you pay with cash!
For a long time, my parents saw credit cards as something similar to hard addictive drugs. Their concern was that you could easily get into trouble with uncontrolled debt and interest.
@@KingAlanIthe only problem with using a debit card for online shopping is that your money isn’t protected by fraud. If you lose $300 on your debit card due to fraud. That sucks. But if it’s a credit card, you have no liability whatsoever. Fraud protection for credit cards is objectively better
Credit cards, when used responsibly, can be a net positive. When used irresponsibly, they can be catastrophic. It really is up to you as a person to decide if you are right for one or not. The key is to not treat your CCs like an “infinite money glitch.” They are a substitution for the cash you already have on hand or in your debit account. Pay them off every month, and you will be fine. Don’t and you may never climb out of debt.
The highest number I could find was 241... 193 United Nations members, 2 recognized as Independent. But one source mentioned 241 counties and territories being recognized.... In short 700 is not a real number. 😂😂😂😂
@@PhoenixEncore ISO-3166 is the country code classification used for statistical purposes and issuing TLDs (top level domains) it contains 249 codes for countries and territories. In many cases countries have external territories, self-governing territories or special regions and these territories have been recognized as a statistical entity based on the M49 of the United Nations Statistics Division, such as US - Virgin Island US, Guam, Puerto Rico etc. UK - Virgin Island UK, Bermuda, China - Macao, Hong Kong etc. You are right 700 is a big stretch.
Not exactly they talked about what they do. Take on risk. There's a reason merchants ran to them in the early days. You're paying into the network of banks.
Dude, what a fantastic video! Didn't think I would watch all 40 minutes of it, but a couple of minutes in I was engaged. I like your presentation style; again, great job!
There was one successful new competitor to Visa and Mastercard -- Discover launched in 1986. Originally, the Discover card was owned by Sears. Actually, it was something like Greenwood Trust and Bank, which Sears owned. Sears offered pre-approved cards to all Sears credit card holders in good standing. I still remember getting my Discover card summer 1986. It was the first non--store credit card I had. Sears first began accepting Visa and Mastercard in 1993.
I live in Southeast Asia and they have dumped Visa and MasterCard. Everyone here uses a QR code based payment system that is somehow connected to Chinese Banks. Even the smallest street vendor uses this system.
@mistersync100 when they purchase something they just scan a QR code that the vendor displays at the front of the store. They hold the phone up and show the vendor the confirmation of payment. Everyone, even the smallest little street vendor use this system. It's in China Thailand Cambodia Laos Malaysia Vietnam Indonesia.
Also used to work at Visa. One thing that stuck with me is that we were told "our competitors aren't AMEX, MasterCard, Discover. Our competitor is cash." and watching this feels really cool to know that part of Dee Hock's vision about a shared goal by a group is still kinda there.
In late '83 I retired from the US Air Force (communications tech) and went to work for Visa. I retired from Visa in early '09 after 25.5 years. It was one hell of a ride just keeping up with almost exponential growth. My one regret is that I never got to meet Dee.
I remember when "VISA" was called "Chargex" before they had magnetic strips - I'm thinking early 70's. They ran TV ads that showed the card and preprinted 3-copy carbon paper receipts going into the manual imprint machine, along with some catchy jingle. The idea was that the merchant would drag a wand across the carbon paper sitting on top of the consumer's card, which would leave an imprint of the card on each paper copy. The merchant would get a copy, the consumer would get a copy, and presumably the merchant would remit the 3rd copy to the merchant's VISA agent to be reimbursed.
Credit Card Imprinter AKA Knuckle Buster. This is still a thing in some cases (at least in EU) for specific cards. Not all shops have this method. If there is no internet/electricity you can still use this method to pay for goods(there is a max amount you can swipe). It is a backup method for paying just like there is a backup method for issuing receipt/invoice if there is no electricity/internet.
Don't forget that cash transactions have costs as well. For a consumer, walking around with cash is risky. It makes one a target for crime. For retailers, keeping cash in their stores is risky as well. Stores, bars, restaurants, etc., are targets for theft at the register, in the office, and on trips to make bank deposits. There is a cost to this as well: losses from theft, expensive drop safes, security guards, extra insurance, armored car services, constant counting and recounting of cash, and more.
Not to mention that as a retailer, some banks even charge you to deposit cash in excess of certain amounts. Plus the manual aspect of having to move the money or pay a service to do so. As a merchant, I'm completely fine with paying the 2.57% that I do now to cover all of the things that I don't have to worry about.
Yea many people don’t acknowledge that because then they’d have to admit that credit card companies aren’t actually driving up prices by 3%. Make the big company the boogeyman, a story as old as time.
Card payments bring with them new forms of crime too though e.g. someone tried to charge over $2000 to my never before stolen credit card at an online merchant I had never heard of (StudentUniverse, which I later heard is more well known in the USA, while I'm in Asia). Also wondering how Amazon manages to charge me $6 monthly although I don't have an account with them. Cards can be convenient though when the buyer/merchant don't have exact change
A little Freakonomics: I remember working in my Sister and Bro In Law's Hardware Store in the 1960's. She had an old school mail & receipt spike full of NSF checks from local customers. A good number of the NSF customers were renters who were about to move so they figured they were going to beat the debt and be unfindable, others were small local contractors who got overextended. Then the Credit Cards started making big inroads to the system here in SE Looziana. The 1960's were truly Watershed years in how ordinary folks handle their finances. It worked for a good number of folk but likely Bankrupted many more.
If anyone’s interested the Aquired podcast has a super in depth episode about Visa and it’s FASCINATING to say the least! Totally recommend checking it out
My mom’s first job was working for BofA at the original office in SF in the late 1940s. My first credit card was a BankAmericard and I was disappointed when they changed the name to VISA, but learning the reason for the color choices of the logo makes up for that. I now live in NC and appreciate your video as I never quite understood how the card became separated from the bank itself. BofA is nothing like it used to be, I knew it wouldn’t be when they left SF for Charlotte.
I left BofA in 1977 and never looked back. I banked in a training bank in Anaheim CA. They wanted to charge me to close my account as I was upset with them and wanted to move my money. I stood in the middle of the bank (at the window) loudly repeating “I want to remove my money from your bank because you keep making mistakes and now you want to charge me to close my account and do that” It went on much longer than I expected but eventually I was able to get my money for free and never walked into a BofA again. Well once. I had a BofA money order and I took it to a BofA bank to cash and they refused saying it wasn’t from their bank. I was in California and the money order was from a BofA in Texas. I don’t remember the outcome of the money order but THAT was the last time I had anything to do with BofA. i was 18yo in 1977. BofA lost me as a customer just as I was starting out. (Edit) I near Fayetteville NC now).
This was a very informative and entertaining video. I've known for some time Visa started from BofA but never looked into how it got from a bank in California to a global powerhouse.
The words: "just a little, don't worry", are anathema to people actually trying to learn more. Don't worry, John. Don't patronize your audience. We're here for the content, and we love it.
I don't run CC transactions. I have a client fill out a check and take a picture. I then represent the check to their bank. Sure, it takes a day or two longer, but I don't get charged a fee. Our lowest charge is 10k, so those fees add up fast.
Yeah, checks are awesome whenever the customer and merchant actually *trust* each other. I consider the payment processing fee the "cost of low trust", with the killer features of payment processors being: possibility of chargebacks/disputes (I don't trust the merchant), keeping my checking account number secret (I don't trust the merchant), and impossibility of after-the-fact bounced checks (the merchant doesn't trust me).
So you don't get charged for banking? There's no cost at all to depositing cheques at your bank, as a business? What happens if someone passes you a dud cheque, what then? If you don't need the protection of a card network, then sure, it makes sense. But for a lot of retailers/service providers, that risk is too great - especially online.
34:34 97.9% goes to the merchant, 1.8% goes to the issuing bank, an 0.1% goes to the acquiring bank and technology provided? Maybe should interview small business owners on what's the true cost of Visa/Mastercard systems. It's never just 2-3% of the revenue stream. Cash is always a good payment method, and some countries have used direct bank transfers as payment methods by scanning QR codes on your phone app. We live in an age of rapidly emerging technologies, and there should be better less exploitative alternatives at much lower costs. Why still charge legacy land line rates when everything is VOIP, because they can.
Brazil has the PIX payment method, it's managed by our central bank. They handle millions of instantaneous transactions daily and it can also add complex metadata to transactions (User message, company and user info so you know to whom you're paying, invoice data, tables of information, etc) , and it has zero cost for the merchants and consumers. VISA/Mastercard should be phased out eventually.
it really is only 2-3% for visa/mastercard. you can even get powerful terminals that will give you a straight fee between there for accepting cards and will usually add in some free software you can use. Cash is not a good payment method. It sucks and is outdated. What's better than having your bank directly let you use your cash? Like a lot of this doesn't make sense.
1) as has been stated, it really is just a 2-3% fee. If the business owner thinks it's a lot that's on them. 2) the alternative to this is spending way more than the 2-3% to move around, protect, and check/monitor the physical cash. 3) that QR system sounds extremely insecure. If it's on your phone it's a really easy way to get hacked, which is why it's not as popular in the US. We have all that stuff.
In the UK the total fees are 1%-1.75% depending on volume - unsure why it’s so much lower here. Cash is often more expensive to process due to the staffing requirements and bank fees.
This was a well researched, engaging video. Thank you for not doing the "I'm about to tell you" scheme. It was paced like I have a brain and want to learn. Some of this I knew, but most of it was great new information. I'm looking forward the the Mastercard story. I was alive and remember both changes but failed to understand the motivations. Good stuff.
Mate, did you say more than 700 countries at about 38:10? I do not know if you intended to say more than 70 countries and slipped, because it can't also be governments even counting regional ones.
I don’t understand I mean 700 countries. Make sense if you don’t think about it! lol The crazy part is most people nowadays are TikTarded, they don’t even know how many countries they are! Especially in America!
before this, I didn't know how banks operated with each other or even what sort of role VISA paid in maintaining cross banking systems. Seriously a mind-boggling watch for someone without a finance background. Appreciate your work to bring this gem of a knowledge out, john! Learned something new and crucial today!
@ crony capitalism then? how would you describe those designed to be competing in business colluding to ensure artificially high profits? I feel that has to be an oligarchy if not an oligopoly where those who are in buisness collude. I mean this has been rebranded as synergy?
@@MrJonyish I don’t think either of those makes any sense in this context. The founding of Visa was simply a cooperative enterprise between many individual enterprises. This wasn’t done via government regulation or explicit legal consent or exemption, so the government did not interfere with the market. This means that it’s not an oligarchy or crony capitalism. If you want to use the word “capitalism”, even though it doesn’t fit in this context as it describes an economic system, “cooperative capitalism” would probably work best.
In Brazil, credit cards work a little different from the US. We do use Visa and Mastercard, but credit is sold differently. For example, a purchase of 100 USD can be paid in multiple installments, for over an year. This reduces a LOT of the upfront cost, but also have the risk of people buying more than they can afford.
The security it offers is worth it alone for all the extra fees we pay, especially with all the issues i had with Solo in the past, which was a debit offshoot of Mastercard.
37:08 not sure what Hock was on about. Competing payment processors and card issuers did emerge after Visa and Mastercard, most notably Discover (in the US). Discover and Amex both issue cards directly to consumers rather than through banks, so what's the issue here?
I'd never thought about the checking vs savings account until I traveled outside the USA, and learned that in some countries the typical consumer account isn't separated into checking/savings. It's one account for all transactions.
A checking account is a type of bank account that allows the account holder to write personal checks as a method of accessing the money in the account. Checks are basically a method of authorizing someone the limited ability to withdraw an authorized amount of money from the check holder's checking account. It used to be that only banks issued checks which could be used to withdraw money from savings accounts.
@@bufordhighwater9872 none of these comments address anything about HOW using "checking" for current accounts is explained in the video. Something the viewer imagines but not explicitly covered doesn't count.
Thank you, John, for a really interesting recap of the path from the initial BankAmericard through to Visa. Am in my sixties, and am from Cali. I saw this happening around me, but was unaware of the mechanics. Super interesting re Dee Hock. Cheers!
Great video! Small but important error at 22:50 the clearing house was not a new idea, it was the standard way banks recognized each others' bank notes before central banking.
1. "He was a capitalist" what's the purpose and use of this reference? What useful information does it provide? How is that info relevant? 2. How is,"member ownership" & member input on organization Socialism? How would join a group where they will have no input? (Joining the armed services or getting job is not applicable) 3. Clearing houses were first proposed in 1636 by Philip Burlamachi, financier to Charles I of England. So an ACH isn't a new thing, but a novel system doing an old thing. ...
I noticed that too. I can't be the only person who is getting annoyed with people misusing the labels of capitalist and socialism to mean "guy that wants all the money" or "guy that works super hard/bootstraps" and "literally anything that involves input of more than one person" respectively. Our school system has failed us in many ways, but one major way is the potato-for-brains way of looking at everything as "capitalist = the bad thing, socialism = the good thing" even when there is no relation at all.
@@BlumpkinSpiceLatte Agreed The school system is run by socialists. It's the same reason why now a days Capitalist = Oppressor and Socialist = oppressed.
@@BlumpkinSpiceLatteI had to take a macroeconomics class in high school that did a great job explaining the difference between economics and their governance as well as how they function. I feel like this must not be very common given people’s lack of basic economic understanding.
Looks like someone really embraced the AI generated slop made from theft of other people's copyrighted works. It really helps “enhance” your “creativity”. My favorite is the one trash image at 12:54 where you can see a mid century banker in his mid century office sitting beneath a clock with weird AI deformed numbers, and on the desk in front of him, his misshaped 1990s landline office phone and his big LCD screen (or iPad, or whatever that thing is supposed to be). The molten faces at 13:54 and six-fingered hands at 14:31 are also a nice touch. Well, as long as it helps your "credibility" as a documentary maker, buddy... just don't expect anyone to take you seriously. Oh, and also, nice detail with the remains of Alamy stock watermarks at 13:37. I bet this one was also AI generated after some creative borrowing of source material from where it shouldn't have.
Random fact: the first video phone came out in 1927. And in the 1950’s there were 2-way video phones. They cost about 50k a piece. It’s not far fetched that an office would have had one. The rest…. Who knows. 🤣
yup. immediately turned me off. thanks for the timestamps so i know it wasn't just a one-off, no shame in making a mistake as im sure we've all been fooled by AI at least once but there's genuinely no excuse for a video like this when there is so much documentation around this time period. it's not impossible to find pictures of Real bankers and office workers from this era, unless you're 1. too lazy too seek it out and 2. satisfied with underpaying an editor who doesn't care enough to do the legwork
exactly, i was also surprised about the overly positive tone when describing how they were sending out credit cards to people who had no idea how to deal with credit and calling advertising “education”.
Even PayPal had a bumpy start. I was at a sister company when it launched. They failed to prevent customers from entering negative numbers. They when to court but the Judges just laughed at them.
Don't know about the US, but over here in Europe very few Visa or MasterCard operate on actual credit, let alone loans. It's just a system to facilitate a bank transaction at shops. It's mostly used due to being the established solution, but getting increasingly more competition.
Tile says VISA, thumbnail has an American Express Card in it, and the opening ad I’m fed is for Wells Fargo. Bet you didn’t know that Mr. Wells was the President of American Express and Mr. Fargo was the Vice-President of American Express. The two founded Wells Fargo & Co., Express, because all the other directors of AmEx voted against their proposal to expand American Express package delivery to California during the Gold Rush. Both were literally the UPS & FedEx of the late 1800s.
This is the first time I hear the VISA story. Thank you for making this video. Only I don't think you are right that customers don't like to pay with crypto, it's that you can not pay most bills with crypto. At my job, we manage payments of utilities for seven hundred people, and at that volume it has become clear to me just how much VISA is taking when people opt to pay us with VISA card. But crypto is not an option because we can not pay the bills with bitcoins.
Fully centralised, private ledger. With confirmations made by government controlled politically biased authenticators charging fixed fees. Possibly the worst form of digital payment and would flop as a cryptocurrency.
Holy CRAP! Girlie, you are living my dream and looking amazing doing it! I'm so proud of you and wow it's really inspiring because I'm 35 now so we're only a year apart and seeing the path you're on is so similar to mine and while I've been slowly figuring out the logistics of my life you've been actually LIVNING IT and DOING IT! I love that for you and I'm so excited to see what I can learn from you! Sending you love, peace, warmth, and happiness!
I worked at a VISA Centre here in Canada for 30 yrs starting in 1974. Back then in Canada it was known as CHARGEX. I actually spent 20 yrs handling 1.5 million authorization calls from merchants. Thanks for history.
you gotta admit VISA was genuis and single handedly revolutionized the worlds economy. it did so much good i’d say the only issue is lack of competition for visa. no one can hold them accountable for high fees for example. they where simply ahead of their time without visa the world would likely be several decades behind in terms of transaction processing. this is one of the few corporate conglomerates you can argue was for the most part made ethically and “earned” their spot. their business model too is just genius like their profits literally goes up with inflation
Because that isn't accurate. Visa, Mastercard and Amex all run their own networks. You might be thinking of payment processors or acquirers which handle any transaction from any scheme the retailer opts to use. Those transactions are then managed on the individual card networks.
@ian9outof10 When paper vouchers were used ("zip-zap machines") the identical stationery was used for both cards and processed through a central clearing bureau. Today the transactions are processed on-line by the individual banks (data connection from the retailer's cash-register terminal), so the clearing bureau has fallen away.
I was heavily involved in the data transfer and acquisition security side of credit/debit card transactions in the 90s, the banks have to consider not only bad debt from credit cards but also fraud which rose to epidemic proportions in the 90s before the introduction of CVV ( not to be confused with CVV2 on the visible portion of the card). Further improvements came with Chip & Pin, however it’s a game of cat and mouse, new security protocols only last so long and it’s a never ending battle. By the way, debit card and credit card transactions have different merchant fees despite all the process being identical.
You should stick to it, I had a try years ago, and didn't end well, specially when you have a bad turn. 2020 deliver me from that trap, but I still have 1k to repay now.I had share the same mindset you got untill the internet market and special offer, push me to get into it, big mistake I make then. Now I use only debit, cash and credit I put myself on card.
They're only bad if you don't know how to use them. The problem is that people spend money they don't have. In reality, you only spend what you physically have in your bank account. That way if things do go wrong, you can instantly pay off the card and cancel it. Always make sure you pay off your debts in time and you won't get charged interest. It essentially means that you get to spend your money, while still being able to keep your savings in an offset account or high interest account. By doing this, you also get points which you can claim on many things. Personally I use those points to buy fuel gift cards. Unfortunately many just see credit cards as free money. Which it isn't. And used improperly you can find yourself in trouble. But used properly you actually gain money for doing what you're already doing.
That's a stupid idea for a few reasons. Mainly you need to build up a credit history if you want to get money from a bank, for example a mortgage. Credit cards are only bad if you use them incorrectly. If you want to use them safely whilst building up credit passively, for example use it for your Netflix subscription or any other subscriptions for that matter. Then just pay it off on time and you'll never have any problems whilst helping yourself in the future. Credit is one of the biggest tricks used by rich people, did you know most billionaires don't actually pay for anything with money? There's special banks that offer 0% interest loans for rich people, they use these loans to pay for stuff because most off their own assets aren't liquid, its usually in the form of bonds or shares in a company that can't be spent.
It's just a lot easier to use and issue. Plus, it's a debit first system. It probably would succeed in Africa if not for the lack of electricity and internet access in many places.
16:00 - Failing to see how there's a dash of socialism. Have we redefined words? Capitalism and democracy are not mutually exclusive. Even if it is a weighted democracy. Socialism would have meant that all the banks shared the profits equally regardless of their many transactions their bank brought in.
Google "301 ranch road west pescadero" and you'll find a bunch of references to it; there is a bunch of farm land on the west side of the Santa Cruz mountains
The problem with cash transactions in the modern day is the cost and risks of accepting cash. There is the risk of theft- by robbery or employee. The next problem is getting the money from the store to the bank. I could have an employee take the deposit to the bank (risks the employee safety) or hire an armored service to do it (risks the store for keeping money overnight or multiple nights in the safe plus introduces a new expense). I was a manager where I needed to open the store which involved taking the deposit from the night before to the bank- about 2 miles away from the mall. It takes about an hour from the paperwork, heading to/from the bank, waiting in line, and having the bank verify it. Secured bank bags, slips, and the extra labor plus the risks. Armored van isn't an option considering since some stores might have small deposit amounts where the cost of pickup is a significant amount of the deposit sent. Accepting cash is not free.
payment cards are one of the greatest cons of all time, at a fee of 3% every single Dollar that is spent 250 times belongs to a card payment taker. They managed to commodify the act of using your own money.
@@WarlordEnthusiast John Coogan did break down the cost of the fees involved in one transaction. It's in the video at around 34:06 , the fees work out to be about 3%, VISA making about 0.2% of that
Go ahead an buy something from online from let's say.. Germany.. with cash. See how well that goes for you. Credit cards are a service that greases the wheels of global commerce. Without them many things would be difficult or impossible. Don't be so obtuse.
@@sbjchef I buy alot of stuff online now because its cheaper than buying it in person with cash. If anything buying stuff with cash is more expensive than card. Unless its something used, then buying it online is the way to go. Also, your "explanation" doesn't explain why a product costs the same in a store if you use cash or card.
Problem is when only a few companies do the bulk of transactions they become gatekeepers to financial activity, and although there are laws protecting the use [right to use] of cash there are less protections for debt/credit transactions. Just ask many merchants in Japan this question.
Hey John. Loved the video! It was a great watch. The closest thing I've come across that aims to unseat visa would be Flexa. It utilizes decentralized collateralization and blockchain to provide instant settlement. They've partnered with a number of the largest POS companies to integrate directly into merchants existing hardware. Would love for you to give them a look and share your thoughts!
@teebob21 Actually, there are refunds and they are handled by the merchant. In my personal experience, they've given me store credit, cash, or a gift card for the refund.
I do have genuine leather bags from other brands kislux I get what I want without paying exorbitant designer prices. That's the point. It's not about the superficial, it's about getting what you like at a price you like.
Well done, interesting video. As a merchant, I can concur that VISA's fees are far too high for the amount of work they actually do... hence the 55% profit margin in 2023, leading to almost $20 BILLION in net profit.... on the backs of the American consumer and small businesses.
Crypto threatens VISA, Mastercard, SWIFT. Giving control of digital currency to the user, instead of some unnecessary corporation that profits by skimming the top.
Meanwhile here in germany, most companies don't accept visa, since their fees weren't profitable for them. Why should you pay a high monthly fee, when you don't have any customers with visa cards. some grocery stores started to accept with a few years ago, but it still far from general use.
Once it starts it'll explode. The reality is overall it's cheaper to accept card but not everyone realizes it because the cost of cash is more hidden in things life theft, errors checks and balance (which takes employee time thus money)
Weird how the government still decided it had to be written in law 20 years ago, that customers paying with a card (formerly "EC-Karte", now "Girocard") must not incur additional fees at checkout? What does this lead to? Ah why, yes, such fees are spread to all customers by accounting for it in goods prices.
@@thiswillprobhrt Yes for Visa and Mastercard exist a fees the vendors have to pay monthly just to be able to use the service. The main reason, why it won't spread further, is that we have a so called "EC-Card" from our bank, which is linked to our bank account and is used instead to pay cashless, or to get money out of the ATM. You only need a visa for when you shop in onlineshops, that don't except anything else besides credit cards. Online payment options here are: "buy on account", "buy on prepayment" (both are bank transfers), "direct debit authorization", "PayPal" (which gets a direct debit authorization), same for "Sofortüberweisung", and "Klarna" (Service, with whom you made an installment payment agreement).
Is there a version of this without music, perhaps an unlisted one? Some of us are weird and can’t focus on spoken words when there’s music vying for attention.
Some presenters are so intensely brainwashed by the millions of advertising jungles they have been subjected to - like Pavlov's dogs - they have become brainwashed an d have this need to play music during their presentation - which detracts from the value of the presentation. These people are so easily brainwashed / indoctrinated - perhaps they should concentrate on a music channel to satisfy their appetite for music.
Visa gets a cut of an arbitrarily assigned amount of a loan that they guaranteed. The product purchased is inconsequential The promise to pay the entire loan is essential. Question: with all this profit occurring why did the government bailouts occur?
I recall still having a Bank Americard back in the late 1970's, eventually getting a new VISA to replace it later. And a Master Charge, eventually becoming MasterCard.
I think the Visa Mastercard duopoly forbids merchants for taking out a fee for card payments. this is why many businesses instead choose to not accept card payments below a certain sum.
@@asdfghyteractually in many countries it is a legal rule to have no fee for card payments, and even in some places a minimum card purchase level is banned
Credit cards are leeches. Cost of goods and services would be LESS if we went back to cash. People think getting 1%-5% cash back they are making out, they are not. Retailers have simply raised the prices to cover the costs
Because cash is convenient? You have to go a bank to get cash, over and over. Does that work at midnight on a sarturday? What about in the middle of nowhere with the nearest bank 50 miles away? What about paying for something online from a company in France? Cash is not free and not as useful as you say.
@@flamesintheattic he prolly doesnt mean just paper cash but opposing credit system. do you know these interest based economy is forbidden in islam? simply because they derails the economy when people starts depending on it. sure go live on what you dont have on the name of convenience.
these western economy are just total scams. everyone knows it but they just so addicted cant control themselves from something that should so basic. westerners profit 9$ from a product that takes 30cents to make and its just fucked up. entrepreneurs founders billionaires mega companies an unicorn born every other month, people pouring money pump pump pump take big profits to stay on radar and cover marketting and 50 middlemen ff
@@flamesintheattic Your low effort argument did nothing to disprove the fact that your cost of goods and services includes credit card fees thus making EVERY purchase more expensive by on average 3.4% and in some cases as high as 5%. You can buy things online via ACH which costs $0.00 in fees.
Thank you for this! Quick editing suggestion there are not 700 different countries on the planet. 🌍 around minute 38:00. Thank you this piece shows the inspiration and construction of many deep networks of belief systems that many of us were born in to that impact our daily lives and that impact the price point of everything around us around the world. When it went from shameful to put something on credit in the early 1960s to life of aspiration because of great commercials the world didn’t predict what would happen. This piece shows where we are and why we are here financially, socially and spiritually. NOTE: remember money has karma and fees (like emotions) matter significantly! Peace ✌🏽
I use Visa and Mastercard debit cards. I only use credit if I want to pay later. The most important thing is that I use cards that don't charge processing fees and other nonsense fees. Remember, banks already make money every time you spend, and you shouldn't pay them to maintain their Visa/Mastercard network.
@TonyFisher-lo8hh some merchants will pay the additional charges, some will ask the customer to absorb the charges by adding it to the total bill. In Singapore, it is illegal to ask customers to absorb the extra fee if the final total bill is not reflected in the receipt 😁
@@tuapuikiabut you're missing the point that the only fee you will be charged as a consumer is interest, if you haven't paid it off at the end of the month. The merchant is still paying the transaction fee regardless of if you use a credit or debit card.
It's not "a trick" or "a paradox" that people use a Visa card and don't know about the company's origin. The same is true of almost all common objects.
Yeah it's kinda like Band-aids, most people don't even realise that's the company's name not the object.
Exactly, most people who drive a car don't need to know how a car works intricately such as thermodynamics and fuel chemistry.
Choosing to work together is not socialism either
That's by design. It was introduced gradually and silently, and it is still being introduced.
@@nialfrancis5728 They be like "Ugh, rich people avoiding taxes amiright?" These days and It's like yeah, I would too. And they would too, why don't socialists just donate all excess money to the State if its so good 🙄 A lot of people in the comments are angry at companies for bringing them a service and making profit of making your life easier. Its incredible.
An interesting footnote at the most modern of credit card history: most credit card issuers track where you shop, what you buy, and your general spending habits. That information is aggregated, and then sold to health insurance companies, among other corporate entities. My Amex has a section on this in the ToS. This practice is illegal in nearly all of the developed world. But not in the US.
This is unthinking even in the developing world
It's done in the EU too don't worrry
Wait until you find out about the corrupt pharmaceutical/ Healthcare industry. They literally hate you
The US has the worst (hilarious lack of)privacy laws in the developed world
Since when US was developed world ?
VISA makes around 54 Million USD in net profit per day
Amateurs, look how much goverments making on inflation. Amateurs ...
@rtsp how does inflation benefit your government? Maybe another government that your government borrowed from might benefit from your government's inflation. Inflation devalues the currency of the operating government .
@@Boozley ua-cam.com/users/shortsuFi8NEoXFgg
@@Boozley Ronald Reagan Explains How Inflation HURTS Americans
@@rtsp Reagan 🤣
You got fooled by an actor. Also that's not the proper answer, total non sequitur.
And now it's become so entrenched in the system that the entire retail economy gives these companies 3% of every sale. Even when there's other payment methods that don't require a fee. Edit: I'm not talking about cash. I 'm talking about other online payment options that don't require fees.
This, would create a competitive opportunity IF the capital-intensive infrastructure needed to run these business wasn't such a monopoly. But commoditisation will happen there too, even if it may take decades.
i usually pay cash and if i buy in small store i have chat with owner,pay cash and they are happy to lower price for 3%,they still benefit by getting money immediately
@@danieleverywhere132 they get the money immediately with a card as well. I get direct deposit every midnight for the previous day. And I dont have to make a deposit at the bank. So the 2% fee is almost worth it, for the convenience... Its the 3.5% + cards that are an issue, for me... the reward cards get over 3%
Americans trapped by their own inability to wait for cash.
no visa keeps 0.2% of that. Most of that goes to issuing bank and acquriing bank. Usually out of a 2.5% take rate transaction. Visa/Mastercard keeps 0.2% the issuing bank keeps 1.8% then the rest of it is split in a plethora of ways with other parties like the the processor, payment gateway, acquiring bank etc. Visa doesnt issue any credit and only keeps roughly 0.2%
I worked for a credit card processor business for years and years. This video is very good at explaining the process and industry. Almost no one outside of the intdustry even knows it exists, let alone who accepts the risk, who gets the money, etc.
FDR, Omaha, Nebraska?
They're too powerful. There needs to be checks on this. Our culture pushes against industry oversight for some reason, and we keep getting screwed by whales.
@@watamatafoyu BankBoston switched over from clearing credit cards internally (and they were a very smart shop, but that was probably why it was too expensive to go on) to using FDR. The day came for the switch over on the home banking system (see below). We threw the switch, and thousands of credit cards fell on the floor. This was 1996, and BankBoston (very smart shop) was Y2K compliant... and FDR, which handled 40% of credit card clearances at the time, was not. So VISA cobbled the system together to bypass the problem (temporarily), threw the switch, and thousands of credit card FRAUD fell on the floor (oops). A mountain of paperwork to work through with Treasury...
@@watamatafoyuthere is oversight
Do you think they run a risk of being ousted? I can imagine Apple doing it (Apple Pay, Cash, the new phone-to-phone; it's kinda like a high-tech version of the mobile money that is taking over Africa). Currently they are building on top of Visa/MC but that could change, couldn't it? I mean, Apple could run its own blockchain even.
In fairness, we dont know how most companies that make the products we use were started or how they even operate beyond the service they provide
But we should know. It's important to know how things work and the origin of the things we use all day every day. Doing so allows us to think for ourselves.
Corporatocracy
@@AlirioDaza8 Yup, that's important, however hard it maybe. other methods are simply not moral.
DUDE. You are a dynamo. I listened to this via bluetooth in my car TO and FROM a furniture store, where I was to buy a new sofa. The very fact I could purchase it in mere seconds was not lost on me during the transaction. I even told the salesperson how hard that would have been back in the day (he wasn't as impressed as I was.) Thank you for spelling all of this out, I'm going to listen a couple of more times. Bravo!
you paid at least 3% more for it even if you pay in full when the bill comes, the credit charge is built into every single thing you buy even if you pay with cash!
For a long time, my parents saw credit cards as something similar to hard addictive drugs. Their concern was that you could easily get into trouble with uncontrolled debt and interest.
My dad taught me never to get into debt and my mom showed me what happens when you do.
Same people who told us not to believe everything on the Internet. They just can't help but be hypocrites
Well, they're not wrong. I don't buy on credit, just debit cards as a convenience particularly for online shopping
@@KingAlanIthe only problem with using a debit card for online shopping is that your money isn’t protected by fraud. If you lose $300 on your debit card due to fraud. That sucks. But if it’s a credit card, you have no liability whatsoever. Fraud protection for credit cards is objectively better
Credit cards, when used responsibly, can be a net positive. When used irresponsibly, they can be catastrophic. It really is up to you as a person to decide if you are right for one or not. The key is to not treat your CCs like an “infinite money glitch.” They are a substitution for the cash you already have on hand or in your debit account. Pay them off every month, and you will be fine. Don’t and you may never climb out of debt.
I was pretty impressed with your knowledge up to the point where you said more than 700 countries now support real-time clearance of funds.
😂😂
The highest number I could find was 241... 193 United Nations members, 2 recognized as Independent. But one source mentioned 241 counties and territories being recognized....
In short 700 is not a real number. 😂😂😂😂
@@PhoenixEncore ISO-3166 is the country code classification used for statistical purposes and issuing TLDs (top level domains) it contains 249 codes for countries and territories. In many cases countries have external territories, self-governing territories or special regions and these territories have been recognized as a statistical entity based on the M49 of the United Nations Statistics Division, such as US - Virgin Island US, Guam, Puerto Rico etc. UK - Virgin Island UK, Bermuda, China - Macao, Hong Kong etc. You are right 700 is a big stretch.
@BangkokZed 😂😂😂
He meant to say 200
38:15 700 countries?! Does this include those on Mars, Titan, and Ganymede?
Yes
Came here to say this! That’s an impressive feat! 😂😂
and don't forget - Uranus
I thought there were over 1200 countries?
NOPE: Only about 195, so…. Not even close 😂
don't forget Belter colonies too
Basically a RISK free middleman Cash cow is what it is LOL
Offset the risk to everyone else, collect all the gains.
And be covered by fdic insurance
still cheaper for shops than for them to allow for individual credit to clients
And the more money that flows, the more taxes govt can collect!
Not exactly they talked about what they do. Take on risk. There's a reason merchants ran to them in the early days. You're paying into the network of banks.
Dude, what a fantastic video!
Didn't think I would watch all 40 minutes of it, but a couple of minutes in I was engaged. I like your presentation style; again, great job!
There was one successful new competitor to Visa and Mastercard -- Discover launched in 1986. Originally, the Discover card was owned by Sears. Actually, it was something like Greenwood Trust and Bank, which Sears owned. Sears offered pre-approved cards to all Sears credit card holders in good standing. I still remember getting my Discover card summer 1986. It was the first non--store credit card I had. Sears first began accepting Visa and Mastercard in 1993.
I live in Southeast Asia and they have dumped Visa and MasterCard. Everyone here uses a QR code based payment system that is somehow connected to Chinese Banks. Even the smallest street vendor uses this system.
How is itt called qr code can you tell me more
@mistersync100 when they purchase something they just scan a QR code that the vendor displays at the front of the store. They hold the phone up and show the vendor the confirmation of payment. Everyone, even the smallest little street vendor use this system. It's in China Thailand Cambodia Laos Malaysia Vietnam Indonesia.
Same in Belgium / Europe.
Can you expand on what company this would be
@@beckybnyc322 CCP 😂
I've worked for Visa for five years. You've given a better history than anyone I've ever heard.
What do you do there specifically? Is it fun?
No, you don't and have never worked for visa. Stop lying hun
Also used to work at Visa. One thing that stuck with me is that we were told "our competitors aren't AMEX, MasterCard, Discover. Our competitor is cash." and watching this feels really cool to know that part of Dee Hock's vision about a shared goal by a group is still kinda there.
In late '83 I retired from the US Air Force (communications tech) and went to work for Visa.
I retired from Visa in early '09 after 25.5 years. It was one hell of a ride just keeping up with almost exponential growth.
My one regret is that I never got to meet Dee.
Ok if ask the average person how ANY company got started they probably wouldn't be able to tell you unless they worked the industry.
21:24 motion graphic?
The editor missed the note XD
Editor: "I'm not getting paid enough for this"
Editor: “nah”
@macstarr1306 moving pictures?
I remember when "VISA" was called "Chargex" before they had magnetic strips - I'm thinking early 70's. They ran TV ads that showed the card and preprinted 3-copy carbon paper receipts going into the manual imprint machine, along with some catchy jingle. The idea was that the merchant would drag a wand across the carbon paper sitting on top of the consumer's card, which would leave an imprint of the card on each paper copy. The merchant would get a copy, the consumer would get a copy, and presumably the merchant would remit the 3rd copy to the merchant's VISA agent to be reimbursed.
Credit Card Imprinter AKA Knuckle Buster. This is still a thing in some cases (at least in EU) for specific cards. Not all shops have this method. If there is no internet/electricity you can still use this method to pay for goods(there is a max amount you can swipe). It is a backup method for paying just like there is a backup method for issuing receipt/invoice if there is no electricity/internet.
Operated knuckle Busters for a decade...
At a business where I once worked, these things were still used into the early 90s.
That’s not that old. It was still used in the 90’s then it got phased out mid 90’s
Ohh, so this explains why cards have embossed raised digits
Don't forget that cash transactions have costs as well.
For a consumer, walking around with cash is risky. It makes one a target for crime.
For retailers, keeping cash in their stores is risky as well. Stores, bars, restaurants, etc., are targets for theft at the register, in the office, and on trips to make bank deposits.
There is a cost to this as well: losses from theft, expensive drop safes, security guards, extra insurance, armored car services, constant counting and recounting of cash, and more.
Not to mention that as a retailer, some banks even charge you to deposit cash in excess of certain amounts. Plus the manual aspect of having to move the money or pay a service to do so.
As a merchant, I'm completely fine with paying the 2.57% that I do now to cover all of the things that I don't have to worry about.
Yea many people don’t acknowledge that because then they’d have to admit that credit card companies aren’t actually driving up prices by 3%. Make the big company the boogeyman, a story as old as time.
Card payments bring with them new forms of crime too though e.g. someone tried to charge over $2000 to my never before stolen credit card at an online merchant I had never heard of (StudentUniverse, which I later heard is more well known in the USA, while I'm in Asia). Also wondering how Amazon manages to charge me $6 monthly although I don't have an account with them. Cards can be convenient though when the buyer/merchant don't have exact change
I work for a bank. It costs an estimated $2B/year for the top 4 banks to support cash in Australia.
A little Freakonomics: I remember working in my Sister and Bro In Law's Hardware Store in the 1960's. She had an old school mail & receipt spike full of NSF checks from local customers. A good number of the NSF customers were renters who were about to move so they figured they were going to beat the debt and be unfindable, others were small local contractors who got overextended. Then the Credit Cards started making big inroads to the system here in SE Looziana. The 1960's were truly Watershed years in how ordinary folks handle their finances. It worked for a good number of folk but likely Bankrupted many more.
If anyone’s interested the Aquired podcast has a super in depth episode about Visa and it’s FASCINATING to say the least! Totally recommend checking it out
Oh and the point about leaving the card at home while at the lavish business dinner wasn’t true apparently 😆
Great podcast, I’ll check out that episode though I haven’t listened to it.
Danny Schechter has a documentary on Credit card bubble called "in debt we trust"
Thanks, I found that episode, and the show looks right up my alley.
👍👍👍
My mom’s first job was working for BofA at the original office in SF in the late 1940s. My first credit card was a BankAmericard and I was disappointed when they changed the name to VISA, but learning the reason for the color choices of the logo makes up for that. I now live in NC and appreciate your video as I never quite understood how the card became separated from the bank itself. BofA is nothing like it used to be, I knew it wouldn’t be when they left SF for Charlotte.
I left BofA in 1977 and never looked back. I banked in a training bank in Anaheim CA. They wanted to charge me to close my account as I was upset with them and wanted to move my money. I stood in the middle of the bank (at the window) loudly repeating “I want to remove my money from your bank because you keep making mistakes and now you want to charge me to close my account and do that” It went on much longer than I expected but eventually I was able to get my money for free and never walked into a BofA again. Well once. I had a BofA money order and I took it to a BofA bank to cash and they refused saying it wasn’t from their bank. I was in California and the money order was from a BofA in Texas. I don’t remember the outcome of the money order but THAT was the last time I had anything to do with BofA. i was 18yo in 1977. BofA lost me as a customer just as I was starting out. (Edit) I near Fayetteville NC now).
This was a very informative and entertaining video. I've known for some time Visa started from BofA but never looked into how it got from a bank in California to a global powerhouse.
Amazing video! I'm 68 and watched credit cards expand and grow but never knew how it all got started.
Fantastic video I laughed out loud learning Bank of America was once called the Bank of Italy
Yeah. That was a highlight 😂
The words: "just a little, don't worry", are anathema to people actually trying to learn more.
Don't worry, John. Don't patronize your audience. We're here for the content, and we love it.
Oh my gosh, I grew up in Fresno and never knew❤ this history. Thank you for making this. Awesome job
I don't run CC transactions. I have a client fill out a check and take a picture. I then represent the check to their bank. Sure, it takes a day or two longer, but I don't get charged a fee. Our lowest charge is 10k, so those fees add up fast.
Yeah, checks are awesome whenever the customer and merchant actually *trust* each other. I consider the payment processing fee the "cost of low trust", with the killer features of payment processors being: possibility of chargebacks/disputes (I don't trust the merchant), keeping my checking account number secret (I don't trust the merchant), and impossibility of after-the-fact bounced checks (the merchant doesn't trust me).
Check's dying soon... the banks in my country already stopped issuing it.
So you don't get charged for banking? There's no cost at all to depositing cheques at your bank, as a business? What happens if someone passes you a dud cheque, what then?
If you don't need the protection of a card network, then sure, it makes sense. But for a lot of retailers/service providers, that risk is too great - especially online.
@@ian9outof10 “Our lowest charge is $10k”, presumably he's doing some identity verification on the customers?
in my country checks are illegal and considered fraud.
i just dont get why this channel isnt bigger. your videos are always top notch, every single time
34:34 97.9% goes to the merchant, 1.8% goes to the issuing bank, an 0.1% goes to the acquiring bank and technology provided?
Maybe should interview small business owners on what's the true cost of Visa/Mastercard systems.
It's never just 2-3% of the revenue stream. Cash is always a good payment method, and some countries have used direct bank transfers as payment methods by scanning QR codes on your phone app.
We live in an age of rapidly emerging technologies, and there should be better less exploitative alternatives at much lower costs.
Why still charge legacy land line rates when everything is VOIP, because they can.
Brazil has the PIX payment method, it's managed by our central bank. They handle millions of instantaneous transactions daily and it can also add complex metadata to transactions (User message, company and user info so you know to whom you're paying, invoice data, tables of information, etc) , and it has zero cost for the merchants and consumers. VISA/Mastercard should be phased out eventually.
@@lucasblanc1295 A government monitoring transactions is the last thing you should ever want.
it really is only 2-3% for visa/mastercard. you can even get powerful terminals that will give you a straight fee between there for accepting cards and will usually add in some free software you can use. Cash is not a good payment method. It sucks and is outdated. What's better than having your bank directly let you use your cash? Like a lot of this doesn't make sense.
1) as has been stated, it really is just a 2-3% fee. If the business owner thinks it's a lot that's on them.
2) the alternative to this is spending way more than the 2-3% to move around, protect, and check/monitor the physical cash.
3) that QR system sounds extremely insecure. If it's on your phone it's a really easy way to get hacked, which is why it's not as popular in the US. We have all that stuff.
In the UK the total fees are 1%-1.75% depending on volume - unsure why it’s so much lower here. Cash is often more expensive to process due to the staffing requirements and bank fees.
This was a well researched, engaging video. Thank you for not doing the "I'm about to tell you" scheme. It was paced like I have a brain and want to learn. Some of this I knew, but most of it was great new information. I'm looking forward the the Mastercard story. I was alive and remember both changes but failed to understand the motivations. Good stuff.
Mate, did you say more than 700 countries at about 38:10? I do not know if you intended to say more than 70 countries and slipped, because it can't also be governments even counting regional ones.
Yeah. 70 definitely. I recall growing up in the 80s, there were once 72.
He said 200 countries.
Two hundred.
Came here to say this!!
700 seems like a lot for this planet
@@rustomkanishka he definitely said 700 at 38:15
I don’t understand I mean 700 countries. Make sense if you don’t think about it! lol
The crazy part is most people nowadays are TikTarded, they don’t even know how many countries they are! Especially in America!
I’ve missed your deep dive videos! Keep it up. Such good value
He's back, baby! The greatest storyteller... after such a long time!
before this, I didn't know how banks operated with each other or even what sort of role VISA paid in maintaining cross banking systems. Seriously a mind-boggling watch for someone without a finance background. Appreciate your work to bring this gem of a knowledge out, john! Learned something new and crucial today!
Always makes me wonder just how much, if any of that old mainframe code is still in use.
A decent amount, I would guess; given that COBOL is still in heavy use in the banking industry.
Can't believe this video is 41 minutes long .. Absolutely incredible work
16:04 you described an oligarchy or oligopoly not socialism
Neither, actually.
@ crony capitalism then? how would you describe those designed to be competing in business colluding to ensure artificially high profits?
I feel that has to be an oligarchy if not an oligopoly where those who are in buisness collude. I mean this has been rebranded as synergy?
@@MrJonyish I don’t think either of those makes any sense in this context. The founding of Visa was simply a cooperative enterprise between many individual enterprises. This wasn’t done via government regulation or explicit legal consent or exemption, so the government did not interfere with the market. This means that it’s not an oligarchy or crony capitalism. If you want to use the word “capitalism”, even though it doesn’t fit in this context as it describes an economic system, “cooperative capitalism” would probably work best.
In Brazil, credit cards work a little different from the US. We do use Visa and Mastercard, but credit is sold differently. For example, a purchase of 100 USD can be paid in multiple installments, for over an year. This reduces a LOT of the upfront cost, but also have the risk of people buying more than they can afford.
As someone who is new to the merchant services industry, this is some good stuff.
The security it offers is worth it alone for all the extra fees we pay, especially with all the issues i had with Solo in the past, which was a debit offshoot of Mastercard.
37:08 not sure what Hock was on about. Competing payment processors and card issuers did emerge after Visa and Mastercard, most notably Discover (in the US). Discover and Amex both issue cards directly to consumers rather than through banks, so what's the issue here?
very professional video. i am shocked not even 1/2 million subscribers. I am sure will be big in the future.
2:18 That basically explains why current accounts are called "Checking accounts" in the US.
Where's the explanation?
No, it doesn’t. Checking accounts are called checking accounts because they can issue checks. Not because charge cards are a thing.
I'd never thought about the checking vs savings account until I traveled outside the USA, and learned that in some countries the typical consumer account isn't separated into checking/savings. It's one account for all transactions.
A checking account is a type of bank account that allows the account holder to write personal checks as a method of accessing the money in the account. Checks are basically a method of authorizing someone the limited ability to withdraw an authorized amount of money from the check holder's checking account. It used to be that only banks issued checks which could be used to withdraw money from savings accounts.
@@bufordhighwater9872 none of these comments address anything about HOW using "checking" for current accounts is explained in the video. Something the viewer imagines but not explicitly covered doesn't count.
Thank you, John, for a really interesting recap of the path from the initial BankAmericard through to Visa. Am in my sixties, and am from Cali. I saw this happening around me, but was unaware of the mechanics. Super interesting re Dee Hock. Cheers!
As much as I hate credit cards, it's still impressive how effectively the system was designed.
Great video! Small but important error at 22:50 the clearing house was not a new idea, it was the standard way banks recognized each others' bank notes before central banking.
1. "He was a capitalist" what's the purpose and use of this reference? What useful information does it provide? How is that info relevant?
2. How is,"member ownership" & member input on organization Socialism? How would join a group where they will have no input? (Joining the armed services or getting job is not applicable)
3. Clearing houses were first proposed in 1636 by Philip Burlamachi, financier to Charles I of England. So an ACH isn't a new thing, but a novel system doing an old thing.
...
Nothing is old, nothing is new. Just reinterpreted.
I noticed that too. I can't be the only person who is getting annoyed with people misusing the labels of capitalist and socialism to mean "guy that wants all the money" or "guy that works super hard/bootstraps" and "literally anything that involves input of more than one person" respectively.
Our school system has failed us in many ways, but one major way is the potato-for-brains way of looking at everything as "capitalist = the bad thing, socialism = the good thing" even when there is no relation at all.
@@BlumpkinSpiceLatte Agreed The school system is run by socialists. It's the same reason why now a days Capitalist = Oppressor and Socialist = oppressed.
Yeah, people really don’t understand what “capitalism” and “socialism” mean. They just throw them around incorrectly and inconsistently.
@@BlumpkinSpiceLatteI had to take a macroeconomics class in high school that did a great job explaining the difference between economics and their governance as well as how they function. I feel like this must not be very common given people’s lack of basic economic understanding.
Very interesting video. I’ve had a credit card for 40 years and the system works way better now than earlier.
Looks like someone really embraced the AI generated slop made from theft of other people's copyrighted works. It really helps “enhance” your “creativity”. My favorite is the one trash image at 12:54 where you can see a mid century banker in his mid century office sitting beneath a clock with weird AI deformed numbers, and on the desk in front of him, his misshaped 1990s landline office phone and his big LCD screen (or iPad, or whatever that thing is supposed to be). The molten faces at 13:54 and six-fingered hands at 14:31 are also a nice touch. Well, as long as it helps your "credibility" as a documentary maker, buddy... just don't expect anyone to take you seriously. Oh, and also, nice detail with the remains of Alamy stock watermarks at 13:37. I bet this one was also AI generated after some creative borrowing of source material from where it shouldn't have.
Nice analytics
Random fact: the first video phone came out in 1927. And in the 1950’s there were 2-way video phones. They cost about 50k a piece. It’s not far fetched that an office would have had one. The rest…. Who knows. 🤣
Some people do have 6 fingers in real life.
or at 5:54 where the credit card says "BAANSK AITHERA". Immediately clicked off this video
yup. immediately turned me off. thanks for the timestamps so i know it wasn't just a one-off, no shame in making a mistake as im sure we've all been fooled by AI at least once but there's genuinely no excuse for a video like this when there is so much documentation around this time period. it's not impossible to find pictures of Real bankers and office workers from this era, unless you're 1. too lazy too seek it out and 2. satisfied with underpaying an editor who doesn't care enough to do the legwork
"The flywheel has been spinning for decades..." Leave us not get misty-eyed.
Very informative...thanks for the post 👍🏻
So that's the time everyone got sucked into debt.. got it!
exactly, i was also surprised about the overly positive tone when describing how they were sending out credit cards to people who had no idea how to deal with credit and calling advertising “education”.
Just the irresponsible people
Even PayPal had a bumpy start. I was at a sister company when it launched. They failed to prevent customers from entering negative numbers. They when to court but the Judges just laughed at them.
Don't know about the US, but over here in Europe very few Visa or MasterCard operate on actual credit, let alone loans. It's just a system to facilitate a bank transaction at shops. It's mostly used due to being the established solution, but getting increasingly more competition.
Visa and Mastercard are just payment processing networks.
Tile says VISA, thumbnail has an American Express Card in it, and the opening ad I’m fed is for Wells Fargo.
Bet you didn’t know that Mr. Wells was the President of American Express and Mr. Fargo was the Vice-President of American Express.
The two founded Wells Fargo & Co., Express, because all the other directors of AmEx voted against their proposal to expand American Express package delivery to California during the Gold Rush.
Both were literally the UPS & FedEx of the late 1800s.
This is the first time I hear the VISA story. Thank you for making this video. Only I don't think you are right that customers don't like to pay with crypto, it's that you can not pay most bills with crypto. At my job, we manage payments of utilities for seven hundred people, and at that volume it has become clear to me just how much VISA is taking when people opt to pay us with VISA card. But crypto is not an option because we can not pay the bills with bitcoins.
Great documentary, John. Learned a lot that I did not know before. Keep it up.
Fully centralised, private ledger. With confirmations made by government controlled politically biased authenticators charging fixed fees. Possibly the worst form of digital payment and would flop as a cryptocurrency.
Holy CRAP! Girlie, you are living my dream and looking amazing doing it! I'm so proud of you and wow it's really inspiring because I'm 35 now so we're only a year apart and seeing the path you're on is so similar to mine and while I've been slowly figuring out the logistics of my life you've been actually LIVNING IT and DOING IT! I love that for you and I'm so excited to see what I can learn from you! Sending you love, peace, warmth, and happiness!
Can we talk about the fact that you could be a banking manager without a university degree?
I've made a horrible mistake.
If you were a white male in the '60s.
I worked at a VISA Centre here in Canada for 30 yrs starting in 1974. Back then in Canada it was known as CHARGEX. I actually spent 20 yrs handling 1.5 million authorization calls from merchants. Thanks for history.
you gotta admit VISA was genuis and single handedly revolutionized the worlds economy. it did so much good i’d say the only issue is lack of competition for visa. no one can hold them accountable for high fees for example.
they where simply ahead of their time without visa the world would likely be several decades behind in terms of transaction processing.
this is one of the few corporate conglomerates you can argue was for the most part made ethically and “earned” their spot. their business model too is just genius like their profits literally goes up with inflation
very accurate i used to work in the auto loan department for bank America so spot on its what they teach everyone.
I missed any mention of how Visa and Mastercharge are now processed as a single system. It seems that just the names on the cards are different.
Because that isn't accurate. Visa, Mastercard and Amex all run their own networks. You might be thinking of payment processors or acquirers which handle any transaction from any scheme the retailer opts to use. Those transactions are then managed on the individual card networks.
@ian9outof10 When paper vouchers were used ("zip-zap machines") the identical stationery was used for both cards and processed through a central clearing bureau. Today the transactions are processed on-line by the individual banks (data connection from the retailer's cash-register terminal), so the clearing bureau has fallen away.
I was heavily involved in the data transfer and acquisition security side of credit/debit card transactions in the 90s, the banks have to consider not only bad debt from credit cards but also fraud which rose to epidemic proportions in the 90s before the introduction of CVV ( not to be confused with CVV2 on the visible portion of the card). Further improvements came with Chip & Pin, however it’s a game of cat and mouse, new security protocols only last so long and it’s a never ending battle. By the way, debit card and credit card transactions have different merchant fees despite all the process being identical.
Is this why some gas stations are a few cents cheaper when paying cash or debit?
It's illegal, (In the US), for gas stations to bump up the price for use of credit, but not for dropping the price of using cash.
@@jimmurphy6095 It isn't illegal. It is against the credit card Terms of Service. Visa could revoke their right to use the network.
super good video, very informative and the little checkpoint updates after a section are great for my adhd lol
One of my core beliefs is NO CREDIT CARDS. I’ve seen my parents having trouble with their credit cards for a few years when I was a kid
You should stick to it, I had a try years ago, and didn't end well, specially when you have a bad turn. 2020 deliver me from that trap, but I still have 1k to repay now.I had share the same mindset you got untill the internet market and special offer, push me to get into it, big mistake I make then. Now I use only debit, cash and credit I put myself on card.
That's pretty unfortunate, since credit is one of the secret weapons of the rich. Credit doesn't get taxed, which makes it very useful.
They're only bad if you don't know how to use them.
The problem is that people spend money they don't have. In reality, you only spend what you physically have in your bank account. That way if things do go wrong, you can instantly pay off the card and cancel it.
Always make sure you pay off your debts in time and you won't get charged interest. It essentially means that you get to spend your money, while still being able to keep your savings in an offset account or high interest account.
By doing this, you also get points which you can claim on many things. Personally I use those points to buy fuel gift cards.
Unfortunately many just see credit cards as free money. Which it isn't. And used improperly you can find yourself in trouble. But used properly you actually gain money for doing what you're already doing.
That's a stupid idea for a few reasons.
Mainly you need to build up a credit history if you want to get money from a bank, for example a mortgage.
Credit cards are only bad if you use them incorrectly. If you want to use them safely whilst building up credit passively, for example use it for your Netflix subscription or any other subscriptions for that matter.
Then just pay it off on time and you'll never have any problems whilst helping yourself in the future.
Credit is one of the biggest tricks used by rich people, did you know most billionaires don't actually pay for anything with money? There's special banks that offer 0% interest loans for rich people, they use these loans to pay for stuff because most off their own assets aren't liquid, its usually in the form of bonds or shares in a company that can't be spent.
@@sCiphre interesting. Could you elaborate on that?
Dee sounds like a genius - going to read his books! Thank you so much for putting this together
UPI's introduction in India quickly tanked Visa and Mastercard's adoption rates here. And Rupay is already eating at their share too.
It's just a lot easier to use and issue. Plus, it's a debit first system. It probably would succeed in Africa if not for the lack of electricity and internet access in many places.
20 cents per transaction at 8500 transactions per second over the course of a year is $53,611,000,000.
16:00 - Failing to see how there's a dash of socialism. Have we redefined words? Capitalism and democracy are not mutually exclusive. Even if it is a weighted democracy. Socialism would have meant that all the banks shared the profits equally regardless of their many transactions their bank brought in.
Hey John, happy Coogan!
A 200’acre ranch WEST of Silicon Valley? Either it’s In Hawaii or it’s in the ocean.
Google "301 ranch road west pescadero" and you'll find a bunch of references to it; there is a bunch of farm land on the west side of the Santa Cruz mountains
The problem with cash transactions in the modern day is the cost and risks of accepting cash. There is the risk of theft- by robbery or employee. The next problem is getting the money from the store to the bank. I could have an employee take the deposit to the bank (risks the employee safety) or hire an armored service to do it (risks the store for keeping money overnight or multiple nights in the safe plus introduces a new expense). I was a manager where I needed to open the store which involved taking the deposit from the night before to the bank- about 2 miles away from the mall. It takes about an hour from the paperwork, heading to/from the bank, waiting in line, and having the bank verify it. Secured bank bags, slips, and the extra labor plus the risks. Armored van isn't an option considering since some stores might have small deposit amounts where the cost of pickup is a significant amount of the deposit sent.
Accepting cash is not free.
So Visa is a proof of stake network?
And the first proper DAO wow
Yes.
@@claritise CAO , VISA isnt decentralised.. fully centralised, private ledger .
makes you wonder if Dee Hock didn't decide late in life to hire a small team of cryptoanarchists to revolutionize banking again
this video made me realize why everything so expensive now. the debt incentives the companys to raise and price gouge.
payment cards are one of the greatest cons of all time, at a fee of 3% every single Dollar that is spent 250 times belongs to a card payment taker. They managed to commodify the act of using your own money.
3%?
Wth kind of card are you using that charges per transaction, most cards just have a monthly account fee.
@@WarlordEnthusiast every single card transaction charges the merchant a processing fee of around 3% which you pay in inflated prices
@@WarlordEnthusiast John Coogan did break down the cost of the fees involved in one transaction. It's in the video at around 34:06 , the fees work out to be about 3%, VISA making about 0.2% of that
Go ahead an buy something from online from let's say.. Germany.. with cash. See how well that goes for you. Credit cards are a service that greases the wheels of global commerce. Without them many things would be difficult or impossible. Don't be so obtuse.
@@sbjchef I buy alot of stuff online now because its cheaper than buying it in person with cash. If anything buying stuff with cash is more expensive than card.
Unless its something used, then buying it online is the way to go. Also, your "explanation" doesn't explain why a product costs the same in a store if you use cash or card.
I love that he's literally scrolling through the script with a mouse. I have no idea why I enjoyed that part so dam much
lol
Problem is when only a few companies do the bulk of transactions they become gatekeepers to financial activity, and although there are laws protecting the use [right to use] of cash there are less protections for debt/credit transactions. Just ask many merchants in Japan this question.
Hey John. Loved the video! It was a great watch. The closest thing I've come across that aims to unseat visa would be Flexa. It utilizes decentralized collateralization and blockchain to provide instant settlement. They've partnered with a number of the largest POS companies to integrate directly into merchants existing hardware. Would love for you to give them a look and share your thoughts!
Oh good: blockchain. No refunds.
@teebob21 Actually, there are refunds and they are handled by the merchant. In my personal experience, they've given me store credit, cash, or a gift card for the refund.
38:15 700 countries... yeah, right
I do have genuine leather bags from other brands kislux I get what I want without paying exorbitant designer prices. That's the point. It's not about the superficial, it's about getting what you like at a price you like.
38:14 Did you just said 700 countries? 😂
Came to see if it was just me!
I replayed that about 3 times, just to make sure XD
I checked maybe 5 times and than checked Google if the "around 200" in my mind were that off
Is that number was for financial jurisdictions? (Counties and States / Provinces together in a list). A sight research miss.
Well done, interesting video. As a merchant, I can concur that VISA's fees are far too high for the amount of work they actually do... hence the 55% profit margin in 2023, leading to almost $20 BILLION in net profit.... on the backs of the American consumer and small businesses.
Crypto threatens VISA, Mastercard, SWIFT. Giving control of digital currency to the user, instead of some unnecessary corporation that profits by skimming the top.
Yeah, crypto works great until your wallet gets cleaned out because you goofed your security. No refunds on crypto scam currencies.
Pretty fascinating how the initial vaules/vision for VISA sound like that of the promise of blockchain/crypto
Meanwhile here in germany, most companies don't accept visa, since their fees weren't profitable for them. Why should you pay a high monthly fee, when you don't have any customers with visa cards. some grocery stores started to accept with a few years ago, but it still far from general use.
Because people spend more
Once it starts it'll explode. The reality is overall it's cheaper to accept card but not everyone realizes it because the cost of cash is more hidden in things life theft, errors checks and balance (which takes employee time thus money)
Is there a subscription fee for vendors in Germany? In the US the vendor lays on the transaction only. Otherwise there is no cost.
Weird how the government still decided it had to be written in law 20 years ago, that customers paying with a card (formerly "EC-Karte", now "Girocard") must not incur additional fees at checkout? What does this lead to? Ah why, yes, such fees are spread to all customers by accounting for it in goods prices.
@@thiswillprobhrt Yes for Visa and Mastercard exist a fees the vendors have to pay monthly just to be able to use the service.
The main reason, why it won't spread further, is that we have a so called "EC-Card" from our bank, which is linked to our bank account and is used instead to pay cashless, or to get money out of the ATM. You only need a visa for when you shop in onlineshops, that don't except anything else besides credit cards. Online payment options here are: "buy on account", "buy on prepayment" (both are bank transfers), "direct debit authorization", "PayPal" (which gets a direct debit authorization), same for "Sofortüberweisung", and "Klarna" (Service, with whom you made an installment payment agreement).
Just discovered my new favorite channel.
Is there a version of this without music, perhaps an unlisted one? Some of us are weird and can’t focus on spoken words when there’s music vying for attention.
I second this
Some presenters are so intensely brainwashed by the millions of
advertising jungles they have been subjected to -
like Pavlov's dogs - they have become brainwashed an d have this
need to play music during their presentation - which detracts from
the value of the presentation.
These people are so easily brainwashed / indoctrinated -
perhaps they should concentrate on a music channel to satisfy
their appetite for music.
Yes, I’d like that too. Background music is annoying
I've learnt to tune it out automatically. I didn't even hear it until I saw this comment
Mute and put on subtitles
Visa gets a cut of an arbitrarily assigned amount of a loan that they guaranteed.
The product purchased is inconsequential
The promise to pay the entire loan is essential.
Question: with all this profit occurring why did the government bailouts occur?
It feels like someone accidentally uploaded the work print version of this video. Still very interesting content tho.
Motion graphics?
I recall still having a Bank Americard back in the late 1970's, eventually getting a new VISA to replace it later. And a Master Charge, eventually becoming MasterCard.
I wish everywhere would just allow a 3% discount for cash. I’d much rather save myself and businesses money than support any processor
They give a discount in Mexico when paying cash
I think the Visa Mastercard duopoly forbids merchants for taking out a fee for card payments. this is why many businesses instead choose to not accept card payments below a certain sum.
@@asdfghyteractually in many countries it is a legal rule to have no fee for card payments, and even in some places a minimum card purchase level is banned
dude i love this kind of education, keep it up! 🎉
Credit cards are leeches. Cost of goods and services would be LESS if we went back to cash. People think getting 1%-5% cash back they are making out, they are not. Retailers have simply raised the prices to cover the costs
Because cash is convenient? You have to go a bank to get cash, over and over. Does that work at midnight on a sarturday? What about in the middle of nowhere with the nearest bank 50 miles away? What about paying for something online from a company in France? Cash is not free and not as useful as you say.
@@flamesintheattic he prolly doesnt mean just paper cash but opposing credit system. do you know these interest based economy is forbidden in islam? simply because they derails the economy when people starts depending on it.
sure go live on what you dont have on the name of convenience.
these western economy are just total scams. everyone knows it but they just so addicted cant control themselves from something that should so basic.
westerners profit 9$ from a product that takes 30cents to make and its just fucked up. entrepreneurs founders billionaires mega companies
an unicorn born every other month, people pouring money pump pump pump take big profits to stay on radar and cover marketting and 50 middlemen
ff
@@flamesintheattic Your low effort argument did nothing to disprove the fact that your cost of goods and services includes credit card fees thus making EVERY purchase more expensive by on average 3.4% and in some cases as high as 5%. You can buy things online via ACH which costs $0.00 in fees.
Which is why paying cash is a losing battle.
Thank you for this! Quick editing suggestion there are not 700 different countries on the planet. 🌍 around minute 38:00. Thank you this piece shows the inspiration and construction of many deep networks of belief systems that many of us were born in to that impact our daily lives and that impact the price point of everything around us around the world. When it went from shameful to put something on credit in the early 1960s to life of aspiration because of great commercials the world didn’t predict what would happen. This piece shows where we are and why we are here financially, socially and spiritually. NOTE: remember money has karma and fees (like emotions) matter significantly! Peace ✌🏽
I use Visa and Mastercard debit cards. I only use credit if I want to pay later. The most important thing is that I use cards that don't charge processing fees and other nonsense fees. Remember, banks already make money every time you spend, and you shouldn't pay them to maintain their Visa/Mastercard network.
Banks still charge the merchants for any card transactions.
@TonyFisher-lo8hh some merchants will pay the additional charges, some will ask the customer to absorb the charges by adding it to the total bill. In Singapore, it is illegal to ask customers to absorb the extra fee if the final total bill is not reflected in the receipt 😁
@@tuapuikiabut you're missing the point that the only fee you will be charged as a consumer is interest, if you haven't paid it off at the end of the month. The merchant is still paying the transaction fee regardless of if you use a credit or debit card.
What an incredible man. He changed the world all while he was just being authentic to his beliefs and values at the time