Re:Europe's $24T Breakup with Visa and Mastercard Has Begun
by jasode on Tuesday February 10, 2026 @12:06PM
(#46963032)
>It's just multiple computers keeping a balance.
Fyi just to clarify about VISA & Mastercard. Those are transaction networks not banks. VISA and Mastercard aren't the entities with mainframe computers that track money balances. It's the customers' and the merchants' banks (JP Morgan, Citi, etc) that participate in the VISA/MC network who manage the balances.
AMEX would different in that they act as both the transaction network and as a bank of customers balances.
In computer science terms, VISA and Mastercard do 2 things that makes their transaction networks useful:
- database holds the authoritative global namespace of 16-digit unique account numbers. (The # printed on everybody's plastic cards.) This avoids all participating banks from assigning any duplicate account numbers to customers.
- act as a "hub" by having a database with the many-to-many relationship between customers' multiple banks -to- merchants' multiple banks. It can then act as routing mechanism between banks. This is what allows a random restaurant to accept a credit payment without contacting the customer's particular bank directly (is it Chase? or Citi?). Instead, the restaurant's payment gateway contacts VISA/MC computers and those networks route it to the correct banks to ask for authorization.
Any new payment system that wants to displace VISA/MC need to recreate all the relationships with 1000s of banks so that the hypothetical new payment cards are "accepted everywhere" across the globe. Definitely not impossible. But not that easy either.
Fyi just to clarify about VISA & Mastercard. Those are transaction networks not banks. VISA and Mastercard aren't the entities with mainframe computers that track money balances. It's the customers' and the merchants' banks (JP Morgan, Citi, etc) that participate in the VISA/MC network who manage the balances.
AMEX would different in that they act as both the transaction network and as a bank of customers balances.
In computer science terms, VISA and Mastercard do 2 things that makes their transaction networks useful:
- database holds the authoritative global namespace of 16-digit unique account numbers. (The # printed on everybody's plastic cards.) This avoids all participating banks from assigning any duplicate account numbers to customers.
- act as a "hub" by having a database with the many-to-many relationship between customers' multiple banks -to- merchants' multiple banks. It can then act as routing mechanism between banks. This is what allows a random restaurant to accept a credit payment without contacting the customer's particular bank directly (is it Chase? or Citi?). Instead, the restaurant's payment gateway contacts VISA/MC computers and those networks route it to the correct banks to ask for authorization.
Any new payment system that wants to displace VISA/MC need to recreate all the relationships with 1000s of banks so that the hypothetical new payment cards are "accepted everywhere" across the globe. Definitely not impossible. But not that easy either.