Electronic Value Exchange (eBook)

Electronic Value Exchange 3
Preface 6
What is Visa? 7
Why Visa? 8
Purpose of the Book 9
What This Book is Not 11
Sources and Methods 12
Structure of the Book 13
Acknowledgements 15
Contents 17
List of Interviewees 21
Acronyms 23
Setting the Stage: Money, Credit, and Payments in America 26
The Federal Reserve System and National Check Clearing 27
Early Charge Cards 31
Western Union and the Department Stores 32
The Oil Industry 35
The Airline Industry 36
Travel and Entertainment Cards 37
Diners Club 37
American Express 41
Bank-Issued Credit Cards 42
Early Bank Charge Card Systems 43
The BankAmericard 44
"The Drop" 46
Other Bank Credit Card Systems 49
National Bankcard Associations 51
Conclusion 53
Associating: Dee Hock and the Creation of the Organization 54
Problems in the Licensing Program 54
A Typical Transaction in 1968 55
Operational Problems 57
Authorization, Floor Limits, and Fraud 58
Clearing and Settlement of Interchange Transactions 60
Organizational Problems 62
Tensions Come to a Head 64
Dee Hock 64
Hock's Personality 65
Views on Organizations 67
Views on the Nature of Money 69
Creation of National BankAmericard Inc. 70
Organizational Dreams 71
Organizational Realities 74
An New Kind of Organization? 76
Conclusion 76
Crafting the Social Dynamics: Staffing, Operating Regulations, and Advertising 77
Building a Staff 78
The Operating Regulations 80
The Card and Marks 81
Inter-Organizational Work and Fees 82
Dispute Resolution 86
The Significance of the Operating Regulations 89
National Advertising 90
Conclusion 92
Automating Authorization: BASE 94
The Need for Automated Authorization 94
Automating Local Authorizations 95
Automating Interchange Authorizations 99
The Joint National Authorization System 101
NBI's BASE 103
Acquiring the Talent 104
Design of the System 105
The Development Process 108
Effects of the New System 111
Conclusion 113
Automating Clearing and Settlement: BASE II and III 114
Truncating the Paper: BASE II 114
Country-Club, Descriptive, and Facsimile Billing 115
Design of BASE II 118
Data Capture 119
Edit Package and TTUs 121
Central Clearing Computer 121
Making Up With IBM 123
Final Development and Rollout 124
Effects of the System 125
Losing Focus: BASE III 126
Problems Begin to Emerge 127
Problems Come to a Head 128
Success in Failure 129
Returning to Purpose and Principles 129
Conclusion 131
Expanding the System: Organizational and Technical Growth 132
Expanding the Organization 132
IBANCO 133
Determining the Structure 133
Studium ad Prosperandum, Voluntas in Conveniendum 134
Formation 135
Antitrust and Dual Membership 136
Historical Context 136
The Arguments 137
Trials 138
Duality 139
Adopting the Name VISA 140
The Need for a New Name 140
Redesigning the Card 142
Implementing the Name 144
Expanding the Computer Systems 146
Expanding BASE I's Capacity 147
Capacity in Real-Time Systems 148
DEC or IBM? 149
Airline Control Program 150
Multiple Data Centers 153
Selecting the Site 153
Designing a Dual-Switch ACP System 154
Expanding Internationally 155
International Authorizations 155
Multi-Currency Clearing and Settlement 156
Conclusion 157
Automating the Point of Sale: Encoding Standards and Merchant Dial Terminals 158
Dreaming the Future: BASE IV 159
Electronic Value Exchange 159
Gems in the Rubble 160
Encoding the Card: Magnetic Stripes and Magic Middles 161
Encoding Options and Standards 162
Magstripe Tracks 164
Magstripe Security 166
The Magic Middle 168
Visa and the Magstripe 170
Dialing for Dollars: The Merchant Dial Terminal Project 172
Dial Terminals 172
The Pilot Test 173
Adoption Incentives 175
Resolutions 176
Adoption and Consequences 177
Conclusion 178
Challenging Conceptual Barriers: EFT and the Debit Card 180
Visa Synonymous with Credit, Debt, and Financial Distress? 181
EFT Utopia, Dystopia and Reality 182
Electronic Funds Transfer or Electronic Value Exchange? 186
The "Asset Card" Concept 188
NBI's Asset Card 190
"Credit Paranoia" 191
Member Reactions 194
Credit Cards vs. "Real" Banking 194
Entrée vs. EFT 195
Enter Entrée 198
Conclusion 200
Negotiating Roles: Controversies and the End of an Era 202
Visa Travelers Cheques 203
A Brief Background of Travelers Cheques 203
Visa's Entry Into Travelers Cheques 206
Reactions and Negotiations 207
Launch 209
The JC Penney Deal 211
The Deal 212
The Reactions 212
Hock's Departure 215
Signs of Empire Building 216
101 California: Headquarters for an Empire 217
The King is Dead. Long Live the King 218
Hock's Legacy 220
Conclusions: Toward a General Sociotechnical History of Payment Systems 222
Contribution to Grand Themes 224
Some New General Dynamics in Payment Systems and Cooperative Networks 226
Value Flows According to a Mark 227
Marks 227
Marks and Value Exchange Rules 228
Rules and Guarantees 229
Marks and Payment Cards 230
Application 231
Networks, Boundaries, and Gateways 232
Making Value Flow 232
Boundaries 233
Physical and Logical Structure 234
Transgressing and Defending Boundaries 235
Boundaries Within the Banks: Debit Cards 235
Boundaries Between Types of Banks: the Thrifts 236
Boundaries Between Financial Organizations: CMAs 237
Boundaries Between Industries: JC Penney 238
Application 239
Epilogue 239
Appendix Core System Statistics 241
References 244
Index 257