A brief look at Visa

As a merchant, you accept Visa cards every day. How much do you really know about the company? Today we will profile one of the giants of the credit card industry.
The company that we know as Visa, traces its roots back to the 1950s and the birth of what we know today, as credit cards. Diners club cards and various charge cards already existed but Bank of America decided to launch an all-purpose card. This was not the first time such a thing was attempted, but it would prove to be the first time it would succeed. Initially, cards were sent to residents of Fresno, California for trial use. Fresno was ideal due to the fact that its population was large enough to support the trial run. Fresno was also small and isolated, limiting the cost and making damage control easier, should the project fail. The initial rollout went smoothly enough but Bank of America panicked when it was rumored that another bank was releasing their own card. The rollout was expanded to include San Francisco and Los Angeles (in an effort to corner the market). The cards were issued with a blue, white, and yellow scheme to represent the gold colored hills of California.
Problems began to occur. The project manager, Joseph Williams, had put too much trust into the American consumer, envisioning only a 4% delinquency rate. Within one year, nearly a quarter of all account were delinquent. Credit card fraud had become rampant within the first year of its launch and many consumers were frustrated, due to the agreement stating that the consumer was responsible for any fraud. By 1960, Bank of America had lost nearly $7 million and Joseph Williams lost his job.
Bank of America then set about reforming the system. They sent a letter to their customers, apologizing for the fraud and imposing proper financial controls as part of a massive cleanup operation. It worked. By 1966 the BankAmericard had expanded outside of California and a competitor had emerged in MasterCharge. Expansion also went international as well. Chargex in Canada, Carte Bleue in France, and the Barclaycard in the UK. Problems though continued to arise as various financial institutions issued their own cards, linked to Bank of America, to their customers. Oversight was needed.
Dee Hock, a manager at the National Bank of Commerce in Seattle, was asked to bring order to chaos. He recommended that Bank of America give up control of the cards and create a separate corporation to manage the cards, National BankAmericard Inc (NBI). However, they only covered domestic cards. In 1974 another company, the International Bank Card Company (IBANCO) was setup to handle international cards. After two years, it was decided that NBI and IBANCO should merge. Hock gave it the name Visa, which he said, would be recognizable in many different languages, all over the world. The distinctive color scheme was retained.
Headquarters were set up in San Francisco and remained there until 1985 when they moved to San Mateo. Today, headquarters are in Foster City, California with processing centers near Ashburn, Virginia and Highland Ranch, Colorado. Visa is a publicly traded company, with an IPO (Initial Public Offering) in 2008. It is at the forefront of the industry and is a leading sponsor of many of the world’s most popular events like the Olympics, the men’s and women’s FIFA World Cup, the NFL, F1 racing teams.