Chaordic Visa Organization (Part 4) / ChronoPay Blog

At that time, I was not able to make the retailers and service companies, as well as cardholders, members of the NBI. Any step in this direction caused a storm of protest from the banks. Probably, if I showed firmness, I would be able to persuade them to my side, but now it's too late to talk about it.

Di Hawk

Dear readers, we continue the series of articles on the history of the birth of the largest financial institution in the world Visa. As in the previous part, quotes from Di Hawk’s book “One from Many: VISA and the Rise of Chaordic Organization” are in italics. Important quotes are in bold. We will discuss these points in the fourth concluding part.

While NBI dealt with double membership and dealt with issues related to communication systems, marketing and the protection of plastic cards, that is, the most important problems that could not be solved, it was impossible to launch the BankAmericard system throughout the United States, Bank of America Service Corporation continued to license banks throughout to the world. Each license had its own specifics, it required a special approach to marketing, computer and operating systems. In addition, all the cards were called differently. If in the USA a credit card with a blue-white-gold logo was called BankAmericard, then in Japan it was already a Sumitomo Card, in the UK it was a Barclaycard, in Canada it was Chargex, in Mexico it was Vancomer, etc. Because of language, currency, cultural and legal differences in other countries there were much more turmoil than in the United States.



Following the NBI example, foreign licensees created their own committee and even tried to put together an international organization. However, their attempt failed. At the end of 1972, the international committee of licensees turned to the NBI leadership with the proposal to create a worldwide organization. We were not opposed, but a complex problem arose. If NBI takes up the development of this project, it means that we will impose our worldview and culture on other countries, and we will simply be hated. And how to combine obligations to NBI members with obligations to banks located outside the United States? How to escape from your own difficulties? At the same time, our success was directly related to the success of the program abroad. Is it possible to fulfill the dream of the most perfect global system of exchange of value without an effective global organization?

This task was more difficult than creating NBI. The World Organization was to overcome linguistic, cultural, monetary, technological, legal and political differences. It was necessary to involve thousands of banks around the world, as well as national consortia in France, Canada, the countries of Scandinavia and the USA. It was to be expected that tens of thousands of various financial institutions from more than 200 countries and regions would also want to join such an organization. This will take several years - without any guarantee of success. And yet, if such an organization appeared, it would be a huge plus for the US market and the market of other countries. At the same time, the experience gained as a result and the strengthened credibility of NBI would undoubtedly render us an invaluable service. It is time for NBI to become a "citizen of the world."

I turned to the NBI Board of Governors with the same request that I had once addressed to Maxwell Carlson. I explained that NBI management will be able to move in the right direction only if it is free from obligations to this organization.

However, we needed to develop NBI in order to maintain its credibility and make a profit. Many of the managers, including our chairman Sam Stuart, used to work on the organizing committee and saw that National Bank of Commerce gave me complete freedom of action. They remembered how zealously I defended then my own independence and the right of committees to act openly, in the common interest.

The Council authorized NBI management to carry out organizational functions, taking into account the needs of foreign participants. To implement this international program, we were relieved of the obligation to observe only the interests of NBI. In the event of a conflict, the board's executive committee was to defend NBI. On the part of the council, this was a very noble gesture.

For two years I was both President and CEO of NBI, as well as an independent agent acting on behalf of international licensees. It was an amazing time: I met many friends, survived the betrayal. There were more than enough surprises.

For two years we fought and removed a huge amount of controversy. The management of each licensed bank made a decision regarding the conditions for participation in the new organization. There were disagreements on only three points. The committee decided to hold the last meeting. If banks did not reconsider their position, the project would have to be abandoned. During the preliminary negotiations, it became apparent that the contradictions were only escalating. We, the organizers, were desperately looking for a way out. It seemed that none of the compromises we proposed could be accepted.

The situation has ceased to be transparent, one of the licensing banks sabotaged the creation of a new organization. Dee Hawk gave a speech in which he withdrew the obligation of leadership. But it was decided before the annual meeting of licensed banks to do nothing. The meeting was to be held in Spain in a few weeks.

I was used to coping with difficulties with ease, so I stopped looking for compromises and thought about what we have achieved in these two years. How did such a large group of different people manage to overcome so many obstacles? Finding an answer to this question was not easy, but it turned out to be very simple. Each time during a crisis, all project participants were focused on success and ready for concessions. They were not concerned with victory or defeat - they were overcome by a sense of unity, illuminated by a common goal.

A few more people joined me, and an hour later we had an idea that could be expressed as follows: the will to win and the willingness to compromise. If we wrote this phrase, for example, only in English, this could offend native speakers of other languages. So she had to sound in a dead language. We turned to linguists and got a translation into Latin: stadium ad prosperandum - voluntas in conveniendum. I still don’t know how accurate this translation is, but it doesn’t matter, because the essence is important.

We asked a good local jeweler to cast a cliche for us, then to make cufflinks. One cufflink was supposed to depict the earth's hemisphere with the contours of the continents framed by the inscription stadium ad prosperandum, and the second a different hemisphere, also with the contours of the continents, this time framed by the inscription voluntas in conveniendum. We wanted to give such cufflinks to each member of the organizing committee. But that was our secret.

In San Francisco, it turned out then a wonderful warm day. At the meeting, people clashed their foreheads, showering each other with mutual reproaches. Four major Canadian banks issuing Chargex credit cards have been very aggressive. They stated that if other banks do not accept their requirements, they will exit the project. In complete confusion, I stood in front of the audience and said:

- Well, it seems that Canada does not want to accept the point of view of the others. What will others say? Will we continue without our Canadian friends?

Everyone nodded back.

- Good. So, representatives of Chargex drop out of the process. Do you think that they can remain at the meeting as observers without the right to participate in further discussions?

And again, everyone nods in agreement. Canadians are surprised, but do not leave.

However, the tension did not subside. On other issues, serious disagreements were also revealed. The business was approaching in the evening, the clouds were gathering. I proposed to interrupt the meeting and, if we abandon the project, consolidate our decision documented tomorrow, and now take a magnificent walk along the bay. At Fisherman's Wharf we rented a pleasure yacht. We invited those who gathered to take her to Sosalito, where dinner was waiting for us at the French restaurant Le Vivoire - not far from the place where Sam, Jack, Fred and I, four years ago, sitting on the open terrace of the hotel restaurant, asked a magical question: “ Assuming that the incredible is possible and that there are no barriers, how do we ideally imagine a global system of value exchange? ”

Mother Nature was supportive of us. We set sail from Fisherman's Wharf. Beyond the Golden Gate Bridge, the sun was setting, painting clouds in pink and purple. And the bridge really, confirming its name, became dazzling gold, which was especially noticeable against the background of pastel colors of the city. A golden path ran along the blue water to the horizon. The evening was warm, everyone took off their jackets, the yacht slowly walked past the buildings of the island of Alcatraz, similar to fortresses (there used to be a federal prison). We sailed on past the green island of Angel Aidend, until we finally landed between the houseboats in Sosalito.
We walked to the restaurant, where we drank several bottles of fine wine and had a great dinner. People thawed. I asked for a moment of attention and said a few words about the difficulties we went through, about the work done. In front of each of the participants they put a case with cufflinks. I explained:

“Our dream did not come true, but let's not consider it a failure.” From the very beginning it was clear that it was impossible to create a world organization. However, for two years we worked tirelessly. We did not know how today's meeting would end, but in any case we decided to give you a present. Open the cases.

All opened graceful boxes. And I continued: - We decided to give you a souvenir to commemorate today. On one cufflink is a hemisphere with the Latin inscription stadium ad prosperandum, which means "the will to win." On the other - the second hemisphere, bordered by the second part of the dictum: Voluntas in conveniendum, or "willingness to compromise." Today, after two years of hard work, we gathered to bury our project. We could not come to an agreement. We, the organizers, have one request for you. Please wear these cufflinks tomorrow. You will go home and take the gift as a reminder that we could not unite the world, because we did not have the will to win and the willingness to compromise. If a miracle happens and tomorrow all our differences will melt away like fog, these cufflinks will remind us until the death hour,

In complete silence, everyone examined the cufflinks. And then one Canadian, my friend, a very cheerful man, got up and, smiling with all his mouth, exclaimed:

- Oh, you little devil!

To a friendly laugh, we continued to have dinner.

The next morning everyone put on these cufflinks. The day before, many committee members called their bosses until nightfall, demanding authority for a positive decision. In complete silence, the chair opened the meeting. He asked:

- Does anyone want to speak about leaving the project? Canadians refused the statements made the day before and expressed a desire to join the new organization. People listened and quietly touched their cufflinks.

An hour later, we agreed on all issues.

A few months later, the international organization Ibanco was created, called today Visa International. Her motto was the phrase "Will to win, willingness to compromise." As far as I know, to this day, each new director of the bank is presented with gold cufflinks and a letter telling about this story. For me, this is the highest reward.

In 1973, it became apparent that the use of different card names impeded the development of the system. Then all the cards were united only by a blue-white-gold logo. In each country, a credit card was called in its own way, and in some countries there were even several names. In the USA - BankAmericard, in Canada - Chargex, sometimes the card was called by the name of the issuing bank, such as Sumitomo in Japan or Barclays in the UK. And every time the card was given the name of one bank, other banks refused to connect to the project. Trading enterprises got confused all the time, and this seriously hindered the work. Thus, the possibilities of international marketing were very limited: cards lost their attractiveness.

Names of cards that were accepted for payment were posted at cash registers: “Here they accept Barclaycard”, “We accept Sumitomo cards”. Merchants did not like the fact that banks advertise on their premises. Card holders thought that only cards of the bank indicated in the announcement were accepted for payment, and this did not suit other banks. The system was expanding, and the name problem complicated everything. In the USA, the name BankAmericard also limited other banks - it turned out that they were promoting Bank of America.

Savings and credit companies, which also received the legal right to engage in the business of credit cards, did not like that the card was called a bank card. In other countries, they were unhappy with the word American. The very concept of “card” was not suitable for such new products as travelers checks and money orders. Every year it became increasingly difficult to solve these problems. When the international corporation Ibanso was created in 1974, a mechanism appeared that made it possible to get out of a difficult situation.

After the creation of Ibano, another important event took place. The international committee, which was at the forefront of the new corporation, no longer wanted to surrender its authority. But could two organizations have a common leadership? At first, it seemed not. There were two separate legal entities: National BankAmericard, which included US banks, and Ibanso, which included several national consortia like NBI, Chargex, Carte Bleue and a hundred more individual banks around the world.

On many issues, the interests of NBI no longer coincided with the interests of other Ibanco members - this concerned marketing, service fees, new products, operational issues and much more. A conflict of interest seemed inevitable, but the same thing happened over the two years that we created Ibanco. Therefore, we decided to deal with this issue.

We came up with a very original way. Ibanco and NBA will sign a joint management agreement - the same staff will serve both organizations. The boards of directors of both organizations will be able to independently remove managers from their posts, but appointing new ones will require the consent of both the NBI Board of Directors and the Ibanco Board of Directors. Thus, managers will be appointed and promoted bilaterally, and removed or punished unilaterally. In the event of a conflict of interest, managers will have to declare this, determining for themselves which of the parties they represent. The other side will be represented by its board of directors.

Shortly after the formation of Ibanco, we asked the board of directors to allow us to develop a single international name for the card. In the new organization, this was a difficult task. It was necessary to replace all the cards that are in the hands of customers. It was necessary to re-stick all the stickers on cash registers in retail outlets. All electronic signs had to be dismantled and replaced with new ones, and only in Japan there were about 200 thousand of them. It was necessary to issue forms and stationery with new logos. The same was true for advertising. The changes were to affect dozens of countries with different languages, cultures and legislation. Joint management was unable to solve such a number of complex tasks.

Reforms could not be led from a single center. Rather, this task will have to be entrusted to thousands of different independent organizations, giving them the right to operate autonomously. I’ll have to explain to people why the name of the card is changing, and promote it on the market. And this needs to be done quickly and consistently, in conditions of honesty and openness, so that cooperation goes hand in hand with competition.

The situation has become more complicated. Although Ibanco had an exclusive Bank of America license, the blue-white-gold logo and name of the card belonged entirely to the bank. Fortunately, by the time Ibanco was established, an agreement had been reached to sign an agreement that provided compensation to the bank in case of transfer of ownership of the international component of the system. Under the terms of the agreement, if the new name of the card is acceptable for 80% of the participants in the system, the right to design cards should be transferred to Ibanco without any additional compensation. This meant that all banks had to abandon the name BankAmericard, and it became the exclusive property of the Bank of America.

We again turned to the goals and principles of the project. Everything was simple with goals: you had to come up with the name of the world organization and its product, while retaining the blue-white-gold logo. The name and logo will be jointly owned. To come up with the name of the card, it was necessary to approve the basic requirements for it. And we started to think.

The new name was supposed to be short, expressive, easily recognizable and easily pronounced. It was supposed to sound so that in no language cause unhealthy associations. It was supposed to provide protection for the world brand, under which the exchange of value and other operations will be carried out. It should not have hinted at the geographical location, name of organization or type of service, for example, Ameri, Euro, bank, charge, credit and card. The name of the card should reflect the mobility, profitability of the credit card and the ability to use it when traveling. As a result, we sketched 15 requirements. But in this situation, you could choose the name endlessly. And we decided to rely on our own intuition and talent.

We gathered all the employees, even inviting a courier, and invited everyone to participate in creating a new name for the card.

“Think alone and all together,” we said. - The main thing is that you should be interested. We will create a special group where you can turn for help and make suggestions. And no outside experts! We ourselves with a mustache. Anyone who comes up with a new name for the card will receive a $ 50 banknote. If several people come up with the name of the card, each will receive such a banknote. The fee is purely symbolic. But if you assign a big prize, we will drown in options. And the winner can hang a $ 50 bill in his frame at home!

How many talents we woke up! People organized work very quickly. Techies even wrote computer programs. Friends and family members joined in. Everyone studied the dictionaries, looking for words with a suitable root. Whatever the staff was doing, they kept thinking about the name of the card. Attacks of violent joy gave way to disappointment, grief-winners fought back from good-natured ridicule. Marketers believed that they, and not some forwarders there, should be the first. Forwarders, in turn, tried to prove that they were also talented - and they succeeded more than once.

The proposals were systematized according to certain criteria. Many ideas that did not meet our principles and goals were eliminated immediately. After a few months, only a few names remained. One of them, Visa, was too simple for the brand: it was either removed from a distance or then remembered about it. Can the word “visa”, which always meant “permission to enter another country”, become a global brand of financial services? Why not? Nevertheless, such a name seemed too common. In addition, we thought that probably someone had already named the financial company.

We began to study global brands, trying to find out if the word “visa” was used in the field of financial services. Soon we learned that there was a Visa brand car, Visa golf clubs, Visa fabric. We got acquainted with the results of the study with bated breath. There were also Visa pens, Visa appliances and many other products with the same name. But we did not find any trace of the word Visa in the field of financial services, publishing, etc., so we quickly registered the name of our new trademark in all possible instances.

We did not yet know if the Ibanco members would agree to change the name of the card, but a start was made: we registered it. “But who received the $ 50 bill?” You ask. Many stories tell about this. No matter how much we rack our brains, we never remembered who was the first to propose the name Visa. It was as if born by itself, arose from the air in the process of work. At the final meeting, someone joked: “It must have come to us. The award should go to everyone, that is, given the face value, to no one. ” Laughing, we decided that so be it.

So, the meeting in Hawaii. It was here that the final decision was to be made. I carefully prepared for the meeting to gather everyone at the negotiating table. On the evening before the meeting, Ferola and I walked along the ocean, then sat down on a small bench. Another couple joined us. We basked in the sun, exchanging impressions of the beauties of nature, first admiring the sunset, and then the sky, dotted with stars.
The next day, at the meeting, I recognized my acquaintance yesterday - it was the director of Barclay's Bank. John Clinton He was not too lazy to come to Hawaii for the sole purpose of convincing the others that we were making a mistake in trying to switch to a single map name. There were long, heated discussions, opinions diverged sharply. As always, we were faithful to tradition and ended the meeting by noon so people could relax and chat. John said he wants to talk to me. An hour later we met on the beach.

And here we are lying on the hot sand under the sultry tropical sun, and John heartily explains to me that Barclay's objects to changing the name of the cards. I listen carefully to him, trying to feel with his skin what he feels. If you take his place, he is right. Once in his position, we would behave the same way. There was no point in arguing. But at the same time I wondered: did he try to look at the situation with our eyes? Are Barclay's interests aligned with those of others?

I asked John if he had time to listen to me? John replied that yes, of course there is. I flattened the wet sand with my palm and began to sketch drawings of a wide variety of maps and stickers. I wanted to show him what problems are happening all over the world because the cards are not alike. I was drawing and suddenly out of the corner of my eye I saw that one of the NBI members was calling me. I waved to him to wait, because I did not want to interrupt the conversation with John. John very quickly realized what I was trying to tell him. I was crawling on the sand, my back was already beginning to bake. I mentally grinned, remembering the old parental saying: own skin is closer to the body. I don’t know, I don’t know - personally today my skin will definitely peel off. So we talked for about an hour, and then John said:

- It seems that we did not fully understand the essence of the matter. I need to think until the morning and consult with other employees. I think we will support the project.

I thanked John and went to smear my back with sunburn cream.

I was caught near the hotel and told me that one of the supporters of the project “overlaid” Bernard Sue, the head of Carte Bleue. Bernard fell on fire and said that he was flying to France on his first flight. But we almost agreed!

- Where is Bernard? He has not left yet? I asked.

They pointed me towards the ocean. Away from the coast, I saw a small figure dangling in the waves.

My heart sank. In an hour and a half, the evening meeting will begin, at which I preside, and here it is! I knew that in his youth, Bernard was an Olympic-class swimmer. And I, a country boy, swam like a duck only in a river and a pond. But I had to talk to Bernard. Well, a job! I spanked to the water and swam. Fortunately for me, Bernard has already turned back.

We met a hundred yards from the coast - the conversation, so to speak, took place in the ocean. I envy Bernard - he didn’t think to get tired, but after half an hour my tongue was on my shoulder. I don’t know what played a role here: either Bernard felt sorry for me, or the ocean put him in a benevolent mood, but he listened carefully to me. And he agreed that the presence of Carte Bleue is very important to us, despite someone's unintentional rudeness.
Good luck and failure like bananas: they grow in one bunch. At dinner, I was next to the representative of Sumitomo Bank, a quiet, modest person. We talked about the art of bonsai - at that time I was just trying to master it. My interlocutor was a great expert in this area. He said that in his family one dwarf tree has been growing for the fifth generation. This lesson gives his family a feeling that life is a relay race and makes you feel that you need to respect the ancestors and work for the sake of future generations. This man admitted to me that he misses his tree and is worried about him, because he needs to be raised a little more and passed on to the young. I shared the conviction that human life is not our personal property and communication with other people should not be like some kind of contractual relationship.

The conversation went by itself to Ibanso. We talked about the fact that Ibanso is built on a special kind of relationship and requires certain sacrifices on our part. We compared Ibano with a bonsai tree, which must be grown and passed on to the next generation. Shocked by this joint discovery, we imagined our "dwarf tree" NBI and fell silent. We did not say a word about the disagreements regarding the change of the name of the cards. I knew that Eastern people easily and beautifully enter a special state of involvement in a common cause. Then, while talking with the Japanese, I also experienced something similar.

At the end of the dinner, I asked my interlocutor for permission to tell the rest of the story of his family tree. At the evening meeting, I said that Sumitomo has a 400-year history. Once upon a time, samurai roamed the country and mined copper. And only then they opened banking and many other Sumitomo businesses. Concluding my story, I added:

- Before continuing our meeting tomorrow, we should think carefully: is it worth jeopardizing the life of our tiny tree? Is it not time for us to revive the samurai spirit, being responsible for the life that we cultivate?

My colleague from Sumitomo sat in the hall and smiled rather.

Indeed, everyone has their own path to understanding, their own motives, and it is useless to impose an alien point of view!

I don’t know, maybe I am romanticizing everything, but the next day the conversation was in a completely different tone. Yes, there was emotionality and tension, but there was a feeling of a common cause - something that was above our personal passions, cultural differences and corporate interests. Nobody pulled the blanket over themselves.
A unanimous decision was made to replace the Ibanco name with the Visa International Services Association, abbreviated Visa. BankAmericard card has been renamed Visa. At the same time, and also unanimously, all the cards in the hands of users all over the world, it was decided to rename Visa. Thus, the name of the cards merged with the name of the corporation. This decision created a lot of problems for many participants, and on the ground they had to communicate with their superiors. It is possible that someone even risked a career. But still they took this step without looking back. For two to three months, we drafted a transition plan for four years. It was a difficult job. Only a common vector was set, but each organization could carry out the transition as it saw fit. Nobody ordered anyone, did not threaten sanctions. No one read notations to anyone. However, deadlines were set for how long each organization had to achieve certain results. Cardholders and merchants took the campaign with enthusiasm and began to organize their work themselves. After a year and a half, almost no old cards were left in circulation, and all the stickers on the cash registers were replaced. Three years later, Visa outperformed all its competitors in the credit card business.

The creation of Visa is an undeniably impressive work that has united thousands of banks around the world into a single system. Moreover, as we learned, in each region decisions are made locally by their banks.

For example, interbank commissions interchange across Russia are established by no means American, but Russian banks. Moreover, the idea of ​​“one bank - one vote” laid down by Hock suggests that even if you have 50% of the issue in the country, you have no more votes when making decisions.

Nevertheless, Dim Hawk regrets several points:

Visa participants are only banks. What does this mean and what does it lead to?Were the banks willing, the rights of cardholders would not be protected from fraud at all. In the USA, where the industry has developed from the very beginning, the very rights are protected by law (Fair Credit Billing Act). If the cardholder finds a transaction that he has not completed, the bank must return the money to him or prove that the cardholder has completed the transaction. As the US Senate correctly noted, if banks created such an imperfect system in which you can copy the card number or the card itself and steal money, it is reasonable if they will compensate such losses to cardholders.


What can not be said about many other countries, for example, Russia, receiving an average of 1.5% from each transaction, banks do not really want to do claims work. If many managers heard about fraudulent transactions, then about returns “service was not provided” - they heard units. And the Russian legislation, which says that the cardholder has a day to file an application to challenge the transaction, does not inspire optimism - “I heard a call, but I don’t know where it is.”

Although the claim work is well described in the Visa / MasterCard rules, the cardholder has nowhere to complain, only to decide through the court. Inside the IPU, only one participant can complain about another, and if all participants within one country decide to sell card fraud insurance, then they will definitely not complain about each other.

American law also shifted the claim work in Visa / MasterCard towards cardholders - if the transaction was completed without entering a pin code or 3d-secure, in 90% of cases the rights of the card holder are right, especially if the TSP carefully did not take a portrait of the card holder with an open passport nearby with face (friendly fraud).

And by the way, emv-chips and 3d-secure do not protect you, dear card holder, but primarily banks from friendly fraud. But very often it is presented in a completely different way.

As for the MTS, they have the only way to reduce the tariffs of the Ministry of Railways - these are endless courts. In Europe, this is how the interchange fee was reduced to 0.2% for debit cards and 0.3% for credit cards.

In Russia, on the other hand, it is easier to say that Visa is an American system, and 1.5% that banks receive for transactions with their cards is so small that there is not enough strength to do claim work.

Say thank you for letting us keep your money in our banks!

There is no ban on dual membership Visa / MasterCard What is the difference between a Visa card and a MasterCard
 for you? Both that and that are accepted all over the world and are attached to any account. If banks competed with each other not only for emissions, but also for brands, the quality of service and the fight against fraud would be one level higher.

I still don’t understand why the Gold card is better than Classic, except that they will call me a doctor abroad, for the appointment of whom I will still pay myself.

Previous Parts:
Chordic Visa Organization (Part 1)
Chordic Visa Organization (Part 2)
Chordic Visa Organization (Part 3)