The Network of Networks

Have you noticed lately that the so-called card networks are talking less and less about cards? This seems especially true of what we used to call the two big bank card networks, Visa and Mastercard. They ceased formally being “bank” card networks when they went public a decade ago, and now the “card” descriptor seems to be fading as the networks eye new opportunities in money movement with or without a plastic token.

Last month, we asked the two big networks about this. Here’s how Ansar Ansari, senior vice president of digital solutions and platform products at Visa, describes the overriding strategy at his company: “The focus of our business … remains our network of networks, which is about moving money from all endpoints to all form factors. This network of networks allows us to provide end-to-end money movement solutions with best-in-class capabilities, using all available networks to optimize speed, security and price of a transaction for consumers, businesses, and governments around the world.”

Mastercard’s Ron Schultz, executive vice president for new payment flows, didn’t speak of a “network of networks” but Mastercard’s expression, “multirail,” is an intriguing descriptor for where that company is going strategically. With its acquisitions over the past few years along with internally developed technology, Shultz said Mastercard can support card, automated clearing house, and real-time transfers (through Vocalink), not to mention bill payments.

Both companies have bulked up through acquisitions in increasingly crucial markets like cross-border payments (Visa-Earthport, Mastercard-Transfast). Plus Mastercard a few months ago added account-to-account transfers through its acquisition of that part of the Nets business.

On top of that, both companies have made bids for data networks that connect fintechs like Square and Venmo with customers’ bank accounts for such functions as account verification and money movement. Mastercard will likely close soon on its $825-million deal for Finicity Inc. (if it hasn’t already done so by the time you read this) while Visa’s $5.3-billion proposal to buy Plaid Inc. has been stymied by the Justice Department on antitrust grounds.

The DoJ’s theory is that Visa fears Plaid, if left to its own devices, could ultimately challenge Visa’s dominant position in debit networking, so it bought the company to forestall that potential threat. Visa denies the allegation, and we’ll all have to wait to see how the case sorts out. But the interesting facet to the case is how even the U.S. government sees the potential for account debiting and crediting via direct connections rather than plastic tokens.

Whether the approach is multirail or network-of-networks, Mastercard and Visa clearly aren’t the card networks they once were. What they’re becoming is something far more interesting.

—John Stewart, Editor, john@digitaltransactions.net