00:00 Visa is a global network that connects banks, merchants, and consumers to enable transactions in any currency, but many people don't actually know what Visa does.

09:29 Visa was not the first to introduce the concept of credit cards, as charge accounts and shared credit histories were already in existence, but it was the first to enter the market at scale and consolidate various lending programs into one card.

19:10 American Express observed Diners Club and decided to enter the credit card industry, quickly signing up 700,000 members and becoming the first real financial company in the industry.

28:40 Bank of America's credit card program, which combined convenience and credit, quickly became the largest in the world, signing up 2 million cardholders in its first year and remaining profitable despite initial losses and fraud.

38:30 In 1966, Bank of America created the Bank AmeriCard Service Organization to license out the Bank AmeriCard program and network to banks across the country, which eventually became Visa.

47:55 In 1968, all the franchisees of Bank of America demanded a summit to address the issues they were facing with the Bank AmeriCard program, leading to a meeting in Columbus, Ohio.

56:59 During a summit organized to address the issues facing franchisee banks with the Bank AmeriCard program, a committee is formed to investigate and propose a new way of operating the system, which ultimately leads to the creation of Visa.

01:06:56 The creation of Visa was driven by the desire of other banks to franchise the Bank AmeriCard program, and the potential value of a global payments and credit network that could take a fee on transaction volume.

01:17:14 Visa was created as a for-profit non-stock membership corporation with a universal set of operating and governing procedures, and every member bank has a vote in determining how the organization runs.

01:27:10 Visa holds a final summit in Sausalito where they vote on who will join the Visa network and who will go their own way, and D gives a nostalgic speech before revealing a gift of pure gold cufflinks to all attendees, ultimately convincing the holdouts to reverse course and join Visa.

01:37:02 Visa's open loop system, which allowed for more scalability and signing up of multiple banks, helped them surpass Mastercard and become the dominant global network, despite the compromises in user experience.

01:46:52 Visa needed to build transaction authorization technology to eliminate the need for bank-to-bank phone calls and address the problem of transactions not being able to happen outside of business hours, so they started a project called the Bank of America Card Authorization System Experimental (BASBase) in 1971.

01:57:00 Visa builds a nationwide and then worldwide telecom network, installs computer systems in member banks, trains bank employees, and builds a centralized data center in San Mateo to create Visa Net, a transaction authorization system that operates over telephone communication.

02:07:01 Visa digitizes the point of sale transaction by making cards machine-readable with magnetic stripes and creating a digital point of sale terminal, leading to a reduction in fraud and enabling the modern payments world we know today.

02:16:57 Visa positions itself against American Express and becomes the exclusive payment provider at the Olympics, eliminating the stigma around using credit cards and enabling the global Visa empire.

02:27:00 Visa's business model has remained largely unchanged since the 80s, with the authorization flow of transactions still following the same process, and the majority of the fees from interchange, network fees, and payment processing fees going to the issuing bank, Visa, and the acquiring bank, respectively.

02:36:56 Visa processed $14 trillion of volume through their network last year, and the growth in payment volume on the network has been 17.3% compounded annually for 51 years.

02:46:38 Visa's net income margins of 50% and gross margins of 98% make it the most profitable large-scale company in the world, with 707 million transactions per day and 16,000 banks in 200 countries.

02:56:33 Visa and MasterCard have no sustainable competitive advantage over each other, but Visa did have a stronger brand element in the past and positioned itself as more premium by partnering with the Olympics and positioning against American Express.

03:05:28 Visa and MasterCard have scale economies due to their large customer base, which allows them to amortize their fixed costs and make investments that pay back instantly, making it difficult for competitors to compete with them. Additionally, Visa has a five-sided network effect, making it even harder for competitors to replicate their success. There are no significant switching costs for customers, and counter positioning is no longer relevant in the industry. Visa's playbook involves launching new products and services that benefit consumers and also help increase transactions, margins, or lock-in. The company operates on a model of communist capitalism, with thousands of banks coming together to create value on a global scale. The success of Visa is attributed to both socio-technical and technological innovations, making it a world-class company in Silicon Valley.

03:14:55 Visa's business model has evolved to allow them to charge more in transactions than is necessary to cover their costs, resulting in high profit margins and value capture, but their growth may slow as the digitization of consumer payments reaches its peak and closed loop systems and real-time payment networks pose potential threats.

03:24:32 Visa is keeping a close eye on the rise of real-time payment systems in various countries, such as PIX in Brazil and UPI in India, as these systems could potentially bypass Visa's network and pose a threat to their business model.

03:34:14 Visa Direct is a new business-to-consumer push-based payment system that Visa has created to tap into the $30 trillion volume addressable opportunity of fast payouts and refunds, while the expansion of cross-border payments remains hugely profitable for Visa.