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Expanding the System: Organizational and Technical Growth

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Electronic Value Exchange

Part of the book series: History of Computing ((HC))

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Abstract

This chapter examines the various ways in which the system was expanded throughout the rest of the 1970s. The expansions were both organizational and technological, and I argue that the two must be kept in a dynamic tension in order to understand this period fully. Organizational topics include the formation of the international organization; anti-trust battles and the institution of “duality”; and the adoption of the name “Visa.” Technological topics include the expansion of BASE I’s capacity by switching to the Airline Control Program (ACP) on IBM hardware and creating a second cooperative data center; the expansion of the authorization network internationally; and multi-currency clearing and settlement.

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Notes

  1. 1.

    Brooke (20 September 1974), p. 1.

  2. 2.

    Hock (2005), p. 196.

  3. 3.

    Brooke (20 September 1974), p. 8.

  4. 4.

    Russell interview.

  5. 5.

    Hock (2005), pp. 210–211.

  6. 6.

    The cufflinks themselves are pictured in Chutkow (2001), p. 138. Russell confirmed the dinner and the presentation.

  7. 7.

    Brooke (20 September 1974), p. 1. IBANCO reportedly stood for “International Bankcard Company,” but was commonly referred to only by the shortened name, and often in title case after first use (i.e., Ibanco).

  8. 8.

    Information on duality and the antitrust case comes from the following sources: Hock (2005), pp. 181–194; Wiegold (2 January 1973), p. 1 and other trade press articles; interviews with Katz, Honey, Russell, Powar, Conway, and Derman.

  9. 9.

    Various articles in American Banker.

  10. 10.

    See Hock (2005), pp. 182–183. Also confirmed in Katz and Russell interviews.

  11. 11.

    Hock (1974), p. 3.

  12. 12.

    Wiegold (2 January 1973).

  13. 13.

    Wiegold (12 July 1973), p. 1. For Worthen’s response, see ‘Worthen opposes call for full trial’, American Banker (23 July 1973), p. 1.

  14. 14.

    ‘Court upsets ruling against NBI dual card ban’, American Banker (25 September 1973).

  15. 15.

    ‘Plea for new hearing by Worthen is denied’, American Banker (25 October 1973), p. 1, ‘Worthen asks high court to review reversal’, American Banker (11 December 1973), p. 1, ‘High court refuses Worthen-NBI review’, American Banker (20 February 1974), p. 1.

  16. 16.

    Hock (2005), p. 190. See also ‘NBI maps new rules banning dual membership’, American Banker (17 September 1974), p. 1, Brooke (20 November 1974), p. 1.

  17. 17.

    Baxter (1983), p. 587.

  18. 18.

    ‘A second card in your future?’, ABA Banking Journal (August 1976), p. 54. Other countries such as Spain and France did not allow such duality. The effects this had on the system evolution and competitive landscape in those countries would be an interesting focus for further research.

  19. 19.

    Streeter (1979), p. 70.

  20. 20.

    Evans and Schmalensee (2005), pp. 281–284.

  21. 21.

    As we shall see, VISA is technically an acronym, but it is commonly written in title case after first use.

  22. 22.

    Some international licensees followed the domestic model of merely adding the licensee bank’s name (e.g., “Banco de Bilbao BankAmericard”). For a pictorial catalog of the various international cards, see Nilson (September 1976), Report No 147, p. 2. Also note that the domestic Carte Bleue card was a national debit card only, so they issued a separate BWG card for use outside France.

  23. 23.

    Katz and Honey interviews. See also Hock (2005), p. 216.

  24. 24.

    Hock (2005), pp. 217–219. Goldsmith claims that he was the one who originally suggested the name to Hock (Goldsmith interview).

  25. 25.

    Honey interview.

  26. 26.

    Visa concept stolen by NBI says creative agency, Nilson (May 1977), Report No 163, p. 1; Nilson (March 1979), Report No 208, p. 2. NBI actually compensated a number of financial institutions that had already used the Visa name in one way or the other. See Chutkow (2001), p. 217; and Nilson (March 1977), Report No 160, p. 1.

  27. 27.

    Hock (1976), p. 9.

  28. 28.

    Honey correspondence.

  29. 29.

    It was first moved to the center, and then to the lower-right where it remains today, though Visa has recently removed the colored bands from the mark. Pictures of the centered placement can be seen in Chutkow (2001), p. 215.

  30. 30.

    This was one of the key reasons cited by Citibank for leaving the Visa system in 1998. See Evans and Schmalensee (2005), p. 171.

  31. 31.

    Honey interview.

  32. 32.

    For a report on the card done for the Woolworth Company, then the fourth largest retailer in America, see Nilson (August 1981), Report No 266, p. 1.

  33. 33.

    Nilson (September 1976), Report No 147, p. 2.

  34. 34.

    ‘A Visa-card offensive angers the opposition’, Business Week (5 September 1977), p. 31. See also Nilson (February 1977), Report No 157, p. 2; and for Nilson’s accusation that Citibank was sending out applications indiscriminately, see Nilson (February 1978), Report No 180, p. 1.

  35. 35.

    ‘Bank cards take over the country’, Business Week (4 August 1975), p. 53. See also, ‘Visa-card offensive angers the opposition’, Business Week (5 September 1977), p. 31.

  36. 36.

    Nilson (July 1980), Report No 240, p. 1.

  37. 37.

    Honey interview.

  38. 38.

    ‘Visa’s climb to No. 1 in cards’, Business Week (17 July 1978), p. 26.

  39. 39.

    Elliott interview.

  40. 40.

    Fojtik interview.

  41. 41.

    Information on the DEC vs. IBM decision comes from interviews with Derman, Fojtik, Peirce, Schramm, and Russell. There is some disagreement as to who voted for which alternative, but as we shall see, it mattered little in the end.

  42. 42.

    Russell correspondence.

  43. 43.

    This was actually one of IBM’s first software “products” sold independently of the hardware. See Ceruzzi (1998), p. 106. Note that CICS is actually a subsystem designed to run on MVS, not a full operating system itself.

  44. 44.

    Peirce interview.

  45. 45.

    For information on Sabre, see Copeland et al. (1995), Knight (1972), Head (2002), and Campbell-Kelly (2003), pp. 41–45. For a detailed review of ACP/TPF, see Siwiec (1977), pp. 169–195, and Scrutchin (1987), pp. 158–160. Additional information on ACP comes from interviews with Peirce, Fojtik, Totten, Reid, vonGillern, and Boston. Although the name “Sabre” is often written in all capitals, it was never an acronym, and was actually derived from the Buick LeSabre.

  46. 46.

    Siwiec (1977), p. 173.

  47. 47.

    Knight (1972), pp. 1424–1425.

  48. 48.

    Siwiec (1977), pp. 171–172.

  49. 49.

    Knight (1972), p. 1426. One IBM developer noted that this came with a certain risk—the system was not terribly protected, and one could easily write code that could bypass safeguards in order to obtain the necessary performance.

  50. 50.

    Knight (1972), p. 1427.

  51. 51.

    This was also necessary in order to debug the system, as some logic errors may only occur under certain timing-dependent conditions. The logged information could also be analyzed to determine the actual usage of the system and tune it accordingly.

  52. 52.

    Siwiec (1977), pp. 171–172.

  53. 53.

    BASE I numbers come from Tootelian and Peirce interviews. PARS numbers come from Siwiec (1977), p. 172. For comparison, Visa claims that their average peak in February 2007 was 6,800 per second, and their peak capacity was 13,000 per second. See http://corporate.visa.com/md/fs/corporate/visanet.jsp (accessed on 12 February 2007).

  54. 54.

    Siwiec (1977), p. 174.

  55. 55.

    Peirce interview.

  56. 56.

    Peirce and Schramm interviews.

  57. 57.

    Totten interview. Information on the creation of the East Coast data center comes from interviews with Totten, Peirce, Derman, and Fojtik.

  58. 58.

    Totten interview.

  59. 59.

    Cleveland (1999), p. 47.

  60. 60.

    Totten and Fojtik interviews.

  61. 61.

    Sources indicated that a fifth center has been added in the US, but it is unclear if this new center will replace one of the existing ones.

  62. 62.

    Fojtik interview.

  63. 63.

    ‘Visa verification net reaches UK, Canada’, American Banker (22 July 1977), p. 1.

  64. 64.

    Information on multi-currency clearing and settlement comes from interviews with Nordemann and Schonheyder.

  65. 65.

    As of 2007, Visa clears in 172 currencies and settles in 16 (http://corporate.visa.com/md/fs/corporate/visanet.jsp, accessed on 12 February 2007).

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  1. Seattle Pacific University, 3307 Third Avenue West, Seattle, WA, 98119, USA

    Dr. David L. Stearns

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Stearns, D.L. (2011). Expanding the System: Organizational and Technical Growth. In: Electronic Value Exchange. History of Computing. Springer, London. https://doi.org/10.1007/978-1-84996-139-4_6

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  • DOI: https://doi.org/10.1007/978-1-84996-139-4_6

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