Visa and Mastercard are accepted almost everywhere. American Express and UnionPay have narrower acceptance. Stripe, Apple Pay, stablecoins, and AI shopping agents each posed a potential challenge to the two networks. Each one ultimately settled on Visa and Mastercard infrastructure. Governments have attempted to build domestic alternatives, and the results have varied with one specific factor: who owns the network.

Origins: The Bank of America Experiment

Before 1958, credit cards were tied to individual retailers, such as Macy's or Sears. Banks faced a chicken-and-egg problem. Consumers had to adopt a neutral bank card that was not linked to any store. Merchants, however, had little reason to accept a card issued by a bank rather than by a competing retailer. Businesses also needed a critical mass of cardholders before accepting the card.

In 1958, Bank of America addressed both sides of the market at once:

• Consumer side: It bypassed the application process and mailed 60,000 pre-approved credit cards to residents of Fresno, California.
• Merchant side: It approached around 300 local businesses and offered access to tens of thousands of potential customers who held the new card.

Marketplace businesses such as Uber and Airbnb later faced the same challenge of building supply and demand together.

Bank of America then recognized that a national network required its competitors to participate. In 1970, it converted the program into a cooperative owned by member banks. That cooperative later became Visa.

Competing Cooperatives

Visa gained a large distribution network because member banks issued Visa cards to both consumers and businesses. Other banks did not want to cede the market to Bank of America. Wells Fargo, the Bank of California, and several other banks formed a rival cooperative, which became Mastercard.

Banks initially had to choose one network. From 1976, they could join both networks and offer either brand. The competition shifted in stages: first for consumers and merchants, then for banks, and finally for bank loyalty.

How the Fee Structure Works

Consider a $100 purchase of a sweater at Zara paid by credit card:

1. The cardholder's bank receives an interchange fee, roughly $2 in this example, paid from the merchant's acquiring bank.
2. Visa or Mastercard sets the interchange rate. The network does not retain it. It charges both banks a smaller network fee.
3. The merchant's bank keeps its share.
4. The merchant receives the remainder.

The structure gives the networks an incentive to compete for issuing banks rather than merchants. A higher interchange fee makes a network more profitable for the issuing bank, and the merchant pays that cost without the ability to refuse it.

The networks reinforce this cycle:

• Networks attract banks through higher fees.
• Banks attract customers with rewards funded by those fees.
• Customer demand pressures merchants to accept the cards.

Merchants cannot decline cards without losing customers. To enforce acceptance, Visa and Mastercard introduced "honor all cards" rules. A merchant that accepts a Visa card must accept any Visa card, including premium rewards cards with higher fees.

Public Listing

Mastercard became a public company through an IPO in 2006. Visa followed in 2008, raising $17.9 billion. At the time, it was the largest US IPO up to that point, and it occurred during the emerging financial crisis. The networks ceased to be owned by banks and became publicly traded companies.

The Shift to Online Commerce

Online commerce added new layers to the payment chain. Early online shoppers needed two things: a card they could use remotely and protection against fraudulent merchants. Credit cards provided both, and chargebacks became the primary consumer protection mechanism.

Payment processors such as PayPal, Stripe, Square, and Apple Pay added a third layer between the shopper and the merchant.

The transaction chain for the Zara purchase online now includes:

Processors increase the number of participants in the chain. They also increase the value of Visa and Mastercard, because each processor becomes an additional distribution channel for the networks.

The Disintermediation Risk

Processors such as Stripe hold relationships with both shoppers and merchants. In principle, they could route payments around the networks. They have not done so for two reasons.

Rewards depend on the network. Card rewards are funded by interchange fees. If a platform steered shoppers toward direct bank-account payments, shoppers would lose rewards and chargeback protection.

Banks lose revenue. Direct account payments generate no interchange fees for banks. In the first half of 2025, US banks collected nearly $66 billion in transaction fees.

A platform would need to persuade shoppers to give up rewards and dispute rights, and persuade banks to support a method that reduces their revenue. Banks have little incentive to agree.

Antitrust Litigation

An antitrust lawsuit against Visa in the United States alleges that the company manufactured this dependency. The case remains ongoing, and no decision has been issued.

Domestic Networks: Ownership Determines Survival

Several countries have tried to build domestic card networks to reduce reliance on Visa and Mastercard. The outcomes differ by ownership structure.

Bank-Owned Networks: Canada

Interac is Canada's domestic network. It operates as a cooperative of the country's five largest banks, following the structure Visa and Mastercard used earlier.

• Interac charges a flat fee of 1.4 cents per transaction.
• Businesses favor it because of its low cost.
• It is used daily for debit card payments in Canada.

Interac offers debit only. Most consumer spending occurs on credit cards, which Interac does not offer. The flat fee generates little revenue, leaving no funds for rewards, marketing, fraud prevention tools, or global acceptance. Visa and Mastercard charge percentage-based fees that finance these functions.

Most Interac cards are co-badged with Visa or Mastercard. Interac processes in-store tap payments, while Visa handles online and international transactions. In effect, Interac functions as another distribution channel for Visa.

Dutch banks also operated a domestic card and phased it out. Of the 21 euro-area countries, 13 have no domestic card scheme. Approximately two-thirds of European payments run on American networks.

The pattern shows that when banks own a domestic network, it remains small and local, because banks earn more from Visa.

State-Backed Networks: India and Brazil

India (RuPay): RuPay launched in 2012 and initially functioned as a debit card for consumers who did not qualify for a standard card. In 2022, the Reserve Bank of India, the country's central bank, linked RuPay credit cards to the domestic payment system UPI. The change applied only to RuPay cards. RuPay credit cards became accepted at every UPI QR code nationwide, from shopping centers to street vendors. RuPay now accounts for close to 40% of new credit cards issued in India.

Brazil (Pix): Brazil's central bank built and operates Pix. Pix holds a 51% share of domestic payments in Brazil, one of the largest domestic payment shares globally.

The difference between India and Canada lies in the decision-maker. In India, the state required the link to RuPay, which removed the choice that banks would otherwise have made.

China

China restricted foreign networks from clearing domestic card payments for years. Chinese residents therefore had no practical choice of network.

Networks as Regulators

Visa and Mastercard have used their control over payments to restrict specific activities and entities:

• 2010: Visa and Mastercard stopped processing donations to WikiLeaks.
• 2020: Visa and Mastercard cut off payments to Pornhub, a Canadian company, after a New York Times investigation.
• Gaming: Steam delisted hundreds of games under pressure from payment networks.
• Sanctions: After the United States sanctioned a French judge over the arrest warrant for Benjamin Netanyahu and a Canadian judge over authorizing an investigation into alleged crimes by US personnel in Afghanistan, both judges lost access to their cards.

These actions affected individuals and companies outside the United States, based on decisions made in the United States.

Russia

After Russia's invasion of Ukraine in 2022, Visa and Mastercard blocked Russian banks. Russia accounted for about 4% of Visa's revenue, so the exit cost Visa comparatively little while causing significant harm to Russia.

Before the 2022 invasion, Visa and Mastercard held 81% of the market for domestic credit card payments in Russia. After the blocks, Russia shifted to its domestic network.

In September 2022, the United States threatened sanctions against banks that processed transactions made with Russian cards. The threat alone caused Turkish banks to stop supporting Russian cards within days.

The case illustrates how the United States can exert pressure through Visa and Mastercard without enforcing sanctions directly. Foreign banks need continued access to US dollars. The threat of losing that access is sufficient to change their behavior.

US Response to Domestic Alternatives

When foreign governments build networks that compete with Visa and Mastercard, the United States has responded.

Brazil: The United States initiated a Section 301 investigation. It concluded that Brazil unfairly favored Pix over American networks and imposed a 25% tariff on Brazilian products. Pix was cited among the factors justifying the tariffs. The United States stated that it seeks competitively neutral treatment for private payment companies, rather than preferential treatment for a government-backed system.

The Department of Justice is suing Visa in the United States for monopolizing debit. Outside the United States, the government has imposed tariffs on a network that competes with Visa and Mastercard.

China: In 2012, the United States won a World Trade Organization case against China. The ruling required China to open card clearing to foreign networks. The United States held that China's treatment of foreign payment networks violated commitments China made when it joined the WTO.

Mastercard began issuing domestic cards in China in 2023. Visa has not obtained a license to operate there. The United States has raised the issue with China directly, and President Trump raised it with Xi Jinping in 2026.

Europe: In July 2026, the European Parliament began discussing a digital euro to reduce reliance on non-EU payment providers. The providers in question are predominantly American.

Stablecoins and AI Agents

Stablecoins and AI agents are the two newest developments presented as potential alternatives to Visa and Mastercard.

Stablecoins

Stripe and Paradigm launched Tempo, a blockchain for stablecoin payments, in March 2026. Tempo runs on an open protocol called MPP, which Stripe co-authored.

On the day Tempo launched, Visa began supporting the protocol. Mastercard followed shortly after, enabling agent payments to run on its network.

In August 2026, Mastercard acquired BVNK, one of the largest stablecoin infrastructure companies. The acquisition gives Mastercard direct control over stablecoin infrastructure. The networks have treated stablecoins as they treated Apple Pay: as another distribution channel.

AI Agents

AI agents differ from human shoppers in two respects.

1. No active payment choice: An agent typically uses the saved card. Today, the saved card is almost always a Visa or Mastercard. When a person shops online, a merchant can influence payment method at checkout through discounts or incentives. An agent does not display a checkout page.
2. No card number exposure: An agent does not hold the card number. Tokens replace card numbers to limit exposure if an agent is compromised or makes an error. Visa and Mastercard issue these tokens. Visa has issued more than 17 billion tokens. Mastercard developed Agented Tokens specifically for agents.

The Protocol Competition

Several companies have developed protocols for agent commerce. Google, OpenAI, and Stripe each have their own, and Stripe and Tempo have a third. Visa and Mastercard connect to all of them. Regardless of which protocol prevails, transactions are likely to route through the two networks.

Adoption remains limited. In 2026, OpenAI shut down its checkout feature after weak usage. Anthropic released an open-source shopping agent in September 2026, but it only builds the cart. Payment processing still runs through the merchant's existing checkout.

Conclusion

Visa and Mastercard have absorbed or accommodated every challenge to their position:

• Apple Pay operates as a wallet for Visa cards.
• Stripe functions as a distribution channel for the networks.
• Stablecoin transactions run on Visa and Mastercard infrastructure.
• AI agents use Visa and Mastercard tokens.

Banks earn more from Visa than they could earn from a network they build themselves. Merchants cannot refuse the networks' cards, because customers carry them.

The analysis indicates that the decisive factor in whether a domestic alternative survives is ownership. Networks owned by banks tend to remain small. Networks enforced by the state can grow substantially, but they draw scrutiny from the United States, which has responded with tariffs, litigation, and diplomatic pressure.