Finance History | Mastercard — Fourteen Banks in Buffalo After a Refused License
· 1966-8
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Finance History | Mastercard — Fourteen Banks in Buffalo After a Refused License
kevin
People treat Mastercard as the Purchase, New York campus at 2000 Purchase Street that always cleared a tap from an S and P 500 book.
The first book was a committee in Buffalo.
On 16 August 1966 a group of banks that Bank of America would not license formed the Interbank Card Association.
Karl H. Hinke, an executive vice president at Marine Midland Bank, had asked the others to come to Buffalo after the California issuer turned Marine Midland down as too large for a regional BankAmericard franchise.
The association was the point.
No single bank owned the mark.
Member committees wrote the rules for authorization, clearing and settlement so a card issued in one city could be honored in another without a bilateral contract for every pair.
The first face of the network was a small circled i printed on each bank's own card design.
By the end of 1967 the association counted about 150 members and Hinke was chairman.
In 1969 the Western States Bankcard Association licensed Interbank to use the Master Charge name and the overlapping ochre circles.
First National City Bank folded its Everything Card into that mark the same year.
Eurocard gave the network a European door in 1968.
The name became Mastercard in the late 1970s.
The mechanism that still sits under every swipe is interchange: the acquiring bank pays the issuing bank a fee set by the network's schedule, which is how a restaurant in one state can take a card issued in another without keeping a file on every lender.
That schedule later drew antitrust suits and a multi-billion-dollar merchant settlement.
Those cases are the cost of a common rail.
Visa, written in Fresno in 1958 as BankAmericard, had already proved that an unsolicited plastic card could stick.
Interbank was the second rail, built because the first rail would not share its license with a Buffalo bank.
The Marine Midland block on Main Street is the public remnant of that refusal.
Photo: downtown Buffalo near the old Marine Midland addresses, via Wikimedia Commons.
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