How Big Banks Created America's Credit Card Addiction

Modern credit cards have become a game in which even occasional consumers are obsessed with earning points, spend hours researching about their next card, and are obsessed with obtaining the best possible rewards. Now there are more options than ever in history. In the last decade, an ecosystem of publications and influencers has emerged that promise to help people sort this increasing complexity to obtain digestible recommendations. And banks have paid millions of dollars to promote their products and maintain this frenzy of consumers, in addition to all their usual advertising on television, direct mail and online. All this ludification exists for a reason. Credit cards are a very profitable business. Getting people to plan their holidays, lifestyle and social status on these small pieces of plastic and metal is part of the plan. If people care so much that they even dedicate their free time to thinking about their next card, the money will continue to flow. Although the sector has existed since the 1950s, the power has been in the same hands. As for the network, it is a duopolio with Visa and Mastercard. Its closest rival is American Express, but even these are still too small to pose a real threat, despite the fact that they used to have 100 years of advantage over Visa and Mastercard. There is more competition when we look at the companies that really issue credit cards, but most of those earnings continue to go to the same four large American banks. Even with the growing political pressure and the intense regulation of the last decade, it is still the same closed circle of market creators that is confabulated and is delighted to keep others in the business. In this episode, we dive into business conspiracy and the economy of credit cards through the major players. Visa, Mastercard, American Express, Discover, Chase and Citibank. Credit cards are part of a broader change from traditional cash to modern electronic payments, in which transaction costs are lower, the record is clear and processing is automated. However, the evolution of physical payment to digital entails its own important risks, and none is greater than security. Credit card and online bank credentials are the most valuable target for criminals, as they can use this data to make fraudulent purchases, steal cash and simply resell on the dark web for thousands of dollars. Computer pirates have stolen hundreds of millions of credit cards from major banks and minorities such as Adobe, Chase, Home Depot and Marriott in the last two decades. And more and more they go to small and medium-sized companies that do not have the resources or the luxuries like Fortune 500 to reinforce their security. If it accepts electronic customer payments, processes credit cards or uses credit cards internally to manage its business, it is exposed to cyberattacks and is a much easier target for cybercriminals. This gives computer pirates access to payment information and confidential customer data. Employees who log into the company's accounts are especially vulnerable, as they put the company's finances and reputation at risk. On average, it takes 121 days to identify a data breach. This delay can substantially increase losses. That is why you should seriously consider a password manager like NordPass, an intuitive, easy-to-use and ready-to-use password manager for companies that manage your online security so that you can focus on your business. NordPass has been created by cybersecurity experts who are behind NordVPN, the most popular VPN solution in the world. Instead of employees reusing their personal and weak passwords, NordPass allows your employees to generate secure passwords and automatically fill in credentials on all devices, both desktop and mobile. Employees can share confidential data such as account logins, credit card details and notes securely between colleagues using the highest XCHA20 cipher standard and zero-knowledge architecture, which means that no one else can see your credentials. NordPass also scans the dark web and alerts you if any of your credentials have been leaked. Forget about putting your passwords in sticky notes, notebooks, messages or spreadsheets. It is a quick way to become an easy target for computer pirates and suffer a financial loss. Try it for free with NordPass, which is a unique, encrypted, centralized and unified panel that allows any company to get ahead of digital threats. We ourselves have been NordVPN payment clients for years. Given our positive experience with the fluid user experience, design, reliability and attention to the ultra-fast and human client of Nord applications, NordPass is an obvious choice for modern MVA companies and for any company. Visit www.nordpass.com and use our special MVA code to get a free 3-month NordPass Business trial without a credit card. Visit nordpass.com to get a free 3-month trial from the world's leading password manager. When you use a credit card, either by touching, sliding or inserting, it is the merchant who accepts the payment and assumes the costs. They are the ones who have to pay the sliding fees and have been trying for decades to transfer the costs to consumers, either through recharges or search charges. When you take 2 to 3% of each transaction, that money accumulates very quickly. But, contrary to what is believed, those sliding fees will not stop the Visa or Mastercard wallets. That 2 to 3% actually goes to the bank that issued the credit card of that person, as compensation for assuming the credit risk and guaranteeing the payment to the company in the name of the person. Mastercard and Visa then charge their own commission separately as software intermediaries that supervise the transfer of money from the bank of the holder of the card to the merchant's bank account, almost like a mini deposit in digital guarantee. The merchant or the company stays with the rest after all these commissions are deducted, and this happens in each transaction. There is a minimum of three parties involved and, often, a fourth or a fifth if the payment is managed in a physical terminal such as Square or Veraphone, introduced in an online gateway such as Stripe or Paypal or through NFC such as Apple Pay or Google Pay. Each intermediary takes its own share. Despite the growing number of hands in the boat, credit cards have continued to be a lucrative business. They are the jewels of the crown even for large banks, as their business divisions boast greater growth and more solid margins, superior to those of the investment bank, car loans, commercial loans and mortgages. Although all parts of this transaction are doing their part, the elephant in the room still exists. Why are banks so happy to keep Visa and Mastercard as intermediaries? Why are large banks no more ruthless when it comes to promoting their own networks, when they are already so aggressive when it comes to extracting every dollar of profit from all other products? And why are Visa and Mastercard so willing to be the public spying chip of politicians, when they could easily point out their bank partners, such as those who take the commissions by slip? The reality is that Visa and Mastercard were not technological companies, companies born in Silicon Valley. Instead, they were born from large banks. Visa was founded by Bank of America, became a cooperative with other banks and, finally, became its own independent entity. Mastercard was formed in response to the alliance of the smallest banks, who feared that the largest banks would displace them. Over time, Mastercard also became an independent company that trades in the stock market. This means that Visa and Mastercard are not a futuristic technological company of the new era. They are a product of the system itself and help banks as much as banks help them. Each and every executive director in the history of Visa and Mastercard has come from a large bank. They all coexist in this tacit harmony in which banks will not invade networks and vice versa. Therefore, Visa and Mastercard can focus on ahead of possible competitors that emerge from the front and never have to worry about being displaced by the rear. Their only competition is new technology, and Visa is enthusiastically associated with almost everyone to ensure that they are considered partners and not objectives. Like Mastercard, they have no opinions about the future, only that they must be part of it. Both companies have programs dedicated to helping emerging cryptocurrencies and financial technology to reach the market faster. And if a startup wanted to go directly against these traditional networks, it would not advance at all because no large bank, either on the side of the merchant or the owner of the card, would join a network of Visa and Mastercard expenses. It was in the mid-1980s when credit cards became popular. The only real credit lines available for the American medium at that time were those of loan sharks or solitary sharks. Banks were the credit card issuers and the networks that made those payments possible. Both made a fortune in this emerging market. It was like a perfect division of labor, since the system worked collectively to promote the adoption of credit cards, both among consumers and among companies. Networks like Visa, Mastercard and American Express were in an arms race to sign as many merchants as possible. Meanwhile, credit card issuers were in their own arms race to sign as many consumers as possible for their specific card product. Networks make money with volume, so they care about getting the most possible number of passes. Banks, however, make money with interest, and credit cards are like fuel for rockets. To the conventional bank. In the simplest abstraction, banks take money from people who do not need it and charge lenders a higher interest rate than they pay depositors. The differential is where banks make money. However, the average person only usually borrows money for large purchases such as cars, houses or commercial assets. As a result, there are three limitations. First, most people do not buy a car or a house every year, so lending opportunities are limited. The second is that these purchases are expensive. Therefore, you, as a bank, must make sure that you are lending to the right people to meet the payment charges and protect yourself in case they escape. And all these general expenses reduce the margins. The third is competition. Therefore, you, as a bank, always compete for your loans with everyone else. And, finally, it is the Federal Reserve that establishes the interest rate as a reference. Therefore, you cannot collude with other banks and you are tied to forces that escape your control. Credit cards break all these restrictions like microcredits. The average American credit line is tiny compared to that of a mortgage. But what is lost in transaction size is compensated with interest. Banks that issue credit cards can charge any type of interest they want without legal limit or relation to the Federal Reserve. It is a dream come true for these lenders, since they can charge radically high interest rates for small amounts of money. With loans of such a small size, the risk is less and the life expectancy is easier. The total market to which you can access is also greater and the driving force is culture, since the only restriction is individual frugality. Unless there is a social change that moves away from materialism, Americans will always buy more, more and more, and credit cards feed that consumerism. But, ultimately, the American economy as a whole is based on consumerism. And all that banks and networks had to do was condition generations of Americans to take loans for everything, from daily routine expenses to punctual withdrawals. Banks could make a fortune by charging higher interest rates to more people than ever with less money. And networks could also make their own fortune by adding commissions. But credit card holders only pay interest when they do not pay the full amount they owe. And since that's where banks make more money, their goal is to encourage Americans to spend more than they can. In the wild west, from the 80s to the 2000s, banks did everything possible to keep people's balance sheets pending. Frequently, interest rates rose without prior notice, they changed the expiration dates to confuse credit card holders, they hid penalties and small letters that raised interest rates to much higher levels than those announced, they automatically approved transactions even if credit card holders exceeded their limit and added huge commissions per hour. And when someone did have a pending balance, they were charged interest not only on what they owed, but also on their previous balance, even if they had paid it. As adoption matured in the 90s, the battlefield changed. Banks needed to encourage people to use their specific cards instead of the ones they already had in their wallet, and they invented inactivity rates to force people to use their card at least once a month. To maximize income, you need high balance sheets along with high interest rates. Returns of charging 25% interest on $100 versus 20% on $1,000 are incomparable. To cut with the growing market saturation, the industry changed once again and began to offer balance transfers with an unprecedented 0% tie. Americans could now transfer unpaid balance from any of their existing cards to this new one without interest for a certain period of time. Banks were happy to lose money with these offers because, at least, they would have captured the balance and now it was just a waiting game for the card holder to make a mistake. Whenever there is balance, there may be an opportunity to get interest. With the saturation in the upper and middle part of the market, banks began to extend loans to high-risk lenders with low incomes such as their new dairy cows. These predatory loans practices generated huge profits for American banks during the 2000s. The money earned by charging interest to card holders exceeded with growth the money earned with sliding rates for several zeros year after year. Visa and Mastercard themselves enjoyed record profits in this gold fever, as they sold the back-end shovels that made it possible for these banks to issue these credit cards in the first place. And in the case of one hand, look at the other. Big banks were happy to pay millions for these tools to finance their returns. However, when the Great Recession arrived, profits disappeared, banks went bankrupt, and regulation arrived quickly. The dangerous patterns that had caused the real estate crisis had developed and credit cards, like mortgages, the non-regulated credit business had degenerated in the extension of deceitfully friendly loans to people and in benefiting from their failings in payment. The division of credit cards of all banks, which in its day had a high growth and high margins, collapsed when the Americans lost their homes and jobs. And since credit cards are unguaranteed debts, they occupied the last place in the priority scale. With a generalized morosity, banks suffered huge losses, and the income they had generated by interest that year was used to finance mortgages. For the first time in history, profit margins collapsed to figures of a single digit in the entire sector, and some banks even ended up in red numbers. In response, the Obama administration promoted the Card Law of 2009, which restricted these predatory practices throughout the sector by demanding the disclosure of information, notifying the increases in types, setting payment deadlines, setting age limits, and prohibiting commercialization aimed at university students. However, the damage of the recession was ultimately limited to banks as card issuers. Visa and Mastercard continued to make a fortune during and during the Great Recession as intermediaries of software without any exposure to the end consumer. The only reason why each of them declared losses in 2007 was for the single payments of the anti-monopoly litigation. Both Visa and Mastercard disbursed billions of dollars in agreements that year with their rivals. The E.U.U. government had discovered the collusion between Visa, Mastercard and the big banks. The four big ones had conspired to build and strengthen Visa and Mastercard's duopoly by not allowing all banks below them to issue credit cards for competing networks such as American Express and Discover. And if you are a small regional bank that usually does business with Chase, Citibank, BOA or Wells Fargo, you really have no choice but to do what they tell you. Despite the forceful evidence from the Department of Justice, the government did not take any action beyond the civil monetary sanctions. Curiously, Visa and Mastercard knew that these fines were going to arrive and quickly made it public before the agreement, and used the funds collected directly from the public markets of their op-eds to pay for these sanctions. Despite having the advantage in bank rescue, the government opted to continue its cross-regulation of the entire sector in all networks instead of the obvious duopolio. At that time, Visa and Mastercard were years ahead in network volume compared to American Express, which had been the true pioneer in the development of credit cards. Not even Discover, Agile and Svelte Advenedisa had any chance of closing this gap, since neither of the two networks could replicate the relations, access, incentives and agenda shared with the big banks that only enjoyed Visa and Mastercard. The Great Recession finally did nothing to stop the trajectories of this duopolio. Even when the Americans switched to debit cards to avoid the risk of interest and develop better spending habits, Visa, Mastercard and the big bank continued to benefit by charging the same sliding rates and dividing income between them. It was in 2011 when the EU government limited the sliding rate of debit cards to 21 cents and 0.05%, which is substantially lower than that of credit cards. This regulation was once again promoted with a holistic vision of the entire sector, under the argument that some electronic payment was better than none. This was an exceptional case in which the government prioritized its interests above the financial system. Lower commissions for the sliding of debit cards would mean that more businesses would accept plastic cards instead of cash, and less cash in the long term would mean fewer opportunities for tax evasion, blanking and corruption, which was an advantage even if expenses for the benefits of banks were produced. As the economy recovered, Visa and Mastercard's earnings continued to increase with the full support of the big banks. Since the government did not show any concern for the duopolio, the two networks were able to focus on getting ahead of their only remaining threat in technology. They created new security standards, such as MV chip cards, and provided support from day one for any emerging potential technology, such as optical readers and smart speakers. Visa and Mastercard have no opinion on the future. Instead, their goal as intermediaries is to be present anywhere and everywhere. With the support of day one for everything, they can wait and see what technologies will take off, such as NFC, contactless and contactless payment, and then increase their investment accordingly. There is a clear division of ambitions. Visa and Mastercard focus on transactions between consumers and companies. Most of the money that flows through both networks each year corresponds to consumer loans and very little to commercial loans. The big banks, on the other hand, focus on transactions between companies and consumers. While transactions C2B, B2B and BTOC are covered so exhaustively, there is much less coverage for C2C. This is why the biggest FinTech services of the modern era, such as PayPal, Venmo, Wise and Cash App, are based on transactions between consumers, because the inherited financial system historically considered that these payments had a value too low to be worth investing time. However, today, the big banks are fighting to regain ground in transactions between consumers through Zelle, and the networks have focused on unlocking a greater volume of payments between consumers and companies, encouraging card holders to now charge higher expenses with their credit cards, such as rent. Visa and Mastercard have also focused on transactions between governments and consumers. Their argument is that they are software providers as well as payment networks. With their tools, they claim that they can help countries reach their unbanked populations, modernize the distribution of benefits to citizens, and better inform politicians about monetary policy. And since almost all countries in the world have some asset deposited in a large US bank, for Visa and Mastercard, they have been able to speak face-to-face with political leaders thanks to the warm presentations of the banks themselves. As a result, income from the sale of software services has increased year after year, and will continue to do so, since anyone who does business with the four big ones will inevitably do business with Visa or Mastercard. This is why China and Russia, with their networks, banks and nationalized technology, are still the only large markets in which Visa and Mastercard publicly admit that they have no chance of winning. While they usually argue in public that they have to be able to charge these sliding fees to maintain security, protection, activity time, and network reliability, the figures tell a very different story. Visa and Mastercard have only lost money once in the last 20 years, and that was only due to the Anti-Monopoly Agreement. Credit loans are so profitable for both large issuers and large networks that the benefits rebounded the following year to reach two-digit figures despite the greater regulation. Margins have remained between 30% and 50% in all areas every year for large credit card issuers and networks. While Visa, Mastercard and the four big ones found the right paths to move forward without stepping on their heels, they all faced the same dilemma. As a result of the Great Recession, one thing is to maintain margins and another to make the cake grow. While networks were focused on technology, banks needed to evolve. As credit card issuers, they could no longer take advantage of everyone aggressively as before with deceitful offers and hidden fees, and they needed Americans to stop using debit cards, since sliding rates were now limited and there was no interest to take revenge. Therefore, large banks collectively changed their strategy. Instead of the stick as before, they opted for carrots. With rewards, credit card owners would feel encouraged and encouraged to continue spending, and all banks invested millions in new products to attract first-time lenders and keep their specific cards at the top of their wallets. But for customers to spend, there had to be more striking and attractive incentives. Instead of the boring and conventional 2% reimbursement and 0% balance transfer, banks turned credit into a game of points. Americans were affected by new and dazzling card products, which promised tens or hundreds of thousands of these virtual points invented by registering that they cost nothing to generate, and multipliers based on categories. There is no direct monetary value or accounting responsibility, and the responsibility to obtain value from these points falls on the card holder. And since banks are the creators and dispensers of this virtual currency, they can inflate or devalue these points freely at any time. And when it comes to marketing, 10,000 points sound much more tempting than $100. The banking business is based on arbitrage, on taking something that is worth less in one market and selling it in another for more. They apply that science to credit cards. For consumers to see value in these false points and worry about accumulating them in the first place, they had to be exchangeable for something more significant than cash. Banks found their miraculous solution in travel partners who already had their own loyalty programs, and needed ways to reward business travelers and promote loyalty. Although the shared airline credit cards and miles exchange programs began in the 1990s, it was only after the Great Recession that all banks began to bet in this direction. They began to buy loyalty points at the highest bid, and obtained a discount directly from airlines and hotels worth hundreds of millions of dollars for leading brands. Then, banks offered these points to card holders to encourage spending. Whenever card holders spend, banks, as issuers, will always recover their money with commissions for use or interests. On the other hand, airlines and hotels love these associations because they get a lot of money out of nowhere, and they also have total control over the value of these loyalty points. They do not incur any cost until the card holder exchanges these points for a real reserve. And even then, these airlines and hotels, like banks, can always adjust how much and where these points can be used to minimize losses. But there is only a limited number of airlines and hotels in the world, and only a few of them are valuable enough for their loyalty points to be worth it to the eyes of consumers. It is a case in which the rich become richer. Airlines and leading hotels can demand higher payments and higher valuations for their points, and the money they earn by selling them to large banks exceeds in magnitude what their smaller rivals earn. In this regard, banks have less and less negotiating power. The appeal of their cards lies in these virtual points that, ultimately, are only valuable if they can be exchanged in leading brands. If they want to keep the holders of their cards, their expenses and their balance, they have no choice but to pay for these carrots, no matter how expensive they are. During the 2010s, the four big ones found themselves in a new arms race to partner with brands outside the travel and leisure sectors. Leading brands such as Kroger, Amazon, Ikea and Costco have partnered with banks to launch shared brand credit cards. Since these minority groups do not have loyalty programs, the only reward they can offer to the card holders is the return of money. But banks are delighted to offer these products because these brands provide their base of consolidated and mature clients who are already paying and spending money today, although with a lot of random cards. Shared brand credit cards are designed to consolidate and channel this expense into a specific card. And it is an obviety, since keeping 2% of each Amazon order is not a small thing. But these minority groups also want their share of the cake. Every time they successfully register a client on their credit card, the issuer bank with which they have partnered pays them a cash reward. This is why flight attendants will talk to passengers about the credit card before landing, and cashiers will also talk to buyers in the box. The issuer company will also offer refunds and income distribution. In this way, whenever these card holders use these shared brand cards in the minority or in the associated stores, either in person or online, the partner keeps 100% of the purchase instead of the usual 98%. And when the same clients use these shared brand cards in other stores or when they keep balance, the minority partner also receives a commission for the interests and the commission for sliding. Today, banks are eager to partner with any popular brand. But not all associations are a success. Uber and Starbucks are examples of shared brand credit cards that were interrupted after a few years due to the low number of registrations, unsustainable benefits and a smaller volume of transactions than expected. Since the Great Recession, Chase, the largest issuer of credit cards in the EU, has launched Ultimate Rewards, Sapphire Products, Airport Lounges, partnered with Marriott, Hyatt, Southwest United, and bought the fascination for chasing millennials who spend a lot and are connected in a chronic way. Chase has allocated an increasing share of its commissions for sliding over the years to keep its shared brand partners happy and its reward portal full of the latest news and the best. Citibank is the second largest issuer of credit cards in the country. It focuses less on travel and more on an older general public by associating with Costco, American Airlines and Best Buy. But although the four big ones lead the way these days in terms of adoption, rewards and knowledge, the reality is that everyone is imitating the competition. It was its close connivance with Visa and Mastercard that allowed the big banks to get up to date so quickly and weaken the advantage of being pioneers of their rivals. Discover began in the mid-1980s as an independent credit card company 20 years after Visa and Mastercard. They were issuers of cards, payment networks and banks, all in one, but their late entry meant they needed to do more to stand out from the duopoly. The Discover cards did not have annual fees, something unusual at the time, and included a cash refund bonus for the first time, Naturally, Discover was willing to take on much of these costs at the time because they knew they could recover the money with interest. However, what makes Discover unique is not how they make money, but who. The big banks have built their business on the foundations of the minority bank. Although the personal bank is a low-margin and high-contact business, it is invaluable because these minority relationships ultimately feed larger-margin businesses, such as credit cards and mortgages. But Discover, as an agile adventist, could never replicate the centuries of physical scale and minority presence of large banks. As a result, they had to settle for serving the neglected segment of the population. Discover was named a credit card for beginners, aimed at university students and freelancers. Since the 2000s, the Discover business has been driven by interests and to ensure that the owners of their cards keep their balance. Sliding commissions only represent a small part of the income each year. Throughout history, Discover has had difficulties getting merchants to accept their cards. As has been mentioned before, part of this was out of their control. The four big banks had banned their networks from issuing Discover credit cards, which meant that all marketing, customer acquisition and adoption by merchants fell solely on Discover, while those same Visa and MasterCard costs were distributed among many others. The other aspect here is that Discover, historically, needed to charge higher sliding commissions, as it had to compensate for its major general expenses as a card issuer and as a payment network. But its biggest flaw is the LTV. Good lenders, according to their FICO score or their income, will always surpass Discover and transfer their expenses to one of the four big ones, where their rewards are more flexible, valuable and aspirational. Meanwhile, high-risk lenders will remain. And this is why Discover's profit margins are much more volatile and sensitive, as their losses will skyrocket in any recession. While Discover holds the last position in the market, American Express holds the first position. Like them, American Express is a network of issuers and a bank all in one. They made a name for themselves in the 80s, positioning their cards as exclusive status symbols for the ultra-rich, and the businesses that accepted MX were considered equally prestigious establishments. But once the big banks intensified their strategy, MX quickly became fashionable. Visa and MasterCard appeared on the scene offering lower sliding rates, and they were able to do so because they were subsidized by the big banks. As a result, businesses opposed the highest sliding rates of American Express, and the outlook changed to favor the lowest position. Although American Express continues to charge the highest sliding commission of all networks to this day, its argument to merchants is that the owners of their cards deserve this bonus. Their clientele is wealthy and compassionate, as the owners of American Express cards spend on average three times more than those of a Visa or credit card, and have behaved in this way every year for the last three decades. But the challenge is that these first-rate lenders are not only rich, but also responsible. Thus, while Discover and the big banks earn most of their money by making customers spend more than they can, American Express earns most of its money with sliding commissions instead of with interest. Since its business is based on invoices instead of balance sheets, American Express was the first important card to offer a point system in which card holders could exchange rewards from a variety of brands instead of being tied to a specific airline or hotel, which was the norm in the 90s. American Express was also the first to create VIP premium airline rooms for its card holders, an advantage that Chase and Citibank are now emulating a decade later. Without the high interest rates, the AMX credit card business has a much smaller margin than that of any of its rivals. On the other hand, the business with the highest margin for American Express is in the payment network, in the authorization, compensation and liquidation of transactions. Credit loans are a very resistant and lucrative business, whether in the upper, middle or lower part of the market. That is why Goldman Sachs went head-on to launch a card with Apple, but like Starbucks, General Motors and Uber before it, it is not bread eaten unless you are in the big four. The money is really in the interest, which only comes from ensuring that people keep their balance and all the ludification that people do with credit cards these days, accumulate points, schedule exchanges, investigate level lists and project their future lifestyle into these pieces of plastic and metal. All these are carrots planted by banks so that people become addicted to spending. American Express and Discover are, ultimately, too small networks to have a real influence, and anything they do in terms of innovation is easily copied by the big four, When AMX bought Resy to delve deeper into the high-end restoration sector, Chase responded just two years later by buying Infatuation and Zagat. It is much easier for banks to sell credit cards to people with whom they already have a banking relationship, and the American medium will not be as technical as a Reddit user when registering cards and exchanging rewards. Both AMX and Discovery have tried to advance more with current and savings accounts products, but their personal bank products will always be inferior to those of the big four. Ultimately, the biggest beneficiaries of credit cards are not the networks, but the big banks, Ibiza and Mastercard. In their essence, they only exist as a duopoly to enrich and protect their creators. The only thing that has made a gap in this power structure have been the emerging buy-now-and-pay-later companies such as CLA, Afterpay and Affirm. The buy-now-and-pay-later system was a direct alternative to credit cards. If consumers began to prefer these payment and payment plans, they would stop having balance in their credit cards. Then, these new intermediaries of Silicon Valley would take the billions of dollars in interests that would normally go to the pockets of the big banks. And as a company, CLA and Afterpay had advanced to the extraction of the credit card, banks would lose their most valuable source of income and with greater margin. That is why the big four reacted so quickly and aggressively. They implemented their own payment and payment programs later, and they prohibited credit card holders from using their credit cards to pay for these services in an effort to completely expel these emerging companies from the financial system. It is hard to believe that the recent hearings of Congress are nothing more than populist political theater, since the real puppeteers are not in any part of the room and no politician is going to go after them. This duopolio of Visa and Mastercard networks is no coincidence, but rather the result of a conspiracy of many years to protect the old guard and maintain power in the hands of the largest banks in the United States, which are too big to break. And now there are two tricks that deserve to be pointed out.