For years the banking sector was prone to disruption, and when the disruption came, it was particularly fast in the payments & transactions ecosystem. Neobanks followed. But there are two powerful and extremely profitable worldwide payment networks that couldn’t care less. They’ve outgrown the parents by every possible financial metric and completely avoided disruption to date. In a world where their grip seems unbreakable, is there room for disruption of this power at all?

The global payments industry (outside of China) pretty much operates under an invisible but colossal duopoly: Visa and Mastercard. These two bank-bred giants of today’s digital payments ecosystem have built networks so vast and so resilient that they have become virtually synonymous with payments themselves, controlling hundreds of millions of merchant acceptance points and facilitating trillions of dollars in annual transactions. 

They don’t issue cards to retail and business clients, don’t extend credit to them, don’t charge fees to them either and don’t carry any risks on their books. They get paid even if their primary bank clients don’t.  

Some Historical Context

Visa started as BankAmericard in 1958 (created by Bank of America) and was later spun off and turned into a cooperative of many banks in the 1970s. Mastercard was founded in 1966 by a group of banks (including Wells Fargo, Bank of California, United California Bank…) under the name Interbank Card Association. Both Visa and Mastercard were originally bank-owned cooperatives — “not-for-profit” utilities — whose purpose was simply to standardize and enable card transactions across banks. And banks flocked to the non-profit cooperatives by thousands, because they didn’t have to build infrastructure (authorization, clearing, settlement…) themselves, they competed fiercely only on issuing, but cooperated on acceptance, a rare thing indeed.

But what happened afterwards? 

In the early 2000s, Visa and Mastercard were restructured into “for-profit” companies, because the owners’ (i.e. banks) interests were far from aligned and lots of anti-competitive practices began to emerge. Under the idea “we are going to serve everyone equally and become global cost optimization utilities” they went public in 2006 and 2008, respectively, became independent corporations, no longer owned by the founding banks. But their business models exploded with the rise of global digital payments, e-commerce, cross-border commerce, and mobile payments. Their management had a clear vision, immaculate execution and serious brainpower, turning these “utilities” into super profitable engines for the new shareholders. Unlike banks, they now operate asset-light business models, are not heavily regulated or balance-sheet driven, are growth-wise independent from economic cycles, are not constrained by capital and are stronger and more profitable than any of the founding or cooperative fathers. The cherry on top: they operate negative working capital models, so they get paid quickly and owe money later.

Their rather constant ~45% to ~55% net income margins (on 30bn-35 bn USD of revenues) are unreachable to any bank, any payment provider, any fintech of this world. And their competitive moat is huge. Furthermore, their clients (banks, neobanks, fintechs and only indirectly merchants) mostly have no idea how to interpret their invoices correctly, have very little negotiation power and, what’s even most striking, are happy to get any perceived discounts from the two giants in the various forms of loyalty-related programs, which keep the end clients locked-in with the banks. 

I call this the true power of network. The following comparison between Visa/MC valuation performance and the performance of their founding fathers reveals the simple truth: “the children have squashed the parents and all the siblings”. 

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The Invisible Empire: Understanding the Payment Oligopoly

Visa and Mastercard’s dominance rests on several pillars:

• Enormous scale: Together, they account for acceptance at nearly 300 million merchant locations worldwide.
• Entrenched economics: A complex web of interchange fees, data processing fees, scheme fees, cross border fees, VAS fees etc make Visa/MC invoices incomprehensible to banking boards. Both acquiring banks and merchants are locked-in alike. A friend – fintech founder – told me they charge even declined payment attempts, failed attempts to pay, basically it’s very hard to optimize their non-pass-through costs.
• Trust with a big T, and brand with even bigger B: for people, the worldwide-known card brands resonate with security, familiarity, and ubiquity.
• Highest possible barriers to entry: Building a global acceptance network requires immense capital, regulatory approvals, and long time — something few, if any, challengers can muster.
• War chests full of cash to invest or acquire any disruptor, potential competitor or new tech provider even popping up far on the horizon: Visa and MC have acquired more than 50 companies during the last 15 years alone with an average acquisition ticket of over 1bn EUR, and since their business model creates surplus cash with the growth, they are extremely hard to be challenged. And they know that.

As one of my super smart friends put it, Visa and Mastercard have made the system so efficient that banks now pay them for integration and participation. In this context, any disruptor faces doom. Or does it?

When Does Disruption Happen?

It happens when innovators recognize either (1) dissatisfaction among existing customers, or (2) a latent opportunity to offer a dramatically more seamless, valuable, or user-aligned product or service than the prevailing one — leading to adoption and behavior shift.

Let’s be straight: individual retail clients don’t feel the duopoly of Visa and Mastercard, they likely perceive the two brands as very positive (marketing plays the trick there). They also don’t associate the two brands with their powerful high fees-driven operating models, they associate them with banks. Retail clientele is not dissatisfied with them.

But several tectonic shifts create an opening for disruptors:

• Open Banking is forcing banks to explore non-card payment rails, leveling the playing field.
• Bank Frustration: Some traditional and neobanks alike, tired of high Visa/Mastercard fees and losing control over customer relationships, are seeking alternatives.
• Merchant Pressure: Merchants increasingly demand faster, cheaper, loyalty-integrated payments, rather than the costly card-driven model (for which they blame banks).
• Consumer Shifts: Mobile-native generations expect payments to be instant, embedded, and frictionless inside apps.

Instant payment (IP) schemes are spurring everywhere. Some are growing so fast (like UPI in India and PIX in Brazil) that have demonstrated their account-to-account real-time payments can circumvent the card rails domestically — achieving mass adoption and reducing merchant costs dramatically. I’m seeing IP schemes exhibiting 1000%+ annual growth rates everywhere.

However, IP payment rails remain domestic champions, while cross-border transactions still rely heavily on Visa, Mastercard, or SWIFT intermediations. The development of cross border IP rails has been attempted (even with Blockchain technology), but it’s almost impossible to scale on the international acceptance level.

A true disruption would require these instant payment schemes to establish legal, technical, and commercial interoperability across borders — something like "payment roaming"? In essence, without cross-border roaming standards, local IP schemes won’t ever dethrone the card duopoly globally.

Payment roaming, what is this?

Could there be an account-to-account payment solution that rather than attempting to replicate Visa and Mastercard's global merchant network, proposes a new model: users stay within their home banking apps while traveling abroad, scanning or tapping to pay at millions of merchants without signing new agreements or downloading any new apps.

• Account-based mobile payments: Basically, no cards - just QR codes or NFC technology embedded inside own banks or merchants’ apps.
• Payment and loyalty integration: A single scan at checkout combines payment and loyalty collection in one seamless move.
• Payment roaming: Users stay within their home banking apps while traveling abroad, scanning or tapping to pay at millions of merchants without signing new agreements or downloading new apps.

In essence, this idea I came across (disclaimer: it’s not mine, but I get interesting things on the table) is based on a preamble "We don't need to build a global merchant acceptance network, we leverage existing networks — to enable our users to pay seamlessly abroad without leaving their banking apps at all."

 Realistic View

Another thoughtful innovation-focused friend of mine raised pointed questions about the feasibility and uniqueness of this strategy. Here's how the conversation between him and the idea-creator (another innovator) unfolded:

Critic’s View:
The model relies heavily on accessing markets via domestic schemes and interoperability outside the continent still falls back on MC/Visa
Innovator’s Response:
We partner directly with domestic schemes, not Mastercard. Our users remain in their local banking apps when traveling — no foreign terms & conditions, no separate apps

Critic’s View: 
Other players could replicate this; the moat seems unclear
Innovator’s Response: 
I see no other scheme building the legal, technical, and commercial standards for global payment roaming. We have invented this

Critic’s View: 
‍Building acceptance is hugely expensive — Visa/Mastercard succeeded because they invested for decades
Innovator’s Response: 
Exactly why we don't try to replicate that. We roam onto existing networks rather than rebuild them — making global reach much cheaper and faster

Is it possible at all?

Despite the perceived elegant theoretical solution, several large hurdles remain:

• Entrenched Consumer Habits: Payments must be simple, ubiquitous, and trusted. Changing behavior is notoriously difficult.
• Merchant Expectations: Merchants want payment solutions that cover all customers instantly — fragmentation will delay adoption.
• Competitive Countermoves: Visa and Mastercard are investing heavily in digital wallets, tokenization, and instant push-to-account capabilities, keeping them in the loop.
• Scaling Cost and Partnerships: While roaming reduces infrastructure needs, securing enough critical partnerships worldwide remains a huge operational task.
  

The critic’s underlying skepticism remains valid: success will depend not only on vision, but on operational excellence at scale. To be achieved alongside the two giants who have not only cash, but also immense IQ power. Basically, it requires a new David who is not afraid of Goliath. 

Conclusion: Evolution, Not Revolution?

What is described is a radically different operating model:

• Seamless integration into banking and merchant apps.
• Real-time, account-based transactions without card rails.
• Loyalty embedded natively into the checkout experience.
• Payment roaming across continents without changing the user's home legal, commercial, or technical environment.

This introduces something that even major Instant Payment systems have not yet solved: a cross-border, interoperable, mobile-first account payment network.

If successful, this could not only challenge Visa and Mastercard’s silent oligopoly but also show UPI, PIX, and other IP giants the blueprint for a true global instant payment infrastructure.

And achieving this will be super hard. Some might argue it is impossible. Let’s talk.

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