Narrator: Imagine it’s 1958. You live in Fresno, California, and one day you receive a thick envelope from Bank of America. Inside is a small plastic card—a BankAmericard—with your name on it and a pre-approved line of credit. You didn't ask for it, but suddenly, you can buy goods and services all over town with a simple swipe, settling the bill later. This event, known as the "Fresno Drop," was a high-stakes gamble. It was an attempt to solve the classic chicken-and-egg problem: you can't have a credit card system without cardholders, and you can't get merchants to sign up without customers who have cards. This audacious move would either ignite a financial revolution or collapse into a multi-million dollar disaster.

The story of how that simple plastic card evolved into the global financial behemoth we know as Visa is a tale of chaos, innovation, and intense power struggles. In his book, Electronic Value Exchange, David L. Stearns unpacks this history, revealing that the creation of Visa was not just a technological achievement, but a radical reinvention of how organizations, money, and trust can function on a global scale.

Narrator: The BankAmericard didn't appear in a vacuum. It was the culmination of decades of experiments in payments. Before the Federal Reserve was established in 1913, clearing a check was a logistical nightmare. Banks would send checks on bizarre, circuitous routes to avoid fees, sometimes taking weeks to clear a payment between nearby towns. This delay created what's known as "float"—a short-term, interest-free loan for the check writer, an economic incentive that made many resistant to a more efficient system.

Meanwhile, merchants were creating their own solutions. As early as 1914, Western Union issued paper charge cards to frequent customers. Department stores and gasoline companies followed, using cards primarily as loyalty tools, not profit centers. The real shift came with Travel and Entertainment cards. The famous story of Diners Club founder Frank MacNamara being caught without cash for dinner was a complete fabrication by his press agent, but it sold a powerful idea: a single card for prestige and convenience. American Express soon followed, leveraging its brand to dominate the market. These systems proved a third-party model could work, but they were built for a wealthy, traveling elite. The financial world was primed for an innovation that could serve the average consumer, but it was a world built on fragmented systems, powerful incentives to maintain inefficiency, and a deep-seated resistance to change.

Narrator: Bank of America’s "Fresno Drop" in 1958 was a brute-force solution to the adoption problem. By mailing 65,000 unsolicited cards, they instantly created a market. But this success was short-lived. The rapid, uncontrolled expansion across California was a disaster. Delinquency rates soared to an astonishing 22%, far higher than the expected 4%. Fraud was rampant. The bank lost nearly $9 million in the first 15 months, an amount closer to $20 million when accounting for all associated costs. The system was on the verge of collapse.

The problem wasn't just operational; it was organizational. Bank of America licensed the BankAmericard system to other banks, but it retained ultimate control. There was no effective way to enforce rules, settle disputes between banks, or manage the system for the collective good. By 1968, the system was described as "literally chaos." Banks couldn't balance their books from day to day because of settlement delays. At a tense meeting of licensee banks in Columbus, Ohio, the members accused Bank of America of being incapable of solving the crisis. It was in this atmosphere of acrimony and failure that a committee was formed to find a way forward, and on that committee was a little-known bank manager from Seattle named Dee Hock.

Narrator: Dee Hock was not a typical banker. His working-class background and experience with personal debt gave him an outsider's perspective. He was deeply critical of traditional top-down, command-and-control organizations, which he saw as rigid, bureaucratic, and destined for failure. He believed a new kind of organization was needed—one that could blend chaos and order.

Hock’s revolutionary idea came to him during a week-long retreat with a few other committee members. He proposed that they stop arguing about structure and instead think of the new institution as a living organism with a "genetic code" of purpose and principles. He called this concept "chaordic." A chaordic organization would be decentralized, self-organizing, and self-governing. Power would be distributed, not concentrated at the top. It would be owned by its members—the banks themselves—and would exist solely to enable cooperation among fierce competitors. Its purpose was not to be in the credit card business, but in what Hock called "the business of the exchange of monetary value." This radical vision laid the foundation for a new entity, National BankAmericard Incorporated (NBI), which would eventually become Visa.

Narrator: With the philosophical foundation in place, Hock and his team at the newly formed NBI had to build a functioning system. Their first task was to create a set of operating regulations. These rules were the social and economic glue that would hold the network together. They dictated everything from the physical design of the card to how transactions were cleared, how disputes were settled, and what fees would be charged. A key innovation was the Interchange Reimbursement Fee (IRF), a small percentage paid by the merchant's bank to the cardholder's bank. This fee balanced the economics of the system, incentivizing banks to issue cards even if their cardholders spent money elsewhere.

The second critical piece was technology. The old authorization process was a mess of phone calls and printed reports. When NBI sought proposals from vendors to build a centralized electronic authorization system, the bids were too expensive and slow. In a move that defined his leadership, Hock declared, "Trust thyself," and decided NBI would build the system itself. The result was BASE (BankAmericard Authorization System Experimental), which went live in 1973. It was a revolutionary real-time network that slashed authorization times from minutes to under a minute, drastically reducing fraud and making the card a viable competitor to cash.

Narrator: Dee Hock’s vision extended far beyond credit. He saw the card as a key to access any form of value, including the money in a person's deposit account. In 1975, NBI launched the Entrée card—the first debit card. Conceptually, it was a bombshell. The banking world was split by a deep cultural divide. On one side were the credit card divisions, seen as risky upstarts. On the other was the "deposit side"—the "real bankers" who dealt with checking accounts and commercial loans.

These traditional bankers were horrified by the debit card. They feared it would cannibalize their profitable credit card business and, more importantly, they saw it as Hock encroaching on their territory. As one executive bluntly put it, the moment you get into the debit card, "you’re hitting bankers where they live." They resisted, delaying the debit card's adoption for years. It wasn't until the 1990s, with new technology and a major advertising push that rebranded it as the "Visa Check Card," that debit finally took off, eventually surpassing credit in transaction volume. The delay wasn't about technology; it was a power struggle over who would control the future of money.

Narrator: Dee Hock’s relentless push to innovate ultimately led to his downfall. The final straw was a controversial deal with the retailer JC Penney in 1979. Hock arranged for Penney to connect directly to Visa's BASE system, bypassing the need for an intermediary merchant bank. To Hock, this was a logical step in creating a pure, efficient value-exchange network. To the member banks, it was the ultimate betrayal. They saw Visa, their own creation, starting to compete with them and threatening to make them obsolete.

The backlash was immediate and fierce. Lawsuits were filed. The CEO of the rival Interbank network (now Mastercard) publicly accused Visa of competing with its members. The perception grew that Hock was building his own empire, not serving the banks. The fundamental conflict between Hock’s vision of a decentralized, open network and the banks' desire to protect their traditional roles had become irreconcilable. In 1984, Dee Hock, the visionary who had built the organization from the ashes of a failing system, was forced out.

Narrator: The story of Visa, as told in Electronic Value Exchange, is far more than the history of a company. It is a case study in how a radical organizational philosophy can solve seemingly impossible problems. The single most important takeaway is that Visa’s success was not rooted in a single product or technology, but in the creation of a "chaordic" structure that enabled thousands of competing institutions to cooperate. Dee Hock did not build a company in the traditional sense; he designed a system of governance, a set of rules, and a shared technological platform that allowed a global network to emerge and thrive.

Hock’s departure marked the end of an era, but his legacy remains embedded in every transaction. The book challenges us to look beyond the plastic in our wallets and see the complex social and technical architecture beneath. It leaves us with a powerful question: in a world facing global challenges that no single government or corporation can solve, could the "chaordic" principles that built Visa offer a model for tackling the great problems of our own time?