Dee Hock, the visionary founder of Visa Inc. who built a system for modern electronic payments infrastructure that transformed how money changes hands, died this weekend at 93.
While Hock’s name may not be well-known, his impact is felt by anyone who has made or received a card payment. Modern shoppers take for granted the nearly instantaneous speed of card payments online or at a store counter, but reaching that point required vast technological innovation as well as unprecedented coordination between rival banks.
Visa’s V, -0.14% current chief executive, Al Kelly, expressed as much in a tribute to Hock on Wednesday, writing that the Visa founder was “not a household name beyond the world of financial services” even though “in many ways, his impact and influence surpass that of almost any other leader in the last half-century.”
Hock came from a different background than many other prominent finance executives, growing up as one of six children in a poor Utah family. He attended Weber Junior College, now known as Weber State University, on a $50 annual scholarship and then married his childhood sweetheart, according to Paul Chutkow’s “The Power of an Idea,” which chronicles Visa’s history.
Hock didn’t create the first credit cards, but he began working in the business at a time when there were serious doubts about their future. Early card programs were rife with fraud and internally maligned, to the point where some initial bank participants weren’t sure they could continue offering them.
Before Visa came into the fray, retailers, restaurants and other groups had their own payment cards that could be used within a small loop of merchants. Some banks were also eager to build their own card programs, which proved easier said than done. Visa traces its own history back to Bank of America’s BAC, +0.03% BankAmericard program, which reportedly racked up millions of dollars in losses in its late-1950s debut amid rampant fraud.
The power of debit and credit cards lies in their near universality: A shopper using a card issued by one bank can seamlessly purchase from a retailer served by a different bank, trusting that the funds move properly behind the scenes. Once BankAmericard became the rare card program to reverse its fortunes in the 1960s, it began signing on other banks around the country as licensees with the vision of building a national system.
That’s where Hock stepped in. As the licensees complained about fraud issues, slow authorization processes and general disorganization, Hock sought to bring structure to the BankAmericard program. In the late 1960s, he came to helm National BankAmericard Inc., later known as Visa, which brought together Bank of America and the licensees through a cooperative.
The goal was not only to improve the financial fortunes of card programs but also to make it so that people would actually want to use the cards and merchants would want to accept them. Visa and the banks can make fraud determinations within seconds now, but in the 1960s, merchants were supposed to call a number to seek authorization for purchases above a certain amount, a process that could take at least five minutes, according to David Stearns’ Electronic Value Exchange, a book that looked at Visa’s early history.
Recall that when chip cards were first rolled out in the modern card era, long after Hock had left Visa, merchants and shoppers chafed at the 15-second wait times that could come with some card dips. As you might imagine, a wait of five minutes or more seemed endless, which is why some merchants didn’t bother to make authorization calls, adding dysfunction to the system.
The member banks had other priorities beyond cards and weren’t always inclined to spend up on new infrastructure that would advance the network. But Hock, as the organization’s CEO, was focused on the big picture and worked to see through projects that would allow for a global footprint as well as round-the-clock authorizations that could take under a minute.
Hock’s autobiography indicates his focus on a grand vision for payments. He sought to “examine in the most fundamental way the functions of a bank, of money, of a credit card; even beyond that to the essential nature of each and how it might change with full application of emerging electronic technology.”
Further, he recognized that money “was not coin, currency, or credit card,” but rather “anything customarily used as a measure of equivalent value and medium of exchange.”
Hock’s success was rooted in management prowess as much as it was in technological vision. Written accounts indicate that he was persuasive but also adopted clever tactics to advance what he believed was the broader mission.
Visa, like its predecessor organization, was a cooperative, and Hock was said to opt for a large board with committees made up of infighting rivals so that he and the management team could actually run the show in the wake of board indecision, according to Electronic Value Exchange.
The book further noted that Visa paid for and allowed spouses to attend board meetings, including one 1982 Bermuda event in which Hock was to push for a proposal that would make banks aggressively adopt terminals. The thinking was that board members might be more receptive to resolutions so they could enjoy a vacation, and he supposedly went as far as to propose the terminal policy after those who would have been expected to oppose the matter had left the meeting.
Hock clashed with organization in his early career but relished being able to create a new model once managing what became known as Visa. He called his organizational design “chaordic,” a merger of the words chaos and order, which he defined as “the behavior of any self-organizing and self-governing organism” that encompassed both principles.
Kelly’s tribute said Hock “left Visa in 1984 to pursue other endeavors but retained a keen interest in the organization he founded.” Stearns’ history of Visa says the circumstances of Hock’s exit are “somewhat contested,” as Hock clashed with the board prior to his final meeting and angered them over matters such as a flashy new office.
Hock’s influence on the financial system is undisputed, but his broader insights on money and leadership continue to resonate as well. Perhaps ironically, he’s found a following among the members of the cryptocurrency community, who see links between the world of digital assets and Visa’s original “chaordic” goals and structure.
Hock’s autobiography was a mix of history and musings, and he moved into the modern era by continuing to wax philosophical on his Twitter Inc. TWTR, +0.28% account until last month.
Occasionally, Hock broke from the philosophical and the financial to relate to people in a different way. Last fall, he expressed “little or no confidence in the logistics of this Twitter site” while pondering a stagnant follower count that was at odds with his notification stream.
Twitter users urged him to think about the followers he was reaching with his insights and asked him to keep posting, which he did. Hock had amassed 28,540 followers as of Wednesday evening. Not bad for a poor Utah farmer.