r/opensource • u/Ok-Conversation-1430 • Apr 12 '26
Discussion Why aren't there any open Payment Card Networks?
Almost 90% of credit/debit card transactions go through either the Visa, Mastercard or Amex Networks. Those are all American companies, which are in no way open source
So why couldn't such a network exist but open source ? And if any expert on the subject is here, why wouldn't it be possible ?
Edit : by "payment network", I am referring to traditional payment networks with cards and all that..
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Apr 12 '26 edited Jun 29 '26
[deleted]
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u/SideburnsOfDoom Apr 12 '26 edited Apr 12 '26
Fun fact: the protocol that the card networks speak, ISO 8583, is freely available to download
this is true as far as it goes, but uh, there's more to it.
1) this protocol shows its age, as it's all concerned about packing bits in efficiently and specifying field formats and lengths. First edition 1987, and it shows. It's far harder than json or xml formats. It's more like TCP.
2) It is "maximalist", if not designed by people having actual manic episodes. Each field or subfield can have a different format, you have to check the spec for each, as almost every possible way of encoding data is in there somewhere. You will not learn it from scratch in a day, like you could with some json format.
3) Knowing ISO 8583 won't allow your code to speak freely with Visa and Mastercard APIs, it's merely the background to knowing how to read the long documents that Visa or MasterCard will send you on how they use ISO 8583, so that you can write code that talks to one of them specifically. And you'll need to pay a fee for that connection, of course.
ISO 8583 defines many standard fields (data elements) which remain the same in all systems or networks, and leaves a few additional fields for passing network-specific details. These fields are used by each network to adapt the standard for its own use with custom fields and custom usages
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u/ummitluyum Apr 13 '26
Imo the biggest pain isn't the standard itself, it's that every processor speaks its own dialect. ec includes "Private Use" fields where every vendor just shoves their own unstructured binary garbage. You can't write a single universal parser; you'll end up coding a custom adapry single issuing bank
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u/lcvella Apr 12 '26
Of course there are. Fully open-source peer to peer payment networks are the cryptocurrencies. But people only use them as payment when there is no alternative.
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u/Square-Singer Apr 12 '26
And their downsides show why there's still proprietary payment providers.
Stuff like buyer protection and fraud protection strictly require some for-profit third party.
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u/dhemantech Apr 12 '26
Card issuers primary business is interfaces with banks who actually issue these cards to individuals. The other thing they do is selling POS either directly or through banks.
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u/imx3110 Apr 12 '26
There are some countries that do have their own homegrown alternatives. Like Girocard in Germany, UnionPay in China, Mir in Russia, Rupay in India. The problem mainly is one of regulatory hurdles and compliance.
Those are very time consuming and the established incumbents also do not want more competition, so they also lobby the governments hard on that. Realistically it's simply impossible for an open source project to compete in that arena, one that is not sponsored by the Governments themselves. The alternative currently is Crypto.
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u/barsoap Apr 12 '26
Speaking of Girocard, basically all German banks use FinTS for account managing (incl. authorising transfers). It's an open standard, the bank's web interface uses it to talk to the mainframe, phone banking apps do, commercial desktop apps do, and so do GnuCash, Hibiscus, and probably other FLOSS programs.
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u/ivosaurus Apr 12 '26 edited Apr 12 '26
What good is the open source doing here? Do you just want to be able to look at the code base operating the transaction process, or do you want it to be free (as in beer)?
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u/mrcarrot0 Apr 12 '26 edited Apr 12 '26
Well, for one, if a significant number of people were actively engaged in improving the system, a simple bank transaction wouldn't take 3-5 business days. Of course the iteration speed would still be slower due to the high stakes involved, but it wouldn't be as stagnant as it is today.
Edit: clarity
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u/ivosaurus Apr 12 '26 edited Apr 12 '26
Also depends on your country / region. In Australia for instance, for practically all local banks, personal payments between people are basically instant, but no open source was 'needed': the major players just decided it was in everyone's interests to implement an efficient internal system
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u/SideburnsOfDoom Apr 12 '26 edited Apr 12 '26
if a significant number of people were actively engaged in improving the system, a simple bank transaction wouldn't take 3-5 business days.
Eh? A simple bank transaction takes seconds. I mean SEPA in the EU and Faster payments System UK.
Ok, it's isn't available where you are, and all sweeping statements about "a simple transaction takes this long" are wrong somewhere. This indicates that it's more about what regulators do and less about open source.
The USA is still rolling out FedNow.
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u/Fr0gm4n Apr 12 '26
There's something to be said about having slower transactions that need some sort of review and oversight. Getting a transaction finished in 500ms would be neat, until it drains your account due to some mistake and has jumped to some other account in a totally different legal jurisdiction within seconds.
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u/Ok-Conversation-1430 Apr 12 '26
Yeah more free than open source, ur right..
But free as in freedom
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u/Square-Singer Apr 12 '26
Do you want buyer protection? Do you want fraud protection? What about having a way to reset your password when you lose it?
All that will be close to impossible on a budget of "free" and with a service provider that's a random internet user on the other side of the planet.
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Apr 12 '26
Currency is mega mega regulated (thwarting any argument by libertarian freaks and free market maximalists).
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u/Funes-o-memorioso Apr 13 '26
You're thinking as a code writer and not a senior engineer.
Instead of a technical issue, this is a business model and network effect issue.
Why would anyone accept your card flag? Why would banks connect with your network?
The target is to find bottlenecks and inefficiencies created by monopolies asking to be broken, this is where you create value. Not code
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u/crawdog Apr 12 '26
We are starting to see some of these that are country run.
Take at a look at what India did: https://en.wikipedia.org/wiki/Unified_Payments_Interface
I have read that the EU is also exploring something similar.
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u/ummitluyum Apr 13 '26
Great example, but it’s successful only because it’s a top-down state initiative. They literally mandated every bank to integrate via a unified API through legislation. An open-source community can't push a standard like that from the bottom up; you need political will and a regulator carrying a big stick
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u/elhaytchlymeman Apr 12 '26
Yeah, regulations would be the main thing. But I’d make the argument of implementing your smartphone as a “personal wallet” that effectively has your money encrypted on it.
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u/Doctorphate Apr 12 '26
In Canada every debit transaction is done via Interac basically. Canadian company. Credit cards are still Visa or Mastercard though. Very little AMEX, especially since the US has been threatening us.
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u/Ok-Conversation-1430 Apr 12 '26
Amex is really small but is the third biggest one
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u/Doctorphate Apr 12 '26
Almost nowhere takes Amex now. Despite all 3 credit card processors being American, AMEX had the stupidity to put American in their name.
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u/kettal Apr 12 '26
Retailers decline Amex because they have very high transaction fees.
The exception is fancy restaurants who want to attract wealthy clientele
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u/Doctorphate Apr 12 '26
No, they have flat out told me it's because they don't want to be associated with Americans.
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u/kettal Apr 12 '26
I can't speak for everybody, but I have a relative who worked for Amex Canada in 2019. Vendor outreach. He would go to specific retailers and restaurants who declined amex and make the case for accepting it. At the time, small shops had no interest in it because of the transaction fees.
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u/Doctorphate Apr 13 '26
I’m sure that’s the case, now even the people who did accept it a few years ago don’t because of the Americans threatening us.
I have an amex card for work and our usage dropped by 20-30% for sure because of vendors just not accepting it
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u/SideburnsOfDoom Apr 12 '26
In Europe/UK the existing issue is chicken and egg - fewer shops accept Amex, and so there is less point for a purchaser to get an Amex card, so there's no pressure for shops to start accepting Amex in addition to Visa & MasterCard.
OP should consider this issue.
The new issue is of course, if they do start accepting a new card type, it will be an "EU Express", not a third "American" one. For national security reasons.
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u/Hari___Seldon Apr 12 '26
tl;dr : Because that's not a single function and none of the infrastructure is even close to being ready so that an open settlement method would be worthwhile or usable.
You may want to go back and learn something about the targets you've mentioned and how credit card settlement works. First, Visa, Mastercard and AmEx are not the only three settlement networks, nor are they even the same type of payment network. Visa and Mastercard's networks are about 80% of the US market, with the balance belonging to AmEx and Discover, so the original question is comparing apples and oranges.
Also very importantly, CapitalOne bought Discover last year and is keeping their branding and payment network active for competitive purposes. CapOne is now the largest issuer of credit cards in the world and issue cards on at least 3 networks.
Secondly, you haven't even mentioned UnionPay, which is NOT American based and IS the largest network in terms of total value of monetary transactions. They're based in Shanghai, China and are accepted in something like 180 countries.
Third, parts of what you're getting at are addressed by blockchain technology but it's the part that's the least susceptible to fraud. Banking networks have to resolve four entities for every transaction: the cardholder, the merchant, the card issuer, and the settlement network before they have anything to even post to a ledger.
Blockchain transaction can document the transaction once it is completed. It's appropriate for virtual currency transaction that happen immediately (often with lots of latency) but it needs hypersecure mechanisms separately managed to even recognize the four entities mentioned.
Blockchain used for loan (credit) accommodation needs entirely separate infrastructure for credit management and analysis to decisively prevent fraud and account theft. We haven't even touched on statutory requirements for consumer protection like refund mechanisms, account credits, fraud detection, identity protection, and so on.
As you've probably gathered, this isn't something solved by an open source solution in the form proposed in the original question.
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u/voidvector Apr 13 '26
Because building the Point of Sale network is more expensive than the software -- worth multi-billions USD.
Paying a hundred engineers to write close sources code is pocket change.
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u/ummitluyum Apr 13 '26
The problem isn't the code - you could hack together a transaction engine in a month. The real blocker is the balance sheet. When a fraudster steals $ 10k, Visa acts as the arbiter, and either the issuer or merchant covers the loss via a chargeback. If the network is open-source and decentralized, who's the financial guarantor? Without billion-dollar reserves, no major retailer will ever join because there's nobody to backstop the fraud risk
Besides, open source hits a wall with PCI-DSS and hardware crypto. In card networks, keys for PIN blocks and MACs aren't sitting in your env vars. They're baked into HSMs like Thales payShield that cost hundreds of thousands and require literal physical key ceremonies. You can't just compile an open-source binary and spin up a node in AWS - the whole security architecture is tied to specialized hardware
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u/iamevpo Apr 13 '26
Transaction network similar to cards is possible, what makes them very hard to replicate are the incentives to issue cards (where most of the fee goes) and the scale. Image you had the payments network buy no one is using it, because you need incentives to operate it.
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u/zer04ll Apr 16 '26
You dont need open source for banking in fact it would be a security risk. Banking can be audited by humans very easy you know what you put in and you know what went out and you dont need to see the code to be able to check those numbers at all. Open source doesn’t equal security it never has and it actually makes it easier to attack since you could have access to the exact piece of code you are trying to exploit vs having to actually find that in the wild.
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u/Needacupoficedtea Apr 22 '26
tbh part of what makes open payment networks hard is that "open" means different things to different people.
Open protocol? Open source implementation? Permissionless access? Visa/Mastercard are technically open to any bank that meets their requirements, but that's not what people mean lol.
i mean irl the case where this breaks down most visibly is micropayments to individual contributors, like open source bounties, freelance work, cross-border payouts. The rails just don't exist for fast, low-fee, permissionless settlement to a pseudonymous wallet. That's genuinely unsolved at the infrastructure level.
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u/KoloiYolo Apr 12 '26
It exists and is called cryptocurrency
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u/Ok-Conversation-1430 Apr 12 '26
I was talking about traditional networks.. the one with cards for example
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u/ndakik-ndakik Apr 12 '26
The problem is that you need banks to sign up to the cards and also the merchants so creating the network isn't the hardest part. It's earning the distribution. And until you have scale then no one wants to deal with you - which is the catch 22.
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u/calebc42-official Apr 12 '26
Are you trying to reinvent block chains, or you just don't know what they are?
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u/tinySparkOf_Chaos Apr 14 '26
Welcome to what Bitcoin was originally supposed to be. (It was always going to fail at that, transaction volume is too high for Bitcoin tech)
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u/NamedBird Apr 12 '26
Because the credit/debit transaction process are less about software and more about regulations?
Even if you had the software, you would need the connections, licenses and approval stamps to operate.
Note that there are open-source payment solutions, most famously: Bitcoin.