I am bit new to the payments industry. Roughly, the way I see payments industry value chain is as follows:
issuing bank => credit card network (Visa, Mastercard etc.) => payments company (Adyen, Square, FIS etc.) => Merchant => Final End Customer.
What I struggle to understand is why do networks (Visa, Mastercard etc.) need payment companies as a link to the merchant? Why don’t they connect to merchants directly and sidestep payment companies? This is especially puzzling in case of offline retail.
What role do those payment companies play and what prevents networks from knocking that bit out of the value chain?
Will be grateful for any input.