Soon after the financial crisis, I looked for a way to beat MasterCard and Visa in their game. These two brands dominate the processing of debit and credit card transactions. I have always considered this duopoly as the enemy of humanity, but it could turn out to be a hasty judgment.
MasterCard and Visa do not process transactions as much as they offer an electronic network and rates for the use of their name. They collect about 0.11% per swipe card, which is not much until you consider that they are executing more than 150,000 transactions per minute through their network. Very nice business to do. All together, the two will generate about $ 30 billion this year
The problem with both of these guys is that it is impossible to circumvent them. If you buy something anywhere in the world with a debit or credit card, it's almost guaranteed to work on the Visa or MasterCard network. In which case, in addition to the 0.11% taken for the network, the shop that accepts the purchase pays anywhere from 3% up to a maximum of 5% in total for processing expenses. And if you travel abroad and ask for something, forget it. Intermediaries everywhere take their wallet nickname along the network.
When commissions on foreign currency transactions are taken into account, it is here that more intermediaries are included. This is where the costs are added much higher and this is often the place where the consumer is most injured.
The idea behind blockchain technology is to carry out transactions of all kinds quickly with little or no dependency on intermediaries. All this makes MasterCard and Visa the enemy of cryptocurrency developers. But none of these brands are still applying for patents on blockchain-based payment methods.
The natural reaction is to sell to sell your cryptography and find a simpler way to get a decent return. We are not agreeing: we think there is an encryption to be made with the MasterCards strategy. That's why you should be encouraged.
Some time ago, MasterCard applied for a patent on the blockchain technology that created a link between cryptic and fiat currencies. MasterCard is not the only one, as there are any number of cryptographic projects with the same idea. Recently we have examined TenX and there are others.
Using TenX as a comparison, the recently awarded MasterCard patent offers fiat encryption conversion using the existing MasterCard network. TenX and many others plan to create their own high-speed mainnet or use the Ethereum platform.
In head-to-head competition, this gives MasterCard a considerable advantage as MC is practically accepted by traders all over the world. As much as I hate the duopoly represented my MC and Visa, now they could prove to be the best thing to happen for a simple reason. Undoubtedly they will accelerate the mass acceptance of cryptography.
Their current network and transaction speed immediately resolves the persistent scalability issue of Bitcoin / Ethereum. Furthermore, as observers have noted, both MC and Visa have put in place systems to identify fraudulent transactions.
Having said that, MasterCard is going to kill all the other encryption wanabys like TenX and others? Before concluding the answer, yes, consider this. In their recent quarterly review to shareholders, MasterCard reported net income of $ 2.33 billion on revenue of $ 5.24 billion. This is a huge profit margin of 44.5%! This stands out on extraordinarily profitable companies such as Apple at 20.3% or the average American corporation at less than 10%.
When MasterCard's blockchain system operates, it will be able to compensate for those already MC margins. So, as an encrypted investor, you have to ask, do you really think MC will transfer those savings or bask in cost savings? The answer is quite obvious.
MasterCard could be the best news
Cryptography critics are the first to deny that Bitcoin and others are a legitimate means of exchange. This is largely based on the limited number of traditional merchants who are in the cryptographic cycle. MasterCard could help encrypt the mainstream and would be a good thing for big names like Bitcoin, Bitcoin Cash and Ether. And with payment processing transactions that take over $ 50 trillion dollars annually, there will be room for startups that offer high-speed scalability at lower costs. It will not happen this year but it will happen.
Featured image courtesy of Shutterstock.