How cryptocurrencies are challenging the MasterCard and Visa Duopoly
It is unheard of for a multinational, not to mention two multinational heavyweights to be lost in a court case. What is even more rare is when the court case forces them to separate themselves from the liquidation costs for a total of $ 6 billion.
Earlier this week, the Business Press published a report that indicated that MasterCard, Visa and some banks would have to pay a multimillion-dollar agreement to more than twelve million merchants. The court case arose from the fact that the two payment networks, in collaboration with some banks, had conspired to illegally increase their swiping rates.
As the case reached its conclusion last Tuesday, an agreement between $ 5.54 and $ 6.4 billion was agreed. If you are wondering what the rates in question are referring to, they are known as an exchange.
This is a whole transaction cost merchants pay for them to use a processor from a particular network every time a sale is completed. This money is traditionally channeled towards maintaining the network. However, a percentage is sent to banks, which then offer credit card rewards schemes to their customers.
Although the increase in interchange fees does not hurt the profit margins of large retailers, such as Starbucks, the arbitrary increase in these costs can damage small business profit margins. And if there's one thing that payment processors are aware of, it's that there's no modern business that can survive without accepting card payments.
As such, payment processors have a hold on the merchant around the world. And this is a position that traditionally have used to exploit traders to get more profits.
The rivalry between visas and cryptocurrencies
Tuesday, the same day that this settlement was reported by Bloomberg, went to launch an attack against BCH (Bitcoin Cash) claiming that the platform was used by some technology enthusiasts to create money from nothing.
It is important to note that this hostility shown by Bloomberg towards cryptocurrencies is not new. This is because they have entrenched the commercial interests that often seem to have a deep grip on their editorial inclination.
However, when analyzing their analyzes, it will be discovered that publishers have completely failed to consider the reasons why the BCH fork occurred. Bitcoin Cash was an idea developed with the hope of creating a better peer-to-peer cryptocurrency.
This means that instead of focusing on off-line solutions, the availability of larger block sizes meant that the network was in a better position to process transactions much faster than Bitcoin. Furthermore, it would cost platform users to trade on BCHs over BTC.
The point here is that there are now more alternatives to MasterCard, Visa and other centralized payment processors. New alternatives are considered better and much more valuable than their competitors. Visa and MasterCard are not out of trouble yet, because there is another current case that seeks to change their business practices.