The rise of bitcoin and blockchain technology could have a profound impact on the card market, hurting acquirers and issuer banks but ultimately benefiting Visa and MasterCard, according to experts from Santander.
In a paper focused on the Brazilian market, researchers from Santander warn that the country's largest credit and debit card operator, Cielo, is likely to be negatively affected if acceptance of Bitcoin grows, with the firm's entire business model challenged by the risk to merchant discount rate and POS revenues.
Issuer banks would also see their interchange revenues threatened, while card suppliers and POS manufacturers could also face some issues thanks to fewer physical cards in circulation.
In contrast, the big card brands such as Visa and MasterCard could benefit from blockchain technology, seeing lower transaction, IT and back-office costs.
Visa, the researchers note, is already exploring the area, working with BTL Group to adapt its technology for processing interbank transactions in a move that is "definitely a challenge to Swift".
For exchanges, the news is also slightly positive, with Bitcoin and other virtual currencies offering the chance for increased FX and derivative trading revenues, although this would be partially offset by fewer clearing fees.
For banks, too, the blockchain is likely to be a net benefit, offering the chance to eliminate difficult, time-consuming, and costly trading between parties.
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