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Forget bitcoin, card firms should embrace stablecoin payments - Gartner

Forget bitcoin, card firms should embrace stablecoin payments - Gartner

Research house Gartner has poured cold water on Visa's recent move to support bitcoin trading on its network, arguing that the real revolution in payments would see centralised financial companies support stablecoin transactions on blockchains.

Earlier this week Visa outlined plans for the first pilot of its new suite of crypto APIs, following other industry players such as PayPal and Square in embracing the digital currency movement.

Gartner analyst Avivah Litan says that the move is welcome, and increase the "technical rails between consumers, businesses and blockchains, and help prepare the transition to future payment infrastructure".

However, in a blog, she also notes that it is "hardly a revolution". Having centralised financial companies that earn revenues by charging transaction fees at the centre of crypto goes against the peer-to-peer ideals of blockchain payments.

"Potential users are left to wonder if, in the future, they will have to pay these centralised services additional transaction fees for moving cryptocurrency across peer-to-peer blockchain networks, defeating the promise of blockchain," writes Litan.

Her answer to this problem is for card brands and other established players to provide the on and off ramps for payors and payees using stablecoins, without being involved in the actual payment that would occur on the blockchain.

This would mean Visa and its peers would not get a transaction fee but would make money from issuers and acquirers using services such as risk management, onboarding and protections for balances.

Concludes Litan: "The question remains: will these centralised financial services companies go forward in line with the spirit of blockchain peer to peer payments at the risk of cannibalizing their existing central-clearing house based-revenue streams? The answer will depend on whether or not these firms have any practical choice."

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 10 February, 2021, 12:58Be the first to give this comment the thumbs up 0 likes

The last line in the article is key.

At the moment, it looks like Visa, MasterCard et al do have a lot of practical choice.

At its prelaunch and inception, Bakkt, the crypoexchange owned by NYSE owner ICE, used GTM of replacing credit card transactions with cryptocurrencies. However, Bakkt probably realized that's a fool's errand and recently pivoted to a cryptowallet for loyalty, miles, rewards, etc. Whatever threat that Bakkt posed to disrupt V / MC is now gone.


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