Are card payment giants threatened by Bitcoin?
When you think of international payments, some of the first names that will spring to mind are global giants MasterCard, Visa, and American Express.
What is their view on the virtual crypto-currency Bitcoin? Well, all three have been relatively silent on the topic of digital currencies, but with a number of the world’s major banks starting to make public their interest in the technology and functionality of Bitcoin, it’s no surprise that Visa, MasterCard, and American Express have also dipped their toes into the water. This might be old news but with a significant long term impact.
Visa with Citigroup and Nasdaq invested in Chain. Chain is an enterprise platform that enables developers to build on top of the blockchain – the public general ledger that is the technology that underpins Bitcoin, effectively recording every bitcoin transaction. As part of its public statements regarding the investment, Visa revealed that it had been evaluating the blockchain technology for some time, intrigued by its potential to create new ways to transfer non-traditional currencies. By non-traditional currencies they mean things that aren’t actually money as we currently know it, but are things that represent value such as gift cards or loyalty points.
MasterCard has invested in the Digital Currency Group. This is MasterCard’s first investment in any kind of digital currency business, and they have publicly stated that they are particularly interested in the technologies in the digital currency and Blockchain spaces. MasterCard are publicly emphasizing their need for safety and certainty regarding currency transactions, stating that they want to help create a level playing field for how digital currency is approached, regulated, and monitored.
American Express was founded in 1850 and is best known for its credit card, charge card, and traveller’s cheque businesses. American Express transactions account for around 25% of the total value of credit card transactions in the United States. As well as the day-to-day business, American Express has built huge value in its brand, and it is regularly ranked as one of the most admired companies in the world.
In terms of Bitcoin, American Express has invested in Abra – a Bitcoin app that focuses on remittances. As part of the Abra investment process, American Express executives were quoted as saying that they believe that the block-chain technology of Bitcoin could play an important role in the evolution of money transfer and commerce – especially in emerging markets.
What does this all mean for Bitcoin?
What’s interesting is that the investments made by the card companies of Visa, MasterCard and American Express are all to do with the block-chain technology, not the crypto-currency of Bitcoin itself.
Part of the reason that the financial services giants are publicly positioning themselves as interested in the block-chain technology rather than Bitcoin is that the digital currency remains volatile and also has struggled to shed its association with criminal activity and other reputation-damaging incidents.
The future of Bitcoin remains relatively unclear, but what is apparent is that the technology that has enabled its creation and function is going to be a key force in shaping our international payments systems in years to come.