Will Visa, Mastercard, PayPal Be Eclipsed By Crypto? Bitcoin Data Shows It’s Already Happening
Crypto Is Cheaper Than Visa, Mastercard, Traditional Payment Systems
Since Bitcoin (BTC) garnered some semblance of traction, it has been touted as a viable alternative to traditional digital payment rails, like Visa, Mastercard, or PayPal. As ShapeShift’s Erik Voorhees said in a recent interview, BTC, unlike centralized digital monies, is free to use (accessible), borderless, and uncensorable — arguably making it a perfect substitute. And yes, the leading cryptocurrency is probably best used as a store of value (gold alternative), as scaling efforts are deemed lackluster by pundits, but recent data compiled by BlockData confirms that Bitcoin has potential as a medium of exchange, too.
Through a graphic, Blockdata’s team accentuated that by many measures, traditional merchant payment processors, like Visa and Mastercard, pale in comparison to Bitcoin, XRP, and other digital assets in this age. In fact, as the analytics startup estimated, merchants would see their margins swell by up to 4% if they accepted crypto instead of fiat on credit/debit cards.
As was depicted, a $1,000 purchase through Visa dwindles to $944.20 after all is done and dusted. The financial services firm charges $25.10 as an interchange fee, an intermediary payment processor, PayPal in this case, takes $29.30, and at last, $1.40 is taken as an “assessment fee.” And with that, the end online merchant receives only $944.20 from the $1,000 transaction. It’s the same (slightly worse) with Mastercard.
With crypto, on the other hand, fees across the board are drastically slashed. In a $1,000 Bitcoin transaction, BlockData estimated that the merchant at the end of the equation gets $974.22 deposited in its bank account, if transaction fees are $5 (they aren’t, by the way) and crypto-to-fiat platforms charge a 1% fee. The difference between $944.20 and $974.22 doesn’t seem that noticeable, but it would have a large effect on the retail economy.
And with that, Crypto Michael, an Amsterdam-based trader who reposted BlockData’s chart, claimed that Visa and Mastercard are going to get phased out, as blockchain assets have “outpaced them by a mile” and will “take out the middlemen” making transactions more costly.
Personal anecdote: These statistics aren’t exactly baseless. In fact, mere weeks ago, one of my employers had to pay me through PayPal’s cross-border payment system. Not only did the transaction take days to finalize, but fees surpassed 4%, eating away at my income. If Bitcoin was used, the transaction fee would have likely been under 0.25%, and would have taken less than an hour if blocks were running on schedule. It’s clear to see why so many are taking a liking to cryptocurrencies over their archaic fiat-run counterparts.
Bitcoin Takeover is Already Happening
Cryptocurrencies are evidently cheaper if the proper infrastructure is in place, but is the takeover occurring? Per data cited by Anthony Pompliano, a partner at Morgan Creek Digital, Bitcoin processed $7 billion worth of value on a day earlier this week. While this sounds minuscule on a global scale, Venmo, a PayPal subsidiary, did $62 billion in volume for all of 2018, meaning that “Bitcoin processed more than 11% of Venmo’s annual volume in a single day.” Moreover, statistics recently revealed that Bitcoin’s aggregate transaction value in 2018 surpassed that of PayPal, and has started to approach that of Visa.
With this in mind, some are sure that cryptocurrencies will absolutely surpass fiat systems. As Ethereum World News reported previously, the team at analytics firm DataLight wrote:
“Bitcoin was the first cryptocurrency ever and its code is still imperfect. However, with all of its imperfections, it is still many hundred times faster than the existing wire transfers. Its fees are so small that you can transfer millions of dollars for a dozen cents. This is the reason many financial organizations find it so attractive… Technical improvement of Bitcoin’s network is almost certain to make it the world’s main payment system.”