Bitcoin Could Make Credit Cards Obsolete
According to some financial experts, Bitcoin transaction fees
are lower. In addition, Bitcoin bypasses the unnecessary and expensive
financial institutions within which credit cards depend. Therefore,
experts believe that Bitcoin’s advantages will encourage merchants to
replace credit cards with Bitcoin.
Satoshi Nakamoto: Bitcoin Payments Are Similar to Cash Transactions
High
credit card fees continue to be borne by merchants and ultimately by
consumers. Indeed, merchants pay billions of dollars to have issuers
process card transactions.
The idea of replacing credit cards with Bitcoin is gaining steam among financial experts.
For example, Panos Mourdoukoutas, professor and Chair of the Department of Economics at Long Island University Post in New York, forecasts that increasing competition in the retail sector and Bitcoin’s offer of lower transaction fees could induce merchants to replace credit cards with the cryptocurrency. Indeed, most of the fees charged by credit card issuers can be avoided using the cryptocurrency.
For example, Panos Mourdoukoutas, professor and Chair of the Department of Economics at Long Island University Post in New York, forecasts that increasing competition in the retail sector and Bitcoin’s offer of lower transaction fees could induce merchants to replace credit cards with the cryptocurrency. Indeed, most of the fees charged by credit card issuers can be avoided using the cryptocurrency.
To strengthen this point, Mourdoukoutas quotes Ian DeMartino, who writes in his book The Bitcoin Guidebook: How To Obtain, Invest, And Spend The World’s First Decentralized Cryptocurrency:
“From a merchant perspective, Bitcoin has the advantage of not having
large fees from credit card companies that cut into profits.” And
DeMartino describes how credit cards erode merchants’ profits,
“Credit
card companies typically charge between three to four percent for each
transaction, a fee the merchants normally take on themselves. For
merchants with small profit margins, that fee could be up half or more
of their profits for each credit card transaction.”
This is
precisely is one of the issues that Bitcoin’s creator intended to
address by making Bitcoin payments analogous to cash transactions.
Satoshi Nakamoto highlighted this significant feature of the
cryptocurrency in the seminal whitepaper Bitcoin: A Peer to Peer Electronic Cash System:
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
Bitcoin Is Faster, Cheaper, and Safer
In
addition to the unreasonably high transaction costs imposed by credit
card issuers, the threat of credit card users becoming a victim of fraud
continues to rise.
Statista published
the chart below, which shows the value of payment card fraud losses in
the U.S. from 2012 to 2018, by type (in billion U.S. dollars). Statista identifies three categories of card fraud: CNP (card not present), counterfeit, and lost/stolen.
"Though EMV chip cards have made some payments safer, experts predict fraud – specifically card-not-present fraud – will remain a growing problem for years to come."
Now
credit card issuers are validating the advantages of using digital
currencies for payments and some of them are taking action. For example,
on August 21, 2018, MasterCard obtained a patent from the U.S. Patent and Trademark Office for a method to increase the speed of cryptocurrency transactions.
See more at: MorisBeracha.com
Comentarios
Publicar un comentario