In the payment’s space it does not get much bigger than Mastercard and Visa. These two companies have cornered the markets and set the tone about how we transact and pay on a daily basis. But it must also be remembered that the way we operate with these two companies and their plastic cards is relatively new.
Now, as the world continues to look for new innovations, there is a building notion that a new method of transacting may be coming. Those in the cryptocurrency space believe they are ahead of the curve with the digital tokens that have been created and the ability they have to be used in transactions, but now, there is an uptake from these big payments companies.
Visa was recently in the news for its work towards getting on board with a digital token, this after filing its own patent application to create a digital currency on the blockchain. More to this, there has been a bigger push towards tokenisation at Visa as it acquired the token services and ticketing businesses, formerly Bell ID and Ecebs LTD, from Rambus (RMBS), a premier silicon IP and chip provider.
Visa already has its token services available, which, as described on the website, is: “a new security technology from Visa, [which] replaces sensitive account information, such as the 16-digit primary account number, with a unique digital identifier called a token. The token allows payments to be processed without exposing actual account details.
All this work being done by the major payments company towards blockchain and tokens, as well as cryptocurrencies, seems to suggest that a major change is brewing. Digitalisation is one part of it, and it is the part that moved payments away from cash and onto digital debit and credit cards which Visa and Mastercard monopolised.
But, the next step which can include blockchain and cryptocurrencies, as well as tokenization, means that Visa, as a prime example, can start to offer a new dimension of products and tools related to payments.
Blockchain and cryptocurrency in its basic form come with a lot of advantages for businesses, as well as clients. In the technology, there is the power to take away a huge sway of intermediaries. While, with the cryptocurrencies, the globalised and decentralized nature makes payments quicker, easier, and often safer, anywhere in the world.
Working with crypto
Visa has already started its journey towards incorporating crypto, and has been at the forefront of some other big payments news — such as when it became the provider for Coinbase and its crypto cards.
Visas have also been seen to be linked to new blockchain protocols designed to make things like Bitocin more payments friendly. Lightning-compatible Fold app joined Visa’s Fintech Fast Track Program in April allowing it to roll out a co-branded Bitcoin cash back rewards card.
But, for Visa to be actively looking into the technology and tokens than simply being a service provider indicates there is this change coming on the horizon. However, to really enter into this space and be a part of the changing landscape of payments, there may need to be a change at the technology level.
Will Bitcoin play a role?
As it stands, Bitcoin is still seen as the gold standard of cryptocurrencies, but it is not the best thing to be doing payments with. Bitcoin has ventured into a space where it is more gold than cash, and its volatility still makes it hard to use on a day to day level.
It begs the question if it is Bitcoin’s makeup that is slowing the change in payments technology to crypto, or if it is the caution of companies like Visa. It could also be the lack of growth of another crypto more suited to payments coming to the fore. However, stablecoins may well be the answer to all of this a few years down the line.