Gartner, a research firm, emphasized in its blogpost the need for centralized payment companies such as Visa, Mastercard, and PayPal to offer blockchain-based stablecoin payment.
The demand for blockchain-based stablecoin payment has increased with the rise in the popularity of bitcoin and other cryptocurrencies. Some card companies, such as Visa, opened up their industry to accepting new bitcoin offerings. Visa collected revenue from the transaction fees for the clearing and settlement of the offerings.
According to Gartner’s VP analyst Avivah Litan, relying only on the transaction fees will not be enough for the centralized payment card companies to stay on top amid blockchain payment-based competition.
Centralised Decentralized Finance (CeDeFi)
Litan described the firms that depend on the fee strategy as centralized, decentralized finance. His thought process is that the centralized mainstream firms with significant bitcoin holdings get into the decentralized finance space by bringing in innovation and taking over the application of the decentralized finance space.
Why the Centralized Credit Card Firms Relying on Transaction Fees Will Not Survive
Customers in the blockchain payment system want to enjoy peer-to-peer transactions without central intermediaries and bank fees. Therefore, the centralized payment card companies’ fee strategy will not hold in a blockchain system whose purpose is to remove transaction fees in the movement of cryptocurrency.
Alternative Opportunities for Card Companies in Blockchain Technology
While the absence of fees is the goal of blockchain transactions, there is currently a lack of offerings for stablecoin payments. Centralized payment card companies can tap into this niche and provide new offerings that have transparent real-time blockchain-based stablecoin payments. Card companies could develop a system that further ties the transaction to underlying information and offers protection for funds that back the stablecoin.
Gartner’s blog post also recommended that card companies extend beyond transaction fees to provide a gateway for payers and payees and improve stablecoin transactions’ functionality. There is more opportunity for the card companies to earn revenue in the value-added services they will provide to the blockchain technology and from interest from the reserves backing up the stablecoins.