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Is VISA a colossus on clay feet?

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The correct answer is ‘Yes’.

Payment technology by VISA and MasterCard had no alternative 20 years ago. Credit or debit card as a customer ID, PIN for authentication, POS terminal to capture transaction details, private network based on ‘star’-like topology to transmit payment data, bank back-offices with poor 12x5 availability  that required additional card processing software available 24x7 were the building block of the payments in the beginning of the 21st century.

There is so much water under the bridge. But curiously enough nobody noticed the fundamental change: banks do not require payment intermediates like VISA and MasterCard anymore.

Technologies have been skyrocketing for the past 10 years. Almost everyone has a smartphone in his or her pocket to identify and authenticate a customer first as well as to capture and transmit payment details next. Any retail bank has a middle-office to provide e- and m-banking 24x7. End of story. Almost everything is in place to introduce fast and cheap international account-to-account payments with no VISA or MasterCard required.

But what about payment rules enforced by VISA and MasterCard? The answer is simple: most of the rules have been introduced by the networks just to compensate some fundamental flaws in their card technology that dates back to 1980s.

Also, there is no doubt that social networks like Facebook threaten traditional banking. To stay afloat, the banks have to counterattack with easy to use, free and secure international payment scheme. This should help retain existing customers and attract millennials.

I do believe that next big money opportunity is lurking in this area. Forget cryptocurrencies and open banking. Just develop a new era solution for worldwide inter-bank payments, beat VISA, Ripple, etc. and hit the jackpot.

#VISA #MasterCard #payments

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