4 ms·
MasterCard's duopoly (with Visa) of all electronic payment systems in the world is so well-known it is often used as the first example of such a market in econo
by DCKing 12y ago
MasterCard's duopoly (with Visa) of all electronic payment systems in the world is so well-known it is often used as the first example of such a market in economics courses. "Legacy" payment systems such as cheques and cash are being slowly replaced by systems very much controlled by MasterCard or Visa.
This is troublesome for two reasons.
The first is political; both companies are American. This gives the American government way too much control over such critical infrastructure. Even if they do not overtly mess with the system, they most certainly are passing all this information on to their intelligence agencies. Even a single worthy competitor from somewhere else would be a huge improvement.
The second is that it stifles innovation. Because of the lack of a well-established competition, the only innovation these companies are interested in is new products that make use of their existing infrastructure. Contactless payments on mobile phones could have been reality five years ago, but MC and Visa have to jump through several hoops and require special SIMs to have it all run over the infrastructure they sell instead of the internet. And the banks are happy to wait instead of innovating themselves.
I'm all for killing cash by digital means. But not if these two companies are doing it.
- zanny 12y agoBitcoin called, its having beers with Dell atm and invited you over.
- DCKing 12y agoWhat does the fact that I can pay with Bitcoin in a very narrow selection of web shops have to do with the vast network of debit and credit card systems that I can pay with anywhere I want (web and brick-and-mortar) without any effort whatsoever? The suggestion that cryptocurrencies are competition to MasterCard's and Visa's duopoly is ridiculous. Cryptocurrencies, due to their intrinsic online nature, are a very limited payment solution. Note that I do support cryptocurrency efforts, use them, and follow the news with interest. But cryptocurrencies are not even close to mainstream enough to have this duopoly worried.
- sickpig 12y agoYou sure really do know a lot about cryptocurrencies. I'm particularly interested in their "intrinsic on line nature", care to elaborate a little bit further?
- DCKing 12y agoEvery Bitcoin-derived cryptocurrency has to keep in sync with the blockchain in order to participate in payments. That is what I mean with "online in nature".
- sickpig 12y agoOk now I got what you meant. thanks for the explanation. Having said that your consideration about "on line nature" applies also to my mastercard in almost all the shops I usually buy stuff be it on line or off line. Without me providing the OTP and the payment processor verifying it I can't buy anything. A little bit OT but worthy IMHO. There are quite a few SPV (1) client implementations that remove the need to have all the blockchain stored locally. The things are moving even further in these field with the implementation of the payment protocol (2) (1) http://bitcoin.stackexchange.com/questions/4649/what-is-an-spv-client http://bitcoin.stackexchange.com/questions/4649/what-is-an-s... (2) https://github.com/bitcoin/bips/blob/master/bip-0070.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0070.mediawi...
- DCKing 12y agoThanks for the links, I'll check them out.
- exo762 12y agoAs if cards are not "online in nature"? Bitcoin is, by the way, much ahead of cards in that regard. You can have bitcoin radio and have PoS (coffee machine, ticket machine, shop's PoS) that does not have Internet connectivity for months.
- 12y ago