This is horribly threatening for all of the incumbent players in the four party model: traditional acquirers, issuer and the networks. Plain vanilla merchant acquirers will struggle to compete with Braintree online and Square offline as their tokenized user bases grow (NB: Square is actually well behind Braintree on this front and we’ll see how they do; IRL is harder than online.) The issuers lose their ability to differentiate. Once tokenized and hidden, any given card product is far more vulnerable to being displaced, as the issuers have already learned from PayPal. How do you stay “top of wallet” when there is no real wallet? As for the networks, their demise is harder to articulate. Visa and Mastercard are fortresses, growing 20% per year like clockwork, despite the law of large numbers. I will leave it at this: in a world where everyone is known, there is no need for an omniscient middleman. That feels like a scary fact for the networks.
Translation: VISA and Mastercard are probably in a very bad spot. How long before credit cards, as we traditionally knew them, start what will probably be a sharp, fast decline into irrelevance?
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Posted 16 February 2013 at 20h33 |  8 notes and Comments