11 Months Ago

Visa, who according to Forbes, handled over $11.2 trillion of payments in 200+ countries last year, is now looking to attack the international money transfer market - which is said to be valued at over $125 trillion.

Since 1973, Society for Worldwide Interbank Financial Telecommunications (SWIFT), headquartered in Belgium, has dominated the market for international payments. However, SWIFT uses old technology, making it relatively slow and expensive to move money around the world, which is why Ripple is arguing that it is able to replace SWIFT, as Ripple’s Blockchain-powered solution is so much faster and cheaper. If indeed Ripple is successful, it would make the business extremely valuable. This may explain why Ripple rose in value by over 35,000% in 2017 and caught the imagination of many Crypto-enthusiasts, as well as sparking a wave of “Fear of Missing Out” (FOMO) across dinner tables around the world and people searched for the next token that could offer them the hope of early retirement.

Visa has also announced that it is going to expand the number of countries from not just the UK, but to six more countries - Spain, Germany, France, Italy, Ireland, and Holland - by now enabling Coinbase to expand its Crypto to fiat debit card for clients. The card allows users to spend in Euros and Sterling, then their Cryptocurrency holdings will automatically be sold to meet the fiat equivalent cost of the purchase. The Coinbase card is attractive for those that travel overseas, as it will reduce the normal expensive foreign exchange fees that many other cards levy. Unfortunately, so far the reaction has not been that positive, with the card scoring only 2.4 on the Google App store. However, new upgrades are promised, which hopefully will improve the customer experience.

Initiatives, like the above from Visa, have to be welcomed as they are driving down the costs of sending and spending money globally while making it much easier for holders of Digital Assets to access their investments in easy and convenient ways. It ought to make it easier to redeem digital loyalty rewards, which are being touted as an important market for Digital Assets. Companies are looking to use Digital Assets to attract new customers while incentivising existing clients to do more business. We are seeing companies offering to pay for clients’ data, as opposed to just collecting it and then reselling it to advertisers - Google and Facebook have been doing this for years!

IOTA has been giving tokens to drivers of Jaguars and Land Rover vehicles during tests in Ireland, it collects information about road conditions and traffic congestion. Facebook has just announced a project called Study, where it will be paying clients for their data (possibly using the soon-to-be-launched Facebook Digital currency, Globalcoin).

Digital Money
Digital Assets

A Year Ago

In 2018, The World Bank claimed that the global remittance market (money typically sent back by workers overseas to their home countries)  reached $689 billion, up from $633 billion in 2017.

The top three countries to receive money from overseas were India ($79 billion), followed by China ($67 billion) and then Mexico ($36 billion). While some banks are charging 11%, the average cost to send money home, according to the World Bank, was 7% i.e. over $48 BILLION is being paid, by often those on low incomes, such as security guards, cleaners and domestic staff. These very same transfers could be carried out for a fraction of this price if the banks were bypassed, along with the other intermediaries, and transfers were carried out using Digital Assets.

Therefore, it ought to be no surprise that Facebook is looking to take a share of the global cash transfer market with the launch of its own Digital currency, as reviewed in last week’s Digital Bytes. This may explain why Facebook is no longer banning adverts for Cryptocurrencies, which it enacted in January 2018. Interestingly, Facebook is looking to raise $1 Billion for its new stable coin project and has been courting Mastercard and Visa to invest.

Meanwhile, PayPal has been cautious about Bitcoin, has announced that it is working with Blockchain technology to be able to handle other Digital Assets. PayPal needs to replace the revenue that it generates from e-Bay (which used to own PayPal until 2014), who after 15 years, stated it will be using an alternative payments service-provider, called Adyen. Adyen is a publicly-listed Dutch company which has already revealed a tie-up with BitPay, and will enable Adyen’s clients access to Digital Assets. Therefore, indirectly, e-Bay clients will have access to Digital Assets too.

PayPal currently has over 270 million users, who potentially will have access to be able to deal in Digital Assets. Who knows, maybe PayPal will develop a closer relationship with Facebook? After all, PayPal is already Instagram’s payments provider and Facebook is looking to launch Facecoin on its other platform, WhatsApp, later this year in India.

Not to be left behind in this digital transformation of payments, Mastercard continues to file patents, as it looks to integrate traditional fiat currencies with Digital currencies. It has been working on Blockchain-powered solutions to improve security, in an effort to minimise fraudulent activities. It is also trying to overcome the challenges of integrating different Blockchains so data about different Cryptocurrencies can be held in one place.

As we can see, the traditional landscape of money transfers is being disrupted by Digital Assets. With companies such as BitPay and Facebook entering the market, traditional firms like PayPal, Mastercard and Visa are having to adapt, as their “fat margins” are being challenged by these lower-cost providers.

Digital Money