Is There a Threat to Card Networks?

Who is trying to replace the card networks?

There are hundreds of innovation attempts that are being made to replace the traditional payments mode of cards and the card network business of giants like Mastercard and Visa. On analyzing these attempts, the backbone of most technologies can be grouped into two broad categories:

  1. Automated clearing house (ACH)
  2. Telecommunication channels

The traditional ACH is not a real-time process; it takes a minimum of 1 to 2 days to clear the funds, which is way less than the time card settlements take – 7–8 days. That is one of the main reasons why people are looking towards ACH as a viable option. The economists and the technologists are not satisfied with that 1–2 days’ time either, so they are trying to find ways to make it real time using techniques like fast ACH.

The other prominent and explored option is through the telecommunication networks. For the consumer having a postpaid connection, the organization has the option to bill the consumer via their monthly bills. And for the consumers who use prepaid, it is even more ...

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