VISA & MasterCard Face Increasing Threat from Local Networks & Crypto Currencies

MEDICIFounder and Chief Strategy & Innovation Officer

For a very long time now, VISA and MasterCard have dominated the fintech world, enabling the rails for card acceptance. When an issuer bank has to transfer money for a transaction done by its customer to the receiver (merchant) bank, they need a network to complete the transaction. It is like charging a small amount every time (say a portion of $2 on a $100 transaction) but on the millions and millions of transactions that are processed. So much so that they add up to Tens of Billions of dollars every day. The following exhibit shows the average daily transaction value of popular payment networks. The interesting thing that the chart depicts is how China Union Pay and Bitcoin have come a long way challenging the incumbents. ChartOfTheDay_1681_Daily_transaction_volume_of_payment_networks_n

China Union Pay is on its way to cross the transaction value of that of MasterCard. It is already way ahead of American Express by 5000 million dollars in terms of transaction value. Do you know that Union Pay has more cards than Visa or Mastercard? yes it does. Bitcoin, the crypto currency, has shown very good progress. Even though people expect it to follow the hype cycle, it has already crossed Western Union in terms of volumes of transaction and is not far away from leaving Discover network behind. Bitcoin is only 27% short of PayPal’s daily transaction volumes. The reasons behind the rise in Bitcoin have been the talk of the town so I am not going to expand on that. Here is an exhibit depicting Bitcoin’s popularity over time vs. the incumbents. I have used Google Trends:


I also came across a graphic from The Nielson Report that you should have a look at to gain further insight on the topic. The following exhibit depicting China Union Pay against Visa and MasterCard in the Asia Pacific (Volumes).

Nilson_Chart_2011_09While Visa and Mastercard are working hard on makin the world implement EMV and NFC, should they be watching their back?

Related questions on LTPlive:

EMV: Mainstream by 201X? Can we trust Bitcoin to eliminate Interchange?

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.

Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.

Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.