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jd2424

Mastercard/Visa Obsolete?

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Could Ripple eventually cut Mastercard and Visa out of the consumer-merchant purchasing process (assume Joe bought a hat from Amazon using his credit card)? 

Currently, Mastercard and Visa facilitate payment, they dont extend credit (the bank does). If both the bank and the merchant are using the Ripple Network, why would they need Mastercard/Visa anymore?

What am I missing?

Thanks
 

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Visa, Mastercard, hell even physical fiat is obsolete to some already.  There are people in the bitcoin community who have been spending and earning only in bitcoin for years.  It's all about adoption and conforming your choices based on your preference.  

 

If enough people make a choice to live through digital currency, ALL payment processors will be forced to conform or cease to exist.

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From a technical standpoint though, is there anything stopping the Ripple Network from replacing the role of Mastercard/Visa for USD purchases? People could still transact in US Dollars, but the Ripple Network would facilitate everything on the back end (the role Mastercard/Visa currently perform). That's what Im trying to figure out. 

 

 

 

 

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Guest petke

I dont think credit cards will become obsolete, considering they offer fraud protection. So you can get your money back if you call the bank and complain. With ripple once a payment has been sent there is no take-backs.

On the other hand I guess gateways could offer somekind of fraud insurance. They'd pay you if you lost money through fraud.

Edited by petke

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Visa and Mastercard dont have anything to do with the fraud protection part. In fact, it's federal law that the consumer doesnt get screwed if their card is stolen and used.The merchant and the bank fight it out over who pays, but from what I can tell, the bank wins almost all the time (the merchant gets the short-end of the stick). Therefore, whether the merchant is using the traditional system or a new system (e.g., the Ripple Network), nothing really changes in regards to fraud.

However, Visa and Mastercard currently charge merchants somewhere in the ballpark of 3.5% per transaction. With the Ripple Network, this would obviously be reduced .X%, which would be a HUGE savings. If the merchant does $1,000,000 in revenue a year, that's an extra $30,000 in their pocket. 

To ask my original question in a different way: Is there any reason at all that the merchant/banks would not run the Ripple Network over the current Visa/Mastercard network (assuming the Ripple Network had the infrastructure and banking relationships in place)? 

 

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2 hours ago, jd2424 said:

Is there any reason at all that the merchant/banks would not run the Ripple Network over the current Visa/Mastercard network (assuming the Ripple Network had the infrastructure and banking relationships in place)? 

 

None of sufficient importance...

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Hoping sooner Ripple will have its own card called XRP CARD competing with Visa and Mastercard, with the capital they have now, it will spread to massive adaptation of ripple system,

Sent from my MHA-L29 using Tapatalk

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No, Ripple won't make card schemes obsolete.

it is very plausible that Visa and MC use Ripple products to replacing existing Authorisation & Settlement layers though. Authorisation is already fast and reliable via the card auth network, the use case is much less strong than for cross border.

You could plausibly see XRP-based debit cards where people are holding and using XRP as day to day currency. That is a long, long way off if it happens.

@jd2424

"Visa and Mastercard dont have anything to do with the fraud protection part. In fact, it's federal law that the consumer doesnt get screwed if their card is stolen and used.The merchant and the bank fight it out over who pays, but from what I can tell, the bank wins almost all the time (the merchant gets the short-end of the stick). Therefore, whether the merchant is using the traditional system or a new system (e.g., the Ripple Network), nothing really changes in regards to fraud.

However, Visa and Mastercard currently charge merchants somewhere in the ballpark of 3.5% per transaction. With the Ripple Network, this would obviously be reduced .X%, which would be a HUGE savings. If the merchant does $1,000,000 in revenue a year, that's an extra $30,000 in their pocket. 

To ask my original question in a different way: Is there any reason at all that the merchant/banks would not run the Ripple Network over the current Visa/Mastercard network (assuming the Ripple Network had the infrastructure and banking relationships in place)? "

This is not true. 

Chargeback management and regulation is supplied by the Schemes, and is not law. The primary purpose of the chargeback system is consumer protection to give customers confidence to continue to transact using their scheme branded card. The Fees applied (Merchant Service Fees) vary hugely, based on risk (prepayment exposure and likelihood of Fraud, primarily). MSF can be as little as 0.5% it is also heavily dependent on the region and local regulation. 

Visa and MC sells banks a very profitable product, everyone makes good money on cards and the associated lending. they are good friends, Ripple would have a tough time squeezing in there.

Also: Hi! First post :)

 

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3 hours ago, Agmar_Strick said:

Visa and MC sells banks a very profitable product, everyone makes good money on cards and the associated lending. they are good friends, Ripple would have a tough time squeezing in there.

Very interesting discussion and a lot of good info here. I would just like to comment on that last statement. A point could also be made that these kind of arrangements are the ones most vulnerable to disruption. We have had very similar business conditions in air flight before Ryanair, hotels before AirBnB and car industries before Tesla. Good friends making good money :-).

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indeed, anything is up for disruption with the right tools/products. 

visa/mc 's competition is more realistically coming from China union pay and from new domestic real time payment networks such as sepa (euro) and NPP (Australia). 

Those domestic network are definitely a space where ripple could work. 

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