The major credit card companies – American Express, MasterCard and Visa – are exploring uses of Bitcoin and the blockchain technology, International Business Times reports. They can see the threat from blockchain fintech, and are considering ways to integrate selected aspects into their own operations.
"We are not currently working actively on any bitcoin-based solutions, but we watch the cryptocurrency market closely,” said Andrew Buckley, head of MasterCard products for Europe. "We find them interesting from a technology perspective, but currently don't see them as a viable solution for mainstream commerce.”
“Our focus is on these hundreds of millions of people with a bit of plastic in their wallets,” he added. “How do we get them into this new digital world? Once we have sorted that out, and the two billion people that haven't got a card, then we may start worrying about other things."
Recently, MasterCard replied to the U.K. government call for information with a put-down of bitcoin and other digital currencies. MasterCard claimed that digital currency transaction costs are lower than credit cards only because providers of digital currency services do not bear any compliance costs, and that, while digital currency payments are not faster than the MasterCard network, credit card transactions are intrinsically more secure.
That should be interpreted in view of the recent announcement of MasterCard Send, a personal payments service that enables funds to be sent quickly and securely to consumers domestically and internationally. Barb King, a group head in the MasterCard Payment Systems Integrity Group, described the service to PYMNTS as “a breakthrough platform in the industry.”
“The distributed ledger is really useful for peer-to-peer transfers,” said Neal Sample, president of Enterprise Growth at American Express. "So the work that Amex does, while it could be supported by distributed ledger, goes far beyond peer-to-peer. It involves creating a set of guarantees and a set of services for both consumers and merchants that they wouldn't get if they were just trying to transact with one another.”
According to Sample, payment is just one of many stages in the commerce cycles, and companies such as American Express provide a complete infrastructure for consumer protection. While bitcoin transactions are intrinsically irreversible, with no consumer protection against fraud, American Express will actively help its customers.
"There are two elements here: the blockchain technology itself, which is very interesting for transactions, then there is bitcoin the currency,” said Jonathan Vaux, executive director of innovation partnerships at Visa Europe. "We are certainly looking at applications involving blockchain. What can you do with this? We know there's a peer-to-peer transaction network happening, but we don't see it scaling unless there is trust in the system. Certainly we are looking at it in a lab environment, and as quick way of routing it's exciting. We have a team in London looking at specific use cases.”
Like American Express and MasterCard, Visa is closely following other aspects of fintech innovation as well. "Visa is facilitating Apple Pay with tokenization, but the card holders won't know about – I mean it makes them safer but they won't know about that, and as far as they are concerned it will operate like a contactless transaction," Vaux said.