By According to certain financial experts, Bitcoin transaction fees are lower than that of banks. Not only are they lower but Bitcoin bypasses the unnecessary & overly expensive financial institutions which credit card companies depend on. Experts, thus believe, that Bitcoin’s many advantages will begin to usher in and encourage merchants to start replacing credit card facilities with Bitcoin.
Exorbitant credit card fees continue to plague both consumers & merchants with billions of dollars being paid yearly to issuers in order to process these card transactions.
This idea of replacing the credit card with Bitcoin is not as far-fetched as most would think anymore as the idea is gaining rapid steam among many financial experts. Panos Mourdoukoutas, a professor & the Chair of the Department of Economics at Long Island University in New York predicts that the ever-increasing competition present in retail coupled with Bitcoin’s far lower transaction fees could see merchants begin to replace credit cards with the cryptocurrency. As we already know, most of the fees incurred by credit card issuers can ultimately be avoided with cryptocurrency as an option!
Mourdoukoutas goes on to quote Ian DeMartino author of “The Bitcoin Guidebook: How To Obtain, Invest, And Spend The World’s First Decentralized Cryptocurrency” “From a merchant perspective, Bitcoin has the advantage of not having large fees from credit card companies that cut into profits.” to further strengthen his point. DeMartino in his book, also describes how credit cards can abrade merchant’s profits:
“Credit card companies typically charge between three to four percent for each transaction, a fee the merchants normally take on themselves. For merchants with small profit margins, that fee could be up half or more of their profits for each credit card transaction.”
Of course, this is one of the key issues that Bitcoin’s inventor set out to address when he made Bitcoin payments akin to that of cash transactions. Satoshi Nakamoto highlights the important feature of Bitcoin in the influential whitepaper: Bitcoin: A Peer to Peer Electronic Cash System:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
FASTER, CHEAPER AND SAFER
In addition to the increasingly high transaction costs inflicted upon merchants & consumers by credit card companies, the ever-looming threat of credit card fraud continues to be an issue.
Statista published the chart below, which shows the value of payment card fraud losses in the U.S. alone from 2012 to 2018, by type (in billion U.S. dollars). Statista lists three categories of card fraud: CNP (card not present), counterfeit, and lost/stolen.
That’s not counting the value of fraud losses in and around rest of world!
“Though EMV chip cards have made some payments safer, experts predict fraud – specifically card-not-present fraud – will remain a growing problem for years to come.”
Today, many credit card issuers are beginning to the validate the many advantages of using digital currencies for payments and some are already taking action. Only eight days ago on August 21st 2018, Mastercard secured a patent from the US Patent And Trademark Office for a method to increase the speed of cryptocurrency transactions.
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