Odaily Frontline | Gartner: Credit Card Brands Should Shift From Bitcoin Transactions to Stablecoin Payments

This article comes fromGartner, original author: Avivah Litan

Odaily Translator | Nian Yin Si Tang

Odaily Translator | Nian Yin Si Tang

We call this type of service CeDeFi, as shown in the figure below.

secondary title

Welcome to join, but it's hard to say it's a revolution

The products of these credit card and payment companies undoubtedly increase the technical lines between consumers, businesses and blockchain, and facilitate the transition to the payment infrastructure of the future. But those products come from centralized financial firms, which earn revenue by charging transaction fees to centralized clearing, settlement and payment services.

The companies we interviewed were justifiably skeptical of these services. After all, the revolution in blockchain payments is that it executes peer-to-peer payments and eliminates central intermediaries and associated bank fees. Potential users will wonder if, in the future, they will have to pay additional transaction fees for these centralized services to move cryptocurrencies on a peer-to-peer blockchain network, which would mean breaking the promise of the blockchain.

Users are looking for a product that we haven't seen in the market yet:

- Low-cost on-chain payments using stablecoins pegged to fiat currencies;

- An easily accessible application to perform stablecoin payments;

- Lower payment acceptance fees than current credit card networks;

- Transparent real-time stable currency payment (and settlement) based on blockchain, bound to the basic information supporting payment;

- Credit card branding and bank protection for stablecoin funds in partner bank accounts.

In this case, a credit card brand or alternative payment company would issue such a stablecoin that customers could use to make transactions on the blockchain. Stablecoin payments will be tied to underlying records, such as what was purchased, and will leverage the blockchain to ensure transparency and immediacy.

The credit card brand will provide payers and payees with access to funds, adding functionality to existing channels, but will not involve actual payments on the blockchain.

secondary title

the bottom line

the bottom line

The recent announcement by Visa that they will support the purchase and transaction of cryptocurrencies (Bitcoin) on their network has been well-received in the industry. But Bitcoin is too volatile to be suitable for payments, and unless the volatility issues are resolved, we think Visa is unlikely to adopt this feature.

However, there is a need for stablecoin payments on the blockchain - especially in the B2B space - to connect thousands or even millions of payers and payees. This is the value proposition that credit card brands and their alternatives (e.g. PayPal, Square) can offer, along with value-added risk management, KYC/login and cash management services (merged with existing fiat currency services).

In the future, credit card brands and their alternatives may support other DeFi functions beyond payments, such as stablecoin credit systems.

secondary title

Technology is not an obstacle, business model is

The question remains: Will these centralized financial services firms continue to follow the ethos of blockchain peer-to-peer payments, risking cannibalizing existing central clearinghouse-based revenue streams? The answer will depend on whether the companies have any real options.

If traditional companies do not take action, emerging stablecoin payment networks will surely fill a market need.