Beyond the ever-pervasive risk of identity theft on an individual basis, one of the most topical stories at the moment is true, mass-scale financial security. Every day, television news and online publications are packed with stories on noteworthy and damaging hacks against celebrities, governments, corporate entities, or major retailers. Our payments systems are no better: in fact, the status quo requires customers to surrender vital and personally-sensitive information to merchants to complete every transaction.
Most importantly, it requires customers to hand over the masterkey to all their finances: their credit card number. This process worked adequately in a world which required fraudsters to replicate or steal physical cards, and risk their own freedom to commit fraud at the point-of-sale. However, with the advent of the internet and digital commerce, fraud has shifted online where hackers can anonymously break into corporate systems and conduct fraudulent transactions from the comfort and safety of an office. The liability for merchants and banks has never been greater, especially at a time when hackers are more powerful than ever. Worse, the latest tools to combat credit card fraud - chip cards - have no impact on online transactions.
Credit card fees are another issue that many find unfathomably difficult to understand and merchants detest. The hundreds of network interchange rates and processor fees are intentionally complex, often with the aim of making a merchant’s true cost difficult to ascertain. If it costs an inconsequential amount to send an email, why are digital payments any different? With a merchant acquirer, merchant processor, payment network, and issuing bank all taking a share of each transaction, it’s no wonder the fee allocated to merchants can easily exceed 3.5% of the transaction amount.
To compensate for fees incurred, more and more merchants are requesting ten or twenty-dollar minimum purchase amounts for card-using customers. It’s an inconvenience for the customer, and potentially leads to lost sales for the merchant. In an ideally designed payment system, it would make sense that electronic money should be as simple and fee-free as an exchange of information; after all, you are not charged per word when you send an email.
Payment services like Apple Pay and Android Pay have tried to fix flaws with the humble credit card, but rather they have simply become added security and convenience layers on top of aging infrastructure. What is needed is a complete overhaul.
Cryptocurrencies designed for payments, including Bitcoin and Dash, are on the rise and are beginning to gain mainstream traction. These virtual currencies attempt to address extant systemic issues of security, fraud, and fees using blockchain technology and eliminating the many centralized intermediary services that constitute the credit card system. This new technology was specifically invented to make digital transactions easier and more cost effective. Already digital currencies have shown more technological promise in their infancy than credit card advancement in a near 70-year history.
The total market cap of cryptocurrency currently stands at USD 12 billion, a giant leap from USD 7 billion at the beginning of 2016. Moreover, growth in trading volumes between digital asset exchanges is staggering, and Dash in particular has experienced monumental growth, which is set to continue well into the future. With a meticulous roadmap in place, Dash aims to tackle the multitude of challenges of payments through their flagship project, Evolution.
Currently in development and due for an alpha rollout in 2017, Evolution will look like an online banking interface to the consumer, but will not be linked to any bank, nor require the use of credit cards. It is a place where people can spend, trade, and save their wealth for free. Transactions will be secure, free, and instant, revolutionizing payments and international remittances, especially benefiting those living in countries suffering from hyperinflation or stringent capital controls.
It becomes clearer every day that the payments industry is overdue for an overhaul. While customer and merchant dissatisfaction continues to mount, trends in cryptocurrency adoption, ease of use, and its range of applications are simultaneously moving forward. Companies embracing the newest technologies will inevitably gain a competitive edge over those that don’t.
About Ryan Taylor
Ryan Taylor is Director of Finance for Dash and an expert in the payments industry with over 15 years of experience in financial services and technology. Ryan previously was an Associate Partner in McKinsey & Company’s Business Technology Office in New York, where he served senior executive clients of some of the world’s largest financial institutions.
Dash is digital cash, spent easily and instantly online and at merchants and service providers worldwide. One of the world’s most highly valued cryptocurrencies, Dash is managed by a self-funded, self-governed organization. Dash’s built-in governance and funding system allows projects to be proposed and voted on by the community, and if approved, paid for directly from the blockchain. Dash has many unique features including instant transfers, low fees, optional privacy and state-of-the-art security.
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