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Is blockchain the solution in making payments more transparent and secure?
With online payments company Wirecard undergoing insolvency proceedings this month, mainstream financial services like VISA, PayPal, and Mastercard are rushing to fill the digital payments void, and be one of the first to offer crypto payment cards, stated experts in the crypto industry.
During an interview with Cointelegraph, Jerry Chan, CEO of blockchain service provider TAAL, and Rod Hsu, President & Co-Founder of virtual currency platform Coincurve, both agreed that the competition could be just what the industry needs to shift the way that digital currencies are being used as a method of payment or technology.
But Chan goes beyond the need for mainstream crypto awareness and points out blockchain can make payment services even more efficient:
“Payment technology is actually already quite efficient. (…) The cost of credit cards is on fraud prevention and insurance, and this cost is borne by the merchants and their banks. Blockchain platforms that are transparent, immutable, and do not support coin mixing or hiding technologies like Bitcoin SV can largely eliminate fraud, thereby reducing this cost to merchants.”
CoinCurve’s Hsu said that the current payment ecosystem involves various roles in the process. This includes clearinghouses, banks, or intermediary payment service providers and it increases the fees and efficiency of settlement:
“Blockchain is a ubiquitous and global public ledger. Therefore, sending digital currencies across the table or around the world, settlements go directly onto the chain with no intermediaries keeping fees low with an almost real-time settlement visible on this public ledger.”
Whether the use of Bitcoin (BTC) can be considered as a method of payment or technology, rather than a store of value to its survival or not, Hsu says that store of value can only go as far as being speculative without the property of serving as a medium of exchange. He also adds:
“This means if we are to see Bitcoin as a global currency, adoption of Bitcoin as a payment instrument is vital as it must fundamentally serve the purpose as a medium of exchange.”
TAAL’s CEO thinks that the lesson from Wirecard’s case for the crypto industry is that financial regulations “are in place to protect the public from exactly these sorts of massive frauds and public consumer losses.”
On the other hand, Hsu summarizes that the crypto sector should learn about “transparency” after the Wirecard’s case, and adds that blockchain is, again, an immutable and open technology to fully audit the flow of funds “at any point in time.”