MasterCard has announced a “P2P” debit card-based remittance system which it says customers will find “more appealing” than the Bitcoin protocol.
MasterCard Send, currently in a pre-signup phase in the US only, is designed to allow transactions between “banked and unbanked consumers,” international and domestic payments at a near-instant speed rather than the several days required with the traditional bank clearing system.
Speaking to PYMNTS, Barb King, a group head in the MasterCard Payment Systems Integrity Group, called the new tool “a breakthrough platform in the industry.”
“[It works off] the model that gives the consumer the ability to get…funds in a way that they’re already very comfortable with.”
The response was in reference to a question regarding MasterCard Send’s advantages over Bitcoin, which King identified as being off-putting to consumers due to the apparent need to share personal details with third parties.
“[C]onsumers are much more comfortable giving their personal details to their financial institution than they are to many other types of entities,” she added.
While concrete details of the scheme have yet to be published, preliminary literature is notable in its arguably misleading use of certain terms used to qualify its “breakthrough” status. MasterCard’s description of Send being a P2P service is debatable, transactions needing to be submitted from a US debit card and processed, as opposed to ‘true’ P2P architecture found in digital currency transactions.
Further, the disadvantages associated with both centralized and bank-based payment systems are still present. Notably, chargebacks could still occur several months after the approximately minute-long transaction occurred.
The MasterCard Send scheme is thus seemingly more of a competitor for PayPal and Venmo than for Bitcoin or Ripple. Indeed, as purely a method of speeding up bank-based transactions to banked recipients, the announcement contains little new technology. Third party add-ons for the banking sector have existed for several years to serve this purpose, such as the UK’s Faster Payments scheme which began offering near-instant transfers in 2008.
Further complications arise from the information presented by MasterCard itself. Details of the exact remittance process for unbanked recipients have not been made clear, and while some sources speculate that transactions could be facilitated via partnerships with fiat money transfer operators such as Western Union, the fees involved have so far not been mentioned.
Regarding security, MasterCard makes passing reference to what it calls “cross-border blocks.” At the present time, however, no further information has been made available regarding how and under which circumstances such measures would be implemented.
King nonetheless remains buoyant about the scheme’s future. “We think [personal payments] is a growing space in the industry, [be it] person-to-person payments, business to consumer, [or] government to consumer,” she said. “When you look at some of the industry statistics that exist, in terms of the opportunity to displace cash and checks, we’re talking trillions of dollars.”