What are the obstacles to an entity with enough users, eg Facebook or Apple, “recreating” Visa/Mastercard?

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Visa and Mastercard are big and not very innovative. They have quite big market caps, big enough to be attractive to FB or Apple.

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Posted by FloatingPoint
Asked on April 12, 2016 4:26 pm
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There are plenty of challenges. The biggest (IMO) is getting users to change their habits. Just having a large userbase is not a guarantee for adoption. Example: Apple Watch.

For a product to be disruptive it has to be better, fast, or cheaper than the incumbent service. And let’s face it, Visa / Mastercard are easy to use, quick, and free for consumers. Add onto that decades of infrastructure, branding, and experience.

Maybe a better approach than “replacing” is to consider how to combine existing habits with growing trends. A prime example is Apple Pay. It doesn’t replace my Visa. It supplements it and helps me pay faster. Venmo is another good example.

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Posted by (Questions: 0, Answers: 2)
Answered on April 13, 2016 11:08 am
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Visa/MasterCard (and Amex) form one of the key ‘rails’ of payments – that is the notion you can pay with your 15/16 digit card number almost anywhere. There are two reasons why this is very difficult to disrupt: 1. To gain the critical mass to challenge will be very hard: it is not only the customers making payments, it is also the vendors accepting payment methods. Paypal (online) is the one that has made the most inroads in this area. However, adding another payment method (for accepting payment) is frightfully expensive and would need to prove out a very large return before the vendor would accept. 2. Visa/MasterCard are entrenched within the whole industry: the processors, banks, etc all get a cut of the transaction. As such, you need to go beyond just providing an alternative and engage all the participants in payments from a processing perspective. You are right that suggesting Apple/FB have the cash to overcome these, yet by disrupting and driving down profits, will their investment be returned? Ultimately, you are uncovering the value of a cryto-currency – where the promise would be a new payment method that was quick and easy to integrate.
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Posted by Sharpie
Answered on May 29, 2016 7:41 pm
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