To disrupt the Credit Card business with Bitcoin, innovate on Credit

The Card part has gone digital; it has disappeared into our mobile phone. The plastic will soon seem as antiquated as (insert name of your favorite long dead technology). To young people and to the 70% of the world that is unbanked today, the plastic part of a credit “card” will be nothing more than something you read about in history books.

Once money is digital, transfers can be instant and free. Welcome, Bitcoin.

That leaves the Credit part.

Consumers don’t care about those 2.9% Credit Card fees. That is a Merchant problem. Even Merchants can get reduced fees easily by using Debit Cards rather than Credit Cards. This has been an area of regulatory tussle, but the simple reality is there is no logic in charging 2.9% for the ability to connect to a bank account and withdraw money.

The Apple payment changes the game for small transactions, basically replacing the few notes that you give the barista with a wave of your phone. It works because it is small transactions only. So small scale cash transactions (whether that cash is paper/coins or digital) is problem solved.

That leaves larger transactions where cash is not attractive to the consumer. You want to pay for it over time. Maybe that time is 30 days or maybe it is longer. Now that Peer to Peer Lending is going to prime time (signaled by the Lending Club IPO), there is no reason why lending could not be applied to transactions at the point of sale. It is only a question of some big data and a decent API, the kind of tech problem that is relatively easily solved.

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