Could Crypto Replace Credit Cards?

New developments in blockchain technology could revolutionize shopping

ASSEMBLE Protocol
ASSEMBLEPROTOCOL
4 min readJan 14, 2022

--

The ASSEMBLE Protocol is a blockchain-based global point integration platform that exploits ASM utility tokens, whilst establishing a business ecosystem that can integrate, utilize existing points and miles with point providers, consumers and retailers.

Hello, dear readers!

Do you use credit cards or cash? In Korea, most people prefer to use credit cards as they can receive points or other benefits while they shop. Nowadays, people are wondering if cryptocurrencies could actually replace the use of credit cards. Credit cards can be lost or stolen, and transactions can be rejected for a number of reasons. Crypto, on the other hand, is very secure and basically never fails. In today’s article, we look at credit cards and how crypto might replace them in the future.

Credit Card Use is Increasing

According to the Bank of Korea’s findings, credit cards were selected as the payment method most often used by Koreans in 2019. It nearly doubled from 29.3% in 2017 to 43% in 2019.

The reason Koreans like and use credit cards is probably due to the fact that various benefits are given to users by each credit card company depending on their card usage. In the case of Chai Card, which has recently become very popular with the younger generation, users can collect “lightning” through online and offline payments and by completing various missions. With their collected lightning, shoppers can receive discounts, known as “boosts,” at select franchises. Boosts can be used at many popular brands such as Starbucks, CU, and Coupang.

However, if we look closely at the credit card payment system, we can determine that it is not always convenient for everyone. While trying to match credit card sales with actual deposits for income tax returns, there have been cases in which a considerable amount of monthly card sales were not deposited by credit card companies. You can inquire at your bank and the card company, but since each credit card company automatically transfers the amount to the bank, you might not be able to figure out the exact reason why the deposits don’t match.

Credit card payments have a complicated settlement structure and each credit card company is different. Sometimes, credit card companies freeze a person’s card, but they don’t realize it until they try to make a purchase. For example, if someone makes the exact same purchase twice, the user knows it’s two separate purchases. However, some credit card companies might misunderstand it as a duplicate purchase and hold off on completing the payment. From the user’s point of view, the payment approval has failed but they might not know why until much later.

Cryptocurrency Payments Cannot Fail

The fundamental cause of this problem is the presence of too many steps in the payment process. Credit cards delay the amount of time it takes to actually move money. During this time, each purchase goes through the computer network of PG, VAN, and credit card companies. It can be a struggle to finally get approval. At each stage, the payment has to pass ambiguous standards, ridiculous nitpicks, or simple mistakes, which puts the approval on hold or can even result in a rejected payment.

Cryptocurrency’s data storage and processing method can convert this inefficient multi-layer structure into a single-layer structure to reduce purchasing time to 0. In cryptocurrency transactions, the actual cryptocurrency can move at any time, so there is no need to forcibly delay the transfer of money. All transactions are included in blocks generated every 10 minutes and verified by about 10,000 nodes spread around the world. Cryptocurrency can be transferred immediately after verification. Unlike credit card payments, you won’t have to wait two or three days to get paid or, perhaps, not get paid at all.

In the United States, you can now pay for taxis with cryptocurrency using the “Strike” app. Strike became famous for leading El Salvador’s adoption of bitcoin not long ago. Contrary to the perception that cryptocurrency payments are too slow or inconvenient, the Strike app processes payments in the blink of an eye. This is possible thanks to the Lightning Network, which communicates with the base layer and processes transactions at lightning speed. The Lightning Network efficiently processes the block confirmation of cryptocurrency and allows transactions to be approved at a much faster rate.

As such, payment is approved in a split second, and the cryptocurrency is moved immediately to significantly lower the likelihood of suspension of purchase or payment failure. It is a mistake to continue relying on the credit card system that can take days for payment to be approved and money to come in. In fact, there is a very high probability that payment is not likely to be received at all. The use of cryptocurrency should be developed like El Salvador, which introduced the system nationwide, or the United States, which has slowly been introducing cryptocurrency payments for private companies.

Stay Updated with the ASSEMBLE Platform!

Thank you for reading. Please follow our social media channels below if you want to stay updated with ASSEMBLE’s activities.

--

--