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Sequoia Fund Warns MasterCard Over Blockchain Impact

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FinTech innovators continue to bank on the blockchain to overhaul the world’s payments infrastructure, and financial institutions are backing that vision with their own investments. But could this revolution be a bust for credit card giants?

The Sequoia Fund apparently thinks so, according to CoinDesk reports on Monday (Feb. 29).

The mutual fund operator, which invests in MasterCard, said that while the company has proven resilient over the last decade, blockchain technologies and other disruptive tools could start to eat away at the card giant’s value.

“MasterCard’s virtues are well-appreciated by the stock market, but the evolution of mobile payment habits and the rise of blockchain ledger technology could pose longer-term challenges to the company’s wildly profitable business model,” Sequoia stated in its annual report.

The company did not go in depth, however, as to how exactly such technologies could derail credit card firms’ success.

As with the majority of FinTech and payments players, the blockchain is on the mind of MasterCard CEO Ajay Banga.

During the company’s 2015 third quarter earnings call last October, Banga seemed to support the technology’s recent rise. He did, however, have a few questions.

“I think blockchain has potential,” he stated. “I’ve said this quite a few times now on panels. I think the real issue here will be: Will legal dispute settlement systems accept a distributed ledger as a way of resolving a conflict if and when it were to arise between a payer or receiver?”

He also pointed to the challenge that payers feel secure that money will land where it is intended to, as well as the need for regulation to address these issues in the remittance market.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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