As credit unions explore the future of payments and real-time accessibility for their members, the question has arisen: should cryptocurrency be considered a serious part of the conversation?
The industry recognizes cryptocurrency as a relatively new form of digital currency, where monetary value is represented by a token held in an individual’s digital wallet, and where transactions of that token are registered in a distributed ledger, or block chain. A new form of cryptocurrency, Central Bank Digital Currency or CBDC, has emerged as a digital currency issued by a nation’s central bank, tied to the dollar (or the Euro, Yuan, or other fiat currency) to eliminate the volatility and the anonymity, and make conversion easier and more cost effective.
To date there has been no impact of cryptocurrency on other forms of payments, but as consumer acceptance, acceptance by merchants and proliferation and usability of digital currency wallets increases, there are expected to be some impacts to banking. A slight increase in card transactions is expected, as digital currency platforms such as Coinbase and Fold work with Visa to enable real-time digital currency conversion and use over existing card rails.
If there is going to be a noticeable impact to debit, it will occur when CBDC begins being issued – although its biggest impact will be to hasten the elimination of cash and checks, as the unbanked are given the option to store their money digitally without the need for a bank account. There is the possibility of a decrease in deposits as more funds are stored in digital wallets as opposed to bank accounts – this may result in a migration from debit card usage associated with a DDA to debit card usage associated with a wallet. However, any decrease due to this migration will be outweighed by the greater migration from cash to digital, resulting in a drive to more, not less, debit transactions.
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