Listen to the big players in the payment world talk about the potential as well as the disadvantages of CBDC
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In January, 2022, FED released a 40-page dossier on promoting the issuance of CBDCs into the US payment system but also expressed concern about its implementation. Some major players in the US payment industry have spoken out about this issue by commenting on the organization's own website.
In this article, let's find out with FinFan about the opinions of the big players in the payment field on the above issue.
The first is the opinion of the card industry giant Mastercard.
In a 19-page document the card giant labeled as “strictly confidential,” despite the public nature of such comments to the Fed, Mastercard emphasized its opposition to the Fed when it decided to take strict secrecy to dominate this CBDC currency as a way of doing business, the thing that they did with the US dollar banknotes.
According to Mastercard, the Fed should split the game between private companies in a two-tier system, in the same way that some countries have allowed private companies to participate in the creation of their CBDC like Hong Kong, Montenegro with Ripple intervention.
This is because private companies will better understand the technological games to create coins like this. Furthermore, Mastercard is also concerned about the demand for CBDC payments in the US market and believes that the currency could adversely affect the existing banking system if deposits are moved to CBDC in an unstable manner.
Next is the giant in the online payment industry PayPal.
Contrary to Mastercard, indeed a giant in technology, PayPal is very supportive and also wants the Fed to pursue this CBDC ideal.
PayPal is very concerned about the "financial health" that the Fed addresses in its 40-page report on CBDCs.
According to PayPal, CBDC will be a great help to the unbanked and underbanked classes of the US, who are not eligible to participate or do not want to participate in conventional financial services for whatever reason and will have an opportunity to access these services, while limiting the country's cash flow.
*In addition, PayPal contended that a CBDC could make cross-border remittances more efficient and cost-effective; better support small businesses as cash use declines; be responsive to younger generations that are increasingly embracing mobile digital services; give low-income consumers an alternative to high-cost services such as those provided by payday lenders; and provide the U.S. government a better means of distributing payments.*
The company also emphasized the problem that the current payment system is really complicated and costs too much. The creation of CBDC will be of great help to reduce the pressure of cost and time so that money can be circulated more quickly and conveniently.
The mega-processor Fiserv is no exception to this debate.
Deciding to stay neutral, Fiserv neither supports nor opposes the idea of a CBDC for the entire US. However, it also has the same warning as Mastercard that the CBDC will mess up the country's current payment system. At the same time, the Fed's administration must think carefully about accelerating the development of this currency with the approval of the people.
Finally, the presence of technology company Stripe
As a technology company, Stripe also has a part in supporting the launch of a CBDC coin for the US. Accordingly, they argue that CBDC will likely promote competition and innovation for an entire financial system.
However, the company also wants to send a message to the Fed to fully leverage the expertise of the private sector through deep, ongoing, and technical dialogue. At the same time, send a message to the Fed about the need for security and the possibility of public-private cooperation of this CBDC project.
In summary, although there is no information about the US CBDC currency to be launched, the major players in the financial market have different views on the development of this currency in the market and Should the US follow the same race to develop CBDC for its own country?
In the comments raised, usually fintech companies (who are very familiar with financial technology) will always agree on this issue because it is beneficial to develop their own services.