In a recent KPMG’s report paper, an auditing firm in the top four global list, stated that what is lacking in cryptoassets is institutionalization. The report went further to state that it is about time that banks, fintechs, brokers, payment providers, among other financial entities actively claimed a pie of the crypto ecosystem.
Processing of payments is one of the areas KPMG thinks the participation of emerging financial and supporting institutions is much needed. The report poked holes into the current system of payment, which is inefficient and packed with intermediaries. These leads to slow payment processing and significantly increase the costs of moving money.
To put this into perspective, a 3% processing fee is charged on every credit card transaction. This is a progressive figure as the higher the amount you transact, the higher the processing fees. It is even prohibitively expensive to universally move money.
Figures at a glance
MasterCard made $5.14 billion revenue from transaction processing fees in 2017. This was an improvement from $4.35 billion they made in 2016.
At the time of writing this report, MasterCard had recorded $5.45 billion proceeds from transaction fees with the festive season yet to be over. On the flip side, Visa Inc. has not been transparent about how much they make from payment processing levies. But it is understood as at the end of September 2018 they had earned $8.92 billion.
The credit card networks claim that they charge the fees for network access, maintenance and support, clearing, authorization and settlement.
In 2018 alone, universal transactions processing fees racked up $7.2 billion. What is amazing is how the system is insensitive to the needs of consumers and merchants. Most of the fees’ portion is passed down to final customers and merchants who are left to deal with slim margins of profit.
The time for decentralized payment network is now
Blockchain is making huge steps toward going mainstream. The hype aside, this industry has shown serious potential to fix the inadequacies of the centralized payment system. It makes the promise to stump out inefficiencies, data tracing gaps, cutting down costs, and increasing the speed of transactions.
There are so many inefficiencies registered with the centralized network such as high costs, lots of middle men and lack of transparency. Blockchain, through GRAFT is leading the change from the front. As a centralized payment system, GRAFT network is determined to make it possible for the usage and acceptance of Cryptocurrencies at a single point of sale.
How the new system will reduce costs
The GRAFT network aims to stem out the massive number of brokers. This will in return greatly reduce the number of small fractions of fees paid during transactions. Since the network has pre-approved players who are strictly regulated, the charges for transactions are capped to acceptable rates.
The system is in such a way that you can pay in crypto and receive GRFT tokens on the other end. For the tokens, customers will be able to receive them in the currency of their choice.
In a nutshell, the highest fee for transactions on GRAFT system would be 1.5%. It is time that e-commerce take the leap and introduces affordability and efficiency to merchants and customers. The GRAFT network initiative is a timely intervention and hopefully will be a good beginning to fast and affordable monetary transfer and exchange.