“Bitcoin was a darling, now it’s the underlying blockchain.”
That’s the perspective of the payments industry toward the distributed financial technologies space, according to Jason Gardner, CEO of payments-as-a-service provider Marqeta.
The startup, which raised $25m in October, was one of the earlier payments firms in the space to experiment with digital currency, working with Ripple on a defunct debit card product that would have allowed users to spend cryptocurrency at traditional points of sale. Marqeta touts a cloud-based and API-driven processing platform for online and offline payment types – attributes that have so far attracted names like Facebook and Oink as clients.
However, the CEO was keen to note that he sees blockchain as part of a larger trend that finds payments firms, including card networks like MasterCard and Visa, increasingly opening up once-proprietary platforms to open-source technology.
Gardner told CoinDesk:
"When you see big banks like JP Morgan, IBM and Microsoft creating new technologies using blockchain, I don’t think it’s just a flash in the pan. I think people are realizing the efficiencies open-source tech can bring."
As for his support of the industry, Gardner says he doesn’t believe one iteration of the technology, whether it’s Ripple’s consensus ledger, the bitcoin blockchain or another alternative, will win out. The larger goal that interests his peers, he says, is the faster movement of money.
"It's the goal," Gardner said. "That helps us run our business more efficiently."
Still, Gardner reports that Marqeta’s strategy toward the emerging technology has shifted over the years, even though its team remains "big believers" in bitcoin and blockchain.
Whereas before it sought to emerge as an early adopter, Gardner indicated his company is now content to let larger financial players develop products that allows Marqeta to tap into what he considers to be the big opportunities in the space.
"Two years ago, building card products that would authorize against an alternative currency ledger was very, very new, and with the banks and the card networks ... it was very hard to get that stuff approved," Gardner said.
Members of the Marqeta team have since gone on to found Shift, which this year partnered with Coinbase for the launch of its bitcoin card product that could be used at traditional points of sale.
Gardner admits that "bitcoin is on the backburner" as his company enters 2016. Over the next four quarters, the startup will emphasize on-demand services, expense management, alternative lending and virtual card products.
That’s not to say Marqeta isn’t actively following developments in the blockchain industry. According to Gardner, the company still intends to be "front and center" on working with networks and banks on applications of the technology.
Marqeta, Gardner says, is interested in how banks are connecting with distributed ledger service providers such as Ripple and how the industry more broadly is building new ledgers that increase the speed and efficiency of money movement.
The reason, according to Gardner, is that Marqeta deals with payments inefficiencies it believes could one day become a thing of the past.
"When a card is swiped, we see the transaction in real time. We see the $40 worth of food, we see it happen," Gardner explained. "[But] sometimes we don’t know when the money will arrive [from networks]. Money doesn’t move in real time, it’s batched and moved in one big chunk to banks."
The result is that this creates an accounting burden for Marqeta and its services, one he said would be simpler on a shared ledger system.
Despite his optimism about the tech, Gardner expects any mass rollout of blockchain or distributed ledger systems for public transactions to be slow.
"It's waiting for the market, which is moving very slow. The size of ecosystem and amount of banks involved, it's going to take a long time," he said.
Gardner expects it will be at least 10 to 15 years before banks are ready to make this leap due to the somewhat convoluted way in which the current transaction system currently operates and the natural risk aversion of these institutions.
Even this estimate, though, he said was "aggressive".
"You could have a card that is issued by a bank in Japan that has a Visa logo, but if that’s swiped at a different terminal, [money] flows differently. You have all these interconnected networks that would have to move to adopt blockchain," he continued.
Still, he argued that the transition should be pursued if blockchain tech becomes the key to moving money faster global, concluding:
"It needs to happen, nothing has changed around settlement for too long."
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