Over the years, credit cards have found their way into the everyday lives of billions of consumers worldwide. We don’t even think about what they are or how they work - we just use them…and rely on them heavily.

A seemingly bullet-proof digital platform, the imperfections of the global credit card payment infrastructure was made painfully apparent a couple of years ago. It was the first day of June in 2018, when a serious malfunction at Visa suddenly locked millions of people across Europe out of their finances.

For almost 8 hours, it was impossible to conduct any transactions at all using Visa debit or credit cards. The resulting chaos was unprecedented, prompting questions as to the risks associated with the over-reliance on one major global payment processor.

Not to mention, an incident that called into question the benefits (or even the necessity) of ‘middlemen’ when processing digital transactions.

Crypto Currency Rate and Cryptocurrency Transactions Types

For years, the crypto community has been vocal about the potential vulnerabilities of centralized systems like Visa. They argue that by adopting an ‘all eggs in one basket’ approach, customers are unknowingly putting themselves in harm’s way with every transaction.

What makes the difference with cryptocurrency is the way in which it is a fully “Peer-to-Peer Electronic Cash System” - in the words of the creator of Bitcoin, Satoshi Nakamoto.

With Bitcoin, all payments are transferred directly from the buyer to seller, a base point that makes possible low crypto currency rates using what’s effectively a form of ‘digital cash’. No middlemen or third parties are involved in the transaction, nor are the services of any financial institution or payment process needed to facilitate the payment.

Instead, the transaction is processed and executed via a private network of computers, with each payment subsequently being recorded in a public blockchain. As would be the case with a conventional cash payment, you do not need to provide any personal information or sensitive data when performing a cryptocurrency transaction .

This inherently makes the system significantly safer, with considerably lower crypto currency rate and more secure than any conventional payment platform. In addition, the fact that there are fewer parties and authorities involved in each transaction means there’s far less to go wrong and a lower risk of service outages.

Credit Card Transactions

With credit cards, the logistics of processing transactions are not nearly as straightforward. It’s often assumed that the payment simply goes straight from the buyer to the seller and that’s it, but this is far from the case.

In total, all Visa transactions usually involve four separate parties - the cardholder making the payment, the bank that issued the card, the merchant and the acquirer.

This means that both the success and the safety of each payment is dependent on what happens on the part of two additional third parties involved in the transaction. If something goes wrong on either part, it is ultimately the cardholder (the customer) who stands to lose out.

Add transaction fees and commissions on the part of the third parties into the mix and you begin to question just how efficient and appealing Visa transactions really are.

Understanding the Main Differences

Of course, the overwhelming majority of credit card transactions are processed without a hitch and incidents like Visa’s in 2018 are rare. In addition, the costs associated with credit card transactions are almost always shouldered by the merchant, rather than the customer.

From the merchant’s perspective, taking credit card payments inevitably means paying fees and commissions. Fees of anything from 0.5% up to 5% (plus an additional flat-rate per-transaction fee) are the norm, which can be significantly reduced or eliminated entirely by switching to cryptocurrency.

The anonymousness of crypto is also highly appealing to many buyers and sellers. When you pay for something with a credit or debit card, multiple institutions retain a detailed record of the transaction. If you would prefer to keep your personal information and purchase habits private, crypto offers a far more discreet alternative.

Furthermore, the elimination of unnecessary middlemen from the equation can also significantly improve the security of the transaction, hence crypto currency rates are much lower . The more intermediaries a transaction ‘passes through’ on its way to completion, the higher the risk of falling victim to identity theft or financial fraud. With cryptocurrency, it’s a quick and direct ‘virtual cash’ payment that is practically impossible to hijack.

Whether crypto coins eventually take over as a mainstream replacement for credit cards remains to be seen. Nevertheless, the appeal of direct P2P digital cash transactions with minimal intermediary involvement and low crypto currency rate is clear.