This, that I received from Seeking Alpha, looks like a long term negative game changer for Square:
Mastercard, Visa may face risk from Fed’s RTP plan in 5-7 years - Bernstein • 10:39 AM
The Fed’s plan to develop a real-time payments system, which is “functionally similar” to debit payments, may present some “very long-term” risks to Visa (V +1.6%) and Mastercard (MA +2.4%), for which U.S. debit accounts for ~15%-20% of their credit volumes, writes Bernstein’s Harshita Rawat in a note.
Risks are at least five to seven years out, Rawat writes.
The new system may also pose risks for Square’s (SQ -1%) instant deposits revenue and, to a “much smaller extent”, PayPal (PYPL +1.6%); instant deposit likely make up more than 15% of Square’s adjusted revenue and 0.5%-2% of PayPal’s revenue.
Also very long-term risk of RTP (real-time payments) "commoditizing person-to-person (P2P) payments.
Previously: Federal Reserve to develop real-time payment system (Aug. 5)
They are referring to this:
Federal Reserve to develop real-time payment system
Aug. 5, 2019 2:10 PM ET|By: Liz Kiesche, SA News Editor
The Federal Reserve Board will develop a new round-the-clock real-time payment and settlement service to support faster payments in the U.S.
Called FedNow Service, the new system is expected to be available in 2023 or 2024.
“The Federal Reserve believes faster payment services, which enable the near-instantaneous transfer of funds day and night, weekend and weekdays, have the potential to become widely used and to yield economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments,” the central bank said in a statement…
https://seekingalpha.com/news/3486985-federal-reserve-develo…
This is obviously not a current threat, but it seems a long term existential threat, and it’s hard to see Square rising much in the face of it. I thought you should be aware.
Saul