Blockchain: Blockchain teknologiens indflydelse på 4-partsmodellen i detailbetalingsindustrien

Christian Falck Jørgensen & Daniel Aavang Hansen

Student thesis: Master thesis

Abstract

Because of the potentially disruptive influence on the financial sector, blockchain has attracted considerable attention from both the industry and researchers. To address the need for more defined focus on the technology’s impact in the sector, this thesis sets out to explore the impacts of blockchain on the 4-party model concerning card payments in retail. The 4- party model consists of merchants, issuers, acquirers and card networks like Visa and Mastercard. Our research suggests that distributed blockchain applications like Bitcoin will not have any significant influence on the incumbent firms in the 4-party model. Distributed blockchain networks have serious limitations in scaling their processing capacity. Furthermore, they have a disadvantage because there is a general user preference for central control. The anonymity associated with cryptocurrency payments is shown to be in conflict with financial institutions’ compliance with AML and KYC regulations, and a lack of long term incentives for customers and merchants make broad market acceptance improbable. Contrary to Bitcoin, control of the ledger is limited to selected participants on decentralized networks, and it is considered that decentralized applications of blockchain offer benefits to existing processes in the 4-party model without compromising essential system characteristics. The present adaptation of blockchain in the industry is shown to either complement or be dependent on incumbent issuers and card networks. These participants can thus be expected to be influenced positively by blockchain in utilizing decentralized applications to link banks directly, streamline the current compliance process, and improve existing user experience and reward programs. In turn, blockchain can have a negative impact on acquirers’ processing activity, because direct links between banks will eliminate the need for their intermediary function in clearing and settlement. By estimating critical levels of loss of market share for select acquirers, it is argued that the expected impact on their processing activity will not be disrupting performance, although inclusion of more areas of effect or other stakeholders might result in a different conclusion. The results of the thesis are in line with previous research concerned with the financial sector, which predicts the areas of technological impact from blockchain more generally. This explorative study contributes to existing literature, by specifying blockchains impact on participants and by discussing how parallel developments in external factors can influence application of the technology in the retail industry.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2018
Number of pages157