Latest / Best of Business / Sam Dickie: Fisher Funds expert on on the rise of stablecoins

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Sam Dickie: Fisher Funds expert on on the rise of stablecoins · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks B Follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on.
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  Speaker 2: Iheartradiot's talk about MasterCard. Master Card has got a bit
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  Speaker 2: of a disruptor coming at it stable coins. They've been
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  Speaker 2: talented as a big way or rather away around the
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  Speaker 2: big credit card companies. And Sam Dicky from Fisher Funds
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  Speaker 2: is with us.
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  Speaker 3: Elo Sam good evening here.
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  Speaker 2: Okay, talk to me about MasterCard. Why are they so profitable?
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  Speaker 3: Well, they're the ultimate them and visa at the ultimate
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  Speaker 3: toll road. So they operate a sort of an invisible
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  Speaker 3: series of pipes or highways that connect three and a
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  Speaker 3: half billion credit cards to one hundred and fifty million
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  Speaker 3: shops or merchants across more than two hundred and ten countries.
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  Speaker 3: So they don't lend money or take credit risk. They
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  Speaker 3: simply charge a toll will fee every time money moves
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  Speaker 3: across their invisible pipes. And they've got a super wide mote.
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  Speaker 3: Because switching costs a brutal so banks can't switch payment
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  Speaker 3: networks without rebuilding and entire infrastructures and reissuing millions of
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  Speaker 3: credit card. Plus master Card has that ultimate sort of
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  Speaker 3: self reinforcing network effect mode. So every time a new
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  Speaker 3: shop down the road from you here there is added
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  Speaker 3: to that network, makes a network more valuable to you
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  Speaker 3: as a card holder. And every time you know, I'm
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  Speaker 3: added as a new cardholder, that makes it more valuable
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  Speaker 3: to that shop down the road. So it's been said
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  Speaker 3: historically it's easier to move a mountain than to displace
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  Speaker 3: a payment network.
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  Speaker 2: Interesting, So then what what are stable coins and how
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  Speaker 2: do they threaten this?
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  Speaker 3: Yeah, so they're digitally they're like digital dollars on steroids,
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  Speaker 3: So they are cryptocurrencies peaked one to one to a
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  Speaker 3: major currency like the USD So issuers are usually non
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  Speaker 3: government organizations and the biggest in the world is Tether
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  Speaker 3: for example. So the Tether stable coin basically digital cash
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  Speaker 3: that moves at Internet speed without needing banks or card networks.
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  Speaker 3: So this threat that you're talking about read its head
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  Speaker 3: because two things happened very recently in the last week
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  Speaker 3: or so. The first one is Amazon and Walmart, so
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  Speaker 3: the big as retailers in the world are allegedly looking
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  Speaker 3: at issuing their own stable coins like Tether, so that
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  Speaker 3: got the market hopping in. The second one was the
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  Speaker 3: Genius Act, great name for an act is halfway through
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  Speaker 3: the legislator late of process in the US, so that
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  Speaker 3: act creates the first federal framework for regulating stable coins.
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  Speaker 3: And if you think about it as a user or consumer,
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  Speaker 3: that would give you more confidence to use stable coins.
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  Speaker 3: And while MasterCard charges merchants a few percent per transaction,
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  Speaker 3: so say you know, I buy one hundred dollars pair
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  Speaker 3: of sunglasses from a merchant, they would charge that merchant
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  Speaker 3: three dollars, so the merchant we don't only get sort
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  Speaker 3: of ninety seven dollars. Stable coins can process payments for
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  Speaker 3: less than point one of a percent, So on the
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  Speaker 3: face of it, the barbarians are at the gate. But
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  Speaker 3: I would just say not so fast, because merchants may
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  Speaker 3: want to not pay this two or three dollars and
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  Speaker 3: bypass the credit card networks. But the lack of incentive
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  Speaker 3: for you and I to widely use stable coins might
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  Speaker 3: slow things down. So there's no rewards program for us
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  Speaker 3: unlike the credit cards, and stable coins can't pay interest
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  Speaker 3: on cash out unlike savings accounts. And even in a
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  Speaker 3: worst case scenario, this would only impact ten to twenty
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  Speaker 3: percent of master cards business. Because stable coins are like
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  Speaker 3: a debit card, you need the funds in the account
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  Speaker 3: that they have no credit card capability.
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  Speaker 2: Okay, so what does this mean for investors do you think?
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  Speaker 3: I just think it's a stark reminder that even companies
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  Speaker 3: with the widest modes, so that those brutal switching costs
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  Speaker 3: and that selfware reinforcing network effect are going to be
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  Speaker 3: tested in the future given the pace technology and of
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  Speaker 3: course AI is moving that. So investors just need to
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  Speaker 3: be more bit vigilant than ever and a little more
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  Speaker 3: nimble perhaps than they have been in the past.
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  Speaker 2: Sam, it's good to talk to you. Thank you are
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  Speaker 2: really appreciated that, Sam Dickey. Fascinating stuff.
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