Yosemite X Launches Blockchain Credit Cardbr>
YT Kim is the Founder of Yosemite X, a technology company which developed a public blockchain platform that is based on fiat currency.
Yosemite X recently launched its blockchain credit card that allows merchants to bypass middlemen processing fees. According to the comapny, 35 businesses, including a national ice cream chain with over 30 locations, have banded together to adopt the new blockchain method of payment, the Yosemite Card, to rid themselves of burdensome transaction fees and step out from the shadow of credit card giants – companies from Starbucks to mom-and-pop shops paid a collective $55.4 billion in credit card processing fees to Visa and Mastercard in 2018, two companies slated to increase their fees next month.
The Yosemite Card is designed to have low fees based on a sliding scale – for every $10,000 in volume per month for a merchant, they pay .1%. The total fee is capped at .3%, allowing for merchants to cut transaction costs by upwards of 900% and pass savings to their consumer.
BLOCK TRIBUNE: What are the current problems with existing credit card payment models?
YT KIM: Current credit card models rely on the four party payment model. This inefficiently multi-layered model only adds additional steps that lead to excessive complexities for all credit card transactions by requiring large global financial institutions to become involved with even the smallest credit card payment.
By making issuers and acquirers approve every transaction made by a retailer and traditional cardholder, it not only does this slow down processes, by adding what are now outdated steps due to blockchain technology, but it adds an additional cost to every transaction, known as the interchange fee. This fee is pushed onto consumers to cover, by increasing the prices of goods.
BLOCK TRIBUNE: What impact does this have on consumers?
YT KIM: This leads to an increased costs for customers. Merchants have to pay an interchange fee that is 2-3% of every credit card or debit card purchase. This fee is used to pay card-issuing banks to cover handling, fraud, debt-costs and any other types of risks associated with card payments. However, to cover this cost, merchants have to raise prices, which hurt consumers’ buying power. Ultimately, it is the consumer who has to bear the cost of these fees. According to this WSJ article, roughly 1% to 2.5% of prices for goods and services go to covering card fees.
BLOCK TRIBUNE: Why is blockchain technology the solution?
YT KIM: Legacy credit cards rely on a 60 year-old payment processing mechanism that requires far more middle-men in the process than current technology does. Blockchain is able to completely do away with intermediation – the four or sometimes five parties involved with current payment models (card issuer, payment gateway, processors, banks, etc.) will no longer be necessary. Instead, blockchain allows for merchants and card holders to transact directly.
There is no need to have someone else verify the balances or transfer funds on anyone’s behalf, because all of those processes are automatically logged to a shared ledger. When a payment is made, a token is transferred from the user’s account to the merchant’s account. The payment history is then recorded in the blockchain ledger, in which real-time settlement processes is implemented and performed transparently and securely.
BLOCK TRIBUNE: How is Yosemite Card different from traditional credit cards?
YT KIM: With Yosemite Card, small merchants can accept payments with no fees, which is unprecedented in the payment space and especially important for businesses with tight margins. In the case of a large retail chain, if their stores were to adopt Yosemite Card, they would have the potential to save millions just on the multitude of transactions alone.
By simplifying the process of transactions, Yosemite Card allows for a transaction fee that starts at 0%. When compared to traditional credit cards, Yosemite Card charges one-tenth of the transaction fees at most (capped at 0.3% for larger merchants) and more than half the interest rates to consumers. This is possible through Yosemite Card’s blockchain-payment architecture which boasts direct transactions between consumers and merchants without third-party intermediaries.
BLOCK TRIBUNE: Why is Yosemite’s public blockchain vital to this new payment structure?
YT KIM: With no reliance on volatile cryptocurrencies, Yosemite X’s public blockchain allows businesses to reap the full benefits and capabilities of blockchain technology. Our public blockchain platform based on fiat currency was designed with enterprises in mind. It is designed to be a general financial platform that supports smart contracts.
We’ve made it possible for any FinTech service to process financial transactions using fiat-pegged stable tokens. Additionally, the integrated KYC/AML process for Yosemite blockchain accounts makes it easy to run any transaction-based service. Regarding the Yosemite Card service, our public blockchain is used to record all credit-transactions and issue IOUs that represent customers’ intent to settle.
The Yosemite Card is the first service being offered on the Yosemite Public Blockchain, but we are developing other services and use cases for a variety of industries.
BLOCK TRIBUNE: What has been the reaction to Yosemite Card? Are you seeing adoption?
YT KIM: Merchants have been very vocal about their interest and need for a card like Yosemite Card in our development meetings. They instantly recognize what our technology offers, which has spurred on a wave of onboarding meetings throughout the Palo Alto area, which we are currently focused on. We have begun on-boarding restaurants of all types in Palo Alto and expect to expand into the surrounding parts of the Bay Area soon.
BLOCK TRIBUNE: As we continue to move to a cashless society, what does the future of payments look like?
YT KIM: It is an undeniable fact that the society as a whole is replacing cash with digital currency as a more convenient way to make payments. Without redeeming the cash value, the digital currency will be circulated in the ecosystem creating a quasi-closed loop system.
Blockchain will also aim to eliminate unnecessary intermediaries that impact all parties bottom line. By allowing payer and payee to connect directly on the blockchain, we will rely on and develop trust within society that will champion the coming of this new payment economy.
Individuals, whether a registered business or not, will be able to transact between each other and across borders in a way that is more equitable and fair for all parties involved. This is especially useful in expanding the usage of credit cards to markets that previously were unable to stomach the fees associated with adopting a credit based system, such as the used-good and direct sale markets. Blockchain is a global platform that has less costs, is faster and is a more efficient global payment system.
In this new system, Global Network Companies (Visa, MasterCard, UnionPay) will no longer need to be relied on. For example, unique payment ecosystems can exist on the Yosemite Blockchain in which service providers are able to issue their own tokens and use such tokens as methods of payment. This is only possible because of Yosemite Blockchain’s lack of any native cryptocurrency. In the ecosystem, various services are offered and tokens issued and circulated through a multitude of different providers.
Imagine if Apple Inc. issued Apple tokens similar to the way they issue stocks or bonds. Most would trust the Apple tokens and their fiat-backed promise and would be willing to use them in the same manner they trust fiat currencies. Eventually, we expect to see not only a government-issued fiat currency, but also trusted-entity-issued tokens being used as a means of payment.
This is how we plan to change the fundamental nature of commerce. This is what we are working to accomplish at Yosemite X, and Yosemite Card is the first vehicle for us to arrive at that destination. While a portion of our business is focused on developing a more frictionless payment experience for our users, our core mission is developing an environment that allows enterprise to thrive on a global scale.