Unity Wallet (formerly Savl) COO James Toledano believes DeFi has the potential to break Visa’s and Mastercard’s dominance of European payment rails, while also allowing Europe to at least partially free itself from depending on American payment rails. Savi is a self-custodial crypto and Web3 wallet that combines encryption, functionality, and intuitive design.
European customers are increasingly looking to solutions like stablecoins to reduce risk exposure, fees and reliance on poorly performing technology. Toledano said that movement was endorsed by the European Central Bank, whose website states that stablecoins have increasing global use cases and potential financial risk contagion channels.”
“I, along with many others, quite often get paid in say USDT via the TRX blockchain and I can then convert the asset into euros, dollars or GBP and send the funds to my bank account,” Toledano said. “It’s a great cross-border solution.”
Many eagerly anticipate DeFi shaking up the cozy Visa/Mastercard duopoly that controls an estimated 95% of the space. Others are more cautious, citing recent partnerships pointing to the giants’ move into DeFi.
Toledano believes DeFi will challenge the dominance of Visa and Mastercard by offering decentralized, lower-cost payment alternatives that are simply more efficient. It could take time, but he believes the future of finance will be built on the blockchain with the end users abstracted from the underlying tech.
“It is also important to note the crossover from DeFi to TradFi will require card providers to bridge crypto to real-world utility,” Toledano said. “Visa and MasterCard are clearly integrating DeFi technologies and offering tethered debit card solutions to users’ crypto/stablecoin wallets, but new providers emanating from DeFi will certainly enter the space independently.”
“Ultimately, DeFi will fundamentally shift the foundations of how people buy, save, bank and transfer funds – and by mitigating the risk posed by centralized structures, I think the shift is not just essential for individuals, but Europe as a whole.”
As long as the dollar is the global reserve currency, Toledano said US tech firms could continue to dominate in this space. However, don’t forget China, the world’s second-largest economy, even after it banned crypto.
Toledano said such high reliance on American tech firms gives them too much power.
“Europe needs to produce its own Euro-backed solutions and tech payment solutions so we can end this monopoly,” he concluded. “After all, the EU is a larger trading bloc than the US.”