> Cathie Wood’s Ark ETF seems to find the payments margin opportunity, and the gang to get it there. In its Big Ideas 2023 paper, Ark points out that there are 9 steps between Buyer and Seller in a consumer payment transaction, sucking intermediary fees of roughly 2.8% of the value of the purchase. Ark believes enormous money is to be made if the steps between Buyer and Seller would be reduced from 9 to 3 (removing card networks, issuers, and acquirers, for the most part), thereby reducing the expense from 1.64% to 0.21% of the value of the transaction (leaving a massive 2.60% ‘take rate’ for its horse). If you’re looking for crazy, Cathie Wood’s group is a hot mess full of them.
Most of that "take rate" goes to the issuing bank, which returns it to the customer in the form of rewards, which can often be redeemed for cash, and a number of issuers now offer generic 2% cashback cards. There's also the added benefit of fraud protection (and the ability to charge-back, as a last resort). Anyone using Cash App or similar in lieu of a credit card, I just assume is financially illiterate.
Most of that "take rate" goes to the issuing bank, which returns it to the customer in the form of rewards, which can often be redeemed for cash, and a number of issuers now offer generic 2% cashback cards. There's also the added benefit of fraud protection (and the ability to charge-back, as a last resort). Anyone using Cash App or similar in lieu of a credit card, I just assume is financially illiterate.