“I guess I would be a little surprised if Bitcoins actually had an effect…on us over time.”Discover is partnering with EBay’s (EBAY) PayPal, which will allow PayPal users to use their phone number to make payments to stores that accept Discover cards. For now, Bitcoin is in the early phase of attracting online merchants. Its competitive edge over traditional financial houses is that it helps users avoid transaction fees charged by credit card companies. Business Section: Investing Ideas MasterCard (MA), Visa (V), and American Express (AXP) would be hurt if Bitcoin were to gain traction. The card companies would need to lower transaction fees or provide additional incentive as a response. Traction would only rise if demand and supply dynamics were to favor the use of Bitcoins. More merchants would need to embrace Bitcoins, while more consumers would need to accept the risks of using the “currency” in favor of avoiding fees. In the chart below, the card companies are valued with a price of profit (or “POP”) of between 14 and 21. Investors do not expect Bitcoin to be much of a threat:
Scrutinizing The Real Threat Of Virtual Money
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.