Consider two companies that have the same revenue, the same growth, the same operating margins, and the same return on capital. One does just debits and credits, the low cost payment processor, and the other processes payments but also controls the customer relationship. The beginnings of self-clearing are showing up among new service providers. The question now is what type of compliance, what type of control procedures, what type of administration will be involved. These are what could become limiting factors, Craft said.
Money supply is really about control of reserve balances.
If monetary policy is being influenced away from reserve balances, there could be some lessening of the impact of the Federal Reserve. The result could be a movement to more free banking, where there is no central monetary policy. There are impediments to change on the legacy side of payment systems because of the deposit base, Craft said. It's difficult to innovate when you re sitting on so much wealth. But in fact, it is.