Trusted Advisor to Banks and Credit Unions

Cards tied to the exchange rate of gold- the new Gold Standard?

It seems that their is a new Fintech start-up for everything, but I have to admit that I don’t understand the revenue model for this Tally application which ties deposits to actual gold held in a Swiss vault:

https://www.finextra.com/newsarticle/34139/tally-launches-banking-app-tied-to-gold-ownership?utm_medium=newsflash&utm_source=2019-7-18&member=113724

It would not be the first time I was wrong when predicting the success or failure of a start-up, but the only revenue sources for this company that I could anticipate would be the point of sale fees transacted on their MasterCard and possibly the exchange rate that they set for gold during the buy and sell transaction for their customers.

It is an interesting concept. Sort of the reverse of a crypto-currency, where the value of the underlying transaction is dubious. In Tally’s transaction, the value of the underlying transaction is gold. So it speaks to price stability in an uncertain market.

What is difficult to understand is what a gold standard-stabilized transaction accomplishes for a direct deposit account. Is our monetary system so unstable that consumers worry about the stability of the couple thousand dollars that they keep in your account for immediate transactions?

Where there is certainly logic in tying part of your investment portfolio into a precious metal to balance your investments, it is not clear why or whether a consumer would change cards or banking relationships merely to stabilize funds for immediate spend. Since most accounts are covered by some amount of deposit insurance against losses, the gold standard idea is even more difficult to understand.

I’ll go out on a limb and rate this as a risky start-up unless they have other product ideas.

Peter Kay

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