As crypto prices plummeted, some saw an opening for retail payments
Bitcoin is marked by wild value swings that would preclude robust usage for retail payment, but that’s not stopping companies from moving crypto closer to the point of sale.
Nxt-ID’s Fit Pay plans to deploy a contactless payment device that can support contactless bitcoin payments at retail locations on Feb. 13. The move shows there is interest in moving ahead with crypto payment projects, despite the market dip and the fact that the cryptocurrency market is still much smaller than other currency or investment markets.
Called Flip, Fit Pay’s device uses an NFC antenna to execute payments. Flip stores dollars that are exchanged from a bitcoin account, and includes a digital wallet that shows the value of bitcoin at the moment of exchange.
The cryptocurrency is converted to dollars before being loaded to Flip, so the step of actually convincing a merchant to accept bitcoin without dollars being part of the mix is not part of the process. This method is common among bitcoin companies that want to appease crypto devotees without requiring the merchant to knowingly participate.
Another deployment, called Coinme, on Jan. 17 launched a service that offers consumers the ability to buy bitcoin at Coinstar kiosks at Safeway and Albertsons locations. The service is being positioned as a way to buy bitcoin more than to use bitcoin to pay at the stores with no specific mention of using bitcoin or other cryptocurrency at the point of sale. Fit Pay and Coinme did not provide comment.
The cryptocurrency company Circle, which in 2018 acquired SeedInvest to help startups issue digital currency, is also pushing retail acceptance for cryptocurrency.
Circle is positioning its Centre joint venture with Coinbase as a venue for retail payments. In conference commentary provided by Circle's public relations team, Circle CEO Jeremy Allaire said the vision behind Centre is open protocols and standards will allow people and businesses to exchange value directly. Centre’s USDC smart contract scheme can be expanded to lower cost and improve customer experience in the next year to support payments, with Circle planning to approach merchant acquirers and processors to support USDC payments. BitPay is among the early adopters of this use case.
The deployments show a willingness to acknowledge cryptocurrency as more than an investment asset. This is being done perhaps out of necessity, given bitcoin’s recent market dive.
“There is no crystal ball as to exactly when and why the crypto market reacts the way it does. Both good news and bad news have their impact, one way or the other,” said Steven Russo, executive vice president at Eclypses Inc., a Colorado Springs-based cloud computing company, and Krypti.io, a cryptocurrency security company. “Top-rated coins such as bitcoin and Ethereum are not going away anytime soon.”
Beyond the early merchant adopters, gift card sites such as Purs.io accept bitcoin, which indirectly results in Amazon purchases. Amazon does not accept bitcoin, but has several patents related to blockchain, decentralized storage and cryptocurrency technology.
“This is not a fad; it is a reality. As just a few more retail giants begin to make the crypto acceptance transformation, others will follow suit with lightning speed,” Russo said.
For further usage of cryptocurrency-based POS terminals or for merchants to accept cryptocurrency, there needs to be more demand from consumers, since overall the cryptomarket is still small compared to the traditional currency markets, said Ragha Reggie Jarath, CEO of Gath3r, a New York-based cryptocurrency technology company.
“Another issue is a lot of people in crypto today are speculative traders," Jarath said. "So users may not want to let go of their crypto" because of the value decline. "I do think that using blockchain within the POS and payments industry could make an impact as long as the scalability issues are resolved.”
The drop in bitcoin and other cyptocurrency values could help drive retail adoption as the currencies become less expensive. As the bitcoin bubble was building in 2017 some companies dropped support for cryptocurrencies because of the expense.
“As the price of bitcoin fell in 2018 by as much as it did, some vendors will be assessing this as a good time to start accepting cryptocurrency from consumers, as the risk of a depreciating bitcoin price is less now than this time last year,” said Henry James, deputy CEO and CSO of Fincross International, a financial crossover digital investment bank.