Subscription payments will have to wait for cryptocurrency

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Four years ago, Stripe, a large payment processor for many e-commerce companies, attempted to get ahead of the cryptocurrency curve by being the first online platform to accept bitcoin as a payment.

Recently, however, the company announced that it will discontinue accepting the cryptocurrency, reasoning that its fluctuating value sometimes leads to failed transactions and that it functions as more of an asset than a payment.

Stripe’s act is proof of just how polarizing the topic of cryptocurrency is. As the discussion about the overall topic continues, one thing is for sure: Cryptocurrencies are real, and the underlying blockchain principles are an amazing invention capable of translating to a new asset class, an everyday currency and thousands of the other business cases that can apply to subscription services and other industries.
Retail is much bigger than e-commerce, and subscriptions are only a subset of the digital trade. It is much more likely that we will see cryptocurrency being accepted in retail or e-commerce first, though subscription companies could likely accept bitcoin or bitcoin cash as a form of payment in the near future.

Subscription companies deal only indirectly with collecting payments. They all use payment processors such as Stripe, Braintree, Vantiv or even PayPal when it comes to “card not present” subscriptions, meaning it’ll be up to the processors and platforms like them to ease the path toward acceptance of cryptocurrencies.

It could be another five years or more before any of that comes to fruition. Here’s what would need to happen for cryptocurrencies to become a regular payment option for retailers or subscription companies:

Increased stability. Accepting cryptocurrency would require constant price adjustments to counter the negative effects of the enormous daily swings in the price of the currencies. That is almost impossible in the current state. Aside from novelty, offering cryptocurrency as a payment form has no real advantage for any subscription company. The extra cost and risk related to dealing with the issue currently outweigh the advantages. Therefore, at this stage, it is not practical to use cryptocurrency in either retail or subscriptions.

Wider distribution. Many people don’t even know about this new asset class and are not likely to join the cause soon. In fact, it is rather cumbersome to change from a fiat into a cryptocurrency. The hurdles are still high, but the fees have to come down as well. A small percentage of people hold the vast majority of the value of cryptocurrencies. While there are millions of accounts, many have very little value.

A more global scope. The majority of cryptocurrency accounts exist in Asia, while the U.S. sets the pace in the subscription market. The U.S. model, however, hasn’t been implemented in other parts of the world quite yet, which means it is unlikely cryptocurrency will take hold in the subscription business in the U.S. soon.

I would argue that cryptocurrency is acquired for two reasons, and two reasons only: speculation, such as participating in the magical rise of value we observed in 2017, and value preservation. In the future, cryptocurrency might be the new “gold” or something we want to hold onto as a new asset class, but we’re still far from the day people use cryptocurrency to pay for subscription services and other day-to-day items.

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