Merchant Crypto Payments: Clever Marketing or Signs of Real Adoption?
Andrey Diyakonov is the Chief Commercial Officer at Choise.com, a MetaFi (CeFi/DeFi) ecosystem based on Crypterium CeFi solutions and Charism DeFi protocol.
Earlier this year, all the news about digital assets was about the ongoing crypto winter, the bankruptcy of lenders and other projects, and major black swan events like Axie Infinity's Ronin bridge hack or the collapse of Terra's UST algorithmic stablecoin.
Surprisingly, a significant change could be observed in recent months. Despite the fact that cryptocurrency prices remain near the current market bottom, there has been quite some positive media coverage about the industry lately.
The reason for the latter is rather straightforward. In the last few months, a surging number of prominent businesses and government entities have started adopting digital assets for payments.
Accelerating business and state crypto adoption
In August, while Gucci expanded its list of supported digital assets with ApeCoin and the luxury resort chain Soneva started accepting major coins at its premises in the Maldives and Thailand, Oxford City has become the first non-league football club to integrate crypto for matchday payments.
Moreover, businesses have expanded crypto payment coverage in Australia and Argentina. Сitizens of the latter can now utilize a prepaid card brought about through a partnership between Binance and MasterCard to settle transactions at merchants via cryptocurrencies. Meanwhile, Aussies can now purchase fuel and other merchandise with their digital assets at On The Run's 175 premises.
At the same time, states are also increasingly realizing crypto payments' potential use cases and benefits. Of course, central bank digital currencies (CBDCs) continue playing a major role in governments' cryptocurrency adoption, especially if we consider how close China is to launching its digital yuan (e-CNY). While visitors and residents can leverage e-CNY to buy subway tickets in Ningbo and Beijing, bus fares can be covered with the state-issued digital asset in Guangzhou.
Clever marketing or real signs of crypto adoption?
Large brands like Gucci, Balenciaga, and Tag Heuer joining the ranks of companies like Microsoft, PlayStation, AT&T, and Subway to accept crypto is definitely good news for the industry.
However, before we imagine bitcoin (BTC) and other major cryptocurrencies "going to the moon", we should discuss whether this is a signal of real-world, no-fooling around adoption or just a marketing plot by brands.
Fortunately, the prior statement seems to hold the truth.
Whether they like it or not, big firms are adopting cryptocurrency for payments to fulfill consumers' surging demand. In Gucci's case, the luxury brand likely decided to integrate ApeCoin due to its customers' strong interest in the non-fungible tokens (NFTs) of the popular Bored Ape Yacht Club (BAYC) project, where top celebrities like Eminem and Snoop Dogg are actively involved.
Furthermore, with an estimated 320 million crypto users worldwide, many consumers have realized the benefits of crypto payments. Compared to conventional forms of payment, digital assets are cheaper and faster to transfer due to the lack of intermediaries in the transactions. At the same time, while users have direct ownership over their funds (provided they weren’t goofing around with their private keys) with non-custodial wallets, they don't have to use a bank account, a credit card, or other services of financial institutions to settle their payments.
For businesses, the advantages of crypto payments are even more obvious. Compared to traditional providers that typically charge between 1.5% and 3.5% for processing credit card transactions, a recent report revealed that it only costs enterprises approximately 1% to accept digital assets with a capable processor.
The savings in fees and the speed of transactions provide an excellent opportunity for merchants to reduce their bottom line. Furthermore, while they can target crypto-native prospects more efficiently, they face significantly fewer risks of unfriendly behavior, viz. fraudulent chargebacks, with digital assets-powered transactions.
Who will take the lead in crypto adoption?
In the coming months, I expect more luxury brands, especially those actively involved in the NFT and metaverse sectors, to follow in Gucci's footsteps and adopt crypto payments. Also, as demand among merchants grows, it will likely give one more reason for payment giants like MasterCard, Visa, and PayPal to introduce new or expand their existing digital asset offerings to fulfill enterprise demand.
At the same time, as the upcoming metaverses of tech firms like Meta and Microsoft are getting one step closer to their launch, we might witness an acceleration of crypto adoption in this field as well, where said assets might be utilized as a means of payment in virtual worlds. Now, how and whether – if at all – future-proven and regulation-resistant will those new efforts be, remains to be seen. Meta still hasn't fully recovered from the Libra blowback. How decentralized and peer-to-peer (P2P) those infrastructures are is yet another point of uncertainty.
Next year, we may also see some new government initiatives that aim to leverage the benefits of crypto payments in a similar way, spanning across the continents, from Iran through African states to Argentina's Mendoza province. However, I believe all those efforts will be slowed down by the focus that might be diverted to CBDC development.
For that reason, I expect businesses to take the lead in crypto payments adoption for the next few months – or at least until China completes the nationwide launch of the digital yuan, opening up the way to millions of new crypto users.
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