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From the Wild West … to the new frontier of commerce?
Bit by bit, but more than bitcoin after bitcoin, cryptocurrencies are becoming more and more popular, for both consumer and commercial applications.
In most cases, fiat is still involved, but, after all, the seismic changes in payments have to start somewhere.
Among the major announcements in recent weeks, PayPal, with an estimated 346 million accounts globally, said it would make cryptocurrencies a “source of funding” for purchases made with its installed base of approximately 26 million merchants.
It is important to note here that cryptocurrencies are a fiat conversion source that uses bitcoin, bitcoin cash, litecoin and ether as crypto choices, but deposits in traditional currencies (such as dollars). Elsewhere, Square announced last month that it had invested $ 50 million – about 1% of its total assets in the second quarter – to buy about 4,709 bitcoins.
“We believe bitcoin has the potential to be a more ubiquitous currency in the future,” said Amrita Ahuja, Square’s chief financial officer. IS Microstrategy bought $ 425 million worth of bitcoins in its final quarter to make the holding its “primary treasury reserve asset” in order to increase returns on its balance sheet. This speaks more of an investment strategy (asset diversification, for example), we argue, than of a pivot towards the use of cryptocurrencies in the service of commerce.
To this end, and in more traditional use cases, it remains crucial to put binaries in place to accelerate and streamline transactions, regardless of the cryptocurrency used.
As highlighted in this space, Ternio claimed to have joined Visa’s Fast Track as a cryptocurrency-centric enablement partner. The partnership will allow crypto companies and FinTechs to enter the market with crypto payments that eventually ride the Visa rails and are therefore accepted by any company or merchant that accepts Visa.
There are indications that the banking world is increasingly bypassing cryptocurrencies. In September, the Office of the Comptroller of the Currency (OCC) clarified the authority for national banks and federal savings associations to hold reserves on behalf of clients issuing stablecoins (those coins must have a one-to-one relationship with a fiat currency).
The outlook for Stablecoins
And in the final salvation of the use of stablecoins – where high-value transactions cross borders in commercial transactions – JP Morgan said he founded Onyx, a new business unit dedicated to blockchain and digital currencies. The banking giant said for the first time it has a paying customer for its JPM Coin, its stablecoin offering.
On a larger stage, of course, a wide range of central banks have studied how to create and issue their own versions of digital currencies. We are still a way out of making the leap from concept to reality, at least on these shores. The Federal Reserve, as has been reported, and more specifically its Boston branch, has partnered with the Massachusetts Institute of Technology to explore the technology and platforms needed for such digital coinage.
As Jeremy Allaire, CEO of Circle Internet Financial, told Karen Webster of PYMNTS, “The doors are starting to open where, in the next two or three years, we will arrive at a place where there are billions of people using stablecoins. Allaire added, “We’re not likely to be in a world where there are, like, dozens of stable different dollar coins. I think we will most likely be in a world where there are two or three. “
As always, the seismic shift in digital payments brings with it puts and takes.
In a speech delivered this week, Fabio Panetta, a member of the executive board of the European Central Bank (ECB), said that the payments industry is in the midst of transformation. And he noted that Big Tech companies, due to their global footprint, “are in a unique position to offer services in the area of global cross-border transactions, where current solutions are low quality and expensive.” Stablecoins, he said, can be used as part of innovative payment solutions. But he warned that there are risks associated with those coins, as consumer data can be misused and the fight against money laundering could be hampered by traceability issues.
It could also make the European payment system unsuitable for supporting our single market and single currency and vulnerable to external disruptions, such as cyber attacks, he said in the speech.
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WATCH LIVE: HOW WE PURCHASE – TUESDAY 10 NOVEMBER 2020 – 12:00 (ET)
New forms of alternative credit and point-of-sale loan options such as “buy now, pay later” (BNPL) harness the growing influence of payment choice on customer loyalty. Nearly 60% of consumers say such digital options now influence where and how they shop, especially robust and well-crafted contactless payments and ecommerce checkouts, so merchants have a clear mandate: understand what has changed and adapt accordingly. . Stick PYMNTS CEO Karen Webster with Greg Lisiewski of PayPal, Mark Rosales of BigCommerce, is Camille Kress of Adore Me as they highlight key findings from the new PYMNTS-PayPal study, “How We Shop,” and chart better and faster paths to a stronger recovery.
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