Crypto Payments Can Be Rewarded, Even With Headwinds

When SHOP.COM started accepting crypto at checkout a year ago, the company was pretty confident that existing customers would accept the new way to pay.

After all, they had been hearing for some time from customers saying that they wanted the shopping comparison market to accept cryptocurrencies “because they believed in it, as an ecosystem for the next form of money”, President and COO Steve Ashley recently told PYMNTS Karen Webster. .

The same applies to new customers, said Ashley, who added that the company’s executives have held crypto for years. “It made sense to reach out to communities because it could bring a new demographic of users to SHOP.COM.”

What they did not expect, he said, was the international appeal of crypto payment.

“In the UK and some of our other markets, we’re starting to see the majority of our payments through BitPay,” he said, referring to his company’s crypto payments technology company. It’s slower in Asia-Pacific, but even there adoption is growing, Ashley said.

Even less of a surprise was customer adoption of crypto for licensed collectibles site Panini America, chief financial officer Bob Hull told Webster on a conference call. Although it only added the crypto payment capability on July 5, the company had already been selling non-fungible tokens (NFTs) for some time, making it “a natural progression,” he said.

“We have a lot of tech-savvy customers on the NFT side,” Hull said. “They’ve been pushing hard for crypto acceptance for a long, long time.”

It’s been seamless with thousands of transactions per day, he said. Phase two, he added, will enable crypto payments for his physical trading cards.

Which is also a good pivot point for Shop.com, Ashley said, as the success of crypto payments led him to consider getting into NFTs himself.

These experiences are pretty typical, said BitPay CEO Stephen Pair, whose company processes crypto payments for both companies, though he added that SHOP.COM is seeing crypto usage by international customers.” reaching levels where it is almost on par with traditional credit cards is very exciting.”

But, he added, given the sticking points in international payments, this is hardly shocking.

Headwinds

That said, the crypto payments space has been affected by the crypto market meltdown, with bitcoin dropping around 70% from its all-time high in November.

While there hasn’t been much of an impact on people wanting to pay in an ecosystem they see as the next financial system, some people are in a “little expectation type pattern,” Ashley said. “If they bought at $40,000 or $50,000, they’re a little reluctant to give it up for anything from that standpoint.” Bitcoin was just over $23,000 on August 1.

Admittedly, bitcoin owners “don’t necessarily want to use it to buy things,” Pair said. But BitPay supports 13 cryptocurrencies, including dollar pegged stablecoins, with four or five more on the way.

“Overall, I would say trading volumes are down with falling prices, but we are seeing a higher mix of stablecoins being used instead of bitcoin,” Pair said. “It just depends on what people enjoy. What they most want to keep.

Hull added that NFT buyers may consider collectibles as an investment vehicle that could offset some of the crypto’s volatility.

keep it simple

Another big headwind, Ashley said, has got people — especially in older demographics — seeing how simple it is to pay with crypto.

“There is just a fear of the unknown when it comes to crypto, and you have to eliminate that,” he added.

From a customer perspective, it also means putting a lot of effort into accepting as many digital wallets as possible,” Pair said, noting that BitPay is compatible with over 100, and they undergo extensive and continuous testing to ensure compatibility – and help wallet users understand procedures specific to their wallet.

Speaking from a merchant’s perspective, Hull said, “I almost feel like it’s easier than fiat currency and the typical merchant account experience we have. It’s a bit long to set up… [but] BitPay has made this incredibly easy. You know where the fees come from. From the CFO’s perspective, I like it because I know it’s going to be 1%. I know what my costs will be for each transaction.

He added, “You don’t have the volatility on the merchant account with the percentage, card transaction fees.”

And, you have no chargebacks. “It’s really important,” Hull said. “If I could push everyone into crypto today… that’s really huge.”

The ease-of-use factor applies to choosing a crypto processor, Ashley said, noting, “We wanted to work with someone who was blockchain first,” as opposed to bigger vendors like PayPal. or Square.

“Longevity in the space” was a big factor, Hull said of the 11-year-old BitPay, adding that “the adaptability BitPay has shown to accept more cryptocurrencies over time” was another. factor.

Impose tailwinds

A development that all three see as a positive sign: Congress is considering exempting small crypto purchases from capital gains taxes, with $200 or $50 among the numbers under discussion.

Calling it a step in the right direction, Pair said he hoped it would be higher than $50 – others in the industry have said the same about $200 – but that’s a point of friction.

The problem is that cryptocurrency sales attract capital gains tax in the United States. Worse than the actual tax liability is the complexity, as it means calculating the gain (or loss) on each sale – which includes using that crypto to buy something.

Although some wallets are working on automatically calculating capital gains and losses, that’s one of the reasons BitPay added stablecoins, Pair said, because people who convert some of their holdings into stablecoins don’t have to calculate only once. Doing these calculations automatically is something BitPay is working on, he added, calling it “very, very doable”.

That’s a problem for Panini’s small-dollar card transactions, which can be viewed this way, Hull said: Buy a pack of NFT cards from the digital store and then list some or all of them on its secondary market, where the average transaction is $25 to $30.

“To think of having to calculate capital gains on that is a nightmare,” he said. “It would be very, very beneficial for us, especially in the secondary market, and would probably drive business even higher if we could get some kind of restraint from Congress.”

Going over that $50 mentioned on a recent bill — those mentioning $200 are on more widely supported legislation — would be a big deal for SHOP.COM, Ashley said.

Indeed, with free shipping at $99, crypto spend is usually between $100 and $115.

Crypto Rewards

Another program that Ashley has high hopes for, he said, is SHOP.COM’s new crypto rewards program, which has added bitcoin rewards through BitPay instead of the cashback dollar program that is a such an important part of his site.

“We’re trying to build even more relationships when it comes to this crypto user,” he said.

“We have a lot of interest in rewards programs and things of that nature — people earning crypto as an alternative to cashback,” Pair said. “It’s not just about getting dollars back into your account. He gets this new kind of digital asset that can go up in value. People are really interested in participating. And, once they start accumulating bitcoin or other cryptocurrencies, they invest in it – and they want to use it more.

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NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS HAVING HIGH DEMAND FOR SUPER APPS

About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.


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