The technological groundwork is in place for crypto payments at the point of sale.
People have traded cryptocurrency for less than 15 years, but in its short history, it’s captured headlines. Since 2009, its value has experience highs and lows; it’s had its share of positive and negative press; and, as more merchants accept it, it’s becoming more of a disruptor in the payments space. While many people have viewed crypto primarily as an investment, perceptions are shifting, and more are looking for ways to make crypt payments for everyday purchases.
According to Paysafe research, 80 percent of cryptocurrency owners expressed a desire to pay with crypto in-store but can’t find a way to do it. Those same consumers also think crypto payments could be an option alongside credit card payments.
Challenges of Accepting Crypto Payments In-Store
Although consumers and merchants may be willing to add crypto payments as an option at the checkout, they need innovators to overcome some challenges to make it happen.
First, the landscape is filled with different currencies with constantly changing values. Retailers need to be protected from value fluctuations if they are going to accept these currencies as payment. A viable solution must bring transparency to retail crypto transactions.
Second, retailers that want to accept crypto payments will also need a way of connecting to cryptocurrency apps – and the account of the shopper standing at the checkout counter. Errors are unacceptable; once a transaction goes through, there’s no way of easily correcting it.
Last, merchants need a way to make it all happen quickly. Crypto payments can take several minutes, much longer than digital payments that process in a few seconds. Merchants will also need a way to process these transactions faster to keep lines moving and keep customers happy.
Crypto Payment Benefits
Creating solutions that overcome these challenges can result in significant benefits for merchants – and solutions providers. One is the potential to reduce payment processing fees. Fees for accepting crypto payments are just a fraction of credit or debit card processing.
Additional benefits include:
- Instant payments: With crypto payments, funds are transferred instantly, even with international payments.
- Fewer chargebacks: Customer protection laws have made it easier for customers to request refunds from their banks rather than retailers. Unfortunately, this has resulted in fraud, up to 80 percent of all chargebacks. With cryptocurrency, a customer can’t request money to be deducted from a merchant’s account without approval.
- New customers: A recent study by Forrester Consulting conducted on BitPay customers showed that 40 percent of customers who choose to pay with crypto were first-time customers of that merchant.
A payment technology company and cryptocurrency exchanges, and app companies that can work together to provide these benefits will find a market ready to deploy their solutions.
How to Make In-Person Crypto Payments Easier
The solution is to use a middle party that works as an “exchange bureau” that confirms and commits to the exchange rate during the retail transaction. The steps in the transaction will be:
- The retailer lists prices in their currency but offers the customer the option to pay with crypto.
- The customer chooses the option on the merchant’s Android device to obtain a quote from a crypto payment service provider (CPSP).
- The system shows the rate for the transaction to the consumer and, if acceptable, allows the consumer to proceed.
- The Android device displays a QR code that the customer can scan using their crypto wallet, which verifies the purchaser’s identity.
- The CPSP then confirms the transaction so the merchant can release the goods being purchased, and then converts the cryptocurrency into the merchant’s currency, and transfers the amount to the acquirer.
- The acquirer consolidates the crypto transactions along with other transactions for that retailer and pays out the consolidated amount to the retailer.
A payment technology that takes a platform approach to add payment functionality at the in-store point of sale makes it feasible for acquirers and payment solutions providers. One integration with the platform provides the ability to make new payment options, such as crypto payments – or buy now, pay later (BNPL), loyalty rewards and redemption, and other methods – easily accessible to merchants and their customers.
Ready to Bring Crypto Payments to Merchants and Consumers?
If you recognize the benefits of allowing consumers to make crypto payments via your app at the in-store checkout – both for consumers and for your business – we’re ready to partner with you to make it happen. Contact us.