By Justin Fraser, SVP Enterprise Sales, at Paysafe
Cryptocurrency awareness is at an all-time high and after more than a decade of momentum building amongst enthusiasts, it’s beginning to seem as though cryptocurrencies are turning a corner towards mainstream use.
Our most recent annual consumer research showed that 84% of UK respondents and 83% of US respondents could name at least one cryptocurrency. More significantly, cryptocurrencies are increasingly front and centre in consumers’ spending plans – with 55% of the UK and US’s 30 million crypto owners saying they want their salaries paid in cryptocurrency.
We are globally inching closer towards mass adoption. That said, we’re not quite there yet and the reason why is the cause of much debate. What will it take for cryptocurrency payments to become as ubiquitous as payments in US Dollars, Euro, or British Pounds?
The drivers for acceptance
If cryptocurrencies are to gain more widespread legitimacy, there are misconceptions that need to be urgently addressed. As recently as 2020, for instance, 30% of respondents to a survey believed cryptocurrencies are mainly used for illegal activities. In reality at that time, they were most commonly used to buy food. This perception is a brake on adoption. a significant number of people have cashed out their crypto investments out of concern over negative news stories or comments from family and friends.
While more people have heard about cryptocurrencies than ever before, this data suggests many still aren’t confident in their level of understanding. Concerningly, our data shows that less than half of crypto owners feel more knowledgeable about cryptocurrencies today than they did when they started buying them.
That said, the single biggest roadblock to greater adoption is lack of acceptance at the checkout. For cryptocurrency payments to become as familiar to consumers as cards, contactless, and other payment methods, customers must be able to pay with them quickly and easily anywhere — in bricks-and-mortar stores and online.
While there has been a gradual rise in the number of merchants who accept cryptocurrencies over the past few years — including big names like Burger King, Starbucks, and Overstock in some markets — they are not yet accepted at the checkout as a matter of course.
Cryptocurrency payments: the merchant’s perspective
For merchants, accepting cryptocurrency payments creates two significant challenges. Firstly, accepting crypto payments has traditionally entailed operational issues such as changes to point of sale equipment, coupled with the adoption of specialised custody and treasury services. Dealing with these issues is time-intensive, costly, and complex.
Secondly, while growing interest and investment — including from institutional investors — means cryptocurrencies are more liquid than they used to be, volatility is still a problem.
In May 2022, driven by the collapse of the TerraUSD stablecoin, over $200 billion of wealth was wiped out in just 24 hours in a massive sell-off in cryptocurrencies and Bitcoin dropped by 10% to its lowest level since December 2020. Smaller merchants in particular are unlikely to have the appetite for this kind of risk, especially when they may have issues such as customer refunds to deal with.
Reaching the tipping point
While crypto’s volatility is likely to persist — some even argue it’s a feature, not a bug — there’s an established way around operational issues: crypto-linked cards. These are standard debit cards that allow the holder to spend their cryptocurrency as they would any other currency: by tapping their card or keying in their details at the online checkout.
Crypto-linked cards have several advantages for customers and merchants alike.
From a customer perspective, they make it possible to top up your crypto account, buy cryptocurrency, and cash out faster than you would via bank transfer. And because they’re issued in partnership with major card issuers, they’re accepted at any point-of-sale system that accepts other cards from those same issuers. Which means quick, seamless payments and no need for merchants to make changes to their payment infrastructure.
Paysafe and Visa Direct: Enabling seamless cryptocurrency payments and payouts
When we asked the crypto owners why they own cryptocurrency, the top reason they gave us was that they believed it’s the future of finance. But belief can only become reality if paying and getting paid in cryptocurrency is as simple and convenient as tapping a card.
At Paysafe, we’ve been working to make this happen for close to a decade. In 2015, Skrill and Neteller became two of the first digital wallets that allowed users to deposit Bitcoin. And in 2016, we launched one of the first payment processing platforms that made it possible for merchants to accept Bitcoin.
Now, through our partnership with Visa Direct, we’ve created an API that allows merchants — including cryptocurrency platforms — to process payments and payouts quickly, and customers to move money in and out of their crypto accounts more easily than ever before.
Where topping up a crypto wallet via bank transfer typically takes up to three days, our Visa Direct integration enables funds to be made available instantly. This gives customers the flexibility to capitalise on dips in cryptocurrencies’ value and makes their coins readily accessible because funds can reach their bank account almost instantly, so they can use them for everyday purchases.
In addition to the benefits offered by Visa Direct, merchants can offer near-instant, seamless payments both locally and internationally through a single, intuitive interface, including to crypto-linked debit cards which customers can use to pay at any Visa-enabled point of sale worldwide.
When customers have the assurance they can use a cryptocurrency as if it were a fiat currency, cryptocurrencies be several steps closer to becoming a legitimate, spendable currency that is accessible to all.
