By: Jon Decker, CEO of BlockChyp
The biggest speculation in the point of sale marketplace is when cryptocurrency will be relevant. Most dealers want to do something with cryptocurrency, but don’t think it is relevant today. This is the main issue surrounding cryptocurrency. The payments and POS communities do not embrace it because there is no demand, there is no demand because no one can use it.
Cryptocurrency has a long way to go before it can be considered a recurring revenue for the VAR and ISV community like payments are today. The primary reason is there is no easy way for holders of cryptocurrency to pay for items. There are no standards in the cryptocurrency market, with too many wallets and too many different types of coins. This lack of standards has contributed to the inability to use cryptocurrency with standard payment terminals with NFC technology. As a result, crypto holders are required to use a friction-filled and unfamiliar process to pay – scanning a QR code on a terminal and using an app to complete a transaction. This takes time, where as Apple Pay you only have to click a button and tap your phone.
The second issue is that cryptocurrency is viewed as an asset, but most consumers struggle to hold crypto assets in relatively insecure crypto wallets or with non-bank third parties. If you had invested $10K in Bitcoin in the early 2015’s at around $300 per coin it would be worth more than a million at current prices. These kinds of returns have caused many people to view Bitcoin more like an illiquid investment such as gold or stocks, and less as a liquid currency. However, this view is changing. In a recent survey, 70% of those polled would invest more in Bitcoin if they could store it in their bank account.
So why should an ISV/ VAR offer technologies that support cryptocurrency to their merchants? Let’s look at the launch of Apple Pay. When Apple Pay rolled out seven years ago, it was hard to find anyplace that accepted it. Retailers initially did not want to spend the time understanding how it worked or purchase new terminals just for Apple Pay. Fast forward to today, and now over 70% of retail establishments can accept Apple Pay with over 90% of iPhone users having set up Apple Pay on their devices. With these kinds of numbers you would think that Apple Pay makes up a huge chunk of transactions in the United States. Unfortunately, that is not the case, Apple Pay makes up 6% of the transactions in the US today.
While Apple Pay may not be used heavily as a product, it is still in hot demand by merchants. I’ve spoken with a lot of VARs and ISVs and the overall consensus is that it’s nearly impossible to sell a new solution that does not support Apple Pay.
Why is that? It’s not about ‘how many’ people use Apple Pay, it is about ‘who’ is using Apple Pay. Apple Pay users are younger, more technology savvy, more educated and more wealthy than the overall population. These are the types of consumers that are attractive to brands and corporations.
This is how we should all be thinking of crypto acceptance. Currently 22% of the U.S. adults ( about 46 million people) own a share in Bitcoin. Also, 79 million people as of November 2021 own a Bitcoin wallet. This is a large and growing market. As a result, brands want to be associated with cryptocurrency so that they are seen as attractive by their targeted demographic groups. Businesses are supporting crypto currency to obtain and retain customers with higher long-term spending power. And ISVs and VARs should be offering cryptocurrency to remain relevant with growing businesses.
The best way for VARs and ISVs to view cryptocurrency is a way to move new sales and gain new merchants. Consumers own a lot of cryptocurrency but don’t have a way to use it. Large established brands like Subway, KFC and Burger King see this opportunity, and are starting to accept Bitcoin. RSPA VARs and ISVs will benefit from being at the front of this wave of demand.