Retailers Will Drive the Adoption of Cryptocurrency, Not The Other Way Around

When Overstock (NASDAQ:OSTK) became the first major retailer to accept Bitcoin for payment in 2014, the move raised eyebrows. Four years later, cryptocurrencies still struggle with being seen as “fake” money, exacerbated by boom and bust headlines and regulatory uncertainty. The fastest path to legitimacy? Bringing cryptocurrency into retail, in a meaningful, visible way.

After all, for the average consumer, cryptocurrency fails to fulfill one of money’s basic functions –  buying everyday items.

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Most people aren’t interested in how blockchain will disrupt technology or decentralize powerful institutions; they care about providing groceries and clothes for their family. Only when digital currency can safely and securely be spent on day-to-day needs will society at large begin to accept it as holding real-world value.

Of course, plenty of forward-thinking retailers have hopped onboard to accept cryptocurrency payments. In 2017 alone, retailers accepting crypto-payments rose by 30%, and consumers have responded enthusiastically.

Monthly payments for goods and services in Bitcoin increased from 9.2 million to 190.2 million from 2013 to 2017, a 2000% jump.  Overstock recently expanded payment options to accept forty additional alt-coins. Japanese department store Marui began accepting Bitcoin payments last August on the heels of the government legally recognizing Bitcoin as a form of payment. (Asia, in general, has been ahead of the curve). Even Amazon has registered at least four crypto-related domains.

This upward spiral of growth suggests a future where a cryptocurrency wallet on your phone is as common as a debit card in your wallet. But to continue accelerating mainstream adoption, we must begin prioritizing merchants.

Historically, merchants have acted as gatekeepers for new payment technologies. When credit and debit cards first began circulating, retail adoption drove consumer confidence and led to their widespread ubiquity. Similarly, with Apple Pay’s initial launch, experts recognized the critical part of Apple’s strategy was getting merchants onboard.  As Willy Shih, an HBS professor stated;

“[Without] the merchant side in place, it doesn’t matter.”

Some B2C businesses are happy to accept the risks for access to the $426 billion tied up in crypto investments. However, with high market volatility, unpredictable processing times, illiquidity, and fluctuating transaction fees, many remain rightfully hesitant to dip their toes in.

These concerns must be met with practical, technology-based solutions. We have identified the challenges retailers face: (1) Instant Settlements for transactions, locking in real-time exchange rates, and (2) the ability to settle in either fiat or cryptocurrency.

Features like these provide merchants the one thing they need to move forward with cryptocurrency: peace of mind.

As merchants should expect, after the consumer sends funds through their e-wallet, the merchant receives the payment, and knows that they received a fair value and that the money is theirs, with no risk of currency fluctuations. Once retailers begin to utilize payment processors that incorporate digital currency, they’ll also enjoy the benefits built into the blockchain, many of which address pain points associated with traditional payment processing systems such as:

• Increased security and privacy protocols.
• Instant, verified transactions, ensuring protection from fraudulent chargebacks.
• Reduced transaction fees, from monopolistic credit card companies.
• A borderless customer base, without the hassle of cross-border banking — not to mention the instant PR appeal of accepting cryptocurrency.

Paying with crypto should be virtually indistinguishable from paying with a credit card via a mobile wallet. Once cryptocurrency can be used in tangible ways – whether it’s buying a round of drinks for friends, or putting a down payment on a car – the consumer’s mindsets will shift to accept digital currency as a real asset, and they’ll gain incentive to examine it for themselves, increasing the market’s value. 

For some crypto-evangelists, the change toward a blockchain-based future seems like a given, but it’s important not to take that vision for granted. Retail provides one of the most efficient points-of-access for the everyday consumer to witness the viability and appeal of digital currencies. Therefore, working towards payment solutions that maximize ease and reduce the risk for merchants is a critical part of creating a future that guarantees usable, stable, and widely accepted cryptocurrency.