Stephen Pair, co-founder and CEO of BitPay, recently shared his views and insights with Crowdfund Insider.
Stephen Pair from Bitpay talked about the current state of crypto adoption and how the financial services sector can be enhanced with digital currency transactions. Stephen also talked about how traditional merchants are responding to the growing emergence of virtual currencies.
Our conversation with Stephen Pair is shared below.
Crowdfund Insider: What are the current trends in crypto payment adoption across various industries?
Stephen Pair: Everywhere we look, we see crypto payment adoption increasing. Of course, there are variations when it comes to different industries and coins. Overall, Bitcoin is still the most widely used cryptocurrency for payments, being #1 in terms of both volume and transaction count through 2023. Still, other coins share a large piece of the pie.
For example, Circle’s stablecoin, USDC, is #2 by volume, meaning it’s used for fewer transactions than Bitcoin but those transactions have a higher dollar value. Litecoin comes in at #2 by transaction count, serving as somewhat of an inverse to USDC in the sense that it accounts for a higher number of transactions, but those transactions have a lower dollar value. There have been times over the last year that Litecoin transactions actually surpassed Bitcoin transactions in monthly transaction count.
XRP, while not a top three contributor to overall volume or transactions, made a substantial comeback. XRP sales are up 65% from 2022, showcasing its popularity with the crypto community.
In terms of popular industries where users are paying with crypto the most, some of the top choices include precious metals, web services like VPN’s and web hosting, watches and jewelry, gaming, and electronics. We’re also seeing increasing adoption in more niche industries like sports, automotive, and luxury brands. In fact, luxury goods became a top 10 category for crypto payments in 2023. This includes brands like Gucci, Ralph Lauren, Hublot, CRM Jewelers, and others.
Automotive transactions more than tripled from Q1 to Q3 of 2023, with brands like Ferrari accepting crypto. You also have sports brands like the Dallas Mavericks, London Lions, and Sacramento Kings incorporating crypto payments. To us, these trends prove the significance of crypto’s use case as a payment method across a diverse range of industries and product lines.
Crowdfund Insider: How are traditional merchants responding to the growing acceptance of cryptocurrency payments?
Stephen Pair: Merchants have begun to realize that they need to integrate crypto payments if they want to stay relevant and attract new customer bases. Each year we see a growing number of traditional merchants adopting, integrating, and marketing crypto payments for their goods and services.
Accepting crypto is a relatively easy way to attract new buyers, some of whom may be very big spenders. It also helps a brand’s reputation by showing they’re keeping up with the times, which can be appealing to a younger, more tech-savvy customer base. Consumers who may have never cared about a particular brand before can suddenly become loyal customers just because a company began accepting their favorite payment method. For companies, the ROI here can be significant given the ease with which crypto payments can be accepted.
For these reasons, merchants are adding crypto as a payment option and advertising the fact that they now accept crypto. The setup for this is simple, especially when it comes to ecommerce, business-to-business cross border payments, and even in-store payments.
Some big brands are embracing crypto payments, including the likes of Ferrari, Ralph Lauren, Gucci, and AMC Theatres. Some even use crypto payments for payouts like paying affiliates, international employees, paying salaries in crypto, or as an additional benefit alongside traditional benefits.
Crowdfund Insider: Are you hopeful 2024 will be a year of widespread crypto adoption by merchants and consumers?
Stephen Pair: Given the price action of Bitcoin this year, I think it’s safe to say that these trends will continue to accelerate throughout 2024.
In the past, we’ve seen the BTC halving cycle coincide with bull markets, and these, in turn, have led to substantial upticks in crypto spending. With the next halving coming up in April 2024, and Bitcoin having already risen by a factor of over 150% in dollar terms in 2023, the coming year could be one for the history books in terms of adoption. Users who have been holding onto their coins for a long time tend to be more incentivized to spend during substantial upswings in price.
While we can’t claim a direct cause-and-effect relationship with regard to that, we can infer the likelihood of a bull run and subsequent spending using historical data. For example, during the previous halving bull run, BitPay sales increased by 52%. Some industries even saw their sales more than double. BitPay has published internal sales data from the last halving and is encouraging businesses to get ready for the upcoming halving for this very reason.
Crowdfund Insider: What insights can be drawn from consumer behavior regarding crypto payments? Where are they most popular?
Stephen Pair: A 2020 study conducted by Forrester showed that integrating crypto payments can greatly improve a businesses’ relationship with new and existing customers, and also its bottom line.
Customers with crypto are more likely to shop with a merchant that accepts crypto. Crypto customers tend to spend more, so a merchant whose key demographic aligns with crypto users could be missing out by not providing this payment option.
Some key points from the study include:
Companies generating new sales
Increasing AOV
Paying lower transaction costs than traditional payment methods
Reducing risk thanks to fewer problems with fraud and mistakes
Crypto makes all of these things possible. It represents a rare opportunity to create a low-risk, high-reward source of revenue. I believe that in order for crypto payments to become as convenient and usable as traditional payment methods, the experience needs to be simple and in line with what people are used to – as simple as entering in your credit card information, and as convenient as tapping your phone onto a payment terminal.
To this end, BitPay is constantly improving its payment experience with an intuitive user-interface. We also continue to accept additional assets, and we’ve listened to customer feedback for over a decade to get to this point and will continue to do so.
Geographically speaking, the lion’s share of BitPay payments come from customers in North America and Europe. We expect to see significant growth in the coming years from countries in Latin America, Asia, and Africa.
Crowdfund Insider: How will regulation play a role in the development of crypto payment adoption?
Stephen Pair: Regulation and adoption have a symbiotic relationship: increased adoption leads to calls for more regulation, and new regulation leads to greater adoption.
A lack of clear regulations can be seen as one of the major hurdles keeping all kinds of capital out of crypto, at both the retail and institutional levels. Whether it’s an individual with $100 worth of Bitcoin that doesn’t know how to handle the tax implications of making a sale or purchase, or a family office that may not have a compliant vehicle for crypto investment.
Overall, well-defined regulatory rules make things safer and easier for everyone, both in terms of payments and the industry as a whole. Regulation improves trust and makes it possible for all related companies to standardize their operations while being in compliance.
As it stands today, it can be hard to comply with what’s unclear, and while things have improved on this front, it’s still somewhat of a barrier to broader adoption in some cases. If we get additional guidance on the regulatory front soon, this could add fuel to the fire of the trends for 2024 that we discussed earlier.