Crypto payments can be rewarding, even with headwinds

Crypto payments can be rewarding, even with headwinds
Crypto payments can be rewarding, even with headwinds

When SHOP.COM started accepting crypto at checkout a year ago, the firm was pretty confident that existing customers would get on board with the new way of paying.

After all, they had been hearing from customers for some time that they wanted the comparison shopping marketplace to accept cryptocurrency “because they believed in it, as an ecosystem for the next form of currency,” president and COO Steve Ashley told PYMNTS’ Karen Webster recently. .

Much of the same was true of new customers, said Ashley, who added that the company’s executives have been crypto holders for years. “It only made sense to reach out to the communities because this could bring a new demographic of users to SHOP.COM.”

What they didn’t expect, he said, was the international appeal of paying in crypto.

“In the UK and some of our other markets, we’re starting to see the majority of our payments through BitPay,” he said, referring to the company’s crypto payment technology firm. It’s slower in the Asia-Pacific, but even in that region, adoption is growing, Ashley said.

Customer adoption of crypto was even less surprising for licensed collectibles site Panini America, CFO Bob Hull told Webster on a panel call. Although it only added crypto payments on July 5, the company had already been selling non-fungible tokens (NFTs) for quite some time, making it “a natural progression,” he said.

“We have a lot of tech-savvy customers on the NFT side,” Hull said. “They were asking very loudly for crypto acceptance for a very, very long time.”

It has been seamless with thousands of transactions per day, he said. Phase two, he added, will enable crypto payments for its physical trading cards.

Which is a good pivot for as well, Ashley said, as its success with crypto payments has it considering entering NFTs itself.

Those experiences are fairly typical, said BitPay CEO Stephen Pair, whose company processes crypto payments for both firms, though he added that SHOP.COM is seeing international customers’ crypto use “getting to the levels where it’s almost on par with traditional credit cards is very exciting.”

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But, he added, given the friction points in international payments, that’s hardly shocking.


That said, the crypto payments space has been affected by the crashing crypto market, with bitcoin down around 70% from its November high.

While there hasn’t been much of an impact on people wanting to pay into an ecosystem they see as the next financial system, some people are in “a bit of a holding pattern,” Ashley said. “If they bought in at $40,000 or $50,000, they’re a little reluctant to give anything up from that standpoint.” Bitcoin was a little more than $23,000 on August 1st.

Certainly, bitcoin owners “don’t necessarily want to use it to buy things,” right now, Pair said. But BitPay supports 13 cryptocurrencies, including dollar-pegged stablecoins, with four or five more on the way.

“Overall, I’d say transaction volumes are down with the lower price, but we’re seeing a higher mix of stablecoins being used instead of bitcoin,” Pair said. “It just depends on what people value. What they want to keep the most.”

Hull added that NFT buyers may consider collectibles as an investment vehicle that can offset some of crypto’s volatility.

Make it simple

Another big headwind, Ashley said, was getting people — especially in the older demographic — to see how easy paying with crypto actually is.

“There’s just a fear of the unknown when it comes to crypto, and you have to eliminate that,” he added.

From the customers’ perspective, it also means making a big effort to accept as many digital wallets as possible,” said Pair, noting that BitPay is compatible with more than 100, and they undergo extensive and ongoing testing to ensure compatibility – and help wallet users understand the specific procedures for their wallet.

From a merchant perspective, Hull said, “I almost feel like it’s easier than fiat currency and the typical merchant account experience that we have. It takes a little bit to set up… [but] BitPay has made it incredibly easy. You know where the fees come from. From a CFO point of view, I like it because I know it’s going to be 1%. I know what my costs are going to be for each transaction.”

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He added, “You don’t have the volatility of the merchant account with the percentage, the transaction fees per card.”

And you don’t have chargebacks. “It’s very important,” Hull said. “If I could push everyone into crypto today…that’s really big.”

The ease-of-use factor applies to choosing a crypto processor, Ashley said, noting, “We wanted to work with someone who was blockchain first,” as opposed to larger providers like PayPal or Square.

“Longevity in the space” was an important factor, Hull said of 11-year-old BitPay, adding that “the adaptability that BitPay has shown to accept more cryptocurrencies as time has gone on” was another factor.

Treasure tailwind

A development that all three see as a positive sign: Congress is looking at exempting small crypto purchases from capital gains tax, with $200 or $50 among the numbers being discussed.

Pair called it a step in the right direction, saying he hoped it would be higher than $50 — others in the industry have said the same about $200 — but it’s a sticking point.

The problem is that selling cryptocurrency attracts capital gains tax in the US. Worse than the actual tax liability is the complexity, as it means calculating the gain (or loss) on each sale – which includes using that crypto to buy something.

While there are some wallets that work to automatically calculate capital gains and losses, one of the reasons BitPay added stablecoins, Pair said, is because people who convert some of their holdings to stablecoins only need to calculate it once. Making these calculations automatic is something BitPay is working on, he added, calling it “very, very doable.”

That’s a problem for Panini’s small-dollar card transactions, which can be seen this way, Hull said: Buy a pack of NFT cards on its digital store, then list some or all of them on its secondary marketplace, where the average transaction is $25 to $30.

“To think about having to calculate capital gains on that, it’s a nightmare,” he said. “It would be very, very beneficial to us, especially in the secondary market, and would probably even drive the business to greater heights if we could get some kind of restriction from Congress.”

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Getting above the $50 amount mentioned on a recent bill — those mentioning $200 are on more broadly supported legislation — would be a big deal for SHOP.COM, Ashley said.

That’s because with free shipping at $99, crypto spend is usually in the $100 to $115 range.

Crypto rewards

Another program Ashley has high hopes for, he said, was SHOP.COM’s newly launched crypto rewards program, which added bitcoin rewards through BitPay in place of the dollar-based cash-back program that is such a prominent part of the site.

“We’re trying to establish even more of a relationship in terms of this crypto user,” he said.

“We have a ton of interest in rewards programs and things like that — people earning crypto as an alternative to cashback,” Pair said. “It’s not just getting dollars back into your account. It gets this new type of digital asset that can increase in value. People are very interested in participating in it. And when they start accumulating bitcoin or other cryptocurrencies, they become invested in it – and they want to use it more.”

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About: The findings of PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy”, a collaboration with PayPal, analyzed the responses of 9,904 consumers in Australia, Germany, the UK and the US and showed strong demand for a single multi-functional super app instead of using dozens of individuals.

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