Reality Check: Cash, Card or Crypto - Will we soon be paying in stores with Bitcoins?

Cryptocurrencies have long been more than just a gimmick for internet nerds. The best-known representative, Bitcoin, currently has a market capitalization of over 120 billion US dollars. That is more than the amount of Swiss francs in circulation in 2018 (approx. 80 billion dollars at the current exchange rate). Despite this, blockchain-based means of payment are mainly used for online transactions and are popular as an investment or speculative object. Will this change? Will it be normal to pay with bitcoins in stores in the future? Panagiotis Karasavvoglou, Head of Merchant Services at Worldline, does a reality check.

Check 1: Who already accepts Bitcoin? Who wants to pay with it?

Some big names in the internet industry already accept the cryptocurrency as a means of payment. These include Microsoft, Expedia and Wikipedia (for donations). However, it must be admitted that this type of payment is still more of a marginal phenomenon. On the other hand, cryptocurrencies and blockchain technology in general continue to attract a great deal of interest. At relevant events, meet-ups and hackathons, you can meet a predominantly young audience that is enthusiastic about digital currencies. Such crypto-enthusiasts would certainly like to use their bitcoins more often in everyday life. We can therefore assume that there will be a larger market for Bitcoin payments in the future, both in bricks-and-mortar and online retail.

Cryptocurrencies are also attracting particular interest in China, due to a comparatively weak national currency and the trade dispute with the USA. Customers from the Middle Kingdom are open to alternative payment methods anyway, as demonstrated by the success of Alipay, among others. There is no reason why this customer group would not also be very happy to pay with bitcoins if the corresponding offers were available.

Check 2: How does paying with bitcoins at the checkout work? What are the advantages for consumers and retailers?

Payment systems, such as the one soon to be introduced in Switzerland by Worldline, work as follows: A QR code is generated in the online store or at the POS, which the user scans with their smartphone - directly from a wallet app. The value of the goods in bitcoins is also displayed there. This has advantages for users: Firstly, consumers do not have to exchange their Bitcoins in order to use them practically, or "load" them onto a credit card, as is necessary with other systems. When paying with Bitcoin will eventually be possible throughout Europe, it will offer the advantage for foreign customers that they will no longer have to convert different exchange rates. Instead, they will have a universal currency that is valid in all countries.

The advantage for merchants of accepting Bitcoin is actually quite simple: the more payment methods they offer, the greater their chance of attracting potential customers. Even if crypto payments are still in their infancy, it is definitely worth investing in the technology of the future - especially for merchants who serve an international customer base. It is important to clarify the currency risk: in the case of the cooperation between Worldline and Bitcoin, the merchant has no risk whatsoever.

Check 3: Do traders need to familiarize themselves with the matter now? What about exchange rates?

Bitcoin has repeatedly hit the headlines due to its strong price fluctuations; after all, there is no central bank behind the currency as a regulating authority. The world of wallets, not to mention the underlying blockchain, is complicated. It is understandable that merchants shy away from the risk of the exchange rate and do not want to deal with the complex processes in the background. However, if they work with a payment service provider that has mastered the technology, this is not necessary. With the Worldline solution, for example, merchants do not even come into contact with exchange rate fluctuations and settlement is then carried out as with any card payment.

Conclusion

Consumers currently have few opportunities to exchange their bitcoins directly for goods. They usually have to take a detour and exchange the cryptocurrency first. If retailers offer the option of paying invoices directly with the digital currency, they are preparing themselves for the future of payments and can also attract new customers today. Last but not least, they are also demonstrating their willingness to innovate and their future viability.