This article understands the development status of traditional payment and e-commerce platform integrated encryption payment in recent years
Compilation of the original text: Bai Ze Research Institute
Compilation of the original text: Bai Ze Research Institute
Due to the increasing use of blockchain technology, the global payment market structure has undergone major changes. Increased demand from individuals/businesses for more efficient payment systems has led to the entry of cryptocurrencies into multiple payment areas, including remittances, payment cards, and e-commerce. More and more retailers are now accepting cryptocurrency payments due to shorter settlement cycles, lower processing fees and higher consumer adoption. In addition, traditional payment and e-commerce companies are also entering the crypto payment space to provide consumers and businesses with seamless and secure payment solutions.
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Why do traditional payment companies and e-commerce platforms want to integrate encrypted payments?
Currently, traditional methods such as cash, bank transfers and payment cards still dominate the payment landscape. However, crypto payments are gaining massive traction. According to data released by Visa, in the first quarter of 2022, Visa's payment network processed a total of $2.5 billion worth of encrypted transactions, up from $1 billion in the first quarter of 2021.
Cryptocurrencies enable faster global payments by eliminating intermediaries like banks and complexity. Traditional payment companies have been reluctant to embrace encryption. However, the recent rapid development of the blockchain/cryptocurrency industry and growing demand from consumers and businesses has prompted its adoption by leading payments and e-commerce companies, including Mastercard, Visa, and Shopify.
The high volatility of cryptocurrency prices is why businesses have been reluctant to adopt it; however, with the advent of stablecoins, businesses have now been showing increased interest in integrating crypto payment options. Globally, more than 15,000 businesses in industries such as gambling, travel, food and retail are accepting cryptocurrencies. According to a December 2021 study by Deloitte, nearly 75% of retailers intend to accept crypto payments by the end of 2023.
Crypto payments offer several benefits to consumers and businesses, including:
Payments without borders: Transfer and pay internationally with blockchain-backed cryptocurrencies.
Faster Settlement: Crypto payments involve fewer intermediaries, resulting in faster settlement.
Lower costs: Crypto payments cost around 1% compared to the 1.5% to 3.5% processing fees of traditional credit cards.
Immutability: Protecting merchants from chargeback fraud (e.g. consumers fraudulently requesting a refund but no return)
Target new consumer groups: Businesses that accept crypto payments can connect to a larger consumer group among crypto enthusiasts.
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Crypto products and services offered by traditional companies and their partners
In order to meet the different needs of crypto enthusiasts, traditional payment and e-commerce companies have cooperated with crypto-native service providers such as custodians and payment providers to provide a variety of crypto-based products, such as:
Transaction and funds transfer services：
As interest in digital assets continues to grow among a broader consumer base, traditional payments companies such as PayPal and Revolut have launched crypto transaction services and allowed peer-to-peer transfers through their platforms. PayPal has partnered with blockchain infrastructure provider Paxos, and Revolut has partnered with Apex Crypto. Similarly, Block (formerly Square), a US-based financial services and payments company, offers bitcoin transactions through its Cash App platform.
payment card：
Both Visa and Mastercard offer crypto payment cards launched in partnership with crypto exchanges, crypto wallets, which holders can use to make payments (automatic conversion of crypto to fiat currency). Platforms offering Visa crypto payment cards include Coinbase, Bitpanda and Wirex, while BitPay and Nexo offer Mastercard crypto payment cards. Some of these cards allow cardholders to earn crypto rewards after spending a certain amount over time.
Merchant Payment Services：
Traditional payment companies are also starting to enable their merchants to accept cryptocurrency payments. For example, PayPal offers a cryptocurrency checkout service that allows its users to use the cryptocurrencies in their wallets to shop on e-commerce platforms. Supported cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). Similarly, payment service provider Worldline has partnered with Swiss crypto service provider Bitcoin Suisse to develop crypto payment platform WL Payments, enabling its offline and online merchants to accept BTC (Lightning Network) and ETH payments.
E-commerce platforms like Shopify, WooCommerce, BigCommerce, etc. are working with some crypto service providers to enable merchants to accept crypto payments. Shopify allows its merchants to accept payments in cryptocurrencies like BTC, ETH, DogeCoin, MATIC, and BNB through partnerships with Crypto_com, Coinbase's merchant service Coinbase Commerce, BitPay, DePay, OpenNode, and Strike.
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Opportunities for traditional payment and e-commerce platforms
In fact, traditional payment and e-commerce platforms have far more advantages than crypto-native providers because they have a large user base, strong systems, and are regulated, which makes them a safer choice for customers to pay with cryptocurrencies. According to Paying With Cryptocurrency data, as of June 2022, only about 23% of companies worldwide that have accepted encrypted payments are receiving cryptocurrencies through encrypted native wallets, and most companies still use encrypted payment solutions provided by traditional payment companies.
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Traditional payment and e-commerce platforms provide encrypted payment development trajectory (2017-2021)
The table below highlights significant developments in cryptocurrency payments by some of the leading traditional payment companies and e-commerce platforms.
Revolut (July 2017): Launch of crypto trading service in the UK
Block (June 2018): Launched Bitcoin transaction service on its Cash App payment platform
Mastercard (July 2018): Granted a patent for linking cryptocurrencies to fiat accounts
Visa (October 2018): Partnering with cryptocurrency trading platform Crypto_com to launch a crypto payment card
Revolut (July 2020): Launch of crypto trading service in the US
Mastercard (September 2020): Launch of central bank digital currency (CBDC) test platform
PayPal (October 2020): Launch encrypted trading service
Shopify (October 2020): Partner with Alchemy Pay to enable crypto payments
Block (December 2020): Launch of the Bitcoin Rewards feature, enabling Cash payment card holders to earn Bitcoin payment rewards
Klarna (February 2021): Partnering with Swedish cryptocurrency exchange Safello to enable Safello customers to purchase cryptocurrencies using their bank accounts through Klarna's payment platform.
PayPal (March 2021): The encrypted checkout function has been launched for US users, enabling US users to use cryptocurrencies to check out online shopping.
Visa (March 2021): The stable currency USDC is allowed to settle payments in its payment network
PayPal (April 2021): Launched an encrypted transaction service on its mobile payment platform Venmo, allowing users in the United States to trade and hold cryptocurrencies
GlobalPayment (May 2021): Partnering with crypto payment service provider GoCrypto to launch acceptance of cryptocurrency for merchants using Visa's POS app GP Tom
Revolut (May 2021): Introduced a bitcoin withdrawal feature that enables its users to transfer bitcoins to wallets outside of the Revolut platform
eBay (May 2021): Introduce NFT sales function on its platform
Mastercard (July 2021): Partnered with Circle to allow settlement of payments using the stablecoin USDC on its platform
FIS (July 2021): FIS’s Worldpay was selected by encrypted payment service provider MoonPay as a merchant acquirer to process encrypted transactions based on credit and debit cards, as well as NFT sales services; Worldpay was also selected by cryptocurrency trading platform OkCoin to provide merchants with payment collection and foreign exchange services
PayU (July 2021): Partnering with crypto infrastructure provider Celo to launch a service for its merchants to receive stablecoins
Worldline (September 2021): Crypto Payments Platform WL Payments Launches in Switzerland, Enabling Over 85,000 Merchants to Receive BTC and ETH Payments
Verifone (September 2021): Cooperate with BitPay to launch encrypted payments on the Verifone online mall and e-commerce cloud service platform in the United States
Mastercard (October 2021): Partnered with Bakkt to provide crypto-related services to Mastercard's customers, including crypto transactions, applying for payment cards, and loyalty programs
Visa (December 2021): Launch of Cryptocurrency Advisory Services for Financial Institutions and Merchants
Shopify (December 2021)secondary title
2021-2022 Development Status
1. Traditional payment companies have further expanded their product range:
In June 2022, PayPal expanded its range of encryption services, enabling its U.S. customers to transfer cryptocurrencies between PayPal and wallets and trading platforms. It also eliminated fees for cryptocurrency transfers between PayPal users and acquired a crypto license, the Bitlicense, from the New York Department of Financial Services. In January 2022, the company announced plans to launch its stablecoin to complement its expanding crypto business.
In August 2022, Revolut expanded its crypto services in the UK by launching support for 22 new tokens, enabling its customers to trade over 80 tokens. In September, it registered a grade with the U.K.’s Financial Conduct Authority, allowing it to offer crypto services in the U.K. In August 2022, the company will also expand its crypto trading services to Singapore.
2. Traditional payment companies expand their encryption services through cooperation:
Visa and Mastercard are partnering with crypto wallets, exchanges, and launching crypto payment cards. On October 17, 2020, Mastercard partnered with cryptocurrency trading platform Paxos to develop a platform to help financial institutions offer cryptocurrency transactions.
In September 2022, Mastercard partnered with hi, an encryption-based financial service provider, to launch an NFT customizable payment card. Cardholders can customize their physical payment cards with NFT avatars and use them to pay with fiat, stablecoins and other cryptocurrencies at any supported merchant. Other Mastercard partners in 2022 include Nexo and Binance.
Visa has partnered with Brazil's Alterbank, Zro Bank and Argentina's Satoshi Tango to launch Visa's crypto payment card.
In June 2022, American Express partnered with crypto wallet Abra to launch its first crypto payment card. Cardholders can earn cashback in over 100 cryptocurrencies supported by the Abra platform.
3. Traditional payment companies and e-commerce platforms launch encrypted payment solutions for enterprises:
In September 2022, BigCommerce partnered with BitPay and CoinPayments to develop a crypto payment solution.
In May 2022, Shopify partnered with Crypto_com to launch the Crypto_com Pay feature, allowing merchants to accept payments in more than 20 cryptocurrencies.
In April 2022, the US-based payment service company Stripe launched an encrypted payment service, allowing its partner platforms to make instant payments to their stakeholders.
In February 2022, eBay will incorporate encrypted payments into its platform. In June 2022, it acquired KnownOrigin, a leading NFT marketplace.
In December 2021, Block (formerly Square) launched a cryptocurrency gifting feature, allowing its Cash App users to gift as little as $1 in Bitcoin.
In February 2022, FIS's Worldpay partnered with Circle to enable businesses to accept payments in USDC. In March 2022, it partnered with Shyft Network to help its merchants comply with crypto regulations.
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The future of crypto payments looks promising
With merchants and consumers showing increasing interest in digital assets and seeing cryptocurrencies as a viable and more efficient payment method, it is no surprise that traditional payment companies and e-commerce platforms are adopting crypto payments.
Cryptocurrencies can create an advanced global payment ecosystem, and encrypted payments provide important business opportunities for traditional payment companies and e-commerce platforms. The future development of stablecoins will further increase the speed of crypto payments and reduce transaction costs, which is critical for businesses to continue to adopt cryptocurrencies. ,
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
risk warning:
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
