Crypto Payments: Evolve Or Diebr>
Any person who has been a part of the crypto-community for a long time (me not being an exception) begins, after a while, to filter an endless stream of news rushing from messengers, social networks, media and even good old fashioned newspapers. Teams, traders and crypto-anarchists sink in their projects or ideas and perceive the publicity surrounding them as new hype wave.
However, have a look around. One of the largest banks in Hong Kong, Standard Chartered, uses blockchain to prevent financial fraud. Twenty-two EU member states signed a declaration to establish a European blockchain Partnership and are preparing to create a unified market that will benefit private and public sectors. Even the vice-president of Goldman Sachs dumped Wall Street to join Crypto Bank as COO. And when five years ago, while starting our first blockchain project, my team and our clients were somewhat akin to financial punks, now things changed.
I’ll give you a few figures because I don’t want to exaggerate too much. According to the Cambridge Center for Alternative Finance, the number of unique, active cryptocurrency wallets users varies between 2.9 million and 5.8 million. 75% of US consumers who own cryptocurrencies have used them for payments within a 12 month period, according to Boston Federal Reserve. In addition, Coinbase/ARK Invest report says that 46% of Coinbase users use bitcoin as a “transactional medium”, defined as making at least one payment per year. This means that the market is developing and eventually crypto-payments (using general purpose crypto, national crypto, or even corporate crypto) will definitely find their place among payment methods.
Obviously, crypto payments did not stand still, and many existing projects and products have shown effective results. For example, Bitpay built the largest number of plugins and integrations for e-commerce in the crypto industry. PundiX created their own point-of-sale devices and debit cards. TenX is working on crypto debit cards with a 0% commission and real-time exchange. Nonetheless, I believe there is still a blue ocean out there for my team at Paytomat.
What makes us think so, you might ask? Each seller has a small computer with software for sales management. Such a computer is called POS or point-of-sale device, and it is connected to the bank terminals. For every sale, the employee enters order in the POS and chooses the method of payment – cash, card or something else. In turn, the buyer gives cash or card and receives check. In Paytomat’s world, the Cryptocurrency button appears next to the “Card” or “Cash” buttons on the POS screen, and the payment process proceeds according to the flow we just described.
Unlike other projects, we rely on existing POS solutions, payment processing and guest management software. We’re building plugins and performing API integrations to enable them to process payments in crypto. While some projects, like PundiX, are developing their own Point-of-Sale devices and debit cards, Paytomat is compatible with most major operating systems and commercially available hardware. It thus avoids the need for merchants to train their personnel or purchase new hardware. In its turn, this significantly saves time and money for implementing crypto payments. By leveraging an existing infrastructure of billions of devices across the globe, we create the first ever blockchain of PoS terminals, turning these terminals into nodes of this blockchain.
Is it possible? Well, dozen of our clients have already successfully deployed the Paytomat solution in our home market – Ukraine. Now they’re accepting payments on a daily basis. Yes, the monthly volume of transactions is not that impressive yet, especially comparing to millions of transactions which Visa and MasterCard process on a daily basis in Ukraine alone. But Paytomat finally moved the story of everyday blockchain payments from mere theory into real life use cases. And I mean not the fancy “bitcoin-only quarters” somewhere in Berlin or Tokyo, but everyday stores and cafes in the midst of Ukraine, whose owners knew nothing about crypto before our installation managers arrived at their doorsteps.
What’s also important, is the transaction speed we managed to achieve. Payments in DASH or XEM take 2.5-4.5 second on average with fees as low as $0.1 within our system. We would love to bring this speed and convenience to the rest of Europe and the World in general. However, currently we face three major challenges:
- Regulatory burdens. While there is currently general regulatory coldness towards blockchain and cryptocurrencies, experts forecast that GDPR will make it even harder for a blockchain startup to reach its market. There are ways to implement blockchain project without compromising user privacy. However, overregulation or, worse, incoherent regulatory framework, make any such project unfeasible from the commercial standpoint.
- Perception of us as a team from a third world country. This issue is more complicated than regulatory. “What does a team from Ukraine have to do with payments in my country?” is a usual question we get from our European merchants and customers. Why nobody asks such questions from PayPal, Square or WebMoney? We should stop measuring projects by their nationality and start looking at what is their core technology and how passionate their team is about their product.
- Pressure from traditional fintech. With all the patenting activity recently going on, I have growing fear for the future of blockchain. In several years there might be a plenty of great ideas and favourable investment climate up there. However, this tremendous growth will be limited by the glass walls of patents, not always filed in a good faith. Having payments processing as our core business, Paytomat has to negotiate with traditional banking industry all the time. While some of our colleagues from the mainstream banking industry are truly innovative and support many of the initiatives my team had launched, we had to cancel some projects or restructure our business to accommodate the sometimes ‘whimsical’ demands of yet another compliance department.
Finally, I would like to note that there are some great challenges, which the crypto community should solve together, even though each project has its own global targets. In order to make crypto payments common, the movers and shakers of the crypto payments industry need to create crypto industry alliances to jointly fight against the regulatory thresholds, create common technology standards and defend against the biases of traditional banking. Only united will we stand and make crypto payments a daily reality for our peers and loved ones.