Airbnb’s chief executive Brian Chesky recently asked on Twitter: “If Airbnb could launch anything in 2022, what would it be?” The top answer? Crypto payments.
Once seen as a niche corner of the internet, cryptocurrencies are slowly entering the mainstream. Globally, there are now over 15,000 companies accepting bitcoin, from small businesses to big brands like Lush and Whole Foods and luxury organisations like Christie’s.
“Even though it might seem that crypto is an already established market, there are a lot of emerging companies and new opportunities still,” says Petr Kozyakov, cofounder and chief executive of Mercuryo, which provides an infrastructure to allow businesses to offer crypto-powered payment solutions — or “crypto as a service”, he tells Sifted.
But what do startups getting into crypto payments need to know? And where are the biggest opportunities?
Crypto is a digital or virtual currency that’s secured by encryption techniques. The best known — like bitcoin and ethereum — are decentralised networks built on blockchains. In other words, it’s digital money that can be exchanged into physical money (fiat).
Crypto is more transparent than fiat money, so you can trace all the transactions
The potential benefits to businesses of adding crypto payments include increased transparency and speed, which can make sales easier, and reduced card processing and money transfer fees. Adding different pay options can also expand the customer base; one study found that up to 40% of customers who pay with crypto are new customers of the company, and their transaction sizes are twice those of credit card users.
“Crypto is more transparent than fiat money, so you can trace all the transactions,” says Kozyakov. “You can easily make a payment from one place to another using crypto and the settlement can even be faster than going through banks and waiting several days.”
You can easily make a payment from one place to another using crypto and the settlement can even be faster than going through banks and waiting several days
Mercuryo, for example, allows people to buy and sell 13 cryptocurrencies (including bitcoin, ethereum, binance coin and 1inch tokens) from 16 fiat currencies.
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But there are also risks. Shortcomings include crypto-based crime like scams (which hit an all-time high in 2021), exchange rate volatility and potential glitches in the tech infrastructure. This can expose businesses to fraud and other issues, but many argue they can be mitigated by partnering with a third-party vendor.
The big ecommerce opportunity
Huge retailers like Starbucks and Coca Cola have started experimenting with crypto payments. Crypto also offers a big opportunity for ecommerce startups, as it can open up access to new demographics that value transparency in their transactions, and help position businesses in an emerging space.
London-based recipe box startup On The Table started accepting crypto payments in the past few months, and they now make up around 10% of all sales, according to cofounder Joshua Paterson.
“Cryptocurrency and the volatility within it is really exciting right now,” he tells Sifted. “It’s a really good way to experiment with the people that might be looking at your business and your service.”
While exciting, Kozyakov says volatility shouldn’t put businesses off: "Cryptocurrency is often associated with volatile price movements, but we want to challenge this perception by showcasing the extremely strong use cases of cryptocurrency as a payments mechanic, rather than a solely a tradable asset."
Because there isn’t mass adoption within crypto at this moment in time, it’s more difficult to find the people that are interested in our service
Paterson also says crypto’s uptake among customers can be low; often, startups like On The Table have a different demographic to crypto enthusiasts — 79% of crypto owners are male and 58% are aged under 34 — but he says this is likely to change as crypto becomes more mainstream.
“Because there isn’t mass adoption within crypto at this moment in time, it’s more difficult to find the people that are interested in our service,” he says. “There’s a bit of a mismatch with the communities.”
But, Kozyakov points out, certain industries like gaming already have a high level of crypto adoption. Mercuryo’s report found that in these industries, adding crypto payments leads to increased transaction volumes.
Amongst B2B companies, Mercuryo also found businesses and customers might be more likely to start using crypto if there was more regulatory transparency — with 33% of businesses they surveyed saying a lack of clear regulation is stopping them from adopting crypto and 39% saying a lack of transparency is holding them back.
Crypto won’t replace fiat
It’s still not reached mass adoption, but the hunger for crypto is growing. Mercuryo’s report says 68% of businesses say there’s a greater need for innovation in payments, and three in five reported increased demand from customers for crypto as a payment option.
And while introducing crypto has lots of benefits, Kozyakov says startups shouldn’t think about replacing fiat, but complementing it.
68% of businesses say there’s a greater need for innovation in payments, and three in five reported an increased demand from customers for crypto as a payment option
“We don’t believe that crypto will replace fiat,” he tells Sifted. “Crypto should work together with fiat and become a tool to solve the problems of today’s traditional financial system.”
Find out how Mercuryo is cryptopowering businesses across the globe.