Frank Weil, Chief Customer Officer at KWI, examines if branded coin via crypto will be the future of payments in retail.
Brands have been offering their own credit cards for years. In fact, the first known proprietary cards date back to the 1920s, when they were introduced by a few US department stores and oil companies.
There are plenty of benefits: store cards breed customer loyalty and allow retailers to gather more data about their customers and their shopping habits. However, whenever customers pay with a credit card, any card, financial institutions levy (sometimes hefty) transaction fees.
Enter payment via cryptocurrency. Brands accepting crypto, and there are only a handful at this point in time like Overstock and Microsoft, are at the forefront of a digital commerce revolution. There is even an Ethereum debit card now. They’re certainly ahead of the pack and placing bets on the future.
Why accept Bitcoin and other cryptocurrencies? Some retailers believe that paper transactions will become obsolete. It enables real-time processing of transactions, and it opens up an easy channel to global processing. And, again, it’s a powerful way to avoid transactions fees and to break the chains from traditional banks.
Will cryptocurrency become a primary form of payment for retailers? Time will tell. Crypto has its share of skeptics based on the volatility and evolving regulatory nature.
However, it’s clear that we are continuing to move toward a cashless society (see the rise of Venmo and contactless payments at New York Fashion Week and the World Cup), and that customers will continue to be drawn to the ease and convenience of digital payments and new technology.
Simply look at the usage rates of the Starbucks app and Apple Pay(both will record more than 20 million users by the end of 2018). Or the ability to buy beer with the touch of your finger. Clear, the biometric company best known for its presence at airport security lines, is testing a new payment model where you can verify your age and pay with just your fingerprint (after you’ve linked it to your credit card, of course) at Safeco Field in Seattle.
These payment systems are shifting the acceptance toward new forms of commerce. Taking this one step further, we predict that we will see a time where brands are issuing their own currency to merge all the customer engagement of branded credit cards with the benefits of cryptocurrencies.
We see this happening with Initial Coin Offerings where companies are issuing tokens as a means of fundraising. As of this past July, there were 1,000 digital tokens in existence, with 12.4 billion dollars raised by companies through ICOs.
Once you strip away the complexities and regulations of the fundraising model, a branded cryptocurrency looks and feels a lot more like the company apps that are currently used and based on traditional dollars.
Retail is evolving in every way, and we predict payments will be the next frontier.