the missing link to mass crypto adoption?

By Justin Fraser, SVP Enterprise Sales at Paysafe

After more than a decade of largely unfulfilled potential, it’s starting to feel like cryptocurrencies are turning a corner.

Awareness is at an all time high – when we conducted our annual consumer survey, 84% of UK respondents and 83% of US respondents could name at least one cryptocurrency.

But the bigger news is that cryptocurrencies are increasingly at the center of consumer spending plans, to the point that 55% of the 30 million crypto owners in the UK and US want their wages are paid in cryptocurrency.

Clearly, we are getting closer to mass adoption.

That said, we’re not there yet.

So what is the missing link?

What will it take for cryptocurrency payments to become as ubiquitous as payments in US dollars, euros or pounds sterling?

In search of acceptance

While more people have heard of cryptocurrencies than ever before, our data suggests that many are still not confident in their level of understanding.

Less than half of crypto owners feel more informed about cryptocurrencies today than they were when they started buying them. And there are also a number of misconceptions floating around.

As recently as 2020, for example, 30% of survey respondents thought cryptocurrencies were primarily used for illegal activities, when in fact they are most often used to buy food. Likewise, a significant number of people have cashed out their crypto investments due to negative news reports or comments from family and friends.

If cryptocurrencies are to gain more widespread legitimacy, these misconceptions need to be addressed urgently.

That said, the biggest barrier to greater adoption is lack of checkout acceptance.

For cryptocurrency payments to become as familiar to consumers as cards, contactless and other payment methods, customers need to be able to pay with them quickly and easily anywhere – in physical stores and online. .

But while over the past few years the number of merchants accepting cryptocurrencies has increased, including big names like Burger King, Starbucks, and Overstock, they are not yet accepted at checkout.

Cryptocurrency Payments: A Merchant’s Perspective

From a merchant’s perspective, accepting cryptocurrency payments creates two big challenges.

First, while growing interest and investment – ​​including from institutional investors – means that cryptocurrencies are more liquid than they were before, volatility remains an issue.

In May 2022, over $200 billion in wealth was wiped out in a massive cryptocurrency selloff in just 24 hours, with Bitcoin dropping up to 10% to its lowest level since December 2020, due to the collapse of the stablecoin TerraUSD. Small merchants in particular are unlikely to have the appetite for this type of risk, especially when they may have issues such as customer refunds to manage.

Second, accepting crypto payments has traditionally led to operational issues such as changes to point-of-sale equipment and specialized custodial and cash services. Dealing with these issues is time-consuming, expensive and complex.

Reaching the tipping point

While crypto’s volatility is likely to persist – some even claim it’s a feature, not a bug – there is a way around the operational issues: crypto-linked cards. These are standard debit cards that allow the holder to spend their cryptocurrency as they would with any other currency: by tapping their card or entering their details at the online checkout.

Crypto-linked cards have several advantages for customers and merchants.

From a customer’s perspective, they allow you to top up your crypto account, buy cryptocurrency, and cash out faster than you would with a bank transfer.

And because they’re issued in partnership with major card issuers, they’re accepted at any point-of-sale system that accepts other cards from those same issuers. This means fast and seamless payments and merchants don’t need to change their payment infrastructure.

Paysafe and Visa Direct: Enabling Seamless Cryptocurrency Payments and Payments

When we asked crypto owners why they owned a cryptocurrency, the top reason they gave us was that they believe it’s the future of finance.

But belief can only come true if paying and getting paid in cryptocurrency is as simple and convenient as tapping a card.

At Paysafe, we’ve been working to make this happen for almost a decade.

In 2015, Skrill and Neteller became two of the first digital wallets allowing users to deposit Bitcoin. And in 2016, we launched one of the first payment processing platforms that allowed merchants to accept Bitcoin.

Now, through our partnership with Visa Direct, we’ve created an API that allows merchants, including cryptocurrency platforms, to quickly process payments and payouts, and customers to transfer money to and from their crypto accounts easier than ever.

Where topping up a crypto wallet via wire transfer typically takes up to three days, our Visa Direct integration makes funds available instantly. This gives customers the opportunity to capitalize on declines in cryptocurrency value and makes their coins easily accessible, as funds can reach their bank account almost instantly, so they can use them for everyday purchases.

In addition to the benefits offered by Visa Direct, merchants can offer near-instant and seamless payments both locally and internationally through a single, intuitive interface, including encrypted debit cards that customers can use to pay at any time. any Visa compatible point of sale. sale worldwide.

And if customers have the assurance that they can use cryptocurrency as if it were fiat money, they will be several steps closer to becoming a legitimate, spendable and accessible currency for everyone.

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