More than two decades after the dot-com bubble ushered in a new era of digital commerce, the payment infrastructure is still very much in flux. That reality is even more prevalent as 2020 approaches, and the cryptocurrency movement is offering a new tool and a unique complication into today’s approach to executing payments.
Indeed, the past year has seen an exciting confluence of traditional payments companies and cryptocurrencies as platforms like Skrill, PayPal, and others strive to provide new avenues to acquiring and using digital currencies.
In many ways, their development has instituted an already-not yet dichotomy where significant gains are evident but not fully realized. To put it simply, traditional payment companies are making progress, but not enough to call the work complete.
Increased Focus on Crypto
After years of development and maturation, many traditional payment companies no longer see cryptocurrencies an aberration. Instead, they see it has an opportunity to embrace what is sure to be a prominent expression of finance in the digital age.
In response, they are increasing their products and services to the crypto community. For example, the online payment services platform Skrill is expanding its reach into crypto with its recently announced crypto-to-crypto buy and sell service that allows users to exchange Bitcoin for other cryptocurrencies.
Skrill has been offering a fiat-to-crypto gateway for more than a year, initially allowing users to buy cryptocurrencies using a credit card or a bank transfer. This new offering is an easy-to-use gateway that provides a pathway for crypto enthusiasts and novice users alike to access digital currencies.
However, while their service expansion reflects the continued interest in digital currencies as a payment methodology, it also represents the trouble that traditional platforms have with crypto custody. Skrill’s latest offering is a custodian service, which means that users don’t have direct ownership of their assets, something that chaffs the priority of asset management.
Similarly, Revolut, a London-based fintech firm, is pursuing a $500 million funding round to expand its cryptocurrency offerings. Commenting on the efforts, the company’s CEO, Nikolay Storonsky, expounded on the company's goals, explaining,
We want to raise at least $500 million in direct equity and potentially, maybe at a later stage, up to $1 billion in convertible (debt).
At times, Revolut has faced questions about its anti-money laundering controls, a shortcoming that will need to be addressed before more users and regulators will give it a broad stamp of approval.
Even many prominent payment companies, such as PayPal, are investing their resources in crypto payment startups. The company’s investment arm, PayPal Ventures, is helping fund a blockchain analytics firm that’s facilitating institutional crypto adoption. Their investment takes place just months after PayPal withdrew from the consortium behind Libra, the cryptocurrency initiated by Facebook intended to enable digital payments for the unbanked. The program was also supported by Visa, Mastercard, and Stripe, three big players in the payment ecosystem who also bailed on the initiative.
Meanwhile, other platforms, like Wirex, are attempting to harness the payment traffic from companies like Visa to promote a crypto-centric rewards program that directly connects to a new Visa Travelcard.
The card supports more than 150 different cryptocurrencies and includes an exchange service that allows users to quickly move between fiat and crypto. Of course, these programs are relatively new, and it’s unclear if they will genuinely hasten the adoption of crypto payments among the general public.
Big Growth & Room For More
Each of these platforms and programs represents significant developments for traditional payment platforms entering the crypto space. By making it easier to acquire and use digital currencies as payment, they are helping fulfill the original vision of digital currencies while also hastening adoption of an asset that feels uniquely prescient in the digital age. Of course, progress isn’t the same as a finished product, and consumers should look for more advancements before they conclude that this ecosystem has reached fully arrived.
Even so, it’s clear that traditional payment platforms are making inroads into the crypto space, and their platforms are making it easier for users to buy, sell, and use digital currencies. As more and more of our lives take place in digital spaces, this is undoubtedly a good thing.
Featured image via Pixabay.