Businesses Face Obstacles When Embracing Crypto


As a company, accepting cryptography is harder than it should be. Technology is different, but this is nothing new.

The problem, according to George Davis, co-founder and product manager of cryptocurrency payment technology company BVNK, dates back to the beginnings of cryptocurrency with bitcoin. Specifically, it started as a peer-to-peer payment product, designed to avoid financial institutions, and then became an investment product before companies began to take it seriously as a payment currency.

“Crypto has evolved first into the retail investor, so there’s a huge community of early adopters in cryptography dating back years,” he said. In most traditional markets, consumers came first. But in cryptography, “we’ve found that companies are lagging behind, and a company is much less likely to have cryptography than any consumer you find on the street.”

As a result, cryptography has moved too fast for traditional finance: “Traditional banks and payment companies didn’t really know how to handle them.”

Or, for a long time, trust them.

“Since running a crypto business before, some of our founders have really felt the pain of trying to get a bank account, trying to pay people around the world, trying to accept payments from their customers,” Davis said. “The same goes for payments. It’s very difficult to accept payments from your customers, because again, payment companies don’t really understand you.”

That means high risk-taking rates, high exchange rates, and stricter requirements for knowing your client (KYC).

As a result, “cryptography is really poorly handled compared to what a traditional FinTech could do,” he added. “These businesses know they have to do it to get that volume, they need to get those customers, but they don’t know how.”

What collapse?

One thing that surprised BVNK founders, Davis said, was that despite the current market volatility – bitcoin has fallen more than 50 percent since November – the number of consumers who want to pay in cryptocurrency continues to grow aggressively.

Which makes sense, as the number of U.S. cryptographic users has grown to nearly 60 million in the last 12 months, according to PYMNTS’s Crypto Consumers study.

See also: U.S. cryptocurrency consumer: use of cryptocurrencies in online and in-store shopping

What is changing is the cryptocurrencies with which they want to pay.

“On the consumer side, we’re seeing a huge demand to pay, especially with stable currencies,” Davis said. “These consumers have withdrawn from more volatile assets such as ethereum and bitcoin.”

They began to move on holdings such as USD Currency (USDC) and Tether (USDT), which in theory allowed them to leave money in the cryptographic ecosystem without suffering losses and without paying rates of increase and increase.

“We are seeing a huge demand and a huge amount of USDC and USDT volume for these businesses,” he said. “Stablecoins are much more like an infrastructure than an investment.”

This is especially true for cross-border transactions, Davis said, noting that a growing number of companies are interested in avoiding SWIFT fees and arrears.

At the same time, he said, “We believe that cryptography will become the infrastructure of the future, but it does not replace everything we have today.”

Nor would he advise companies to keep more than a little of their treasures in crypto.

Take it easy

BVNK focuses on the B2B side, helping companies accept and use cryptography without having to learn a new way of paying.

A CFO or treasurer should view the acceptance or use of cryptography “differently than picking up another method of fiduciary payment,” he said. “Our focus is really on making sure there are no differences in that evaluation flow, that it feels exactly the same as when your customer pays you in fiat.

“So we’ll manage the repayment flows, we’ll handle the payments, we’ll handle what happens when they pay less, what happens when the blockchain is slow, and so on.”

Although KYC’s requirements in the world of cryptocurrency payments are getting tougher, especially as the European Union nears the end of its legislation on Crypto Assets Markets (MiCA), it is generally not a field that BVNK has looked at. It is launching a KYC bass access ramp with the goal of facilitating account-to-account transfers because it uses crypto, but it doesn’t touch consumers anywhere, Davis said.

While BVNK’s crypto business is currently focused primarily on European mid-market companies, it is launching a major boost to America, Davis said, thanks to a $ 40 million round of Series A funding.

Read more: Cryptographic banking firm BVNK raises $ 40 million in Series A

What he found interesting was how fast the process was.

Investments in venture capital firms, until recently, had “a very important focus on infrastructure, investing in business … to make that infrastructure sustainable and stable for the future of companies using this technology.”

What BVNK found, he said, was “a great interest in investing on the B2B side, especially because it’s not so susceptible to that volatility in the market.”

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NEW PYMNTS DATA: THE TRUTH ABOUT BNPL AND SHOP CARDS – APRIL 2022

About: Shoppers who use store cards use them for 87% of all eligible purchases, but that doesn’t mean merchants need to start buying options now and pay later (BNPL) from the time of purchase. The Truth About BNPL And Store Cards, a partnership of PYMNTS and PayPal, surveyed 2,161 consumers to find out why providing both BNPL and store cards is critical to helping merchants maximize conversion.



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