The use of digital assets to make payments is growing, according to a recently published study.
It reveals that cryptocurrency’s role as a viable means of payment has
been expanding and this year’s market rebound has increased the turnover
of crypto payments. The report suggests that debit cards linked to
digital currency wallets will remain an important tool until wider
adoption of direct cryptocurrency payments.
Also read: BCH Can Be the Global Coin for Daily Spending, Says Italian Crypto Executive
Crypto Payments Industry Expands With Growing Markets
The study highlights a general correlation between upward market
trends and the expansion of the crypto payments industry. Its Compound
Annual Growth Rate (CAGR) increased 21% between 2014 and 2015 and jumped
over 600% two years later. But even during the bearish 2018, when the
price of major cryptocurrencies took a hit, the sector’s CAGR expanded
by around 90% year over year. The recovery that started this year has
had a positive effect and the rising volume of payments this spring
indicates that the recession is over.
The industry assessment has been conducted by Crypterium,
a payment solutions provider that recently launched a crypto debit
card, one of the few products in this niche that’s available globally.
The analysis examines the performance of leading cryptocurrency payment
providers such as Bitpay, Coinsbank, Cryptopay, Spectrocoin, Wirex, and
Xapo. It covers two main types of services offered on the market: those
allowing merchants to accept digital currency directly and solutions
enabling customers to pay with crypto assets through conversion to fiat.
Statistical data gathered by Crypterium shows that the average value
of transactions processed by the payment platforms stabilized during
last year’s decline in a relatively narrow range between $1,000-2,000.
The volume of crypto payments and the average amount have increased in
2019, reaching a seven-month high in April. The researchers believe
that, helped by the crypto market recovery, the increasing number of
payment providers in the sector which offer new solutions for both
merchants and customers will help the industry achieve “gradual and
sustainable organic growth.”
The report further identifies the regions that concentrate the most
crypto holders who are using digital assets to make payments. The
authors emphasize that the number of wallet addresses has been
constantly growing and active wallets worldwide have reached 34 million
in the first quarter of 2019, increasing by 44% just in the last 12
months. According to another study that news.Bitcoin.com covered in May, the figure is even higher – 36 million.
High Income Countries Adopt Cryptocurrency Payments Faster
A key finding in the Crypterium analysis is that cryptocurrency
payments are more popular in high-income nations in general. Based on
data for trading and mining activity from the largest digital asset
exchanges and mining pools, Crypterium has shortlisted the top 20
countries. Coins are increasingly used as a payment instrument in the
United States, United Kingdom, Russia and China. The company concludes
that their adoption is triggered by different factors depending on the
jurisdiction. The most common reasons to trust cryptocurrencies include
the desire to maximize efficiency in payments and the need to protect
assets against hyperinflation.
To better understand why people choose decentralized coins over
traditional payment methods like cash, fiat payment processors and bank
cards, the researchers have analyzed various factors such as debit and
credit card ownership, internet accessibility, mobile phone ownership as
well as macroeconomic indicators including gross domestic product (GDP)
per capita and share of shadow economy. Based on their qualitative and
quantitative assessment, they have grouped the leading 20 countries in
three categories: Innovators, Shadows and Survivors.
The United States, Canada, Germany, France, England, the Netherlands,
Italy, Spain, Japan, and South Korea are the so-called ‘innovators.’
They are characterized by deep penetration of banking and digital
financial services and unrestricted access to mobile services. According
to the authors, they offer the best opportunity for merchants to
capitalize on increasing crypto adoption as most customers there have
access to the internet and own a mobile device.
Medium to low income countries – Russia, China, Brazil, Poland, and
Turkey – have been labeled as ‘shadows.’ Many of their citizens have
lost trust in government institutions, banks and national currencies due
to economic recessions. They often see cryptocurrencies as an
alternative tool to make payments and receive income. The group of the
‘survivors’ includes Vietnam, India, Iran, Venezuela, and South Africa.
Their populations have poor access to traditional banking services and
they look at digital coins as a way to overcome economic challenges like
hyperinflation and save on money transfers.
Debit Cards Remain Viable Option for Crypto Users
Until wider adoption comes around, debit cards tied to crypto wallets
are likely to continue to offer the most applicable solution for
cryptocurrency users who want to spend their electronic cash on a wide
range of products and services. The prepaid cards that can be loaded
with digital coins can be used in both brick and mortar stores and
online platforms to purchase anything that can be bought with regular
bank cards as they convert your crypto assets and merchants are paid
with fiat money. They also allow you to withdraw cash directly from
regular ATMs.
In its study, Crypterium, the issuer of a new crypto debit card,
has mentioned five established platforms that provide this type of
product: Wirex, which offers a crypto card in the European Economic
Area, Coinbase,
popular in the U.K., Bitpay, which is a working option for U.S.
residents, Cryptopay, with its card available in the Russian Federation,
and MCO, which issues Visa cards in Singapore. However, there are many
more options on the market, as news.Bitcoin.com recently reported, such as Paycent, Uquid, Bitsa, and the ADV cards.
The team behind the in-depth analysis of the crypto payments sector
notes the strong demand for cryptocurrency cards. Companies that
launched such products saw their average monthly turnover figures
increase three times, the authors claim. Again, there’s a correlation
between the state of crypto markets and the interest in debit cards
facilitating cryptocurrency payments. The number of monthly searches for
‘bitcoin cards’ has reached a 12-month high in May 2019. Users
recognize the importance of these cards for mass crypto adoption. Almost
70% of the responders in Crypterium’s 2018 Customer Survey indicated
that cryptocurrency cards are the best option to achieve that at the
moment.
Former Visa Executive Leads Company Issuing Global Crypto Card
The future of crypto cards seems bright, as global payment card
ownership in general is growing rapidly. The number of debit card owners
is expected to double in less than a decade and according to the World
Bank, it will reach 69% in 2020. Crypterium has one of the latest
offerings in the market and it’s also one of the few that can be ordered
anywhere in the world. The Global Bitcoin card
launched recently with support for bitcoin core, ethereum, USD coin and
Crypterium’s own token, CRPT. Nevertheless, the fintech company plans
to expand their number with over a dozen other cryptos within a year and
bitcoin cash (BCH) is one of the currencies it’s considering, Crypterium CEO Steven Parker assured news.Bitcoin.com.
“Cards is definitely a key part of the Crypterium proposition. A
payment card is still the most convenient ‘channel’ to enter the
mainstream payments eco-system and the easiest way to make a payment in
the online and offline worlds and also withdraw your money in cash,”
Parker emphasized. “So we do envisage a growing number of crypto cards.
Our belief is that fiat cards enabling crypto transfers will indeed
become a strong segment in cards. However, we do also see a big
opportunity for NFC channels such as Apple Pay and Google Pay and we
intend to launch those types of service by the end of the year. Also,
our company roots are in QR codes and we are still seeing how we can
integrate that type of functionality. QR codes are huge in China,” the
executive added.
Steven Parker noted there are different flavors across different
regions but he believes crypto payments will grow all around the world.
“Of course, we see the highest ownership of cryptocurrencies in places
like the U.S. and Korea. But as in payments generally, I think we shall
see different adoption rates. Asia is already led by mobile payments, so
I can imagine crypto payments growing faster there. We see large
developing markets such as Brazil or Russia, as a big opportunity. And,
of course, some of the more interesting consumer innovations – prompted
by the Open Banking revolution – is happening in Europe,” he elaborated.
The executive thinks crypto adoption can mirror local financial habits
and Crypterium has integrated, for example, the ability to transfer in
and out via Iban accounts.
Parker spent over seven years at Visa as General Manager for Central
and Eastern Europe and Head of Marketing for the greater region that
encompasses the Middle East and Africa as well. He was approached by
Crypterium in late 2018 with a simple proposition: to make payments,
especially person-to-person and cross-border, faster, more seamless and
cheaper. He also recognizes that traditional financial services are
expensive and exclude many people who don’t have access to bank
accounts. Through services like those offered by his Estonia-based
fintech company, anyone with a mobile phone can open up a wallet and
immediately receive and make payments. “I think that’s amazing and the
borderless nature of cryptocurrencies is what makes it possible,” the
former Visa executive stated.
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