While everyone was focused on metaverse and NFT gaming, crypto payments have quietly become one of fastest-growing and most disruptive areas in fintech, with providers like CoinsPaid increasing their volume by 340%.
The ‘other’ big crypto trend
Ask just about any crypto user to name the top 2021 trends in crypto, and they will probably mention Play2Earn gaming and the rise of metaverse projects, emergence of L1 ecosystems like Solana and Avalanche, and the NFT hype. Indeed, the media have been pushing these narratives, often at the expense of equally important trends – such as the parabolic rise of crypto payments.
It can be argued that mass crypto adoption is about using crypto as a means of payment more than anything else. And indeed, in the metaverse and P2E gaming this is already so: players pay with crypto to buy avatars, event tickets, virtual land plots, and so forth. For example, Axie Infinity’s annualized revenue has reached $1.2 billion by October 2021 – and all that revenue came in the form of crypto payments.
Crypto payments booming across the board
What many people don’t realize is that crypto payment volumes have been growing just as fast outside of the realm of blockchain platforms.
For instance, CoinsPaid, the world’s second-largest crypto payment gateway, has processed $5,43 billion worth of crypto this year, or 67% of the provider’s all-time cumulative volume ($7 billion). 8,95 million transactions at the end of the year; 3,34 million in 2020. Growth by 5.61M, which is 168% more or 2.7 times more than in 2020.
Just as importantly, major legacy payment businesses are readily venturing into crypto payments. The best-known recent examples include:
PayPal: the company first allowed users to gain exposure to Bitcoin and ETH in the app, followed by purchase checkouts in crypto. Merchants can choose to get paid in BTC or to have their crypto revenue converted into fiat.
While PayPal and FIS aren’t crypto processing companies per se, their initiatives can give a huge boost to the sector. Once users have tried paying with BTC to selected merchants through PayPal , they will feel more comfortable doing that on any website, through any crypto payment provider, and in different digital currencies.
FIS: the world’s largest payment processing company launched a solution allowing banks to offer BTC exposure to account holders – and even issue crypto debit cards. While this isn’t a crypto payment product, being able to buy BTC through one’s bank and spend it with a debit card will boost adoption. FIS also has a Card-to-Crypto service that enables users to buy cryptocurrency with regular bank cards.
In the coming months, the number of such products can grow exponentially. According to the new study by Circle and PYMNTS, 73% of the financial institutions that already allow their customers to pay with crypto plan to add support for more cryptocurrencies in 2022.
From 300 to 800 merchants in one year
Financial businesses seem eager to offer B2B crypto solutions, but is there a real benefit for merchants? Indeed there is – at least according to Max Krupyshev, CEO of the above-mentioned CoinsPaid, which has expanded its portfolio from 300 to 800+ merchants this year. Mr. Krupushev lists 5 reasons why merchants turn to Bitcoin, ETH, DOGE etc.:
1) Saving on payment costs. Not having to pay acquiring fees or deal with chargebacks means savings of up to 80% – at least for CoinsPaid clients.
2) Near-100% acceptance rate. While banks often refuse transactions coming from certain countries or directed to specific merchants, crypto payments are almost never refused.
3) Security. Merchants who accept Bitcoin don’t have to worry about credit card fraud (including so-called ‘friendly fraud’). The payment flow is monitored, and any suspicious transactions are immediately red-flagged.
4) Versatility. Merchants working with providers like CoinsPaid can choose how to settle (withdraw revenue): in crypto or in one of several fiat currencies directly to a bank account.
5) Larger outreach. In mid-2021, there were 300 million crypto holders in the world – twice more than at the start of the year. Adding Bitcoin as a payment option is the best way to access this growing audience.
One more reason is other companies’ example. In the past few months, many brands have integrated crypto or announced plans to do so, including the US cinema chain AMC, e-Commerce platform MercadoLibre, Croatian supermarket chain Konzum, and even the Tourism Authority of Thailand.
Growing interest in crypto payments is reflected in CoinsPaid’s own numbers. The gateway has seen a 340% increase in the volume of processed transactions in 2021 and a 168% spike in their number. The total volume at the end of the year is $5,43 billion and the total transactions amount is 3.34 million.
Perhaps even more impressively, CoinsPaid now handles around 7% of all on-chain transactions in Bitcoin in the world, up from 5% a few months ago.
That a single payment provider should process such a large percentage of BTC flows shows that crypto payments aren’t just an appendix to all the exciting events in crypto: it’s actually the key mover on the way to mass adoption.
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