In recent years, cryptocurrencies have emerged as a transformative force in the financial world. These digital currencies – such as Bitcoin and Ether – are decentralized and offer secure, efficient and borderless transactions.
As their popularity continues to rise, it is critical for retailers to consider embracing crypto adoption as a payment option. [Side Note: If you’re needing a refresher on Digital currencies the RBA has a handy explainer here.]
While cryptocurrency is not legal tender in Australia, digital currencies such as Bitcoin are considered a legal asset and can be traded. There are a number of companies across Australia that are already accepting cryptocurrency payments. Gas station and convenience store chain OTR Group is one such company that already allows people to pay for their gas and purchases with cryptocurrencies.
Understanding the risks and benefits to retailers of crypto adoption is essential for widespread retail adoption. So, what are the risks and rewards?
- A growing customer base
Integrating crypto adoption into retail can open doors to a huge and growing customer base. RBA’s June 2023 “Consumer Payment Behavior in Australia” bulletin highlighted that more than 60 percent of respondents knew about cryptocurrency as a payment method. Various reports from HedgewithCrypto and Statistia estimate that between 18 and 25.6 percent of the Australian population owns some form of cryptocurrency. Cryptocurrency enthusiasts are eager to issue their digital assets and are actively seeking underwriting companies. By catering to this growing customer segment, retailers can tap into a niche market and attract a new group of customers who value the convenience and security that cryptocurrencies provide.
- Diversification of payment options
Consumer preferences evolve and retailers must adapt to meet these changing demands. By offering cryptocurrency as a payment option, retailers are diversifying their payment methods, opening up their business to a wider range of customers. Since convenience and choice are highly valued, accommodating diverse payment preferences can contribute to customer satisfaction and retention.
- What about the volatility of cryptocurrencies?
Reducing the volatility of cryptocurrencies can be a barrier for retailers as a payment option. To navigate this, retailers can use certain strategies to minimize the impact, including:
- Direct conversion to fiat currency: Merchants can partner with payment processors or cryptocurrency payment service providers that offer instant conversion of received cryptocurrencies to fiat currency. The merchant then receives payment in their preferred local currency, reducing exposure to cryptocurrency price fluctuations. This provides a level of stability and certainty for the retailer, enabling them to maintain consistent pricing and financial operations. Retailers can limit their exposure to volatility by partnering with a payment service provider that converts received cryptocurrencies into fiat currency at the point of purchase. By converting the received cryptocurrencies at the time of purchase, retailers can secure their revenue and reduce the potential impact of sudden price swings.
- Beware of stablecoins: Stablecoins are cryptocurrencies designed to maintain a stable value by pegging their price to a specific asset, such as a fiat currency or a commodity. By accepting stablecoins, retailers can minimize the risk of price fluctuations, as they offer a relatively stable value, which is beneficial for day-to-day transactions and maintaining predictable income streams. This type of cryptocurrency is currently under industry-wide scrutiny for suitability in Australia. Stablecoins may become a viable alternative payment method in the coming years.
- Price adjustments and real-time calculations: To adapt to cryptocurrency volatility, retailers may consider implementing dynamic pricing strategies, using real-time calculations to adjust prices based on the current exchange rate of cryptocurrencies. By linking prices directly to exchange rates, retailers can ensure that customers are charged the correct amount at the time of purchase, reducing the risk of loss due to price fluctuations.
- Innovation and Early Adoption Advantage: By embracing early-stage crypto adoption, retailers are positioning themselves as innovative and forward-thinking institutions. These can be valuable reputational assets in an increasingly competitive market. Using cryptocurrencies as a payment option demonstrates a commitment to staying at the forefront of technological advancements and meeting changing customer demands. Such early adoption benefits can attract tech-savvy customers who value advanced solutions and are more likely to choose companies that align with their values.
What is ANZ Worldline Payment Solutions doing in this space?
The parent company of ANZ Worldline, Worldline SA, has recently partnered with a luxury hotel Chedi Andermatt to provide cryptocurrency acceptance for their business with great success. The solution provides the company with the ability to accept payments in cryptocurrencies, with many of the volatility issues mentioned above, one solution and one experience for both point of sale and e-commerce. The underlying Worldline Crypto Payments proposition is fully operational across Europe with over 1000 innovative companies introducing the payment method into their shopping and e-commerce operations. ANZ Worldline Payment Solutions looks forward to introducing this innovative solution to Australian retailers in the coming year.
The adoption of cryptocurrencies as a payment option is no longer a futuristic concept but a contemporary reality. Retailers who proactively embrace this technology can benefit from expanding their customer base, offering their customers more ways to pay the way they want and potentially building a competitive advantage in the marketplace. While there are still challenges to overcome, such as price volatility, the potential benefits may outweigh the risks.
About the author: ANZ Worldline Payment Solutions provides secure payment and transaction services to merchants across Australia. From sole proprietorships to Australia’s largest institutional companies, it has a market-leading solution to help you grow.
ANZ Worldline Payment Solutions is a partnership between ANZ Bank and Worldline – Europe’s #1 payment service provider and number four globally.
The partnership brings together the strengths of both companies: ANZ’s trusted local expertise and industry oversight, and Worldline’s best-in-class, end-to-end payment solutions and global innovation.
By joining forces, the companies are introducing Australian retailers to some of the most innovative e-commerce and in-store payment solutions available worldwide.
Learn more: https://anzworldline.com.au/en/home/payment-moments.html
Things you should know
As this guidance has been prepared without regard to your specific goals, financial condition or requirements, it is essential that you assess its suitability for your individual situation before taking any action on the information provided. Before making any decisions based on this information, it is advisable to obtain independent financial advice. The information, opinions, conclusions or recommendations presented in this article are reasonably formulated based on information available at the time of publication. However, no warranty is made as to the accuracy, reliability or completeness of any statement contained in this article.
ANZ Worldline Payment Solutions means Worldline Australia Pty Ltd ACN 645 073 034 (“Worldline”), a provider of merchant solutions. Worldline is not an Authorized Deposit Taking Institution (ADI) and entering into an agreement with Worldline is not a deposit or liability of Australia and New Zealand Banking Group Limited ACN 005 357 522 (“ANZ”) or any of its affiliates. legal entities (together “ANZ Group”). Neither ANZ nor any other member of the ANZ Group endorses or warrants Worldline.