BitPay adds USDC, GUSD and PAX merchant support, but will people use it?
Do merchants or consumers drive adoption of new payment methods?
One of BitPay's core businesses is international B2B money transfers. It essentially works just like Ripple ODL, in that BitPay buys cryptocurrency with the local fiat currency on the sender's end, transfers that cryptocurrency to an exchange in the destination country and then converts that cryptocurrency into the local fiat currency on the recipient's end. BitPay charges a flat 1% fee for these types of money transfers.
Ingeniously, BitPay somehow found a way to deliver the exact same service as Ripple without creating a new $9 billion market cap cryptocurrency in the process.
Even as crypto markets fell in 2018, BitPay saw its services in this area increase by 250% through the year. This application of cryptocurrency, as an occasional bridge between fiat purchases, is where a lot of cryptocurrency's use has been to date.
But one of the reasons cryptocurrency is in this niche, as a tool for intermediary money transfer companies rather than a tool for direct P2P or B2B payments, is because of a lack of merchant acceptance for cryptocurrency.
That's changing in a small way with BitPay's addition of the Circle USD (CUSD), Gemini Dollar (GUSD) and Paxos Standard (PAX) stablecoins to its merchant payment service.
The upshot is that these stablecoins can now be spent at the 30,000 BitPay merchants around the world.
"Accepting or paying with stablecoins opens up new possibilities for global businesses that require the stability of the dollar but the security and efficiency of blockchain payments," said Stephen Pair, BitPay CEO and co-founder. "Businesses can invoice international customers without the need for costly, complicated cross-border wire transfers. Customers can send and receive payments using fast, efficient, and volatility free dollar-pegged stablecoins."
Real money
Adoption of new payment methods is tricky. It's a balancing act between merchants and consumers, where both need to get on the same page to make a new payment option hit the mainstream. One way to kickstart adoption is with the sheer scale that something like Libra tried to bring to the table.
Another is with something that's legitimately useful.
Digital currencies certainly qualify here, with a range of advantages such as faster and cheaper payments as well as the ability to make international micropayments for the first time.
Stablecoins qualify even further, by doing away with the deflationary model and volatility of Bitcoin, which could make it easier for the party on one side of a transaction to convince the other to accept stablecoins instead of wasting money on an expensive international wire transfer or similar.
It's also worth asking who these features benefit.
Precedent says a payment method will see wider uptake by skewing its benefits towards consumers rather than merchants. This has been seen among at least one of the few stablecoins that's actually seeing some real-world use as a daily payment method.
The same principle can also be seen beyond cryptocurrencies in credit card adoption. It's great for consumers and kind of terrible for the merchants who bear the brunt of the costs but have no choice but to bow to consumer preferences.
History says consumer adoption drives merchant adoption rather than the other way around.
But that's also good news here. There are no fees for converting USD to stablecoins like Paxos, and with some e-commerce sites on its merchants list, these new additions could give international online shoppers a reason to use BitPay.
Plus, if it means eliminating chargeback fraud, credit card fees and currency conversion fees, and gradually eroding the overall market share of credit cards, there are good reasons for merchants to incentivise consumers towards stablecoin payments.
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Disclosure: The author holds BNB and BTC at the time of writing.
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