How EMV Migration Paved the Way for Crypto Payments | PaymentsSource

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When card networks began pushing merchants to upgrade their point-of-sale terminals for EMV chip card payments a decade ago, some saw it as a contactless payment Trojan horse. The same migration may also have paved the way for the acceptance of cryptography.

So far, cryptocurrencies have had limited appeal for retail payments, largely due to the volatility of assets such as bitcoin and the complexity of converting between digital and traditional currencies. But with the momentum around stablecoins — which limit their volatility by tying their values ​​to government-issued money — merchants and consumers might finally embrace the idea of ​​using crypto for payments.

“I think consumers will use digital assets at point-of-sale, at a payment terminal, or in e-commerce on a laptop,” said Tim Vanderham, chief technology officer at NCR in Atlanta. “It’s still nascent right now, but you can see it starting to develop in the reports.”

NCR has just completed the acquisition of LibertyX, a Boston-based cryptocurrency software provider. Digital payment software company Bleu is planning an upgrade to support cryptocurrency payments, while traditional NCR rivals Diebold Nixdorf and Verifone are developing crypto-enabled updates for acceptance points of sale.

“Will we see tokens like Dogecoin available at point of sale? Probably not yet. [traditional] currency,” said Sesie Bonsi, founder and CEO of Bleu, a Los Angeles-based technology company that develops contactless payment and payment technology for retailers.

Tim Vanderham (left), chief technology officer at NCR; and Sesie Bonsi, founder and CEO of Bleu. “I think consumers will use digital assets at the point of sale, at a payment terminal, or in e-commerce on a laptop,” Vanderham said.

NCR and LibertyX will integrate their technology, combining LibertyX’s digital currency systems with NCR’s Pay360, which supports payments for financial institutions, retailers and other businesses such as restaurants, initially covering around 25,000 merchants. LibertyX’s technology also works on ATMs and kiosks, and will combine with NCR’s Cardtronics unit to support access to digital assets on the Allpoint ATM network in convenience stores, pharmacies and supermarkets.

“When you look at how the technology to support payments has evolved, everything is stacked on top of each other,” Vanderham said, noting the evolution of point-of-sale terminals to support mobile wallet transactions without contact involving QR or Near Field Communication codes laid the foundation for digital assets by enabling remote software updates rather than entirely replacing payment hardware.

Today, most systems for making cryptocurrency payments in stores convert these funds to traditional currency before reaching the merchant, and this option will be retained for merchants who wish to offer stablecoin or CBDC transactions. , as well as for merchants who want to accept certain forms of digital currency directly, Vanderham said.

“We’ll be able to present merchants or consumers with the real-time crypto to fiat exchange rate, or a stablecoin option that wouldn’t be as volatile,” Vanderham said.

The value of stablecoins in circulation has increased rapidly. In January, the market capitalization of stablecoins was $172 billion, according to analysis by The Times of India, which used data from Coingecko.com. This is up from the $130 billion reported by the US Treasury in October as part of the President’s Financial Markets Task Force report on stablecoins. There were also over $5.5 trillion in stablecoin transactions in 2021, according to Guidehouse and Messari. This is an increase from $1.35 trillion in 2020 and $250 billion in 2019.

“We definitely see more brands accepting crypto in 2022,” said Talie Baker, strategic advisor for Aite-Novarica in Denver. “I would say there isn’t a wide range of traditional merchants accepting crypto yet, but we’ll probably see a ton more this year and next.”

The trend has caught the attention of many payment companies who want to play a role in using digital assets for payments. These companies also foresee a demand for central bank digital currencies. Over 100 countries are engaged in or considering CBDC projects, with a focus on government payments and disbursements.

“We want to use existing payment real estate, like phones and payment terminals,” Bonsi said.

Bleu plans to launch a product this year that enables stable point-of-sale transactions via a mobile device, using Bluetooth or QR codes to connect the smartphone to an existing point-of-sale terminal.

Bonsi hopes to enable consumers with stablecoin wallets to use funds from that wallet at a point of sale. This is an emerging use case that could become a competitive necessity should PayPal or Block develop their own stablecoins to accompany existing cryptocurrency trading services.

Bleu is studying a peer-to-peer payment model, in which the stablecoin payment rail or CBDC could enable digital transfers between two consumers, between consumers and merchants, or between a stablecoin wallet and a merchant, Bonsi said. This account could also be used for contactless payments in stores, according to Bonsi.

Among NCR’s traditional rivals, Verifone recently teamed up with BitPay, a bitcoin and cryptocurrency payment service provider, to make it easier for merchants to access blockchain payments in stores and on e-commerce sites through the cloud. Diebold-Nixdorf operates a pilot of its cryptocurrency payment platform, which uses an application programming interface to allow merchants to support crypto transactions.

According to Avivah Litan, vice president and analyst at Gartner Research in Potomac, Maryland.

“The consumer receives a QR code that reflects what they are paying for,” Litan said, adding that updating a merchant terminal to support crypto QR payments requires few changes to the merchant that would likely be managed. by their payment company. “End users will go to processors and say ‘do it for us’.”

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