A number of sellers are diving headfirst into cryptocurrencies as a form of payment for e-commerce purchases. The latest is Japanese e-commerce giant Rakuten.
In its year-end earnings report, Square (NYSE: SQ) said it had purchased approximately 3,318 bitcoins at a cost of $170 million. The company previously had purchased $50 million in bitcoin. The total of approximately $220 million represents roughly 5% of Square’s total cash, cash equivalents and marketable securities on hand as of Dec. 31, the company said.
The reason for the purchase is that Square “believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future. The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis,” the company said.
Square lets users buy bitcoin with its Square Cash App, accelerating adoption of its app. In its earnings call, Square said it spent just $5 to acquire a single customer in 2020 and it generates $41 in gross profit from each Cash App user.
Josh Brooks, head of marketing at OnBuy.co, said that cryptocurrencies represent an opportunity for retailers to reach new customers.
“With the ability to appease consumer demand for immediacy and security, while expanding market share for retailers, cryptocurrencies could prove extremely beneficial for the eCommerce industry if adopted efficiently,” Brooks wrote in a recent commentary for Global Banking and Finance Review. More and more companies have grown to understand these benefits, leading to a surge in consumer attention, and it may not be long before we start to see the commercial use of cryptocurrency as standard.”
The reason cryptocurrencies appeal to retailers is the global nature of e-commerce. With consumers able to purchase from any site — in any country — cryptocurrencies represent a simplified transaction process.
“Fiat money is the government-issued currency used as standard in any given country, like British pounds or U.S. dollars,” Brooks said. “While OnBuy is circumventing this concern for its retailers by providing auto-currency conversion and using PayPal to process global payments, cryptocurrencies also negate this concern entirely as they can be used in every country of the world without having to adapt prices or currencies, making global expansion far more streamlined for businesses.”
A survey of 5,000 Americans conducted in 2019 by Crypto Radar found that 6.2% owned bitcoin.
Rakuten is going a step further, allowing users of the Rakuten Wallet to use cryptocurrencies to pay for purchases through the company’s Rakuten Pay and Rakuten Cash ecosystems without fees. Previously, the company charged a 300-yen ($2.80 USD) fee after tax.
Rakuten is allowing holders of bitcoin, Ethereum and bitcoin cash to participate.
Luxury performance apparel retailer Ultracor also announced on Monday that it would accept cryptocurrencies as a payment method.
“At Ultracor, we ceaselessly strive to remain ahead of the technological curve, from our apparel design and production process to our website functionality. We are excited to be among the first luxury fashion brands to introduce this ‘next big wave’ of cryptocurrency, what is sure to become a more prevalent form of payment in the future,” founder Asha Kai said in a statement.
On Feb. 17, OLB Group (NASDAQ: OLB), a provider of omnicommerce and payment solutions for small and midsized merchants, announced its SecurePay payment platform could conduct transactions in cryptocurrency. Cryptocurrency wallets can be used directly at any point of sale (PoS) utilizing OLB’s OmniSoft cloud-based business services platform solutions, it said. Also, general-purpose wallet services — including Apple Pay and Google Pay — can be used to make purchases at any PoS serviced by OLB’s SecurePay gateway.
The process is seamless once the consumer chooses a crypto payment method, the company added.
SecurePay supports multiple cryptocurrencies, including bitcoin, ethereum, USDC and DAI, across all merchant platforms.
“One of the primary benefits of supporting cryptocurrencies at the payment gateway and point of sale is the flexibility it affords consumers,” Ronny Yakov, OLB’s CEO, said. “As more consumers become comfortable with cryptocurrency payments, it is vital that merchants support these transactions to remain competitive in the online marketplace. We have developed a solution that is easy for merchants to implement and provides the high degree of security and efficiency that consumers expect online. We anticipate that our cryptocurrency payment acceptance features will become increasingly popular as the year progresses.”
Merchants are paid in U.S. dollars.