Crypto firms take different paths to the point of sale | Payment source

Cryptocurrency always seems to stumble on its way from speculative asset to mainstream payment method. But fintechs are constantly trying different approaches towards that goal.

“The market opportunity for crypto payments is huge,” said Shane Rodgers, CEO of PDX, a cryptocurrency company that is issuing its own coin and developing a system to quickly convert crypto to traditional currency.

PDX’s platform is set to begin testing in mid-October. At the same time, YellowHeart, a ticketing company, is launching a crypto payment option for digitally native consumers who want to spend crypto coins directly instead of converting them at the point of sale.

“It’s something the younger generation uses every day for payments, no matter what anyone says,” said Josh Katz, YellowHeart’s CEO.

Both approaches are different but have the same goal of building momentum for mainstream crypto payments, which remain rare despite data suggesting a significant appetite for crypto at the point of sale among both consumers and merchants.

PDX Global’s platform will convert multiple digital assets into government currency in near real-time. To mitigate crypto’s volatility, which has been particularly acute during the correction in recent months, PDX will support cryptocurrencies with tokens backed by energy resources such as oil and gas initially, with plans to add more sustainable energy options in the future.

Consumers will pay PDX in crypto, and PDX will pay the merchant in local currency. Merchants will pay PDX a 1.5% settlement fee, which is lower than card fees, which typically range between 2% and 3%. The speed of settlement – a day or less – and the support of energy assets both insure against changes in the crypto value. PDX will also hold different types of crypto to ensure liquidity.

PDX does not issue a stablecoin at this time.

The difference between PDX’s platform and a stablecoin is that PDX is “backed by” the oil and gas reserves (and other assets), but not “linked to” the value of another currency. That could cause more volatility than a stablecoin, although PDX has applied for a banking license and expects to create a stablecoin after receiving the license, according to Rodgers.

PDX will use same-day ACH to process payments, and plans to use FedNow for instant settlement when the national faster payment system launches in 2023. “The merchant is settled in cash; they are not tied in any way to the crypto side of the transaction unless the merchant want to accept crypto,” Rodgers said.

As PDX prepares its pilot, YellowHeart is taking a different approach by avoiding the conversion altogether.

YellowHeart has launched an NFT ticketing app for Android and iOS, replacing physical tickets with a digital resource that gives consumers access to content and NFTs that act as digital content mementos. The artists selling tickets can track ticket cycles, which are designed to reduce scalping. NFTs, or non-fungible tokens, are a digital representation of a work of art or other content. The buyer is the owner of the NFT, which allows the digital asset to serve as a form of currency that can be traded or sold.

The YellowHeart app connects to the company’s NFT marketplace and features a wallet that integrates with the Ethereum blockchain and cryptocurrency technology company Polygon. Events will have QR codes on-site so users can download the app to view artists’ NFTs and make purchases. Artists at the launch include Maroon 5, Romero Britto and DJ White Show, and investors include LiveNation.

YellowHeart has tested the crypto payment feature internally before launch and uses Coinbase as its processing partner.

YellowHeart, which charges a service fee for crypto or non-crypto payments, does not keep the difference if the value of cryptocurrency goes up between payment and settlement, nor does it “cover” the loss if the value goes down.

“It’s a risk, but if you come to us, it’s Bitcoin coming into your door and not ours,” Katz said, arguing that the target base already invests in and trades crypto, and booking and paying for tickets is an additional use for crypto balance for active cryptocurrency traders.

Research suggests that there is a demand for crypto payments. Eighty-five percent of merchants will have the ability to accept crypto payments, according to a Deloitte survey of managers at 2,000 merchants. But 45% say they are not interested in holding crypto.

The PDX option keeps crypto out of the hands of sellers. It’s a model similar to most cryptocurrency payments, exchanging the money into traditional currency before the transaction reaches the merchant; PDX offers fast processing as a differentiator.

In YellowHeart’s case, buyers and sellers are likely already interested in crypto and other digital assets. For example, many of the targeted events for YellowHeart involve NFTs. While NFTs are still an early stage technology, there is a possibility for it use NFTs for incentive marketing and to reach new, young consumers to build future relationships.

In a previous interview, Jose Fernandez da Ponte, senior vice president of blockchain, crypto and digital currencies at PayPal, said that despite recent price fluctuations, there is momentum to move a significant volume of transactions to crypto. PayPal and Block both support crypto trading, allowing consumers to build balances that can be used for other transactions.

“We’re a Web3 company doing Web3-related commerce,” Katz said. “Crypto payments are critical to doing business in that world.”