Checkout.com’s payment gambit blurs fintech and crypto

Payments stores’ deep embrace of crypto is a sign of things to come that the average person may never notice.

Why it matters: Mainstream crypto adoption is often talked about in terms of the masses trading bitcoin for everyday purchases. But what if crypto makes its way into backend payment processing that everyone uses but doesn’t spend much time thinking about?

Context: Behind every e-commerce transaction is a payment shop like Checkout.com.

• They make sure that people who sell things are paid by the people who buy things – the invisible hand that makes online shopping possible, among other things.
• What’s important, the company’s head of crypto strategy, Jess Houlgrave, told Axios, “is to keep up with the innovation” of the businesses they serve, whether for now or for what comes next.

Between the lines: The line between fintech and crypto is beginning to blur in payments.

• While transaction volume for the UK-based fintech is dominated by mainstream, non-crypto e-commerce activity serving fast fashion retailers like Shein, Checkout also counts 12 of the top 15 crypto exchanges as customers, Houlgrave says.
• It has settled roughly $1 billion in stablecoin transactions since that feature launched in June, according to Houlgrave.

The big picture: Houlgrave doesn’t think legacy payment infrastructure will be rendered obsolete by crypto rails. Rather: “We want to see these two payment systems converge.”

Zoom in: The most crucial factor for crypto compared to legacy fiat payment processing is accessibility, says Houlgrave.

• Settlement of stablecoin payments for exchanges requires 24/7 service; on bank rails it is 9-5 on weekdays, minus public holidays.

Of the note: Checkout.com settles for the stablecoin USD coin, to be specific.

• “We built this feature because it was requested by the market,” says Houlgrave. “The desire to settle in stablecoin was a question from the industry.”
• Customer demand also explains “why USDC?”

In-game status: Checkout’s competition in payments has also taken the crypto plunge. Stripe and PayPal launched their respective crypto services this year, despite the crypto winter and broader economic gloom.

The intrigue: Fortune’s Jeff John Roberts claims payments are the real reason Elon Musk bought Twitter, citing his long-held ambition to disintermediate ACH, the electronic bank-to-bank payment system.

What will be next: A payout function.

• “Today my options are limited to a wire transfer, which can take days and maybe $80 [after fees]” Houlgrave says, describing how payouts can enable businesses to compensate workers in crypto and reduce associated transaction processing costs.
• “Imagine a world where you can do that with a stablecoin. Immediately, in my wallet is not $100, but maybe $99.50.”

The bottom line: “The holy grail of payments – take crypto out of it – as soon as the transaction goes through, the money is in my account.”