Deluxe aims to add crypto

Dive card:

• Deluxe, which still has a big business offering checkbooks to paper-preferring consumers, isn’t letting that stop it from preparing for the future. The company plans next year to let consumers make some payments from a digital wallet by converting their crypto to a stablecoin, said Mike Reed, who heads Deluxe’s ​​payments department.
• The Minneapolis-based company aims to make that happen by next year, said Reed, who is based in Atlanta and oversees the part of the business that offers digital options to customers that can automate payments and remittance processes.
• “Payments are moving very quickly, so there’s always a new thing on the horizon, so we’re looking at crypto to see if we want to add crypto to the gateway just to see if customers will use it,” Reed said in an interview on sidelines of the Money 20/20 conference in Las Vegas last week. The company “hopes to add to that next year,” he said.

Diving Insights:

Deluxe has acknowledged that despite the still robust demand for checks, this mainstay of the over 100-year-old company is waning.

“We expect the number of checks written to continue to decline due to the digitization of payments,” the company disclosed in its annual filing with the Securities and Exchange Commission in February. Among the culprits that caused the decline, along with debit cards and digital payments, are cryptocurrencies, the company said.

In fact, Deluxe CEO Barry McCarthy said earlier this year that he expects the company’s payments division to generate more revenue next year than its check-printing business.

The company’s assessment of crypto is a futuristic hedge against that eventuality. “We’re not losing business because we don’t have it today, but you never know,” Reed said. “I’d rather be ahead than not.”

Deluxe began thinking about the move to crypto when they noticed their bank partners were nurturing many first-time home buyers using crypto in 2020 and 2021 for home down payments, Reed said.

“If they start using it in those kinds of ways for high-ticket items and other things, maybe they will,” Reed explained in describing their use for the crypto alternative.

Reed also envisions consumers using their digital wallets for crypto for other large payments. “People may be in a bind and they may want to pay the taxes on their homes using that asset and they’ll need to get it out and be able to pay the tax bill,” Reed said. “Who knows, so we’ll be ready for it.”

Still, he noted that it’s not likely to enter the mainstream for daily payments anytime soon. “I don’t know that we’ll have people wanting to pay for Coca-Cola at the convenience store with their crypto wallet, but who knows.”

From using paper to digital money, Deluxe’s ​​foray into crypto is another move the company is making to be prepared for a variety of payment methods consumers use, beyond checks.

“Deluxe understands the ecosystem we’re in,” Reed said in a follow-up statement emailed through a spokesperson. “We are talking to our (merchant) customers to find out if they will accept crypto at the point of sale. We are also looking at blockchain, to use the distributed ledger to help facilitate real-time payments, especially where data payment is required, for example with an invoice.”

The company also noted that it is still determining the best way to implement the crypto addition. “The use cases for crypto are still being validated and we expect to have a crypto payment acceptance option on the market next year,” Reed said in the statement.