Nevertheless, Ferrari started to accept cryptocurrency payments in the U.S. in October 2023 and hopes to roll out this scheme in Europe. PayPal created its own stablecoin in August 2023. Why would companies do this? Is the crypto payments market, for instance, expected to grow significantly?
Retailers hope to gain an advantage
Merchants seem enthusiastic about the idea of crypto payments. Predictions are that multiple different e-commerce vendors hope to offer crypto payments on their websites come 2024. The main drivers for this are opportunities to broaden their customer base, improve customer journeys, and potentially lower transaction fees. Cryptocurrency transactions can either be accepted directly - with the merchant accepting Bitcoin or Ethereum "as is" - or they can use a third-party aggregator, which helps convert the transaction to U.S. dollars. One such intermediary is BitPay, which mostly processed crypto transactions for gift cards in 2023. Yet, merchants and consumers did approach crypto payment differently from each other. Consumers in late 2021 hoped to use crypto as a payment method for travel, whereas the industry that focused on these payments the most was luxury goods.Crypto payments still have to overcome regulatory obstacles
Cryptocurrency payments are forecast to grow at a compound annual growth rate (CAGR) of nearly 17 percent between 2022 and 2029. One of the biggest challenges for this market is regulation. PayPal, for example, received a subpoena from the U.S. Securities and Exchange Commission (SEC) on its stablecoin in November 2023 - four months after its initial launch. The regulator took an active stance after the collapse of stablecoin TerraUSD in 2022, which caused a crypto market crash. Additionally, cryptocurrency was also a major source of payment fraud in the United States in 2022. Perhaps consequently, cryptocurrency used for payments is predicted to be a far smaller market than the predicted transaction value of CBDC - the attempts from central banks to use blockchain technology to digitalize fiat currencies like the euro.
