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Digital payments on the rise, with crypto making inroads

Digital payments on the rise, with crypto making inroads

Explainers Essentials

20 Jul 2020

The landscape of payments is changing rapidly as a result from developing technology and changing consumer behavior.

According to a Research and Markets report, the transaction value of global mobile payments was USD 3715 billion in 2019 and is projected to reach USD 14,407 billion by 2025.

The fundamental shift has been long in the making, but since the global pandemic forced many cities into lockdown mode the previously slow pace of adopting digital payments has kicked into a higher gear. We’ve had to change the way we spend and while it hasn’t been easy for everyone or every business, it’s more than likely that our renewed focus on digital payments is here to stay long after COVID-19 subsides.

A recent study by PYMNTS showed consumers who made online purchases increased by 35% from 2019 to 2020. That may not be that surprising given the current circumstance, but more indicative of digital payment adoption is that consumers’ use of mobile phones to make in-store purchases rose by 25%. That’s a signal we’re talking about a long-term shift in the way we spend money.

As a digital currency, crypto has a role to play here but it still has a few challenges ahead. That has everything to do with breaking into mainstream payment options.

Most people prefer the usual suspects

There is no shortage of ways crypto can be used for digital payments. In fact, the digital-first nature of cryptocurrencies makes it a perfect fit. But for now, crypto is not a huge part of the push for digitizing payments. Most people, when they shop online or use mobile devices to make in-store payments, prefer the usual suspects for paying.

Major credit card companies like Visa and Mastercard have digital wallet functionalities. Tech companies making a play for financial services like Google, WeChat and Samsung have vast networks of merchants that accept their payment methods. New players like Square App are kind of in between these two movements being big on tech but built for financial services from the start.

But there are a few recent developments which may indicate crypto is making a push for becoming a more integral part of the digital payments landscape.

More crypto-friendly payment options

Just last month, PayPal made headlines as rumors emerged that the global payments giant was considering making cryptocurrencies available on the platform. The rumors came from job listings that specified the need for crypto and blockchain specialists.

While people familiar with the matter did confirm the company was looking to crypto and was talking with several exchanges to provide liquidity, the official company response has been that PayPal “does not comment on rumors or speculation.”

PayPal has over 325 million accounts worldwide, meaning any form of integration with crypto would be huge for the industry. It would make crypto much more viable in the eyes of mainstream users that already make payments digitally. Of course, there’s already speculation it could drive up the price for BTC and ETH, but the more meaningful shift comes from more people storing crypto in digital payment wallets. Consequently, it may mean more retail merchants will be accepting crypto payments one way or another.

As one of the major players in the space, CryptoCom is actively building out the network of online merchants that accept crypto as part of their digital payment options. Merchants that join the network can choose to accept crypto directly or receive it as fiat currency at a small fee. Together with other companies doing the same, this has contributed to the ever-growing list of retailers that accept crypto as payments. Currently that list includes names like Microsoft, Overstock, Newegg, Nordstrom, Whole Foods, Etsy, Lush and many more.

Flexa is taking a different approach, partnering at the technical infrastructure level to integrate crypto with digital payments. Earlier this year at the National Retail Federation’s 2020 Show and Expo they announced a new undertaking between Flexa, Gemini, and NCR Corporation, the largest point-of-sale (POS) software vendor in the world. What they demonstrated was an integrated ecosystem of crypto-based payments using in-store POS systems.

While Flexa supports many different cryptocurrencies, they have been big on stablecoins from the start as this particular form of crypto is designed for spending and usage. By accepting various forms of cryptocurrency, especially stablecoins, merchants can lower processing costs, reduce fraud loss, and reach entirely new sets of customers. The company says that already 40,000 points of sale across the US and Canada are connected to Flexa payment services, tapping into the crypto-economy and all the benefits digital currencies have to offer.

We’re seeing similar developments in the exchange space. At AAX, we’ve spent the last month building up our infrastructure around fiat on and off ramps. We now make it easy to buy crypto with cash, supporting more than 20 different fiat currencies, and our users can convert their crypto back to cash as well. This fiat-to-crypto corridors are a crucial part of redesigning the payment space and integrating the future economy with crypto. Merchants can easily accept payments in crypto and use an exchange such as AAX to liquidate their funds - or engage in arbitrage and sell their crypto on our over-the-counter platform.


While payments have been digitalizing for a long time, crypto has only recently made advances into this space. But given the recent developments, it looks like there is a bright future for crypto in digital payments as it slowly enters the mainstream.

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