Issues like price volatility, pokey transaction times, and sheer reputational risk have left many processors and independent sales organizations on the sidelines when it comes to cryptocurrency acceptance. Many, but not all. The latest entrant, and the largest so far, in this nascent market is Payroc LLC, which later this year will roll out a commercial program for acceptance of Bitcoin, Ether, and Bitcoin Cash, three of the leading crypto coins.
But the Tinley Park, Ill.-based acquirer doesn’t plan to stop there. It’s working with Ethos.io PTE, a Singapore-based exchange and technology developer that can support multiple coins. “We want to facilitate as many [coins] as we can,” Jared Poulson, Payroc’s chief integration officer, tells Digital Transactions News.
Right now, the crypto program is in a beta phase, but Poulson expects it will roll out by the end of September. No merchants are signed yet, he says, “but we have a lot of merchant interest.” Payroc has plenty of prospects already among the more than 30,000 merchants that use the company for credit and debit acceptance. All told, it processes $8 billion annually in payment volume.
The program will start out cautiously. It will be open only to online merchants, and will offer only crypto-to-crypto exchanges, which means merchants will receive payment in Bitcoin or one of the other available coins and will have to handle exchanges into dollars on their own.
Poulson says starting out with e-commerce, rather than with physical merchants, should mitigate one of Bitcoin’s biggest issues: slow transaction time brought on by network congestion. Online merchants don’t have to worry about lines forming at the cash register as transactions work their way to confirmation on the blockchain, Poulson points out.
“Point of sale will come later,” he says. “That’s going to require efficiencies so a coffee shop will accept crypto knowing the transaction will be fast.”
Sticking to crypto-to-crypto will help solve another issue: pricing volatility. Slow transactions can cause merchants to lose out on value—or refund value—if the price of Bitcoin versus fiat currencies slips or rises while the transaction is waiting for confirmation.
“Merchants will have to be pretty comfortable accepting crypto,” Poulson says. But while crypto is far from a common currency, merchants may be able to use it to attract customers who otherwise wouldn’t buy, he adds. “For a small percentage of transactions, many merchants would like the buzz,” Poulson observes.
Payroc envisions a gateway fee of a nickel per transaction, though for users Ethos will layer on an incremental charge based on the current network fee, Poulson says. The median transaction fee charged by miners to those spending Bitcoin, for example, has been another volatile factor. It rose as high as $14 at the start of the year but has since dwindled to about a dime, according to Bitinfocharts.com.
When it comes to both consumers and merchants, crypto isn’t for everybody, a factor Payroc recognizes, Poulson notes. “Consumers are comfortable using Visa and Mastercard,” he says. “Until [we] solve that, it’s just the merchants that have a really good reputation that will benefit from [crypto].”
That might begin to happen as more ISOs and merchants adopt cryptocurrency. Payroc isn’t the first ISO to bring acceptance of these digital coins to merchants. Aliant Payment Systems Inc., Fort Lauderdale, Fla., launched Bitcoin acceptance last summer and added Ether and Litecoin in March, for example.
For Payroc, crypto helps fill a need. “We are interested in proliferating payment methods to our merchants,” says Poulson. “We thought this has legs.”