Digital Transactions Authoritative, insightful and timely information for payments professionals
By Jim Daly
A summer poll of payments executives found that less than a third think Bitcoin and other so-called math-based virtual currencies will greatly change how money is moved within 10 years. But majorities, some strong, also think that Bitcoin will spur responses from PayPal Inc., the big wire-transfer providers, and central banks. The respondents aren’t so sure how the global payment card networks will react to the digital upstart.
“It [Bitcoin] has that disruptive potential, we just don’t know which way it’s going to go yet,” said George Peabody, a consultant and researcher at Menlo Park, Calif.-based Glenbrook Partners LLC.
Peabody revealed results of Glenbrook’s July-August online poll of payments executives worldwide while speaking Tuesday at SourceMedia Inc.’s ATM, Debit & Prepaid Forum in Las Vegas. The poll garnered more than 300 responses, 66% of them from the U.S. The survey base came from Glenbrook’s client lists and the subscriber list of SourceMedia’s American Banker newspaper. Some 15% of respondents said they had purchased Bitcoin.
On the one hand, payments executives don’t seem overly worried today about Bitcoin, the most prominent of what Peabody calls a group of new math-based currencies that rely on cryptography. When asked if Bitcoin “will replace how money is moved in 10 years,” some 23% of respondents replied “no way” and another 46% said it was unlikely. Only 5% replied “definitely,” while 26% considered such a scenario likely.
On the other hand, only 27% of respondents believe it is definite (3%) or likely (24%) that Bitcoin will be forgotten in three years. And when asked about Bitcoin’s effect on prominent payments companies and sectors, the respondents indicated that the virtual currency is about to make its mark.
For example, 61% think it is likely (54%) or definite (7%) that PayPal will support Bitcoin in its digital wallet. PayPal already is by far the biggest online alternative and mobile-payments player, and supporting Bitcoin would enhance the utility of its wallet with a small but growing consumer niche.
Similarly, 67% of respondents said it is likely or definite that Bitcoin will impact The Western Union Co., MoneyGram International Inc., and other international remittance providers. When asked in separate questions about nine prospective use cases for Bitcoin, 61% termed international remittance as very important or critical—more than any other use case. On a scale of zero to three, international remittance scored 2.75, followed by e-commerce payments at 2.66.
The respondents were well aware of governmental skepticism about Bitcoin, which because of its unregulated nature and relative anonymity is popular with drug dealers, payment card fraudsters, and other criminals. (USA Today on Tuesday published a front-page story about how the FBI busted Silk Road, an underground online market that only accepted Bitcoin for payment.) Forty-five percent believe Bitcoin will be regulated or banned within three years and another 26% said regulation or a ban will come within five years. Only 8% believe Bitcoin can escape regulation.
Payments professionals aren’t quite as sure about how the payment card networks will react to the virtual upstarts. Asked if “Bitcoin will impact the card brands,” 50% considered that possibility unlikely and 9% responded with “no way.” Thirty-three responded with likely and another 9% said definitely.
Among Bitcoin’s prospective uses, after international remittance and e-commerce payments, Bitcoin currency trading came in third, earning a 2.50 on the three-point scale. Next came micropayments (digital goods under $1), 2.43, followed closely by domestic person-to-person payments as cash replacements, 2.42. The rest were a store of value for investment and savings, 2.02; business-to-business payments, 1.83; and business-to-consumer payments such as payroll, refunds, and incentives, 1.73.
The respondents don’t believe Bitcoin is about to replace cash, cards, or checks at the physical point of sale any time soon. POS payments came in last among the prospective uses, scoring only 1.62.
