Where there is a will, there is a way. Provided there is also a clear understanding of what’s at the heart of a consumer’s interest in making a change.
That seems to be the case today with consumers and cryptocurrency. Although there seems to be an increasing number of consumers interested in using crypto to pay, not knowing enough about it keeps them from taking that step. Closing that knowledge gap presents an evolutionary opportunity that FinTechs are hoping to capture by providing easy-to-use platforms and rewards programs better suited to changing consumer behaviors.
Sergio Arana, founder and CEO of novae, told PYMNTS in an interview that the concept of redefining payments is associated with how people make decisions and do the mental math associated with new forms of currency. Humans have adapted over time to different currencies from bartering to fiat, and crypto is just another such transition waiting to happen. The behavioral aspect of how people use their money to make everyday purchases must be considered in order to understand a consumer’s interest in and use of crypto.
“I don’t know exactly if crypto alone can redefine payments, but people are definitely redefining the payment industry,” said Arana.
The Cryptocurrency Payments Opportunity: Driving Crypto Adoption and Use Around the Globe is a PYMNTS study that examined the changing attitudes and perceptions around cryptocurrencies worldwide and assesses the opportunities for financial institutions (FIs) and businesses to benefit from the change.
The study revealed that investments in digital currencies among Americans have increased, as 48% of investors bought such alternative currencies in the first half of 2021. More than $12 billion has been transferred over cryptocurrency networks, representing approximately 1.5 million transactions each day. Transaction volumes are set to continue to expand, but this will require more businesses to trust and support these currencies. And 67% of cryptocurrency owners agree that there is a current lack of merchants who accept payments via digital currencies.
Arana pointed out that it is critical to consider how commerce has grown and changed consumer expectation to cause a shift to digital. The pandemic has forced consumers to use digital payment methods so they could operate within the restrictions. According to Arana, connecting digital assets to digital payments is an easy opportunity to allow crypto into business transactions.
“FinTech is constantly working to develop an easy access model, but it is not too easy, as a significant share of people do not understand how crypto works,” he said. “The access to crypto has to be connected to how people use it.”
Evaluating how people access crypto is a significant barrier for the industry. Arana highlighted that the payment industry and FinTech have been working on formulating a seamless process for people to use crypto as fiat currency in all kinds of purchases for everyday spending.
See also: ‘Super App as a Service’ Enables BNPL, Universal Rewards Redemptions, Including Crypto
Modern Use of Crypto
“In the lending space, using cryptocurrency as collateral is a new way to spend money,” said Arana.
He explained that traditionally, if a consumer has money in a bank account and uses a debit card, it will deduct the amount from their balance. However, the digital space creates an opportunity in which banks can hold a consumer’s crypto while allowing them to spend their money in fiat currencies.
“It is like buy now, pay later for crypto,” said Arana.
Read also: Turning Loyalty Points Into Digital Currency for Latin American Consumers
Converting Rewards to Crypto
While studying consumer behavior, Arana noted that the reward program came out as an interesting challenge for crypto-focused companies. Historically, most rewards were spent on the travel industry before the pandemic, but consumers’ daily spending has changed.
“People are ready to switch their rewards to crypto,” he said. “We have converted rewards to digital currencies on our platform, allowing consumers to spend these rewards on 70-plus million merchants around the world without restrictions.”
With the help of Visa and a comprehensive new rewards program, Miles Blue’s “Super App-as-a-Service” platform brings crypto transactions and buy now, pay later (BNPL) payments under the same umbrella, just like credit and debit cards, for their customers. The disruptive solution allows customers to pay and get paid by combining currencies and rewards instantly.
Arana further added that consumers tend to hold their rewards to spend on specific products or services. The technology platform allows consumers to switch their rewards to cryptocurrency while providing extra benefits. Anytime a customer pays using the program, they earn bonus crypto and up to 10% additional rewards for spending within the platform.
See also: What Price Loyalty? Ulta, KeyBank, novae Say Points Must Be Spendable, Programs Flexible
Giving Financial Control to Consumers
“We are trying to create a beautiful cycle based around freedom, and it is very important to us,” said Arana.
A decade ago, loyalty programs or rewards were only offered to a select group of individuals, but today, consumers have the choice to convert to any cryptocurrency and can spend their benefits on any product or service from their preferred merchant, giving them complete control over their finances, he noted.
Acceptance has been the biggest barrier for the growth of cryptocurrency. novae’s digital convergence technology uses consumers’ common payment credentials, allowing them to make payments in fiat currency while converting it in reference to cryptocurrency that the customer owns. According to Arana, this concept makes acceptance easy, as businesses and consumers are not bothered by the conversion process.
“The [method] has no barriers on the technology side and will see an amazing growth if many start using it,” said Arana.
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