While cryptocurrencies have the potential for faster cross-border transactions at a lower cost, common misconceptions hold back broader consumer adoption. In the Digital Fraud Tracker, Wirex’s Tony Lees explains how crypto-linked debit cards, stringent onboarding processes and vigilant monitoring systems can help simplify use and ease fraud concerns preventing mainstream uptake.
Consumers have become increasingly aware of and engaged with cryptocurrencies in recent years. Cryptos are no longer just stores of value or means of investment, as the FinTech and banking industry is now offering crypto payment solutions. Crypto cards, for example, enable consumers to make purchases using crypto by automatically and instantaneously exchanging crypto to the local currency.
Procedures and protocols are also maturing, although sometimes at the cost of certain features that crypto users are accustomed to. There are even certain cryptocurrencies called stablecoins where the value of a token is pegged to that of an existing fiat currency to give customers peace of mind regarding volatility.
The number of use cases for cryptocurrency is growing at an unprecedented rate, according to Tony Lees, chief product officer at cryptocurrency platform Wirex, which has 4.5 million users around the globe. As the world becomes cashless, cryptocurrencies will play a significant role, Lees said. They permit fast, easy payments, much like cash but with the added convenience and portability of electronic payments.
“There are huge benefits to crypto payments, namely lower fees, faster payments as well as making cross-border payments much easier and cheaper, making them a hugely important alternative to traditional finance,” he said.
The key to wider consumer adoption will be overcoming misconceptions and educating the general public about cryptocurrency use, Lees explained. Crypto debit cards that make the exchange at the point of sale (POS) help consumers feel more comfortable by simplifying the process. That technology can also take the burden off of merchants who are already dealing with the growing number of payment options their customers expect. Rather than adding another payment option, they can accept cryptocurrency but receive the local currency.
“A common misconception around cryptocurrency is that it is overly complicated,” Lees said. “But that doesn’t need to be the case when it comes to payments, which is why spending cryptocurrency at the point of sale is crucial. It means that anyone can hold crypto and spend it without having to worry about keeping up with conversion rates or going through the process of manually exchanging crypto themselves.”
Keeping Crypto Secure
Lees said recent Wirex research indicated that consumers’ second-biggest concern about cryptocurrencies after volatility is security and safety. He said most of this comes down to continued misconceptions regarding platform reliability. Platforms such as Wirex are licensed and regulated; furthermore, they prioritize setting their own standards for safety, reliability and security in areas not yet regulated. Wirex, for example, attempts to match the compliance tools traditional financial institutions (FIs) use.
Security measures protect both customers and the general public by ensuring that Wirex’s users are who they say they are and are engaged in legitimate transactions. That means a stringent onboarding process and regular reviews of users’ conduct. The trade-off is that Wirex users do not have the same anonymity that is often a selling point for cryptocurrency transactions. Lees, however, said he thinks that is an essential step in crypto becoming a mature and widely accepted means of conducting transactions.
“We believe this transparency is a huge factor in helping to bring crypto into the mainstream and reassuring consumers, businesses and regulators that customers are allowed to use our services and are using them for legitimate reasons,” Lees explained.
Customers also get more reliability out of their transactions if they are willing to use cryptocurrency as they would other currencies. Wirex has monitoring systems in place to protect against fraudulent transactions and unauthorized access to accounts. Authenticating both the origin and destination, which is not seen in typical crypto transactions, further protects customers while preventing criminal activity on the platform.
Looking Toward the Future of Crypto
Mainstream adoption of cryptocurrencies is very likely in the next few years, Lees said. Cryptocurrencies are already in use for cross-border transactions and by some national governments.
“El Salvador became the first country in the world to adopt bitcoin as legal tender, and other countries like Singapore [are] putting together comprehensive regulation and structures to allow cryptocurrencies to operate as part of the national economy,” Lees said. “As more multinational companies, from PayPal to eBay, show their support for crypto and help to develop a global network of crypto services, as well as a growing public demand for easy access to crypto, it’s highly likely that more countries and businesses will begin to follow suit in order to establish themselves as key crypto players.”
Lees said he conceptualizes a world in which businesses keep parts of their balance sheets in cryptocurrency as a matter of diversification of investments and even pay employees at least in part with crypto. It could also gain traction in B2B transactions. In the coming years, what was once a currency for speculative investments will be more widely used as it was intended in the first place.