The Week In Payments: Crypto’s Spendable Moment, Connected Commerce, BNPL Future

A person looking to buy bitcoin a year ago could have done so for the bargain-basement price of $6,664.58 — and would find themselves approximately $51,000 richer today, as the cryptocurrency’s price continues its push to $60,000 and beyond. And while crypto was popping this week, as it has been for the last several weeks, that wasn’t the only news in the hopper, as a hyperactive business climate connects with an economy that’s raring to go. And new payments solutions like BNPL continue to generate ever-increasing interest from consumers and merchants.

All of which added up to a lively discussion between PYMNTS’ Karen Webster and Spreedly CEO Justin Benson. Spreedly, Benson said, has been hesitant to move in on crypto, waiting to see how consumer and merchant demand shakes out. But Benson agreed that crypto is interesting and relevant — particularly this week, as big companies like PayPal are making moves to make it more spendable.

“One of the core components for higher adoption of crypto is whether it’s supported by regulatory bodies,” Benson said. “That seems to be reaching a tipping point with the Feds, talking about a dollar-backed stablecoin and Visa’s announcement around support for it. So when you think about what could drive higher adoption, regulatory acceptance is a precursor to participation by banks and institutions.”

Like many innovations that start out by considering consumers’ wants and needs, Benson believes crypto needs to make a jump, and eventually must lean into a B2B use case. If big banks can drive billions of dollars at a lower cost, particularly cross-border, it makes a powerful offering, he said.

“I think a lot of technologies in payments have done that,” noted Benson. “They start off by solving a consumer problem, but if they make it, it’s often because they pivot to solving a B2B problem and get real traction there.”

Crypto, particularly with regulatory support, appears poised to make that jump. That means crypto could now go from being a novel solution in search of a problem to becoming a legitimate, mainstream financial management tool at an institutional level.

Harmonies in the Connected Economy

Switching to the connected economy, Benson noted that the drive for consumer convenience is creating a bit of a tension in retail surrounding the control of the customer-retailer relationship.

In the era of aggregators and marketplaces, he said, this is becoming a particularly important issue, as those companies are an increasingly large part of the momentum that connects consumers to businesses — both online and in the real world. And that tension takes different forms depending on the size of the players involved. For a small, independent grocery or restaurant, the aggregator is a channel for exposure, providing a new way to bring in a customer who might not otherwise have found them. But for a larger, established, Walmart-scale brand, that math is a whole lot different — and their willingness to share the customer relationship is much lower.

“If you’re Walmart, if you’re Whole Foods, you might want to have a direct relationship,” Benson said. “And so something like Instacart is going to be a non-starter for you, because it puts somebody in between you and that customer relationship. It feels less like a channel and more like a tax that sits between your customer and your established brand.”

Then again, Benson said, in a connected economy where consumers are more dislocated than they’ve ever been, having the maximum channels available could end up being the strategic path for retailers of all sizes.

BNPL and the New Payments Order

Buy now, pay later (BNPL) has quickly grown to global prominence, Benson said, due to the number of problems it has managed to solve for consumers and merchants. For most consumers, it’s a better financing system than credit cards, he noted, as it cuts out unwanted fees and costs. At the same time, it’s a better checkout system on the whole, more aligned with the current cultural zeitgeist focused on putting consumers in control of their payments destiny.

“Suddenly we see that everything’s a subscription,” Benson said. “And that prepares millennials for BNPL. People who want to pay a subscription are sort of opposed to big payments. They liked the idea of buy now, pay later because that’s how they manage in the subscription economy.”

The interesting thing to watch, noted Benson, will be the next evolution of the BNPL space, which is rapidly becoming crowded with similar competitors. In the next 18 to 24 months, he believes there will be more specialization and fragmentation in the space as players look to differentiate their offerings.

BNPL didn’t much impress Benson when it first came around, as it didn’t look all that “special.” But he believes it’s come through by doing more than meets the eye within those offerings. “And I think it’s so successful because they’re solving different problems for different modes and at different times,” he said.