Nine years ago, Laszlo Hanyecz paid 10,000 bitcoins for two large Papa John’s pizzas, marking the first purchase of tangible goods for digital money. Cryptocurrencies have come a long way since then, and although bitcoin still has a ways to go before being universally accepted by retailers, thousands of merchants around the world are beginning to take cryptocurrency in exchange for goods, while it continues to grow daily.
At this year’s Consensus conference, blockchain startup Flexa made public its partnership with a number of major U.S. retailers using its payments app, Spedn. The app would allow users to make purchases in more than a dozen stores of the caliber of Barnes & Noble, Office Depot and Whole Foods with cryptocurrencies.
By expanding the number of stores and chains that accept digital money, it will further lead to mass adoption, in which several other domains where distributed ledger technology (DLT) can be of help to the retail industry.
A Kaspersky Lab Global IT Security Risks Survey, published in February, showed evidence that cryptocurrency payments are gradually moving away from the fringe. Of more than 12,000 consumers across 22 countries, 13 percent have used cryptocurrency to make online purchases.
Companies joining the path of accepting crypto may choose to for several reasons such as wanting to appeal to younger technologically advanced customers by offering cutting-edge technology. Others may embrace the promise of technology but are bullish on crypto themselves, which is where intermediaries like Flexa, which are ready to stand in between corporate businesses and the dicey crypto market to absorb part of the uncertainty come in handy. With Flexa, more companies find themselves willing to try out the new payment method.
The retail business could also use the optimization and enhanced fraud protection of loyalty programs, which is a primary tool for sustaining a relationship with a customer. Transaction-based programs tend to rely on infrastructure that is less secure than that of “real” payments, which has led to an increase in loyalty-fraud crime in recent years.
But by adding blockchain into the equation, it could help retailers address both issues. Hackers and fraudsters will have more difficulty gaining access to a system that relies on a distributed ledger compared to one that stores all the data in a centralized database. In addition, creating a token-based rewards ecosystem open to third-party businesses provides customers a wealth of diverse ways to spend their points.