Massimiliano Silenzi, the CEO and co-founder of Cryptorefills, shares more about the latest trends and developments in crypto payments.
I consider a modern and innovative crypto payment today to be one that uses stablecoins over a fast and scalable network. Allow me to explain why without getting too technical. Although I am a huge Bitcoin fan, our research shows that four out of five ‘crypto-shoppers’ prefer using stablecoins, specifically USDT and USDC, for crypto purchases. These stablecoins are pegged to the US Dollar and were originally mainly native to the Ethereum network. However, using USDC or USDT today directly on Ethereum isn't ideal due to scalability issues.
Visa claims it can process 65,000 transactions per second, while Ethereum manages only 15 to 45 transactions per second, depending on network congestion. Additionally, a stablecoin payment on Ethereum costs users an average of 1 to 2 USD in fees and can take several minutes to process. This is an impractical and non-competitive payment method.
An innovative crypto payment system instead allows stablecoin payments but resolves the scalability issues, enabling customers to pay with negligible fees (less than 0.01 USD) and see transactions processed within seconds. Today, there are interesting solutions to achieve this, grouped into two main categories.
The first category involves alternative networks supporting stablecoins, such as Solana or Avalanche. These networks use different technologies and consensus mechanisms to ensure higher scalability and lower fees.
The second category includes Ethereum Layer 2 networks like Optimism, Base, or Arbitrum. These Layer 2 networks are built on top of Ethereum (Layer 1), can achieve up to 100,000 transactions per second, and settle transactions periodically on the Ethereum mainnet.
To sum up, an innovative crypto payment today is a stablecoin payment over a Layer 2 or scalable network, featuring negligible fees, immediate transaction processing, and a smooth, intuitive user experience.
There are about 400 to 500 million crypto owners worldwide, with varying demands for using crypto for payments based on their segments. From crypto enthusiasts in blockchain hubs like Silicon Valley, Singapore, and Berlin, to digital nomads in Bali and Portugal, freelancers in emerging markets paid in crypto due to being unbanked, and customers in fragile economies plagued with inflation and instability, the demand is diverse.
However, many brands remain reluctant to accept cryptocurrency payments due to technical, risk, financial, and reputational concerns. Cryptorefills was born to bridge this gap, enabling people globally to make everyday purchases with crypto. Cryptorefills operates in 150 countries, allowing users to top up their mobile phone credit and purchase gift cards and digital products from the world's top brands using Bitcoin and other cryptocurrencies.
From a business model perspective, we function as an ecommerce platform with a unique twist: we self-process the blockchain payments and currently offer the highest combination of cryptocurrencies and Layer 2 and alternative payment networks globally.
There are two primary levels of challenges in processing crypto payments, depending on the method used. If a company opts for self-processing—where users pay directly from their wallets to the company's blockchain wallet—significant hurdles arise. These include the technological complexities of managing and verifying blockchain payments, security risks, exchange rate risks, accounting complexities, AML compliance, providing a good payment flow, and handling customer care and refunds. Several excellent crypto payment providers can manage most of these issues very well for merchants, so for companies opting for third-party processors, these challenges are not an issue.
The second level of complexity extends beyond payment processing to consider the crypto payment within the end-to-end purchase process and in its goal of attracting or retaining crypto customers. No third-party processor currently offers a wide variety of scalable networks and Layer 2 solutions. The crypto community is ‘very tribal’, which is reflected in our transaction data: stablecoins (USDC/USDT) account for most payments but are almost equally spread across eight different networks. Without supporting networks like Solana, Avalanche, or Base, merchants might miss out on potential sales.
Moreover, the crypto payment flow must be considered within the context of the product being purchased. Time-sensitive purchases, like hotel or flight bookings, may not align with Bitcoin transactions that take an hour to process. Similarly, small, repetitive purchases are impractical with high processing fees.
This is why some merchants partner directly with us to resell their gift cards, and increasingly, their products and services. Beyond our compliance, security, financial, and technical capabilities, we offer the widest variety of networks. We make products visible and accessible to hundreds of thousands of crypto community members, with a discovery, purchase, and payment flow designed end-to-end to be crypto-first, tailored to the product being sold.
To put things in perspective, according to UN and Europol data, current global money laundering amounts to between USD 800 billion to USD 2 trillion annually. In comparison, data from Chainalysis shows that USD 22 billion of this involves crypto. While crypto technology has indeed been exploited by criminals, it's worth noting that sophisticated criminal organisations with a minimum understanding of blockchain's permanent traceability would likely choose less traceable methods if available.
That said, the need to prevent and detect illicit activities through blockchain payments is critical. Like many businesses in our space, we have the typical tools like tier-based KYC. Unlike other payment forms, blockchain offers an additional powerful tool in its AML arsenal: Know Your Transaction technology (KYT). Due to the transparent nature of blockchain, where transactions are permanently recorded on the ledger, KYT allows for tracing each transaction and all funds passing through a wallet. These tools are not only utilised by crypto payment processors but also by law enforcement agencies, serving as a significant deterrent to potential criminal activity.
Crypto payments have a unique flow compared to traditional payment systems. The customer sets the currency, amount, network, and recipient's wallet address and initiates the payment, not the processor. Additionally, the technology is constantly evolving with new wallets, networks, and upgrades. Sometimes, new wallets are released quickly with underdeveloped user experience elements. This creates three key UX challenges.
First, preventing user errors is critical. Customers often send too little due to exchange or custodial wallet fees or simple mistakes. Others send too much, such as a customer who mistakenly sent USD 17,000 for a USD 50 gift card. Errors like sending to an incorrect wallet address are irreversible, resulting in permanent loss of funds. Mistakes like sending the wrong token might be reversible but are complex from a customer care perspective. We've optimised our payment flow to minimise these errors.
Second, educating customers is essential due to the novelty of crypto payments. For example, some customers use Bitcoin for a USD 5 or USD 10 mobile airtime top-up and end up paying USD 10 or USD 20 in mining fees, waiting hours for transaction approval. Using Bitcoin’s Layer 2 (Lightning Network) or stablecoins on a Layer 2 network would process the transaction in seconds with negligible fees. Throughout the process, we explain why blockchain payments may take time due to network congestion and suggest the cheapest payment networks and options to avoid excessive costs.
Third, addressing the rapid evolution of technology is necessary. New wallets and networks are continually introduced, sometimes with suboptimal user experience features, especially when it comes to mobile browser and wallet integration. We strive to stay ahead by constantly updating our systems and providing clear guidance to our customers to ensure a smooth and intuitive payment experience.
I would avoid processing crypto directly and select a top-tier regulated crypto payments processor. There are some great companies doing this.
The other option is to tiptoe into crypto through a company like ours, by offering products to the crypto community through a dedicated crypto-commerce platform. We work directly with some of the world's leading brands selling their gift cards and other products, and within this relationship, we share some data concerning the networks and the types of currencies used by customers. This way, as we grow their sales towards the blockchain and web3 communities we help educate their payment, product, and marketing teams for future acceptance of cryptocurrencies.
About Massimiliano Silenzi
Massimiliano Silenzi, Ph.D. is the CEO and co-founder of Cryptorefills. He started his career in Telco corporations, followed by country and regional director positions in mobile commerce startups in Europe and MENA, and CEO of Onebip (mobile payments). As of 2016, he is an entrepreneur in the payments and blockchain space.
About Cryptorefills
Cryptorefills is a crypto-commerce platform enabling people worldwide to use Bitcoin and other cryptocurrencies for their everyday needs.
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