How can merchants, vendors, and other ecosystem partners worldwide fully participate in the crypto economy? Shane Rodgers CEO of PDX Global has some ideas.
Who is PDX Global for those who do not know it yet?
PDX Global’s platform and payments app will open up cryptocurrency to a vastly larger active audience, making it possible to freely and easily spend all traded cryptocurrencies for the first time through a single app that doesn’t rely on our antiquated payment system.
It is a financial technology platform that provides end-to-end financial infrastructure, technology, and services to individuals, corporations, and institutions globally. It is primarily focused on servicing the crypto economy. The PDX platform is being built as an on-ramp to enable retailers, other merchants, financial groups, and ecosystem partners to fully participate in the crypto economy.
For retail users, it offers a primary financial account to invest, store, spend, earn, lend, borrow, and be paid in, crypto-assets. It will also provide a one-stop-shop for fund & money managers, corporations, and individuals to access crypto markets through advanced trading and custody technology, as well as provide a full-service digital banking capability.
The main challenge is that our payments system is built on a 60-year-old legacy infrastructure that is rife with middlemen, high fees, payment delays, and fraud. In fact, the major credit card companies again raised their swipe fees this past spring, in part to ‘cover costs of fraud’. The move sparked more outrage among merchants, who will be forced to pass on these costs to customers and consumers during a time of inflation. Even congress took a stand against it. This is why companies like Amazon were recently trying to eject VISA UK from its payment options, and why banks in March were proposing replacing credit card payments to merchants with Zelle.
Clearly, the system is broken, and no bolt-on solutions will help. We are at a point where the industry is using a large, outdated contraption rather than building a clean system from scratch, and now the competition is ready to sidestep the system entirely.
At the same time, companies and individuals are chafing to use crypto for purchases, including everyday transactions. A Q4 2021 survey by Crypto.com/FIS Global of 110,000 crypto users and 1.5 million merchants indicated that 64% of customers wanted to use crypto for travel, 52% for groceries and retail, and 42% for buying cars. The current correction in crypto valuation has not affected these attitudes at all. So, the demand is there.
Crypto-based payments, which use the blockchain, are direct peer-to-peer payments. The primary advantages are simplicity, speed, and better security. There are fewer pain points and points of failure. The direct transaction eliminates half a dozen middlemen who each take their cut and delay the process. The fastest blockchains already handle an equal or greater number of transactions per second than VISA, making settlement instant, in cash, or in crypto. Blockchain transactions offer verification and traceability for any transaction between a consumer and a merchant, removing the risky physical card from the equation.
The other primary benefit for merchants, when they want a cash settlement, is that they have zero exposure or risk to the customer’s crypto-based payment. We have separated the two parts of the transaction and quarantined the crypto risk entirely from the merchant.
And of course, the direct automated nature of the transactions means vastly lower processing costs so that we can cut merchant fees by half, or more, to around 1.5%.
You mentioned risk. How does PDX Global cope with the fact that you are taking the crypto volatility risk on you?
The risk is very minimal because we are only accepting the top 100 largest crypto assets by market cap and daily volume, which translates to liquidity. Our holding and pricing risk is minimal as well, as we are only holding the crypto assets for the several minutes between the time we absorb them and the time we resell them. Also, some of this risk is absorbed by the customer, not PDX. As experienced businesspeople from the finance and corporate worlds, we have brought a good deal of collective knowledge to bear on reducing risk factors for all parties.
We’ve seen interest in increasing across all verticals, and even local government. If you look at the recent research report by Crypto.com and FIS Global, you see that 80% of both luxury goods merchants and retail/grocery stores are absolutely ready to jump on board, while 63% of financial services and healthcare companies are enthusiastic, and 50 percent of digital media and gaming companies are on board. We recently met with a large boutique hotel group that is interested in beta-testing our crypto-to-fiat payment app.
What can we learn from merchants that are embracing crypto payments successfully?
These merchants are leaders who have jumped out ahead of the pack to secure more market share. Of course, you need to do it thoughtfully, with crypto payment systems that work efficiently, not crypto solutions built on top of the aging credit card system. The successful merchants are forward-thinking and are alert to emerging trends. And of course, they listen to their customers, which all businesses should do.
The main issue is a wait-and-see attitude. The merchants that hang back and play it safe will be left holding the bag. They suffer from a lack of sophistication, awareness, and ability to take even partial risks. If you know that your customer base includes a percentage of crypto holders, the risk is minimal – all that’s required is a crypto payment pilot program in a store or two to confirm the benefits.
The current crypto slowdown is a correction and a bump in the road. Fearful merchants need to realise that crypto can’t be ‘uninvented’. Interest is too high and the benefits are too substantial. Merchants and consumers alike have long been clamouring for a simpler solution to our expensive legacy credit card systems that prolong settlement times and invite fraud. Well, here it is!
Merchants should continue to observe the consumer and crypto trends, watch what competitors are doing, and where the world is going. They should also be aware of the shifting generational changes in an increasingly digital world that is moving steadily towards Web3 and beyond.
There are certainly some concerns about the industry that must be addressed. We hope to see more robust US regulation of the Wild West aspects of the crypto culture, which would be ideal – consumers and merchants will feel safer.
This is a genie that is not going back in the bottle, so there will be continuing momentum to mass consumer adoption of crypto for day-to-day utility. Merchants must go along with increasing customer demand or be left behind. The tools for crypto adoption and crypto payment are only going to get easier to use and more robust.
Shane Rodgers is a former investment banker and CEO of PDX Global, a worldwide payments and digital banking platform that is being built as an on-ramp to enable hundreds of millions of retail users, institutions, merchants, and vendors, and other ecosystem partners worldwide to fully participate in the crypto economy freely and easily with instant conversions and low fees.
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