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Dan Romero
@dwr.eth
How to bootstrap crypto as a consumer-friendly payment method When I joined Coinbase in 2014, my first job was trying to get merchants to accept Bitcoin payments. (I worked with @nick on this.) Bitcoin as a consumer payment method didn't work out for a few reasons: 1. Clunky UX — after scanning a QR code, you had to send the exact amount of Bitcoin from your wallet; prices could also fluctuate during the checkout flow 2. Small user base — population of people with a bitcoin wallet was probably closer to 10M in 2014. 3. Lack of incentives — no incentive for consumers to overcome the clunky UX. Further, credit and even some debit cards offered cash back and points. *** Fast forward 10 years, consumer adoption of crypto payments is still low. However, we have the possibility of significantly improved UX thanks to faster, cheaper and smarter blockchains, stablecoins, and at least 100M consumers with a fiat-connected crypto account. What remains is the lack of incentives. 1/
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Dan Romero
@dwr.eth
2/ One strategy for improving incentives is to adopt "your margin is my opportunity". Accepting card payments is costly for businesses, esp. smaller ones. ~3% per transaction and then some % of transactions are fraudulent. So call it 4-5% all in. Additionally, consumers get 1% back on those purchases. So one strategy would be to split the savings: - 1.0% cost for merchants - 1.0% cash back to consumers - 0.0% processing fee for crypto processor Further, focus on small businesses (since larger businesses negotiate much lower rates with card companies). American Express had a program called Small Business Saturdays where they would waive processing fees for qualified small businesses. Lean into similar branding that paying with crypto is pro-small business and not feeding the "big bad" duopoly of Visa / MC. What incentive for the crypto processor? You'll likely make money either with trading fees or, if you're a stablecoin issuer, the interest that you generate from increased circulation.
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Chintan Turakhia 🎩
@chintan
agreed, and this is the approach to take. Take nothing as the processor. Give it all back to the merchant and let them redistribute into their supply chain (i.e., coffee growers) or give some back to the consumer as a first adopter incentive. or both
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PixelSushiRobot 💫
@psr
Been using Coinbase card and it has 0.5% "cash back". Pretty small in comparison but I love that I can choose both the funding crypto + rewarding crypto.
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