Not all that long ago, bitcoin was shorthand for cryptocurrencies, and crypto was shorthand for speculation, for a “Wild West” of lightly regulated coins and tokens whose main functions seemed to be making and losing fortunes in a single trade – and paying for purchases on the dark web.
Today, there are thousands of cryptocurrencies, but their use in a real-world setting has seen slow, and at times bumpy, progress.
In an interview with Karen Webster, Ternio’s Co-Founder and COO Ian Kane and Daniel Gouldman, co-founder and CEO, said the payments world is on the cusp of bringing blockchain – the rails that underpin the cryptocurrency transactions themselves – to legacy financial providers.
Bridging that tech gap, they said, will open up the digital payments ecosystem more fully to the use of cryptocurrencies, and even digital fiat currencies issued by central banks.
The company said on Tuesday (Oct. 13) that it has joined Visa’s Fast Track as a cryptocurrency-focused enablement partner, which means it will help crypto companies and FinTechs come to market with crypto payments that ultimately ride the Visa rails – and are therefore accepted by any business or merchant that accepts Visa. This makes Ternio Visa’s first crypto-focused enablement partner.
Ternio already has other debit card programs in place, including the Litecoin Card in partnership with the Litecoin Foundation. And now its BlockCard debit card platform lets users transact with cryptocurrency anywhere that Visa is accepted.
At a high level, said Kane, Visa – which was hesitant to get into the crypto space just a few years ago – now stands among the biggest proponents of digital currencies.
Looking Toward Interoperability
As for the reasons why, Kane said of Visa, “They’re a payments company and they understand what blockchain can do. And they understand that the digital assets that transact on top of blockchain all have value.” It’s not about bitcoin, Ethereum or a specific cryptocurrency, but rather the potential to turn cryptocurrency into a spendable asset at the physical or digital point of sale.
Bringing Ternio into the Fast Track program, said Kane, is a nod to the fact that there needs to be interoperability between legacy financial/payments systems – spanning Visa, ACH, wires and bank accounts – and a burgeoning ecosystem of consumers with digital assets, who have made gains through trading and now want to turn those gains into transactions with merchants.
Along the way, said the Ternio executives, there has been the need to educate financial professionals about blockchain – and just how far they say the world has come in terms of digital currencies.
In other words, it’s time to shed the common misconception that bitcoin is blockchain, blockchain is bitcoin and wild speculation in cryptos is the hallmark of it all.
We’ve already traveled a bit down the path, since, as Webster noted, we don’t bank in person much anymore (if at all) and we don’t see accounts rendered in dollars sitting in the vaults. Much is done digitally already, amid the great digital shift that has changed payments.
“It’s not commonly known that one of the world’s most traded cryptos is actually the digital dollar,” Gouldman explained. “Unfortunately, the crypto-focused media may still train people’s focus on bitcoin-centered headlines that scream about price gains and losses.”
The truth of the matter, according to Gouldman, is that a cryptocurrency ecosystem already exists, underpinned by blockchain. He contended that blockchain is a transformational technology because unlike other technologies, it has an integrated payment layer. The cryptocurrency is the DAP that sits on top of that layer, he added.
Getting there requires interoperability across global platforms that are agnostic about the denominations – whether it’s euros, pesos or digital dollars – and that also enable cross-border payments.
Kane said that cross-border remittances present a significant greenfield opportunity for cryptos, offering the illustration of a Chinese exchange student studying in the U.S. who needs money to buy books. The traditional model would be for wire payments to travel from a big global bank to America to get funds to students – an expensive, slow process. But through the joint efforts of Ternio and Visa, a family could send crypto to that student’s Visa card in a matter of minutes.
“Crypto doesn’t know any boundaries,” said Kane, who added that blockchain, paired with KYC (and improvement of traceability) is actually a safer way to send money. Awareness and interest in using crypto across a variety of use cases is gaining traction, said Gouldman and Kane: Ternio’s own research has found that 70 percent of 35,000 blockchain investors have spent crypto in the past 12 months.
And eventually, he said, most of commerce will involve at least some form of a digital currency that travels across a chained rail (some of it issued by central banks), which allows for real-time payments that are cheaper and more efficient.
“Maybe you want to pay a dollar to access an article you need on the internet. And so every crypto is going to have its own use case within the internet – but when you want to use those stores of value to transact in the real world, how do you do that? And that’s through Visa,” said Kane.
The movement toward using cryptocurrency in retail use cases is inexorable, said Kane. Though there may be scores of cryptos out there – and, like sports teams, everyone has favorites, and it’s tough to predict winners from a crowded field – cryptos, in general, are efficient payment mechanisms for microtransactions, he added.
The future also points toward digital currencies issued by central banks, said Kane. Just as gold is traded on marketplaces across the globe, so too will other commodities be traded in digital form – but ultimately will be convertible into digital dollars. That’s because the dollar is currently the reserve currency of choice across the globe, noted Gouldman.
That means no matter which cryptos or digital assets gain favor with users, the technology and networks that facilitate the transactions themselves are critically important.
The duo noted that the recent push by global central banks to examine central bank digital currencies (CBDCs) has all but driven a stake into the consortium backed by Facebook to introduce Libra into the mainstream.
As Karen Webster noted in a column back in June of last year, central banks’ power to shape monetary policy faced a threat from the association of private companies to operate a network and a currency running over separate rails.
In terms of standardizing digital currencies, Kane maintained that digital currencies may be more “palatable” to consumers, at least for now, as cryptos may still carry some of the mystery (and risk) associated with the dark web.
“The benefits of crypto are also its Achilles heel: decentralization. You own your own money. There’s no custodian and that’s it,” he said.
But if transactions go awry, he cautioned, “it’s going to potentially cost you a significant amount of money. And I think Visa is kind of saying, ‘Listen to virtual currencies here. They work. They can interact with your existing financial products. You understand checking accounts and Visa cards.’”
Gouldman and Kane noted that Ternio and Visa are seeking to make crypto spendable. “All we’re talking about is a ‘flip’ into something on a more modern rail that is easily convertible and frictionless,” Gouldman stated.
Users keep the crypto on the cards until they are ready to spend – and the BlockCard acts as a debit account with funds withdrawn instantly across the blockchain, with no additional fees.
With Ternio’s status as a Visa Fast Track enablement partner, Kane said, visibility will rise – not just for Ternio, but also for crypto as a viable part of the retail landscape.
“When we start talking to people, they say, ‘Wait a second. So you guys have a debit card in the U.S., you’ve got FDIC-insured bank accounts, you’ve got the ‘onramp’ covered – so how come I’ve never heard of you?’” he said.
NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020
The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.