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Accepting bitcoin payments is not something retailers should worry about any time soon, according to Visa’s CEO, Alfred Kelly.
Kelly told the audience at the NRF Big Show 2018 that despite the excitement generated at the end of 2017 by the rapid increase in bitcoin trade, there are more important things retailers should be taking into account.
“I don’t think it’s a trend that, in payments, is going to take off,” Kelly stated. “I would put the challenge of figuring out how to deal with cryptocurrencies lower on your list than some of the other things we’ve talked about.”
Cryptocurrencies such as bitcoin have been growing in popularity over the past few years as a global decentralised payment method not controlled by any central bank, administrator or payment provider.
But Kelly said there were too many variables to consider when accepting bitcoin and other cryptocurrencies, which would make it difficult for retailers and consumers to embrace, and he advised putting it “low on your list of worries” for retailers.
For example, as the price of bitcoin changes so frequently, Kelly questioned when a price for commodities such as goods, holidays or airline tickets would be fixed for consumers to pay for them, and claimed the fluctuation in bitcoin trade at the end of 2017 “woke people up” to the uncertainty of cryptocurrencies as a payment method in retail.
“You don’t think of a currency as moving at that level of fluctuation,” he said.
Kelly said Visa would not accept or process a cryptocurrency-based transaction, but blockchain is another story.
Blockchain has retail potential
Blockchain technology is one of the things Visa is testing and looking into. Distributed ledger technologies such as blockchain are growing in popularity, with use cases such as identity authentication and increased transaction transparency among those being explored.
“Blockchain is a really interesting technology – this open ledger type of technology, which enables bitcoin but can enable a whole bunch of things. We think it’s got some really interesting applicability in the B2B world and we’re doing a series of pilots and tests,” said Kelly.
In 2017, Visa launched a research centre in Palo Alto and hired 250 data scientists to test technologies that may be applicable in the payments space, such as machine language, artificial intelligence (AI) and blockchain.
“The idea of an open ledger might lend itself to some interesting applications for us, but it’s still early days,” said Kelly.
Despite claiming Visa has “not yet” found a use case for blockchain that could be used on “any kind of scale level”, he said the company was “more than happy” to help retailers with some of the technology it is looking into.
“If you’re in a world that’s competitive, trying to find that edge – an edge that can make you more efficient, an edge that can make you more effective – you should look at what these technologies can do for you at a pragmatic level to help move your business along, and don’t just fall in love with them because they’re the sexy term of the day,” said Kelly.
From cashless payments to automated purchases
Retailers are being forced to connect their online and offline offerings to make the omni-channel retail experience more seamless as they cater to the increasingly fickle consumer.
As consumer expectation increases, so does the technology adoption for retailers as they try to give their customers a better experience.
In certain parts of the world, physical cash payments have already started to dwindle in favour of card payments, due to growing consumer expectation.
Though the US is slightly behind in new payment methods such as contactless, Kelly claimed once these have been more widely adopted they will begin to become part of consumer expectation.
Eventually, this will filter through to other parts of consumers’ lives, as technologies such as internet-connected devices become more commonplace. In the future, Kelly stated, these may have integrated payment capabilities, such as connected fridges that order their own stock.
These might not make card payments obsolete, as there are likely to be card credentials stored behind these transactions, but Kelly said it wouldn’t matter how the transaction was initiated.
“If we start counting the number of places where payment credentials could be used,” he said, “when you think about connected homes, connected offices, connected cars, the reality is that in every home there could be three or four or five different locations where there’s a possibility for integrating payment.”
Ultimately, said Kelly, as the world becomes increasingly digital, banks, payment providers and retailers will have to work together, not only to provide customers with the payment experiences they expect, but also to keep these payments secure and customer details safe.