How Facebook’s Cryptocurrency will Disrupt Payments Forever
Still think cryptocurrency is just hype, or a fad? Prepare to fall behind. The cryptocurrency Facebook is about to launch for WhatsApp will transform your customers’ payment options, marrying the benefits of crypto with the stability and reliability of traditional currency. Once the world gets a taste, there’s no turning back.
From one of the first-ever cashback credit cards (issued by Sears), to PayPal, to ApplePay, the most exciting and transformational innovations in payments have not only driven increased revenues for businesses, but improved the customer experience. The customer side is critical — if there aren’t tangible benefits to a new payment system, good luck getting people to use it. Done correctly, blockchain and cryptocurrencies can reduce transaction costs, increase payment speed, remove reliance on third-party payment processors like credit cards, and improve customer retention by providing businesses with the data to build out the best loyalty programs and customer experiences the world’s ever seen.
Unfortunately, when you think of cryptocurrency, dramatic price swings probably come to mind, and the idea of using them in the “real world” seems absurd. Who’s going to pay with something that could be worth double its value tomorrow? The answer, as the adoption figures bear out, is almost no one. That’s why Facebook, as well as JP Morgan, Rakuten (the “Amazon” of Japan), and the companies I advise, like KODAKOne, are all eschewing the speculative side of crypto and designing their currencies to be as stable as the dollar. Remember that people were skeptical of credit cards as well, and now even traditional players like Kroger are growing frustrated with their limitations and fees. Simply put, it’s shortsighted to think there’s no room for improvement, and these companies are nothing if not forward-looking.
Rumor has it, Facebook’s cryptocurrency could be ready for its initial use case (remittance payments in India) within the next few months, and there’s no reason to think it’ll stop there. Facebook is already working on integrating the messaging (and soon-to-be crypto payment) functionalities of WhatsApp, Facebook Messenger, and Instagram. That’s 2.7 billion people who will have a faster, cheaper payment option that makes sending money as easy as sending a text. Forget clunky old Western Union — this product will directly compete with Venmo.
Companies like Facebook, JP Morgan, and KodakOne are paving the regulatory road for branded cryptocurrencies, providing peace of mind to the legal and compliance departments of those that follow suit. CTOs and CMOs will have a model to follow and make their own. Over the next few years, we’ll see hundreds of companies waking up to what their own cryptocurrencies can do for their brands. Many people believe Amazon is already developing its own stablecoin, and if it wasn’t before, you can bet it is now. As if the allure of even more insights into its customers’ payment behavior weren’t enough, it’s not going to risk Facebook dethroning it as the king of e-commerce.
Companies that lag behind will find themselves with inferior transaction speeds, eating or passing along unnecessarily high payment fees, and fundamentally less connected to their customers as important transactional data continues to flow to PayPal and credit card companies. Customer satisfaction and retention will suffer, and their loyalty programs won’t be able to make up the difference because they’ll lack the insights their cutting-edge competitors will be able to leverage and build into their coins.
The payment landscape is changing quickly. Will your company keep up?
Bruce Elliott is President of ICOx Innovations, a publicly traded company specializing in “blockchain for brands.” ICOx offers customized blockchain and branded corporate currency solutions to reduce transaction costs, improve data insights, and drive increased customer loyalty for brands like KodakONE.