Crypto is now firmly on the radar of retailers around the world.
According to The Harris Poll, in the USA, more than three out of ten Americans believe that cryptocurrencies are the ‘future of money’. Youngsters are more comfortable adapting to this digital currency revolution compared to their older counterparts.
If crypto is accepted as the future of money by the retailers, then the possibility of it being considered as the future of rewards and loyalty programmes is quite high.
Though crypto is undoubtedly cheaper and faster in many ways like having to pay no remittance fees and cash transfer fee to the receiver bank, providing better security and preventing money laundering, it also has many pitfalls such as crypto transactions being irreversible, being subject to uncertain tax implications and being high-risk financial assets.
A dive into the global fashion retail market with crypto take-off
Besides the pitfall, numerous retailers like Whole Foods, Home Depot, GameStop, Newegg, Starbucks, AT&T and Microsoft now accept bitcoin and other cryptocurrencies at their physical stores. In addition to looking at the technology, Amazon is preparing to introduce its own cryptocurrency. To give customers the option to buy cryptocurrencies, retailers are implementing point-of-sale systems, in-store ATMs and self-service checkouts. This enables customers to make purchases using debit cards and cash. It is just as quick and easy to buy things with bitcoin as it is with a debit or credit card due to mobile wallets allowing users to store and send bitcoin.
This has been reflected by many of the e-commerce platforms as they have started accepting cryptocurrencies as a different form of payment, signalling the official entry of cryptocurrency into the fashion industry. Although cryptocurrencies are new, they reflect the way the business will operate in the future, making it simpler and safer to complete transactions.
Gucci being the first one to accept cryptocurrency, is hopeful that 100 per cent of its stores across the USA will start accepting crypto payments soon. Along with Bitcoin, Ethereum, Dogecoin and many others, ApeCoin and Euro Coin will also be accepted by Gucci through the cryptocurrency payment processor BitPay. While everyone is aware of the price fluctuations associated with crypto, Balenciaga is hopeful about the future of digital money. Currently, it accepts Bitcoin and Ethereum payments and is not much worried about the volatility of crypto. Tag Heuer has however put a cap of up to US $ 10,000 in cryptocurrency in the luxury watch brand store. Farfetch, the retail platform dealing in luxury items, aims to accept crypto payments from the USA, UK, and Australian customers.
As the popularity of digital tokens is rising, consumers are replacing cash with crypto and more companies around the world are starting to accept payments in cryptocurrencies. Burberry, Givenchy and Dolce & Gabbana are other few of the top fashion brands and stores experimenting with NFTs, a different kind of cryptocurrency.
August 2021 witnessed the rise of Philipp Plein, a popular German fashion designer and founder of a luxury e-shop, becoming the world’s top fashion house accepting payments in 15 different cryptocurrencies. Following the trend, Off-White announced that it would accept bitcoin payments at all of its flagship locations in Paris, Milan and London. This indicates the changing face of business as more and more brands are supporting the growth of digitalisation in every sphere.
We all remember the crypto market crash in May 2022 which wiped out massive long positions on significant exchanges worth billions of dollars. Following the meltdown, Chief Marketing Officer of American Eagle Outfitters, Craig Brommers, remarked at the CommerceNext 2022 Conference that he was uncertain regarding the readiness to accept cryptocurrencies. The chaotic crypto trend made him rethink his idea about accepting crypto payments. Even businesses were warned by Consumer Financial Protection Bureau Director Rohit Chopra, who told Bloomberg that stablecoins might not be ready for payment. Yet, many merchants have declared they will take cryptocurrency as payment.
Trends keep changing. Though the crash of crypto cautioned many retailers, the younger audience still finds it an attractive way to purchase goods. Both Pacsun and American Eagle Outfitters are investing in digital transformation as a strategy to grab the attention of the younger audience. By initiating activities in Roblox, both businesses have been active in online gaming and commerce.
Michael Relich, co-CEO at Pacsun, stated that they are focusing a lot of their efforts on social media and online shopping to fit and connect with the Gen Z audience on a more personal basis. The tendency of youngsters to adopt and adapt to cryptocurrencies coaxed them to offer BitPay as another payment option and win their confidence.
But American Eagle Outfitters thinks otherwise because its experience proves that the market is still naïve and not ready to accept crypto payments.
Union Budget and Crypto in India
India has a growing crypto industry, since the Supreme Court removed the RBI’s ban on cryptocurrency transactions but since then, there are no clear regulations regarding digital assets. A significant step towards realising the potential of the industry was taken when the Government announced a 30 per cent tax on cryptocurrency revenues in the Union Budget of 2022. The flat 30 per cent tax on cryptocurrency has not changed in the Union Budget 2023 too, as announced by Finance Minister Nirmala Sitharaman.
Although the Indian cryptocurrency sector is unregulated, several businesses are already taking steps to take advantage of the user community that is growing. While some have already started accepting money, others are thinking about it. Contrary to other industrialised nations, India is still in the early stages of cryptocurrency trading.
Users can purchase crypto from crypto exchanges. To make a crypto payment, the user can send bitcoins from their digital wallet to the recipient’s specific bitcoin address using an app or website. The recipient has a few options when the money arrives in their account – they can either exchange the cryptocurrency for a less volatile digital asset or convert it to fiat and withdraw it.
Perspectives of crypto exchanges and retailers
Since June 2020, CoinSwitchKuber, the biggest cryptocurrency platform in India, has added close to 8 million new users. “Cryptocurrency sector is trending and companies are looking to enter the market with increased interest,” said the Chief Business Officer of CoinSwitchKuber, Sharan Nair.
Owners of Bitcoin now have the option to purchase gift cards from a list of 90 brands which includes hotels, restaurants, lifestyle items, apparel and more. All you need to do is have bitcoin in your digital wallet and be a KYC-verified customer.
WazirX is another India’s premier and trusted crypto exchange and a trading platform. According to Nischal Shetty, the Co-owner, consumer goods that make digital currencies more usable in daily life will represent the next wave. More crypto education is required if digital currency is to be widely accepted in India and around the world.
Highkart, The Rug Republic, Purse, Sapna are few of the marketplaces which have courageously started to accept cryptocurrency. The top amongst them, The Rug Republic is a Delhi-based decor business that accepts the top 20 cryptocurrencies by market valuation apart from Bitcoin. Although the company currently relies on platforms like WazirX and Binance to execute transactions, it hopes to develop its own payment system soon.
Although these small businesses have trust in cryptocurrencies, their larger competitors seem to be waiting for the Indian Government to clarify its stance on them. Additionally, RBI has stated that it is preparing to introduce its own cryptocurrency. A turning point will be achieved once the largest merchants begin accepting cryptocurrency payments frequently. By that point, using cryptocurrency will not only be acceptable but also commonplace.
Growing popularity of Crypto
A recent survey of 2000 senior executives in the USA conducted by Deloitte proved that retailers are hopeful about accepting crypto payments and investing in digital money. According to the study, 83 per cent of merchants said they anticipate their customers’ interest in crypto payment options to increase in future and 64 per cent of those respondents said their customers have a substantial interest.
Another survey of 596 consumers in the USA conducted by Gartner’s Software Advice in 2022 proves that users do not get fully affected by market fluctuations. Nearly half of the respondents polled that they would consider using crypto in the coming years. Only 29 per cent of those polled expressed concern about market swings.