Last month, Facebook confirmed its cryptocurrency GlobalCoin will be in about “one dozen countries” by this time next year. Rumors state it could now happen by Q3. No surprise! It was only a matter of time before Facebook announced its intention to wade into the cryptocurrency waters. Effectively holding power over a currency that can be used, exchanged, and rewarded through its social media platform.
As CEO Mark Zuckerberg stated, “It should be as easy to send money to someone as it is to send a photo.“ Examples in China underscored the potential value of embedding this crypto technology into the platform. A perfect example is their Alibaba Alipay service garnering 588 million investors and $168 billion in assets by the end of 2019.
Naturally, Zuckerberg needs to outdo the competition. It’s why GlobalCoin stands to be earned, rather than just bought. It’s definitely time to pay attention.
How will this new Facebook stablecoin affect high-risk merchant accounts? Let’s look at the four biggest points below:
1. GlobalCoin vs. card-not-present payments
GlobalCoin, with issuance completed by Swiss-based subsidiary Libra, will be available through WhatsApp. The app alone supports two billion daily active users. It is designed to be a payments mechanism and a medium of exchange within the massive social media ecosystem today. It will sit at a crossroads between global currency and interconnected communication. The stablecoin will roll out in conjunction with banks and brokers so it will be linked with multiple conventional currencies. Select online merchants will be paired with the platform, in exchange for lower transaction fees.
In total, the over 2 billion daily active Facebook users will be able to send and receive GlobalCoin payments, which due to its convenience, will only grow in popularity. Not to mention, the lower transaction fees will make this kind of arrangement highly preferable to online sellers. However, from our experience, talk of lower fees means accommodating vendors who are lower risk. This tells us that adult, nutraceutical, survivalist and tactical gear, and other high-risk merchants will likely be prohibited or restricted from trading with Facebook’s new cryptocurrency. There is no plan for subscription payments through this system. Therefore, merchants with recurring/membership models may have to alter their business if they wish to accept GlobalCoin. Consequently, it could take some time for high-risk merchants to be able to integrate this form of payment.
2. Goodbye to liquid cash
There’s already been a rise in credit cards, debit cards, and other forms of payment that are easier to carry around than cash, over the last few decades. Well, that convenience is still extending into today. This is why more people than ever are considering cryptocurrencies like Bitcoin that are available in their crypto wallets. It’s just a thumb tap away on their phone screens. Plus, with the volatility of Bitcoin, as it receives a bad rep in the news today, people are looking for alternatives that are reliable and stable. Facebook’s new tender will bring more legitimacy to virtual currencies. It may help other cryptocurrencies gain legitimacy, as it will prove the use case for digital cash.
How high-risk merchants can implement GlobalCoin into their checkout (if at all) remains to be seen. However, high-risk merchants accepting online orders should continue to diversify their payment channels. It will give them an edge and appeal to consumers through multiple buying options. Keep watching the experiment of GlobalCoin, because it’s still too early to accurately predict how this will affect you.
3. Direct bank competition
Facebook is already under fire for containing its own governing capabilities that are potentially swaying our opinions and information feeds. The same concern extends to its financial endeavors, with government regulations, customer data, and potential use outside of Facebook. Essentially, the social network will become its own bank, directly competing with other financial institutions. Some traditional credit card acquirers could reject processing history when performing underwriting for merchant accounts that accept this form of payment. That is if any processing history data will even be made available. That said, which side of the argument should you place your high-risk merchant business?
4. The more payment options, the better
In the end, accepting multiple payment options is beneficial, because no customer should be alienated at the checkout. Multiple payment solutions help you keep existing customers, attract new ones, and stay relevant with changing preferences. Whether it’s Amazon Pay, Square, ACH processing, your own merchant account or cryptocurrencies, the more monetary channels, the higher your conversions and sales!
As this new age of virtual currency arrives, Bitcoin remains the more popular option for high-risk merchants that want to trade. Processing these transactions helps sell goods and services often rejected for financial and reputational risk by traditional acquiring banks. It also allows for more secure payments, little to no chargebacks, and maintains lower costs all while removing transaction size limits. Also, the ability to transfer funds quickly and inexpensively with encryption technology will revolutionize your operation for the future. Additionally, you can reach consumer markets that are not heavy users of credit cards and traditional payment methods.
The business of alternative payments, high-risk merchant accounts and other processing services can get complicated. DirectPayNet stays abreast of payment industry developments and changes to ensure merchants aren’t left in the dark. Contact us today!