Even before it had the usual cashless payment options, homeware e-retailer &glazed was already allowing customers to pay for their purchases using cryptocurrency.
Bitcoin, Ethereum and Litecoin were among those accepted at its checkout page since the start of the year, before other familiar options such as PayNow were added.
Co-founder Lionel Lim made the less-typical decision, partly due to his interest in the burgeoning space. He invests in cryptocurrencies, and also holds a full-time job at a crypto exchange based in Singapore.
Besides, having as many payment methods as possible would be the way to go for an online store, he said.
“We want to make it as seamless as possible – to the extent that whatever you want to pay with, we got it,” he told CNA.
So far, it seems very few are willing to part with their digital currencies. The take-up rate has been “very low”, with cryptocurrency payments making up just 1 per cent of total orders, according to Mr Lim.
Bitcoin was used in all of these transactions. With the order size averaging at S$33, shoppers would have paid with a mere fraction of the cryptocurrency which, after the bloodbath last week, is trading at about US$30,000 (S$41,600) as of Wednesday (May 18).
Mr Lim said he has been keeping the takings in the firm’s digital wallet on Coinbase Commerce, the payment platform it is using to accept cryptocurrency, and is in no hurry to cash out.
“We can see how there will be concerns for big businesses because for them, even having just 1 per cent of sales in Bitcoin might mean cashflow issues. But we are a very small business,” he added.
“Unless we start having a lot of transactions in Bitcoin then naturally what I’ll do is to transfer them to either stablecoins or fiat. Now, I’m just going to treat it as a form of investment.”
CRYPTO AT THE CHECKOUT
A number of other businesses have also started accepting cryptocurrency in recent months, such as online pet food and supplies store Kibbles, homegrown fashion brand Charles & Keith and luxury car retailer EuroSports.
Those that spoke to CNA said they see the potential to attract new customers as cryptocurrency ownership grows in Singapore and abroad.
Charles & Keith, which rolled out cryptocurrency as a payment mode on its e-commerce site in March, said it did so “to benefit those who own cryptocurrency and might be seeking additional channels where they can purchase goods and services using their investments”.
Since the launch, Singapore-based customers made up 70 per cent of the cryptocurrency transactions on its site. Ethereum was the most popular digital currency, accounting for half of the payments.
“We see a heartening trend where it seems to be attracting a new customer base,” a spokesperson said in an emailed reply last month.
For Kibbles, allowing customers to pay with digital currencies brings added advantages of simplifying cross-border transactions and lower foreign exchange fees when it takes on orders from overseas, said founder Andrew Lim.
Like &glazed, both Charles & Keith and Kibbles signed up with cryptocurrency payment gateways.
Doing so was a no-brainer, said Kibbles’ Mr Lim, noting that cybersecurity was a key priority. As a bonus, transaction fees are also lower than those charged by credit card firms.
Mr Lim from &glazed noted that one of his concerns prior to accepting cryptocurrency was the speed of these transactions, which tend to have “a lag” compared with traditional payments.
For example, the Bitcoin network supports about five transactions per second while Visa processes around 1,700 transactions on average during the same time, according to various media reports.
This lag is because each transaction on the bitcoin network is validated by “miners” who, in simple terms, use computers to crack complex mathematical problems. There typically needs to be consensus on the network about the validity of the transaction for it to go through. While this reduces the risk of malicious activity, it can also increase transaction times.
“That’s my concern,” said Mr Lim. “What if someone makes a payment and it takes days to come in? Given how we do deliveries within one to two days, what if I don’t get the money after delivering the goods?”
This concern has since been resolved, as transactions went through “immediately” on Coinbase, he added. “Third-party solution providers do help to make it easier for businesses to accept crypto.”