Businesses that want to get at a piece of customers’ crypto windfall just got a big boost.
Coinbase is adding cryptocurrency merchant support through a service called Coinbase Commerce, the company revealed late Wednesday. The service can be integrated directly into online merchants’ checkout flow and lets them accept bitcoin, bitcoin cash, ethereum and litecoin payments as a payment option using just an email address or phone number. It’s already fully integrated with online marketplace Shopify.
“Our mission at Coinbase is to create an open financial system, so we’ve designed this solution to serve merchants worldwide,” the company said in a blog post announcing the service. Coinbase declined to comment for the story.
The rollout comes on the heels of news that payments company Stripe has bailed on its bitcoin support, though it continues to support other digital currencies and crypto-based projects.
Coinbase is positioning itself to help retailers benefit from investors’ recent gains and get ahead of competing services about to launch. The price of bitcoin went back above $10,000 on Thursday – the highest price since Feb. 1.
“Coinbase is going into a lot of other business lines right now, and that makes a lot of sense for the crypto ecosystem,” said David Sica, a partner at Nyca Partners. “It’s a pretty simple valuation: you’ve got this wealth creation event happening in cryptocurrency, wallets are growing, and to me as a retailer, that is a spend I can tap into.”
The merchant service doesn’t amount to the cryptocurrency becoming a mainstream way to pay for things any more than the investing feature does, Sica said, since price volatility and transaction time don’t make it very practical, at least right now. Should a future or alternative cryptocurrency with a more stable value be released in the future, Sica said, this would create the infrastructure for it.
But it might be an effort by Coinbase to encourage mainstream payments of cryptocurrencies, specifically bitcoin, Michael Moeser, Javelin Strategy’s director of payments, suggested.
“Coinbase is the largest bitcoin exchange in the U.S., and in order to facilitate greater adoption of bitcoin in this country beyond its use as an investment vehicle, Coinbase needs to promote its use as a payment currency,” he said.
There are other companies like Square who facilitate bitcoin use in its peer-to-peer payments app Square Cash, but their ability to drive adoption of bitcoin pales in comparison to Coinbase’s potential, Moeser added.
Coinbase’s challenge now is to mitigate the friction associated with cryptocurrency payments.
“It is likely [Coinbase] will leverage the large volume of transactions they conduct each day to pool transactions amongst users with end-of-day netting,” though the company has not commented yet on how they are dealing with these issues, said Charlie Laing, a consultant at Capco.