CStore Decisions
| May 24, 2022
The market capitalization of all cryptocurrencies is estimated to be over $2 trillion. This prepaid reserve has attracted the attention of retailers to help investors with a path to instant liquidity for the highly volatile alternative asset by accepting cryptocurrency directly for purchases. The growth is prompting c-store operators to question how they can tap into this green field opportunity to increase sales and new revenue.
Cryptocurrency and stablecoin platforms make money by charging fees to buy, sell and hold a highly speculative fractional investment. For example, Block, formerly Square, now generates 70% of its revenue from cryptocurrency services through Spiral, formerly Square Crypto.
Knowing this, c-stores not only have the potential to add net-new revenue from cryptocurrencies and stablecoins, but also eliminate interchange by displacing other higher cost tenders such as credit and debit cards.
The ultimate utility for any funded account or “assets under management” is payment services, and all new payment types start with merchant acceptance.
The most lucrative way for c-stores to play would be by issuing their own branded cryptocurrency or stablecoin pegged to the unused, prepaid balances in a private-label gift card account. It would be no different than a prepaid private-label gift card, yet with the upside and, more importantly, volatile downside of fluctuating value.
Unused prepaid balances of fiat, stablecoins and cryptocurrency — only accessible through the c-store’s app — unlike card-based payments offer merchants a real-time payment, good funds model with the added benefit of non-repudiation, no regulation E nor chargeback risks, and little or no interchange.
To effectively do this the c-store needs a five-star-rated mobile app with a compelling value proposition for repeat use by consumers for managing cryptocurrency and stablecoins as a plus-one add-on feature.
The end game is not just the inherent loyalty of any private-label prepaid program (as the consumer can only spend their c-store prepaid funds at that store), but the opportunity to increase Monetizable Daily Active Users (MDAU) within the c-store’s own branded mobile app.
But all new payment types start with merchant acceptance and to make this work the c-store will need to get its private-label prepaid card program manager to support cryptocurrency and stablecoins, including providing a physical point-of-sale (POS) interface for making payments at the pump for fuel sales and inside the convenience store through a five-star-rated mobile app.
At this point, the infrastructure providers to c-stores lack the basic market connections, platform integrations and business acumen required to add cryptocurrency and stablecoins at the POS.
The other way for c-stores to play is by offering cryptocurrency services with the ATMs or coin-conversion kiosks already hosted within the convenience store.
Finally, if your current suppliers don’t support it, c-stores can add yet another single-purpose crypto-only ATM or coin-conversion kiosk from any of the myriad of companies now offering such services.
Richard Crone is the CEO of Crone Consulting LLC, an independent advisory specializing in mobile strategy, autonomous check-in/checkout and personalized payments. Follow him on Linkedin.com/in/richardcrone/.
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