On the whole, PayPal and other money transfer services like TransferWise are accessible to the average consumer. These firms have readily available mobile apps that connect to a customer’s bank account without much trouble, support multiple currencies and geographies, and automatically price transactions in the appropriate currency for both parties.
By comparison, cryptocurrency exchanges and most wallets still exhibit multiple points of friction in the user experience. On the whole, owning and transferring cryptocurrency still requires a level of technical understanding that few mainstream remitters possess. A particular sticking point in the experience is the exchange into and out of cryptocurrency and the user’s local currency. This process can take time and exposes users to volatility risk.
PayPal’s 200 million users and long institutional history give it a competitive advantage over new crypto solutions. Consumers can reasonably assume that if there is a problem with one of their PayPal transactions or online wallets, they can speak to a representative on the phone who will help them find a solution.
In the customer service arena, cryptocurrencies still have a ways to go. While cryptocurrency companies have certainly become more open and willing to engage with the public, there are still only a handful of teams that offer help desks. Even the more prominent crypto exchanges still struggle to offer timely support to their users, making basic crypto transactions a comparatively riskier activity.
PayPal today is one of the most trusted payment platforms used to make purchases on the internet. When the company began, however, it had a difficult task in winning over wary users who were afraid of exposing their personal financial data online.
Today, the crypto industry has the same challenge of making users comfortable with a new way to pay and transmit money around the world. We must continue to move away from the negative associations of the early days of crypto and toward a future in which cryptocurrencies are safe, trusted, mainstream tools for remittances and other day to day transactions. To achieve this goal, the crypto industry must provide a remittance experience that is easier, cheaper, faster, and more secure than current solutions.
By far the biggest barrier to disruption of the remittance marketplace lies in crypto price volatility. The design of popular tokens and speculation in the currencies has led to dramatic price fluctuations that prevent their utility as alternative forms of payment. So long as consumers can’t be sure that the cryptocurrencies they’re trying to send today will be worth the same tomorrow, they probably won’t use them.
The solution to this problem can be found in the rise of the so-called “stablecoin,” a new type of cryptocurrency designed to track the value of fiat currencies like the dollar or the euro. As the the industry works to optimize mechanisms for achieving a price-stable cryptocurrency and combines this with simple and intuitive user tools, it can begin to disrupt the remittance industry. At that point, cryptocurrency will offer consumers a faster and cheaper alternative than traditional money transfer networks using highly efficient blockchain networks instead of expensive and inefficient middlemen.