What Prevents Payment Systems from Adopting Cryptocurrency

There is a growing number of payment systems that accept and transfer cryptocurrency. However, there are a few issues that need to be overcome for a successful operation of such payment systems. The two main factors that need to be eliminated are volatility risk and a lack of regulation.

Volatility risk is a big issue because not a lot of customers are willing to receive payment in a currency with an unpredictable future rate. For example, if the car that I want to buy costs 13 ETH, which at the moment of the purchase equals to $5000, but if by the time the wire payment reaches the seller the price of ETH goes down, then the seller gets an amount that is below the market price of the car.

In order to prevent volatility, there are a few solutions that current payment systems implement. BitPay, for example, gives the merchant and the seller a fixed rate in the 15-minute window. Monaco provides real-time interbank exchange rates. TenX uses real-time rates. Ternion Payment Processor will have fixed rates and instant conversion of crypto-to-fiat at the point of sale due to the integration of the Ternion Exchange.

Regulation is also an essential part of payment systems. A lack of regulatory oversight is the reason why established payment processors steer clear from adopting cryptocurrency. Western Union, for example, does not add cryptocurrency to its operations due to a lack of consistency of regulations across the globe. Current payment processors allow cryptocurrency transactions are also not regulated, thus they are risky to use. Due to that Ternion Payment Processor will be a regulated entity.

Western Union CEO, Hikmet Ersek, also mentioned central banks’ generally skeptical stance towards cryptocurrencies as a reason not to add digital assets to the spectrum of services offered. He said that “nations are built on flags, constitutions, borders and currencies,” and central banks will not give up that kind of control.

However, it is interesting to see how the notion that traditional structures may not support a new reality of cryptocurrency is changing. One of such developments is the Dubai International Financial Center (DIFC) Courts’ partnership with the government’s Smart Dubai initiative. The partnership aims at developing a network built on blockchain technology and smart contracts to “explore verification of court judgments and sharing of documents in real-time for efficient cross-border law enforcement.” This advancement shows that nations are built on borders, but that might change due to Blockchain.

In the end, we can see that current payment processors that operate with crypto are not regulated and they are taking different measures to combat volatility. And traditional payment processors are afraid of adopting cryptocurrency due to a lack of regulatory oversight and the stance that traditional financial structures are taking towards cryptocurrency. However, as time progresses, it becomes more evident that blockchain and traditional finances are more resilient together than apart.

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