Asia is the world leader in cryptocurrency investment, with Central and Southeast Asia accounting for a third of NFT sales in the $22 billion trade last year. Asian consumers are actively trading cryptocurrencies and using them to pay for goods and services, while retailers are using blockchain in their retail operations. The value of cryptocurrency transaction is expected to exceed $16 billion in 2023, leading 75% of retailers to prepare to accept the new currency.

Purchasing power and rising personal incomes are growing in the region. With nearly 700 million people, Southeast Asia has one of the fastest growing populations in the world; 440 million people are active Internet users and more are connecting. Young tech-savvy people are ready to try new things, thus embracing cryptocurrency after witnessing the many incentives to participate – such as Play-to-Earn GameFi programs. Even for the wealthy, virtual assets, including cryptocurrency funds, NFTs and stablecoins, now account for up to 7% of an investor’s portfolio, making them the fifth largest asset class. . Asian consumers are hungry for faster, safer and easier payment options – something cryptocurrencies can deliver and retailers will need to comply with.

Shopping with Crypto

Today, more than 18,000 businesses accept cryptocurrency as payment for their products or services. Understandably, cryptocurrency trading has boosted the wealth of young, tech-savvy individuals, with brands now keen to appeal to this new group of affluent consumers – and that’s no surprise since 52% of investors in Asia are betting on the crypto. Most notable for its Web3 efforts, Gucci has also started accepting Bitcoin cryptocurrency payments.
to Dogecoin
. Customers receive a payment QR code which they scan to pay through their digital wallet. Fueled by the prevalence of cryptocurrency usage, Gucci now offers cryptocurrency and NFT training to its staff members.

But it’s not just in luxury, cryptocurrency is now beginning to be offered in everyday retail experiences alongside cash and credit. A wide range of retailers, from sneakerhead market Novelship to shoe and handbag brand Charles and Kieth and global coffee chain Starbucks
to name a few, are now accepting cryptocurrency for commercial transactions, allowing consumers to pay directly with their digital wallets. Charles & Keith saw customers from Singapore account for 70% of cryptocurrency transactions on its site. This benefits those who own cryptocurrency and might seek additional channels to purchase goods and services using their investments.

Accept alternative payments

Asians have embraced digital payments on Covid-19, boosted by contactless payments and consumer vouchers, and discovered a new love for digital payments among QR code payments, digital wallets, BNPL (Buy Now Pay Later) and even biometric payments. Retailers prefer this for low commission rates and convenience. A quarter of Asian consumers are cross-border shoppers, whether online or through physical travel; cryptocurrency has enabled a more transparent, global and interoperable payment solution no matter where they are in the world.

Hong Kong’s largest mall operators, such as New World Development’s K11 Musea, Times Square and Harbor City, also celebrated innovative digital collectibles, ranging from the presentation of the Bored Ape Yacht Club, Moonbirds and CryptoPunks at Bunny Warriors and Hertz City Asian NFT Collection in their malls to attract interest and spending from these new cryptocurrency elites. But where is the continent heading with its use of blockchain in the retail world?

A new incentive for malls sees properties reward shoppers with lucrative cash back coupons for spending, some even seen circulating on second-hand marketplaces such as Carousel. LiberSave, a digital coupon solution software that uses blockchain behind its processes, steps in to connect merchants and shoppers. Using the blockchain as the basis for coupon processing allows merchants to apply digital asset management best practices and keep transaction history unchanged to increase reliability and security. An innovative approach to cashback, discount and promotion campaigns is achieved through the digitization of coupons and the optimization of user experience.

Not only used to parade as an early adopter of next-gen financial technology, there are many advantages to accepting crypto, and it is also financially rewarding. Traditionally, credit card rates account for up to 2-4% of transaction fees, while cryptocurrency accounts for half of that, if any. Cross-border traders also lose out to unfavorable exchange rates, making cryptocurrency a better option and simplifying cross-border transaction fees. Unlike electronic bank transfers which can take days to process, cryptocurrency payments are transferred in real time, allowing merchants to receive assets in hand and a stable cash flow.

The transparent nature of cryptocurrency payments also helps reduce fraudulent transactions. During the pandemic, an increase in credit card fraud has been observed, where the dollar volume of attempted fraudulent transactions increased to one third in 2020 compared to the previous year. Considering this, cryptocurrency is now considered safer than credit card payments because cryptocurrency does not require third-party verification. Transactions are recorded across the public network where the sender and receiver of the payment can access relevant transaction information and verify when and how a cryptocurrency transfer was processed.

Phemex, a cryptocurrency exchange and trading platform, has also seen an increase in international buyers. An increase from two million to five million users has been seen in one year, with Asia-Pacific being one of the top performers in terms of merchants. Simply offering new ways to pay by opening up cryptocurrency payments also opens up access to new demographics, catering to the cutting-edge customer base who values ​​transparency in their transactions. People now earning salaries in cryptocurrency are driving demand for cryptocurrency payment options. The financial asset management platform was led by Morgan Stanley
executives who had found opportunities for retail marketers in the digital neo-economy. Commenting on alternative payments, Nicolas Tang, Director of Internal Communications at Phemex shares: “Settlement on blockchain networks is much more capital efficient than existing payment networks. The volatility of cryptocurrency may prevent some from directly interacting with digital assets, but Web3 is changing finance in ways that modern businesses really cannot avoid.

The challenges ahead

Arguably, cryptocurrency is volatile and indeed subject to price fluctuations. Even as an investment, it can also affect income streams where, under current market conditions, the value of cryptocurrency received today may be worth another. Therefore, some retailers use cryptocurrency solely for their own investment reasons. Okra, a restaurant in Hong Kong, allows diners to pay with cryptocurrency, but only so the company can pay its suppliers and convert fares to fiat.

Using cryptocurrency to receive or make payments can be treated as a barter transaction because it is considered a digital asset. Legislators are constantly developing regulations to govern uncertainty and hardship, hence the ongoing legal and regulatory developments. As more and more retailers accept cryptocurrency, there are still hurdles to overcome, especially in the legal sector. Take South Korea, where regulators have introduced strict requirements for cryptocurrency exchanges, such as an in-country Information Security Management System (ISMS) certification. In 2021, many exchanges were scrambling at the last minute to get certified to operate, with only a fraction of success. Nearly a third of full-time workers nationwide have invested in cryptocurrency – which, by comparison, only about 11% of Americans have invested in cryptocurrency. Then there is China, which has banned cryptocurrencies outright, excluding its population from enjoying crypto-focused retail services. Since China is the most populous country in Asia, this retail revolution might not be uniform across the board.

Invest in the future

Asia is an epicenter of innovation, incubating countless blockchain projects challenging traditional financial institutions. The consumer market, especially in Asia, has always been a changing and evolving market, and as cryptocurrency becomes more and more a part of everyday life, the retail experience will follow. . More brands are accepting cryptocurrency for their products with new opportunities for cryptocurrency holders to spend their tokens. If Asian retailers fail to take advantage of this, they risk being shut out of the market and alienating consumers. Despite the challenges that can be seen in the region, it seems that nothing can stop the Asian crypto-retail movement. If the current trajectory of cryptocurrency used in retail in Asia continues, we could be looking at even greater adoption over the next decade.