In offering global internet merchant account services, particularly with high risk industries, we’re known as a payment processor that thinks outside the box. Roughly five years ago, when the idea of bitcoin and other crypto currencies began filtering into the mainstream, it caught our attention and we wanted to find out more. Digital currency use continues to grow and more businesses are offering solutions for consumers to pay for products and services with such.
While crypto currency may be efficient with its person-to-person/no intermediary setup, it is somewhat like the wild, wild west of payments – there is no regulation. And that frightens governments here and abroad as its popularity slowly grows.
The European Banking Authority recently published its estimation on applying EU law and banking standards on crypto currency use, no doubt because it is preparing to establish regulations with a goal of transparency. We feel the U.S. will eventually follow, not only to figure how to tax digital currency appropriately and fairly, but for two other reasons.
Reason 1: Anti-money laundering
Digital currency use with internet merchant accounts could be revolutionary for the merchant services industry. In the eyes of governing bodies, however, digital currency’s biggest asset may also be its biggest curse: Transactions are P2P and final. Following a money trail in a crypto transaction can be difficult, but it’s not impossible. Criminals tend to create different wallets to hide and disperse funds, thus making the money trail increasingly difficult to follow, similar to playing whack-a-mole.
The anti-money laundering issue segues nicely into our next reason.
Reason No. 2: Funding of illegal and illicit activity
In November, we attended MJBizCon 2018, the largest cannabis business tradeshow in the world, in Las Vegas. In the session titled Cannabis Cash: Banking & Financing Risks, one line from the speaker, Sundie Seefriend of Safe Harbor Private Banking, stood out. She said, ‘If you really want to draw attention from the FBI, try accepting crypto currency as payment for cannabis.’
That very statement underscores the concerns governments and law enforcement bodies have (very much including the FBI and Interpol), not only with accepting digital currency for cannabis, but for any product or service. The big concerns from governments are centered around the funding of illicit activity, such as money laundering for narcotic sales, and worse, terrorism.
Prediction: Wallet providers will have added responsibility
Instabill is partnered with several mobile wallet providers for internet merchant account services, enabling merchants to accept transactions via mobile phones. Because of the ease of use, mobile payments are growing rapidly. In fact, in some regions, it is the preferred method of payment. While Blockchain, Bitpay and Coinbase are three of the most popular wallets for crypto currency payments, it will be curious to see if their models change over the next several years to integrate more security and monitoring.
Quick story – Our take why crypto currency has gained popularity
Perhaps this is reason No. 3…
A significant reason why the popularity for crypto currency has steadily increased is, bluntly, disdain for large banks. Simply, business people, particularly in the UK and Europe, want other alternatives to accept payments.
In September of 2013, we attended the inaugural Crypto Valley Summit in Douglas, Isle of Man, a two-day conference for digital currency enthusiasts that attracted close to 300 attendees from all corners of the world. It was a conversation I had with an attendee that I began to understand the attraction to the use of digital currency, particularly to Europeans.
Simply, there is a population, particularly in Europe, who are tired with the antics of large banks.
‘You Americans and your banks,’ one Englishman said early on the first day. ‘Why is it that no one goes to prison even when these banks are guilty of the most daft financial crimes?’
He was referencing the Bank of America’s $16.65 billion penalty in August 2014 for misleading investors leading to the 2008 financial crisis. No Bank of America employee was incarcerated. It continues to this day. Remember the Wells Fargo fake account scandal? The U.S. banking giant paid only $185 million in penalties even though it impacted 3.5 million consumers.
My English colleague had a point, and I didn’t have an answer for him. But now I understood his interest in crypto currency. It was a theme that was constant throughout the conference.
Internet merchant account solutions for crypto currencies
At the 2014 inaugural Crypto Valley Summit, Instabill announced it could offer internet merchant account services for crypto currency merchants, and was one of the first high risk merchant account providers to do so. It is a service we can still offer today.
We encourage prospective merchants to have an initial conversation with one of our expert merchant account representatives about the possibilities at 1-800-530-2444.