Cryptocurrency App Now Accepted at Starbucks, Other Retailers

ALEXANDRIA, Va.—Flexa, a cryptocurrency payments startup, yesterday launched a mobile app and payment network that enables instant cryptocurrency payments in stores and online. Although it’s a limited launch, Starbucks, Whole Foods and Nordstrom’s are now among the many retailers accepting cryptocurrency, but none seem to be making a big deal about it, according to Forbes.

Flexa, which built the app and signed up businesses to participate, is working with Gemini, a cryptocurrency “bank,” to make the launch a success. Although some of the largest companies in the world now accept bitcoin, ether, litecoin, bitcoin cash, zcash and the Gemini Dollar (GUSD), no one wants to talk about it publicly.

Companies accepting these cryptocurrencies, according to Flexa, include Barnes & Noble, Baskin Robbins, Bed Bath & Beyond, Caribou Coffee, Crate and Barrel, Express, GameStop, Jamba Juice, Lowe’s, Nordstrom, Office Depot & OfficeMax, Petco, Regal Cinemas, Ulta Beauty, and Amazon-owned Whole Foods. However, none of these companies have independently confirmed they are accepting cryptocurrency.

“The crypto industry has historically over promised and under delivered,” said Tyler Winklevoss, CEO of Gemini. “This is one of the first times we’re actually delivering on the spend use case of using your crypto.”

While Gemini custodies the crypto funds, Spedn takes care of the payment itself by generating a one-time QR code on the customer’s phone screen. The customer scans the code into the participating store’s existing scanner, which debits the amount charged from the customer’s account. While the customer gets a receipt showing the purchase as a gift card, Spedn settles the actual payment with the merchant in the preferred currency later.

One reason merchants might want to use a product like Flexa, according to Flexa CEO Tyler Spalding, is that cryptocurrency transactions are permanent. They give Spedn the certainty it needs to decline requests that funds be returned, a process called chargebacks. Chargebacks cost merchants an estimated $31 billion in 2017. “We have a verified, irreversible payment,” Spalding told Forbes. “Which is not possible using any other current method.”

What’s more, it only costs Spedn about four cents to process payments, which could sharply reduce the interchange fees merchants pay on typical credit card transactions. U.S. merchants paid $88.39 billion in interchange fees in 2016 on $5.936 trillion in traditional credit card payments for goods and services, according to a 2017 Nilson report.

(For more on getting a handle chargebacks, see “The 411 on Chargebacks” in the May issue of NACS Magazine. For more information on swipe fees, see the NACS advocacy issue guide.)

Today’s crop of giant, well-known companies accepting the Spedn app is certainly the largest, most high-profile group, but not the first. Early in the history of bitcoin several big companies, including Microsoft, Overstock.com and Expedia, accepting cryptocurrency. But in 2018, as the price of bitcoin collapsed from $19,000 to $5,000, companies stopped the practice, citing price volatility.

One big difference between the early generation of companies accepting cryptocurrency and those announced yesterday is the relatively recent invention of stable coins like the Gemini Dollar and USD Coin, which give users the benefits of crypto without the risk of fluctuating prices.

Payment