Gemini Partners With Payment Network Flexa To Enable Retail Purchases With Crypto

Credit: Michael Del Castillo - Forbes

Buying coffee with Bitcoin has long been considered a holy grail for cryptocurrencies. Thanks to a partnership between cryptocurrency exchange and custody company Gemini and blockchain payment network Flexa, that goal might be closer to reality.

According to a press release today, consumers will be able to spend four cryptocurrencies – Bitcoin, Ether, Gemini Dollar, and Bitcoin Cash –  for purchases at mainstream retail stores using SPEDN – Flexa’s wallet available in the app store. Partners for Flexa’s initiative include well-known organizations like Whole Foods, Crate and Barrel, and Starbucks.

The process, as described in the release, is fairly simple: users download the SPEDN app and transfer their cryptocurrencies to the app. When it is time for payment, customers simply scan the app at the store’s Point-of-Sale (POS) system and the relevant amount in fiat currency will be deducted from their wallet.

How Does the App Work?

A reporter at Fortune tried the app and found the process to be smooth and frictionless. SPEDN does not require integration of new POS systems to transact using cryptocurrencies, which had been the case earlier. It does, however, require users to create a wallet on SPEDN. Another advantage of this process is that transactions are done in real-time, as opposed to the long waits that characterized Bitcoin’s previous attempt to become a payment medium. Gemini, which handles the backend, will custody cryptocurrency used in the process.

But the exchange cannot completely eliminate the volatility associated with cryptocurrencies. Instead, it is banking on the wallet to boost adoption of the Gemini Dollar, the stablecoin used on its exchange.

Tyler Spalding, CEO of Flexa, told Fortune that the attraction of their network lies in lower commission fees for merchants and the chance to experiment with new blockchain-based rewards for customers. Other payment processors, like Bitpay, which started with similar ambitions have, since, shifted focus to becoming a money transfer platform for small businesses.

More Questions

That said, there are still several unanswered questions related to the app’s functioning.

The total number of confirmed transactions on Bitcoin’s blockchain is still significantly below its peak. This means that average confirmation times are still manageable. It remains to be seen whether Flexa, which claims to have a separate network, can handle a surge in transaction volume.

Transaction fees also skyrocketed with an increase in Bitcoin’s transaction volume during the surge of 2017. How much commission will Flexa charge for payments made using its network and are they susceptible to the same fee increase? The retailers included in Flexa’s experiment did not provide any comment to Fortune and it is likely that they are participating in the initiative as an experiment.

There is also the matter of adoption. Several retailers had begun accepting Bitcoin and cryptocurrencies in the run up to its peak price in 2017. But consumers remained wedded to fiat currency. It remains to be seen whether the case this time around is different.