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How the pandemic pushed forward the development of digital payments

According to an April study published by the Bank for International Settlements (BIS), in fear of transmitting COVID-19 via cash, people are increasingly looking into cashless payments.

With a sudden increase in consumer demands for cashless payments, the pandemic can accelerate the worldwide transition to digital payments while serving as a catalyst for the modernization of the financial industry.

And it's not the first case where a global crisis serves a catalyst for a major structural change.

After the Great Depression in the 1930s, the devastating economic crisis accelerated the process of eliminating the international gold standard while expanding social welfare and strengthening labor unions.

However, we don't have to look that far to see how a global crisis accelerates major economic changes.

The 2008 debt crisis was followed by strict regulation of the banking industry, creating a system where banks have weaker financial performance but bear fewer risks to the world economy.

Shifts similar in magnitude to the previous economic crises are happening now.

First, consumers are looking for alternative ways to replace cash. This includes contactless credit cards, mobile, and cryptocurrency payments.

Furthermore, the COVID-19 pandemic highlighted the importance of central bank digital currencies (CBDCs), which many (including the BIS) see as the next step in the evolution of money and global finance.

After China began testing its digital yuan, many countries around the world have been picking up the pace in regards to CBDC research and implementation. 

Britain, EU countries, Sweden, US, Canada - all of them are heavily discussing this topic right now. 

Just recently, Japan also revealed that it's going to add the matter of a central bank digital currency into its official economic plan.

When can we pay for coffee in crypto?

Many countries understand the importance of digital currencies - but so far payments in cryptocurrencies are not common. 

This matter depends on a number of factors, not the least of which is cooperation and compliance with the existing financial structures and payment providers.

But while the governments of various countries are busy making decisions on the status of cryptocurrencies, there are already ways for you to buy coffee with crypto today.

How can this be done?

Cryptocurrencies as a method of payment

Scenario 1

Here, a service provider creates a cryptocurrency credit card that allows consumers to fund their cards with digital assets and use them for payments in a similar way to standard payment cards.

As this method doesn't require merchants to set up dedicated cryptocurrency payment gateways, crypto cards allow consumers to use their digital assets to pay for products and services at their favorite stores.

On the other hand, to bring the idea of a cryptocurrency card to life, the service provider must possess vast experience and an extensive network in the payments industry, working with Visa, MasterCard, or their principal partners' to issue the payment card.

Due to the highly resource-intensive process, only a few successful cryptocurrency card projects are present on the market.

Scenario 2

Here, a café decides to accept Bitcoin directly.

The owner uses the customer's bill to calculate the BTC equivalent a consumer has to pay, displaying a QR code on a tablet device for the customer to scan and initiate the transaction from his crypto wallet.

While theoretically, customers can use crypto to buy coffee at the café, this simple integration of cryptocurrency payments has some caveats in practice.

First, consumers have to wait until their transaction gets confirmed – which can take up to an hour, especially when lots of people are utilizing the blockchain network –, which could discourage them from using cryptocurrency as the payment method at the café.

Second, due to the high volatility of cryptocurrencies, employees have to continuously recalculate the crypto-fiat exchange rate in order to avoid making a loss. Because of the same reason, upon a successful transaction, they have to convert the digital assets to fiat currency quickly.

Third, while some governments have already regulated cryptocurrency and recognized it as a payment method, digital assets are unregulated or banned in other countries. In the latter case, the café may not be allowed to accept crypto payments as a business.

Scenario 3

Here, the consumer uses a cryptocurrency exchange to convert his digital assets to fiat currency, which he then withdraws to his payment card or bank account.

After the transaction is processed, the consumer can use his withdrawn fiat currency to pay for products and services via a payment card. As you can see there are multiple steps involved in this process and the flow is complicated with potentially multiple service providers needed to fulfil the end to end requirements of this flow.

Since this is the only method available on the market that currently works in practice, it will take time for cryptocurrencies to reach widespread adoption unless a major change in consumer behavior occurs.


Mainstream crypto adoption will come when the boundaries blur between traditional finance and the digital economy. When this happens, it will become a habit for the average consumer to use digital currency to pay for his day-to-day expenses in a similar way contactless smartphone payments have become habitual now.

A major shift in the financial industry and the regulatory landscape can also accelerate crypto adoption.

For example, if central bank digital currencies become the standard payment methods for daily expenses, decentralized cryptocurrencies like Bitcoin will get better adoption by consumers since they are already familiar with the technology.




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