Convergence Will Enable ‘Pay With Anything’ Era

It seems that pretty much anything can be turned into a digital asset these days — that is, if it hasn’t been converted already.

According to Gavin Michael, CEO of blockchain asset management firm Bakkt, a successful payments and commerce network is one that can accommodate all types of digital dealings — from currencies to cryptos, to rewards points and more — and turn illiquid assets into spendable assets across a variety of endpoints.

Converting digital assets into cash that is spendable (or sendable), he said, could unlock as much as $1.2 trillion in value stored in those assets.

As Michael told PYMNTS’ Karen Webster: “We’re trying to be a new payment rail that allows people to get access to liquidity in assets that traditionally haven’t had liquidity associated with them.”

In terms of mechanics, the Bakkt platform of services, in a B2B2C model, allows users to convert those holdings through accounts loaded into digital wallets or pay with points directly with merchants. The digital asset marketplace, with loyalty, redemption services and payments built into the platform, is accessible via Bakkt’s app or through application programming interfaces (APIs), he said.

The platform works with financial institutions (FIs) and merchant partners, helping them with the infrastructure and capabilities to access new markets and offer new products at scale and giving them regulatory clarity, better price discovery and better risk management. APIs also speed up new ways to create value and experiences for the end customer with relatively little technical heavy lifting, he said.

“We’ve all been down this path of integration after integration, and it’s a very slow way to build a network,” he said.

Reimagining The Last Mile

The platform helps spur a reimagining of the last mile in commerce, Michael said. It’s no longer just about the delivery of the payment. Payments are swiftly becoming just one part of the broader context of the commerce experience.

Broadly speaking, he said, there’s a trend of loyalty and commerce coming together, which demands flexibility in what can be used to pay — and when and where. Michael pointed to the emergence of digital loyalty programs, where rewarding the customer not only encourages them to spend but cements the relationship between consumers and merchants too.

Offering those options at the point of sale (the brand establishes the redemption price) also has advantages for the merchants that already have loyalty programs in place, reducing the liabilities of those reward programs, he said. After all, plastic gift cards can sit unused in drawers as liabilities on merchants’ balance sheets for years.

“When we talk to [Bakkt’s customers] businesses” about these digital engagements, Michael said, “it’s about striking new forms of engagement, but it’s also about acquisition and growth.”

Spending And Passively Acquiring Crypto

The shift comes as the barriers and silos of stored value are coming down, a trend that is reflected by the fact that, as noted in a May PYMNTS survey, 57 percent of cryptocurrency owners have made a purchase with it in the past year.

Read more: How Consumers Want To Use Crypto To Shop And Pay in 2021 And After

“A digital asset for us is obviously crypto, but it is also loyalty points, rewards points, gift cards, and even cash,” Michael explained.

By embracing that broad definition, the Bakkt platform serves several interrelated customer segments, particularly within the crypto space.

For the consumers, there’s the ability to gain access to the cryptos themselves, as well as merchant offers, loyalty points and gift cards.

“They can increase their spending power, and this helps power commerce itself,” Michael noted.

Earn And Burn

The co-existence of new and traditional rails provides additional capabilities to brands like Wyndham to personalize rewards at the program, segment or individual levels, so they can stretch their value propositions beyond simple payments to payments and loyalty.

“It’s the earn and the burn” that brings value-add to consumers, he said.

As he said of the digital economy at large and Bakkt’s digital marketplace in particular: “It starts with pay with points, but then it becomes pay with anything.”



About: Forty-seven percent of U.S. consumers are shying away from digital-only banks due to data security worries, despite significant interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can shore up privacy and security while offering convenient services to satisfy this unmet demand.

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