Coinbase’s chief policy officer discusses coffee chain accepting crypto on ‘The Claman Countdown.’
A test case for mainstreaming cryptocurrency is coming to a local coffee chain in the nation’s capital, FOX Business has learned.
Compass Coffee, a veteran-owned coffee brand with sixteen stores in the D.C. area, is partnering with the U.S.’s largest crypto exchange, Coinbase, to offer customers the option to pay for their morning brew with USDC, a so-called “stablecoin,” a form of cryptocurrency that works like a digital dollar. Compass is the first D.C. cafe to accept payments in USDC.
On Wednesday, customers who pay with USDC at Compass’s Half Street location will get 90% off their orders as well as a non-fungible token, a type of digital asset, that can be used to redeem a free tin of coffee branded with the Coinbase and Compass logos.
The move is the latest example of how crypto is slowly making its way to Main Street, with U.S. businesses opening up to the idea of accepting cryptocurrency as a payment option.
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A test case for mainstreaming cryptocurrency is coming to a local coffee chain in the nation’s capital. (Fox Business/Eleanor Terrett)
A major roadblock to the normalizing of digital assets as a form of payment has been their applicability on Main Street. Besides a handful of large companies like Starbucks, Subway and AMC Theaters recently accepting payments in bitcoin and ether, many U.S. businesses do not accept crypto remittances, particularly small mom-and-pop stores.
But since the January launch of eleven bitcoin ETFs on Wall Street, the conversation around crypto and its viability as a long-term store of value is beginning to shift.
Larry Fink, CEO of the world’s largest asset manager BlackRock, has famously done an about-face on bitcoin in recent years, once calling it “a vehicle for money laundering,” now calling it a form of digital gold.
While bitcoin may be a hot investment prospect, stablecoins, which are typically pegged to a fixed asset like the U.S. dollar, do not have the same price volatility as bitcoin, making them a more suitable crypto for use in day-to-day transactions.
USDC, the stablecoin that Compass Coffee will accept, is issued by crypto company Circle, in which Coinbase holds a minority stake. Users can convert their dollars into stablecoins using a digital wallet or through a crypto exchange like Coinbase or Kraken.
Coinbase hopes the partnership with Compass will encourage other small businesses in the area to integrate stablecoin payments and help to bust crypto’s rep among D.C. regulators and politicians as merely a speculative investment asset. Coinbase aims to achieve this by spotlighting crypto as a solution to what it calls the U.S.‘s “antiquated” financial system that “shortchanges” Americans, primarily through hidden transaction fees.
One of the biggest selling points for cryptocurrency and the blockchain technology it operates on is its ability to cut out the so-called “middle man,” or intermediary organizations like banks and credit card companies, that impose fees whenever money is moved across their platforms.
The decentralized nature of the blockchain helps cut the cost and the time of crypto transactions down to just fractions of credit card transactions, which can take days to settle, with processing fees ranging from 1.5% to 3.5%.
Coinbase and Compass are alerting customers to this money-saving message using the coffee cups at the Half Street store on Wednesday.
“$126 billion in estimated credit card transaction fees paid in 2022 by U.S. merchants,” the cups read. “2.5X the entire U.S. coffee shop market. Over 99% of this could have been saved by using blockchain technology.”
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Compass Coffee is partnering with the largest U.S. crypto exchange, Coinbase, to offer customers the option to pay for their morning brew with USDC, a so-called “stablecoin,” a form of cryptocurrency that works like a digital dollar. (Fox Business/Eleanor Terrett)
In the case of Compass Coffee, the company says it currently loses around 3.75% of its revenue to credit card companies through so-called “junk fees,” surcharges paid on transactions made with a credit card.
As a small, veteran-owned business that survived the COVID-19 pandemic, Compass says every dollar counts and the money it currently shells out to credit card companies could be better used to pay staff, rent and suppliers.
“Accepting crypto payments could be transformational for our business,” Compass Coffee founder and CEO Michael Haft tells FOX Business. “We hope to help transform retail experiences by accepting USDC and limiting junk fees so those margins that would typically go to credit card companies can come back to us and boost the local economy instead.”
Compass Coffee says it currently loses around 3.75% of its revenue to credit card companies through so-called “junk fees,” surcharges paid on transactions made with a credit card. (Fox Business/Eleanor Terrett)
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While the USDC payment option will only be available at its Half Street store for now, Compass plans to roll out the feature at its 15 other locations in the future.
Coinbase will also host its inaugural Update the System Summit on Wednesday, an event aimed at spotlighting how cryptocurrency can be used to solve real-world problems facing everyday Americans.
The event will feature panels with major industry players like Marc Andreessen of crypto-focused venture capital firm Andreessen Horowitz as well as pro-crypto lawmakers like North Carolina Republican Rep. Patrick McHenry and Wyoming Republican Sen. Cynthia Lummis.
“The Update the System Summit will feature the myriad real-life applications that are being developed for crypto and blockchain technology,” Coinbase’s Chief Policy Officer Faryar Shirzad told FOX Business. “Our partnership with Compass is a good pilot to show how stablecoins can simplify finance and save small businesses thousands of dollars on unnecessary credit card fees.”
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