In an experiment at Pick ‘n Pay’s (PnP) head office, their canteen store successfully accepted Bitcoin as a method of payment.
Jason Peisl, IS executive at PnP, explained the pilot lasted for an hour, during which five transactions were made by three PnP IT employees.
The operation was conducted in partnership with Electrum, a payments’ technology company, and Luno, a Bitcoin management company.
According to Peisl, both Luno and Electrum were monitoring their platforms during the transactions.
The process involved a cashier printing out a quick response (QR) code after scanning the chosen product. The customer then opened the Luno application, scanned the QR code from there, and accepted the payment for the product.
WATCH: Peisl demonstrates how the transactions took place here.
Richard van Rensburg, deputy CEO of PnP, said that although they have now proven to themselves that this is possible, they do not believe it will lead to more business in the near future.
He explained they are unlikely to use Bitcoin “until the payments industry and regulatory authorities have established a framework for managing the risks associated with cryptocurrencies”.
PnP found the transactions to be simple and cost-free on their side. Although it was also frictionless for the customer and they did not incur any transaction costs, the process of exchanging Bitcoin to rand was expensive.
“The cryptocurrency industry has some way to go to create a low cost currency exchange process. Cryptocurrencies are still in relative infancy and it will take some time before they become widely accepted as a form of tender,” said van Rensburg.
“Progress is unlikely to be hampered by technology, but rather by regulatory issues and concerns. Cryptocurrencies have the potential to provide a cheap and frictionless cashless payment platform in the future and we believe it is this that will drive their eventual adoption by the industry,” he added.
Sonya Kuhnel, founder and managing director of the Blockchain Academy, explained that, according to her understanding, Luno converts Bitcoin into South African rand, and then settles it with PnP through Electrum.
“Therefore the transfer of value is still South African rand and it falls within the current South African regulatory environment. So it's important to emphasize that PnP does not accept Bitcoin directly, nor do they end up with Bitcoin in their wallet or account,” said Kuhnel.
She also pointed out that an important aspect of cryptocurrency is that it’s a push payment mechanism, and not a pull payment mechanism.
“This means that a cryptocurrency payment is authorised and therefore pushed through by the sender and is not being acquired by the retailers bank. This eliminates further costs and friction during the payment process,” she said.
Further benefits include low cost retail banking, money transfers, remittance services, and loyalty programmes.
According to Kuhnel, “The benefits of accepting cryptocurrencies is broad and each cryptocurrency has their own distinctive benefits.”
For a comparison of traditional banking products, have a look here.