Flexa on Monday (May 13, 2019) launched a new digital payment network that uses cryptocurrencies to cut processing costs, eliminate fraud and preserve users' privacy.
The network uses Flexa's Spedn app to process consumer transactions at cooperating merchants. The new payment platform makes it possible to spend Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and the Gemini dollar (GUSD) at any of the merchants currently accepting payments on the Flexa network.
Flexa partnered with Gemini, a regulated and secure cryptocurrency exchange and custodian based in New York City. Every Spedn digital wallet is fully insured on Gemini's New York Department of Financial Services (NYDFS)-regulated infrastructure.
The app allows consumers and businesses to spend cryptocurrency in real stores instantly without worrying about volatility, according to Flexa cofounder Trevor Filter. The company sees the new payment platform that handles cryptocurrencies as the future of digital payments.
The existing payments infrastructure is broken, according to Flexa. Alternatives to cash, such as credit and debit cards, are expensive for merchants and prone to fraud.
Instead of bolting cryptocurrency payments on top of debit cards, Flexa built new connections with merchant point-of-sale terminals nationwide.That network bypasses the existing payments infrastructure and pushes cryptocurrency-based payment authorizations, called "flexcodes," directly to merchants.
The first retailers on board include GameStop, Nordstrom, Whole Foods, Caribou Coffee, Jamba Juice, Bed Bath and Beyond, Lowe's, and Crate and Barrel.
The safety and reliability of cryptocurrency payments depend on the parties involved in the transaction, according to Charles King, principal analyst at Pund-IT.
"The volatility of crypto prices and high-profile failures and scams befalling some platforms have made commercial usage a tough sell," he told the E-Commerce Times. "Flexa, through its partnership with Gemini, claims to have fixed those problems."
Differing Views on Digital Payments
"Flexa's main commercial pitch for cryptocurrencies is that traditional payment systems are broken, overpriced and insecure, while blockchain-based systems offer superior security and efficiency..."
Flexa's main commercial pitch for cryptocurrencies is that traditional payment systems are broken, overpriced and insecure, while blockchain-based systems offer superior security and efficiency, and they cost sellers and buyers less than standard credit cards, noted King.
However, the viability of crypto is itself a concern, he pointed out. Conventional payment systems are based on and follow the rules of accepted, state-backed currencies.,
"So if things go south, sellers and buyers have formal recourse. That underlying infrastructure doesn't really exist for crypto," King warned.
Cryptocurrencies are the root of the payment platform rather than actual currency, explained Chris Morales, head of security analytics at Vectra. They are not stable and are traded like assets as the price has wild fluctuations in value every day.
"From a technical perspective, making a transaction is not a big deal. The risk might be in disputing charges, though, as there is no authority for payment resolution like you would receive with a credit card," he told the E-Commerce Times.
The pros and cons of the new system fall in line with the acceptance of cryptocurrencies. Trust inthe seller and the ability to recoup funds are the biggest concerns for online transactions, Morales said.
"There is a sense of security with backed and insured bank funds," he noted. "This is non-insured money, and once it leaves your wallet, it is gone."
"The virtual nature of the blockchain technology necessitates the need for utmost privacy and security. Blockchain is the technological spine of the crypto world."