In a breakthrough announcement in the cryptocurrency market, Vancouver based NetCents (CSE:NC) (FSE:26N) (OTCQB: NTTCF) announced a collaboration with Visa introducing the NetCents Visa credit card. The co-branded card enables crypto currency wallet holders and traders a real-time seamless purchasing power using crypto currencies for in-store and online transactions with the more than 40 million merchants that accept Visa worldwide. Its common knowledge that the biggest deterrents for merchants to accept cryptocurrency for retail and business transactions are volatility and liquidity. Last month NetCents took a dead aim on the volatility deterrent by securing an institutional credit facility totaling 1.4 billion USD to power merchant settlements. Announced on June 22, this development enables to NetCents to eliminate the high volatility risk for all of its merchants essentially acting as ‘market-maker’.
As an added bonus the line of credit will allow NetCents to ‘float’ currency in the market over extended periods allowing the company to profit from arbitrage trading opportunities. The earnings from this arbitrage, according to NetCents founder and CEO, Clayton Moore will ultimately allow NetCents to reduce fees to its client base. Industry watchers and investors responded resoundingly positive to the news catapulting the stock from mid-June lows $0.50 to highs of $2.26 during the week of the announcement. This next catalyst, directly address the crypto liquidity and adaptability barriers could provide another surge to its recent high and beyond.
“We’re allowing NetCents users to spend our cryptocurrency in real time, says Moore. “Unlike most of the crypto cards in the market, our is not just a pre-loaded or adjusted credit card, which is a simple integration. We’re modifying our instant settlement technologies and tethering them directly into our user wallets. There’s no need to go online and top up your card, so for all intents and purposes it works like a debit card but with the functionality of a credit card.”
The irony, according to Moore, is that the whole process is transparent to the merchant. “The card works like any other credit card.” He points to how far the industry has evolved in such a short period. “Two years ago, you buy one bitcoin it would take you 16 hours to get a confirmation that you actually bought it. Here we are today enabling real time credit card cryptocurrency transactions all over the world.”
Another key differentiating factor of the card is that the NetCents Visa enables its users to spend up to three separate cryptocurrencies on the card. Using any of its instant settlement clients such as Bitcoin, Lightcoin, Ethereum, BitCoin Cash and Ripple, the user will be able to pair to their credit card and will be asked at sign-up to rank them in priority order. “If they’re doing a $1,000 transaction, we can do partial settlement against all three coins in a single transaction.,” says Moore. “According to Visa they are not aware of anyone else doing that.” Additionally, since the coin stays in the user’s crypto wallet, there is no risk of financial loss caused by losing the physical card.
Beyond the obvious branding benefits, the arrangement bodes well for NetCents, firstly for a wealth data and secondly NetCents now deals directly with Visa rather than through its other partnerships. One of the big problems with the credit card and merchant payment industry adoption is the limited dataset that the vendor has to work with. “What were going to get is unfettered access,” says Moore. “If there are no limiting factors on where you can spend your crypto currencies, where do users want to spend it? We’ll have all that first party data that we’ll be able segment into specific merchant, whether its United Airlines or Starbucks. We can now reach out to them directly, informing them we did $5 million in transactions via crypto that they were not aware of, and that was just a small percentage of users.”
Should merchants be paying in attention? Just to bring you up to speed, there are approximately 5,392 cryptocurrencies being traded with a total market capitalisation of $201bn (as of April 22, 2020). As expected, the top ten make up more than 85% of that market with Bitcoin reigning supreme at 63%. The card is arriving on the scene at exactly the right time, research shows that crypto investors are increasingly becoming interested in seeking ways to transact with their crypto, rather than just hold them as a store of wealth. The market is maturing as well – there are about 50 million crypto wallets in use globally, and that number is increasing by 10 million wallets a year – any rally in crypto will cause the growth rate spike as well.
After citing numerous transactions, NetCents can present its case to a now-trusting merchant who has much more confidence in bullet-proof crypto-transaction system. “At that point we convert them to sign up directly so you’re no longer dealing with interchange fees and chargebacks or fraud. We’ll open the vendor up to the entire cryptocurrency eco-system. We see it as a huge data play to not only drive the user adoption and become that bridge solution, but then be able to mine that data, whether its industry or merchant specific and do really targeted business development and do outreach to these merchants.”
Enabling more users and targeting more merchants on a viral level (hate to use that word, however it fits here) can have a parabolic effect on a provider such as NetCents, who are ‘fast’ becoming a ‘long-time’ established cryptocurrency eco-system. Investors should keep an eye on NetCents as the Crypto Industry reaches maturity and is now becoming investment grade. Coinbase has been hinting at a $12 billion dollar IPO. This means that institutions are looking to have some crypto exposure in their portfolios – as it is one of the fastest growing market segments in the financial services industry.
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