Tap to Pay or Scan to Spend?
Comparing Point of Sale Solutions
For merchants and business executives navigating the evolving payments landscape, the dominance of card processing and the rise of 'tap-to-pay' are familiar realities. However, emerging technologies, particularly stablecoins, coupled with the global prevalence of QR code payments, present a competitive alternative with the potential to reshape the future of checkout. This analysis examines the critical tradeoffs between established card-based systems and scan-to-spend stablecoin solutions, focusing on the factors that impact your bottom line and customer experience.
We examine some of the key tradeoffs in the Future of Checkout:
Cost
Transaction Speed & Settlement
Merchant Reach & Customer Accessibility
Security & Risk Management
Cost
Transaction fees represent a direct cost to business profitability. Scan-to-spend stablecoins offer a compelling advantage by providing a more efficient transactional layer that reduces these fees by 2-3%, resulting in potential savings exceeding 60% on one of the largest operational expenditures. Furthermore, the elimination of dedicated hardware and reliance on existing Wi-Fi-enabled mobile devices translates to lower upfront investment and reduced maintenance expenses. This efficiency can be particularly attractive for businesses with high transaction volumes or those seeking to quickly optimize their operation.
Winner: Scan-to-Spend Stablecoins
Transaction Speed & Settlement
While tap-to-pay offers immediate transaction confirmation, the settlement of funds can take 1-3 business days, impacting cash flow. Scan-to-spend stablecoins offer a near-instantaneous confirmation and settlement within 3-4 seconds, providing merchants with faster access to their funds. This quicker settlement can improve cash flow management and reduce the need for working capital.
Winner: Scan-to-Spend Stablecoins
Merchant Reach & Customer Accessibility
Currently, tap-to-pay enjoys widespread merchant acceptance and significant customer familiarity, with Visa reporting 80% of their 2024 purchases occurring at contactless-enabled merchants.
Scan-to-spend stablecoins face the challenge of building a comparable merchant network. However, their inherent ability to function on any Wi-Fi-enabled mobile device offers the potential for swift, scalable deployment as a standalone SoftPOS or alongside existing POS terminals.
While tap-to-pay currently enjoys broad reach, the fact that 71% of merchants anticipate replacing their POS hardware with mobile SoftPOS within the next two years, combined with progressing regulation and the increasing liquidity of stablecoins, suggests a plausibly rapid adoption of scan-to-spend stablecoin services in the near future.
Winner: Tap-to-Pay with Cards
Security and Risk Management
Scams, hacks, & fraud are key concerns for any payment network.
All payment methods are vulnerable to these challenges:
Global e-commerce fraud losses reached $41 billion in 2022 Source
North America has the largest fraudulent transaction value of any regional market (42%) Source
One of the key risk factors in this particular market is the incredible volume of data breaches across the region, along with the everyday availability of stolen credit cards. Source
QR codes by themselves can be exploited for phishing attacks or malware distribution, reducing trust among users.
Smart contracts have been hacked for value they manage.
NFC based Tap-to-Pay terminals have improved the security and experience of processing cards in stores but why is the cost and technology required? Why were chip cards not enough?
Cards by design share sensitive payment information directly. So cards need to upgrade all the new technology, hardware, and installation for encryption, tokenization, short-range communication, and user authentication to combat this core system design issue against evolving attacks.
In contrast with Spendcodes, no sensitive information is shared. The customer holds their secret key to scan, sign, and spend from their device when they want. Since Spendcodes does not save sensitive payment info, there is no potential for a widespread database breach. In fact, there is no database at all. That said, there is some risk on making a single transaction. Malicious code could be injected into a Spendcodes flow to hijack a pending payment. However, if a customer confirms payment to a malicious address, the fraudulent transaction would be noticed right away since the flow requires confirmation checks on both counterparty devices of merchant and customer. This dramatically reduces the risk of repeat or widespread exploit.
Finally, Mastercard, Visa and other Tap-to-Pay providers have a significant portion of their business devoted to support and reimburse charges they deem as fraudulent providing some insurance to users.
Spendcodes informs all users to treat transactions like cash. Spendcodes does not hold insurance, have a reimbursement policy, or support team for any malicious transactions. All users agree to use the service “as is” like cash which works without fee to users through their ability to assess and verify their assets and counterparties.
Winner: You. Use one or both. There are alternatives.
Conclusion and Next Steps
The future of checkout presents a dynamic landscape with alternatives to traditional card processing. While tap-to-pay remains a dominant force, scan-to-spend stablecoins offer potential advantages in cost efficiency and faster settlement, with the promise of broader accessibility.
Businesses must carefully evaluate the current limitations in merchant reach and the distinct security considerations. Ultimately, the optimal payment strategy will depend on your specific business needs, customer base, and risk appetite.
We encourage merchants and business executives to:
Further research stablecoin payment solutions and their potential benefits for your business.
Monitor regulatory developments in the stablecoin space. ( Subscribe or get free, weekly updates on Linkedin )
Consider pilot programs to evaluate scan-to-spend options and their immediate savings. ( We can help. Book a demo )
Engage with industry experts to understand how much these benefits mean for you and your customers in the years ahead.
Have feedback or questions on how to Scan-to-Spend Stablecoins in one or many locations? 🏪 … 🏪 🏪
Our team has onboarded and administered software-only solutions with thousands of locations and employees nationwide. We can get you up-to-speed and measure out a plan for today and projected demand tomorrow. 📈 Just one mobile device is enough to start 📱