Due to bitcoin’s perceived benefits as a more efficient and less costly alternative to traditional payment options, many in the digital currency industry view incumbent payment service providers as antiquated competitors – firms that will be disrupted out of business when the technology matures.
Now, at least one notable payments industry trade association indicates that its members may be recognizing that bitcoin possesses this disruptive potential, and that this may soon lead to a rise in partnerships between traditional electronic payments providers and bitcoin startups.
In an interview with CoinDesk, Electronic Transactions Association (ETA) CEO Jason Oxman talked at length about his organisation, how the digital currency can better execute its agenda in Washington and bitcoin’s potential appeal to the traditional payments industry.
Notably, Oxman evoked Napster in his comments, comparing bitcoin to the controversial file sharing service that rocked the record industry. Citing it as a cautionary tale that is resonating with the payment industry, he said:
“They went all the way to the Supreme Court to shut [Napster] down. That is traditionally how incumbents react to innovation.”
Oxman, however, believes the payment industry will take a different approach to emerging technologies. In particular, he noted the recent partnership between Global Payments and BitPay as one that suggests the payment industry will not turn a blind eye to innovation. Under the terms, Global Payments has agreed to refer customers interested in bitcoin to BitPay’s service. He added:
“I think our industry has the opposite story to tell, and I think that’s embodied [by] the BitPay, Global Payments deal.”
Founded in 1990, the ETA represents more than 500 companies in the merchant-acquiring industry, fighting for its interests in Washington, DC. Notable members including Amazon, MasterCard and PayPal, along with BitPay – the ETA’s only bitcoin industry member.
Embracing innovation equally
Throughout the conversation, Oxman sought to frame his sector of the payments industry as one that is willing to work with emerging tech startups, including those in bitcoin space. He noted, however, that his support is likely to extend equally to providers of all forms of electronic transactions.
Oxman suggested the ETA itself does not advocate for bitcoin over other new and novel means of transacting, nor does it have an official position on its advantages or disadvantages when compared to other offerings.
“At bottom, our industry is in the business of facilitating electronic transactions, and those electronic transactions are going to take the form of whatever the customer or merchant of choice agrees is going to be the form of their electronic transaction,” he said.
Oxman further argued that this inclusive viewpoint could be beneficial to the bitcoin industry. As the payments industry has been broadly considering innovations in mobile payments for some time, he suggested his members may now be more inclined to embrace bitcoin and its potential through strategic partnerships:
“I think it will continue to happen going forward.”
Facilitating connections
To date, just one bitcoin company has joined the ETA, but according to Oxman, that doesn’t mean ETA members haven’t been given more exposure to bitcoin.
The Bitcoin Foundation has played a central role in educating the ETA and its members about the benefits of bitcoin, he said. As an example, Oxman recalled a 2013 ETA event at which Bitcoin Foundation general counsel Patrick Murck spoke, lauding it as a strong sign that both bitcoin and the broader electronics transaction industry can find common ground.
He explained:
“[Murck] did a good job of putting a business-focused backing to bitcoin. With that kind of introduction, our members look to bitcoin as an interesting development in the industry, and at least one of our members has seen fit to strike a deal with a bitcoin processor.”
Oxman went so far as to frame the ETA as a potential ally in the expansion of bitcoin’s use amongst consumers. Given the large number of merchants accepting electronic payments – between eight and nine million in the US alone – he believes bitcoin could be expanded greatly through the reach of ETA members.
“No company, no new startup in the bitcoin world has the infrastructure to reach all those merchants to make the pitches to why they should accept bitcoin,” he said.
Promoting smart regulation
Given his expertise as a liaison to Washington, Oxman also commented on New York’s proposed bitcoin regulations, drawing on his experience educating the 20-plus federal agencies that are involved with regulating payments about industry innovations.
The ETA, Oxman noted, spends most of its time ensuring that governments don’t stifle innovations in the field of electronic transactions. In the past, this has meant his organisation has needed to pave the way for new and controversial payment options such as those offered by PayPal and prepaid card providers.
Above all, Oxman stressed that he feels it is important for the bitcoin industry to tell its story to regulators, but that he understands the initial reaction of the government. Regulators simply aren’t used to payment methods that don’t offer certain forms of protections, he said.
Oxman explained:
“In the world of new payments technologies, any regulators are going to ask questions about the level of consumer protection available through alternative payment systems. The less those systems are established and deployed, the more regulators are going to feel compelled to step in and protect consumers where those protections are not otherwise available.”
When asked for his opinion on the BitLicense proposals, Oxman also struck a balanced tone. He suggested that he sees both sides of the issue, but that he believes New York needs to conduct more research into bitcoin and its underlying technology.
“I do think that it’s important to sound a cautionary note that regulators should not apply reflexive rules just because something is new. What they should do instead – hopefully New York will undertake this, but the early signs are cause for concern – they should take a real in-depth look at how bitcoin’s systems operates, how the block chain operates, how bitcoin providers like bitcoin processors take additional steps to protect consumers, to protect merchants.”
“I’m not surprised to see that interested parties have asked for more time for comments to be filed in New York,” Oxman concluded.
Image via The Paypers