Does Worldpay support bitcoin and the blockchain?
The answer, according to senior vice president Chester Ritchie, depends on how you frame the question. Today, the £3.6bn payment processor isn't doing anything internally with digital currency or the blockchain, he says, but like many payment services companies, it is interfacing with the industry in an effort to best serve merchant clients.
"I don't know how public it is," Ritchie tells CoinDesk at Money20/20 in Las Vegas. "We do have partners that are doing something in their solution for bitcoin."
Ritchie said that bitcoin startups such as BitPay and Coinbase already plug into Worldpay's payment gateways, through which small and large businesses can accept a variety of payment methods, from credit cards to boleto payments to bitcoin.
As for his personal feelings toward the technology, Ritchie believes it "remains to be seen" whether bitcoin and the blockchain, the digital currency's distributed ledger, can be leveraged to foster changes in Worldpay's business model or the wider payments industry.
For one, Ritchie acknowledges that the technology is becoming more widely thought of as a database or asset management innovation. Also, he believes that the industry has gradually moved toward these use cases as others, like payments, have proved problematic.
"Is bitcoin the actual cryptocurrency that we think could impact payments?" he asks. "I'm still skeptical because of the limited number of bitcoins. People would rather hang on to them rather than spend, so I'm not sure it's the perfect fit for a currency."
Still, Ritchie is enthusiastic about the development space, even if it's clear he views the technology as a bit of a novelty, or at least something that while entertaining, doesn't exactly have the practical applications that would be needed to entice consumers and businesses today.
That doesn't mean the company isn't taking small steps though. Ritchie said Worldpay is headed toward implementing bitcoin as part of its gateway product SecureNet, though he's less clear about how exactly it will fit into the multi-channel commerce product.
Ritchie says Worldpay is also following developments closely through a partnership with the Georgia Institute of Technology, one of the small but growing number of US universities at the forefront of engaging their student bodies in bitcoin and blockchain work.
The university has so far allowed bitcoin to be used to top up student payment cards, and has its own branded bitcoin wallet. With its US headquarters in Atlanta, Ritchie says, Worldpay works closely with Georgia Tech's incubator, where it sponsors hackathons that specialize in FinTech.
"We have a sandbox where we have this technology and [students] can come up with solutions and we do that all around the incubator. That's how we keep abreast on this," he said, adding:
"Large companies don't innovate, small companies do."
Areas of disruption
Though Ritchie is a bit bearish on bitcoin as a digital currency, he seems genuinely enamored by some of the big ideas in the space.
He talks excitedly, for example, about how the blockchain, which can be used to back shared ledgers among financial institutions, could decrease the cost of data centers used for payment processing and the management of such resources.
"I think you'll see that happen as the first step in the evolution, there could be some application of blockchain technology there," he said.
Notably, Worldpay is currently in the midst of expanding its data centre presence and migrating to facilities with increased capacity following its sale from Royal Bank of Scotland (RBS) in 2010, according to its 2014 annual report.
Ritchie sees a potential opportunity for the blockchain with tokenization as well, suggesting blockchain tokens could be used as a stand-in for cardholder data in online card-not-present (CNP) transactions that currently increase checkout times at e-commerce websites.
Such an idea has also been suggested by security experts at conferences like Keynote 2015, where discussions centered on replacing today's tokens with those logged in shared ledgers.
Level playing field
By easing friction at the point of sale via the blockchain, Ritchie believes that the currency could come to wider acceptance alongside mobile payments, which he argues would then be more convenient for online consumers.
"As retailers start to realize that, they'll see that they don't want to take anything but mobile payments," he continued. "Then [other mobile options] will be on an equal footing with the Coinbase wallet. Whether you're using PayPal or bitcoin, it's all the same interaction."
Ritchie implies that he doesn't see this transition taking place soon, voicing his perception that most merchants, or even attendees at Money20/20, aren't familiar with digital currency.
"My perception is if you were to go around and ask 'Have you bought a bitcoin?' 99% of [Money20/20 attendees] will say no," he said. "They haven't figured it out, it seems complicated."
But, that's not to see they couldn't be made aware of the technology.
Over time, Ritchie can see blockchain-based systems "democratizing the financial system" and returning savings to merchants, who he feels pay too much for processing.
"Payments are costing them 25% on their bottom numbers. So something like bitcoin, you don't have a lot of these intermediaries, you can knock that down to a full percent."
Images via Pete Rizzo for CoinDesk