Galaxus customers in Liechtenstein and Switzerland can now pay with DCHF, a Swiss Franc stablecoin. Does that have any significance, or is it a marketing stunt?
Last week, Sygnum Bank, Coinify, and retail chain Galaxus announced, “The world’s first e-commerce transaction using a bank-issued stablecoin.” Swiss and Liechtenstein consumers can now pay with DCHF, the Sygnum Bank Digital Swiss Franc, at Switzerland’s largest online retailer.
The Swiss-based “crypto-bank” Sygnum launched DCHF already back in March. The digital currency is pegged 1:1 to the Swiss Franc and fully covered by a CHF reserve, according to the bank. We reported about the launch here: Sygnum launches Swiss Franc-pegged stablecoin.
Anyone who wants to buy DCHF can deposit EUR, CHF, SGD, or USD, and the bank will convert it to DCHF via their e-banking portal. Users will also be able to trade and store the stablecoin with Sygnum bank.
According to the recent press release, DCHF “eliminates the need for card systems, reduces costs and fraud, and processes transactions in real-time.” The online retailer Galaxus now allows customers to pay with DCHF, besides other cryptocurrencies. In April 2019, Galaxus was the first major online retailer in Switzerland that offer customers to pay with cryptocurrencies.
“Galaxus strengthened its position as an e-commerce pioneer by accepting digital currencies as a means of payment in early 2019,” says Thomas Fugmann, Galaxus’ CFO. “Enabling our customers in Switzerland and Liechtenstein to make payments on our online store with stable digital currencies like the DCHF further enhances their convenience.”
Why paying with cryptocurrency?
No doubt, the idea of paying with cryptocurrencies at online retailers is appealing. Fees could be significantly lower than they are today, as there is no need to use the banking system, which takes a cut out of every payment.
Every year, more than USD 3.5 trillion, including USD 11 billion in Switzerland, pass through a chain of payment service providers and card systems during e-commerce transactions. With a digital currency, such as DCHF, none of those intermediaries would be involved anymore, and the transaction can happen in real-time.
“With the DCHF and other digital currencies, the future of money is going back to its roots; exchanged between two parties, instantly and simply,” explains Mark Hojgaard, Coinify’s CEO. “This speaks volumes about the potential of trusted, price-stable digital currencies in the e-commerce space.”
A small step for an online retailer and a big step for the crypto community?
Sygnum launched DCHF in March 2020, and Galaxus started accepting digital currencies in April 2019. We wondered at the time whether that was a marketing stunt or a real crypto breakthrough.
We don’t have any data on how many Galaxus customers have really paid in crypto since April 2019, but it’s probably not many. Otherwise, we would have heard how much of a success it was in the meantime, but we haven’t.
That said, a stablecoin is much more suited for online transactions than Bitcoin or Ether, because of its price stability. But then again, will consumers go through the process of transferring their currency to DCHF first to pay for a purchase?
That might not be likely today, but now imagine an ecosystem in which digital currencies are not the outsider anymore as they are today. Then that makes absolute sense. And at some point, someone has to start with a new idea. So, while the partnership between DCHF and Galaxus will probably not have any real-world implications today, it might have an impact in the future.