Tl:dr:
- Starbucks, Etsy and a flood of global brands are experimenting with cryptocurrency payment options.
- Tag Heuer is the first LVMH brand to accept Bitcoin payments. Luxury brands Gucci, Breitling and Balenciaga also announce plans to start accepting cryptocurrency.
- Generation Z gravitate to brands that offer digital solutions and cryptocurrency payments. Crypto millionaires want somewhere to spend their fortune.
- Mastercard, Visa, Stripe and BNP Paribas are working on crypto payment solutions brands can integrate.
There are as many 19,000 cryptocurrencies on a 1000 blockchains. Together they are worth a trillion dollars. Bitcoin and Ethereum are the most famous, Hippo Inu, MimbleWimble and Spartacats are among the more obscure. Together, they form the financial backbone of Web3. But do they have use outside of speculation and investment?
Starbucks, ETSY, KFC and Burger King believe they do and are experimenting with ways to offer customers cryptocurrency payment options. And it isn’t just burgers and coffee. If you’re in the market for yachts, (wouldn’t that be nice?) houses, telephones, cars or holidays, you can purchase them with crypto. But what about luxury?
Panellists and visitors at Vivatech were hotly debating the topic. Could Solana or XRP be accepted by brands as an alternative to Euros and Dollars? Are brands already accepting Bitcoin, and if they aren’t, how long until they do? In this article we’ll answer that and look at some of the reasons for – and reasons against – accepting crypto payments.
Tag Heuer accepts cryptocurrency
“With an increasing number of customers using or earning digital currencies regularly,” said Tag Heuer CEO Frederic Arnault, on the eve of their announcement, “TAG Heuer intends to be a key player in the imminent transformation of the e-commerce and retail spaces.”
The news followed the launch of the Tag Heuer Connected range – a watch that allows owners to display their NFT collection – proof they intend to be a key player in the imminent transformation of the luxury and NFT space too.
Tag Heuer will start accepting cryptocurrency payments on their US website using BitPay for transactions of up to $10,000. Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, Litecoin, Shiba Inu and 5 USD-pegged stable coins will also be accepted.
Where Tag Heuer leads, others follow. Balenciaga now accepts Bitcoin and Ethereum at its flagship stores on Madison Avenue (NY) and Rodeo Drive in Beverly Hills. Hublot has launched a limited collection of 200 watches (with the catchy name, “Big Bang Unico Essential Grey”) that can be purchased exclusively on their US website with, yes, that’s right, cryptocurrency.
Italian fashion giant Gucci is trialing cryptocurrency payments in New York, Miami, Las Vegas, Atlanta and Los Angeles whilst Swiss watchmakers Norqain and Franck Muller will accept cryptocurrency at select stores in Switzerland.
I was going to end there, but whilst writing this article, James Bond’s favourite watchmaker Breitling added BitPay’s cryptocurrency payment service to its website.
Why would luxury brands accept cryptocurrency as payment?
Why now? Why such a hullabaloo in the midst of a bear market? Privacy, no chargebacks, quick transactions and the ease of accepting foreign payment are all advantageous, but the real answer is people. Lots of people. 145 million adults in the US own cryptocurrency. When asked in a survey, a further 46 million said they intended to buy crypto this year. 100,000 new Ethereum wallets are created every day.
Ultimately, Web3 is part of a wider cultural shift. The next wave of luxury buyers will gravitate to brands that make a digital splash. Customers want access to experiences in the metaverse, they want NFTs combined with physical assets and they want the choice to pay for watches, perfume, clothes and jewellery with their digital currencies. This doesn’t mean they always will, but when given a choice between a brand that offers a crypto payment solution and one that doesn’t, which do you think they will choose?
But that is for the (not too distant) future, what about today? There are over 100,000 crypto millionaires and 19 of the world’s billionaires made their fortune from cryptocurrencies. The already wealthy want to spend their wealth on luxury. Many want to pay with Bitcoin.
When confronted with such a stark reality, the first task for a luxury brand is to devise an experiment for cryptocurrency payments. Perhaps an exclusive service for items above €500,000? How about a bespoke service only available to loyal customers? A more ambitious starting point could be a payment solution added to the checkout on a country-specific E-commerce site. There are as many choices as there are blockchains, all have their advantages and obstacles.
The crypto obstacles facing luxury brands
Volatility is the obvious barrier. In November 2021, Bitcoin was worth $69,000. Today (July 2022), a quivering $20,000. And where BitCoin goes, other cryptocurrencies follow. How do luxury brands accommodate this price fluctuation? One answer would be to use stable coins, but that has its own set of issues. Other barriers include converting crypto to Fiat, security risks, regulation and tax. All truths a luxury brand will have to discuss and consider openly as it plans its crypto strategy.
Once a luxury brand has taken the decision to experiment with crypto payments, the next step is integrating a service. Tag Heuer uses BitPay (as do Breitling and Hublot), Stripe and Paypal offer payment solutions to vendors, and both Visa and Mastercard are exploring blockchain infrastructure. And don’t forget every single bank under the sun.
