Plutus intends to bridge bitcoin’s merchant gap

London-based bitcoin startup Plutus makes a bold claim. Their smartphone app will allow you to “tap and pay” with bitcoin at any Near-Field Communication (NFC) enabled payment terminal, anywhere on Earth, even if the merchant has never heard of digital currency.

NFC is a technology that allows short-range, secure data transmission between devices, like your smartphone and a merchant’s “tap-and-go” credit card payment terminal.  Not every Point-of-sale (POS) terminal is NFC-enabled, but they are catching on.

According to Deloitte, at the start of 2015, there were already millions of NFC-ready payment terminals installed globally, out of the tens of millions of terminals in use around that world.

– Deloitte


Plutus’ strategy is simple, “don’t try to beat the status quo, start by working with it.” Throughout their documentation and blog, the company reiterates that the way forward for bitcoin adoption is not by replacing today’s means of commerce, but to work within it, and make the whole process as invisible to users and merchants as possible.

– Plutus


To this end, Plutus claims to have found a way to eliminate a classic dilemma in bitcoin adoption. “Users can’t spend Bitcoin because it is not accepted, and merchants can’t accept Bitcoin because users don’t spend it.”

With their smartphone App set to launch in “early 2016,” the most intriguing thing about Plutus is how the coins get exchanged for the currency that merchants require. The company has created a Decentralized Exchange (DEX) where traders can buy the coins that Plutus users are selling at the time of checkout.

– Plutus

In a similar fashion,  the San Francisco-based startup Purse facilitates an aftermarket, which allows users to sell giftcards for bitcoin. Plutus facilitates an aftermarket allowing users to sell their local fiat currencies to bitcoin users.

The major difference between Purse and Plutus is that the former is limited to just a few giftcard-accepting stores, such as Amazon and Starbucks, whereas the latter is available at every NFC-equipped terminal around the planet, currently numbered in the millions.

For merchants to accept NFC payments, first they will need to install compatible POS terminals, and new POS terminals cost several hundred dollars. Therefore, not every merchant who accepts credit cards will be able to automatically accept Plutus shoppers.

Thankfully, NFC-enabled POS terminals do seem to be catching on, especially in Europe and North America.

According to an independent report by Swedish M2M/IoT market research firm, Berg Insight, shipments of NFC-ready POS terminals to merchants is estimated to be 9.5 million units worldwide. The report also stated that 80 percent of all POS terminals shipped in Europe feature NFC, compared to 75 percent in North America.

– Berg Insight


Not only is the number of NFC-enabled POS terminals rising, so is the number of NFC-compatible mobile phones. According to a Deloitte report, monthly contactless payment usage via NFC-phones will grow substantially, with both “the volume of NFC-smartphone transactions and the range of spend value to increase steadily over time.”

Deloitte predicts that five percent of the base of 600-650 million NFC-equipped phones will be used at least once a month to make contactless in-store payments at retail outlets, a substantial increase from 0.5 percent during mid-2014. In addition, the firm said that NFC payment is prime for mainstream adoption.

– Deloitte

Global information company, IHS independently estimates shipments of NFC-enabled handset to be 756 million in 2015, up from 444 million in 2014, and should reach 2.2 billion in 2020.

NFC Handsets

A major reason so many NFC-equipped handsets are getting shipped is because Applepay requires the technology for it’s iPhones. If Plutus catches on, it’ll be thanks in no small part to Apple’s influence over the payments world.

Ironically, Applepay itself might not be catching on, and investors have been continually disappointed by adoption rates, blaming their 1% pickup rate on bad timing, as NFC has taken longer than expect to roll out to merchants. This may give Plutus lots of room to dominate the format.

– TheStreet  


Meanwhile, Visa, Mastercard, American Express and Discover all have their own versions of NFC tap-and-go payment programs, such as Visa’s PayWave and MasterCard’s PayPass, so merchant adoption of the POS hardware for NFC will remain strong. By 2020, they could be in the majority of all smartphone and merchant POS devices, giving Plutus users a way to spend bitcoin at the majority of all merchants.

– Plutus