Spar Switzerland customers can already pay with cryptocurrencies in over 100 stores

Spar customers can now pay for tomatoes, cotton swabs, or sunflower oil with cryptocurrencies, and it's incredibly easy: At the checkout, they simply tell the clerk. Then, using their crypto wallet—an app—they can scan a QR code and initiate the payment. The process is barely different from a Twint transaction.

The new payment system is already available in over 100 stores, including those in Arnegg, Heimberg, Schüpfen, and Zurich. Although Spar hasn't yet drummed up any publicity for it, customers are already using it daily, according to a company spokesperson. Spar sees this as "clear evidence that Bitcoin and stablecoins are already accepted as a means of payment."

Naturally, the news is spreading quickly in the Swiss crypto industry. Quite a few of these nerds are entering a Spar store for the first time these days to try it out.

The good news for Spar Switzerland is that launching crypto payments incurs virtually no costs, while the retailer benefits from massive fee savings on every transaction. "Crypto payments are significantly cheaper than payments with credit cards, debit cards, or Twint – the costs are around two-thirds lower," says the Spar spokesperson.

Transactions are processed directly through Spar's existing checkout infrastructure. When customers pay by scanning the displayed QR code, the amount is automatically converted into Swiss francs and transferred to the Spar merchant account. "Everything runs seamlessly in the background, without any additional effort," the company assures.

But how does a retailer that is strongly rooted in rural areas and functions as a village shop in many communities achieve this pioneering role?

"It was a coincidence that we came into contact with Spar," says Cyrill Thommen, head of the Zug-based company DFX, which provides the technical solution and processing. "I was at a lunch meeting with the Spar managing director and had the opportunity for a spontaneous pitch. He was immediately interested," reports Thommen.

There are good reasons for this interest: the high fees charged by traditional payment systems are a constant problem for retailers with their usually razor-thin margins.

The Swiss Retail Federation filed a complaint against Twint with the Competition Commission in July, arguing that Twint was abusing its market power by charging unreasonably high fees at the expense of retailers.

No wonder DFX is now being contacted by other retailers. They aren't interested in crypto per se, says Thommen. But they are annoyed by the exorbitantly high fees of traditional payment systems. This annoyance is making retailers willing to experiment.

DFX charges Spar a fee of 0.2 percent on transactions. The transaction is free for customers if it is made using Frankencoin, a so-called stablecoin that mirrors the Swiss franc one-to-one. However, Spar customers also receive no benefits by paying this way, which saves the retailer money.

And if customers pay their bills with other tokens – this is possible with the most important cryptocurrencies such as Bitcoin, Ether, Solana, or the two dominant dollar stablecoins USDC and USDT – DFX converts them into Swiss francs in the background – subject to fees, of course.

While some watch and car dealers also accept crypto payments, Spar has special requirements: The transaction must be completed quickly. No retailer can afford a queue at the checkout.

Nevertheless, customers can pay with over ten blockchain tokens – although these payments may take a few minutes to process. Since it's impractical to wait that long for confirmation, DFX has developed a new standard: "We accept a payment even before it's confirmed on the blockchain. If someone were to exploit this, we would report it," says Thommen. Spar stores have cameras that could help with identification.

The company cannot yet say when all Spar stores will accept crypto payments. This is because Spar Switzerland uses two different POS systems: its own and one from another company.

"With Spar's own system, we were able to implement it quickly, with a simple software update. With the other system, we're still waiting for the third-party company to implement it," says Thommen. However, the activation is technically very simple and will probably only take a day.

Also, only a limited number of crypto wallets can process QR codes, but these include only common ones, such as the wallet of Binance, the operator of the largest crypto exchange.

The fact that Spar now accepts crypto payments will, in and of itself, hardly put pressure on traditional payment systems to lower their fees. These act like a tax: Because we consumers don't pay them directly, but only indirectly through higher prices in stores and e-commerce, we don't even notice them.

Only when Coop, Migros, and other industry giants follow suit will the fees likely start to slide. And behind the scenes, these considerations are underway. "We're taking a close look at what Spar is doing," says a management member of a competitor.

The retail sector is currently being courted by former parliamentarian Pascale Bruderer, whose company aims to create a regulated Swiss franc stablecoin called CHFD. Bruderer wants to bring the banks on board.

Swiss authorities are also under pressure to relax their regulations for stablecoins, which are among the strictest in the world. Unlike all other countries, the Swiss Financial Market Supervisory Authority (FINMA) requires the complete identification of all intermediate holders of a stablecoin. Not even the EU, the world's regulatory champion, has come up with this idea.

The Swiss crypto lobby recently complained about the "petty regulations and regulatory micromanagement" of stablecoins in a letter to Federal President Karin Keller-Sutter. Several politicians co-signed the letter. Now that the US is fully committed to stablecoins, a rethink is also taking place in the Swiss parliament.

The Frankencoin, which can be used as a means of payment at Spar, among other things, is pegged one-to-one to the value of the Swiss franc. However, while established stablecoins like USDC and USDT are issued by companies that back these digital dollars with assets such as government bonds, an algorithm and the community ensure the security of the Frankencoin. In short, the system is difficult for laypeople to understand.

Suffice it to say: Anyone who wants to can create new Frankencoins by depositing collateral such as Bitcoin or Ether with the protocol and paying interest on the newly issued digital francs. This is an attempt to democratize money creation—which in the conventional financial system is the sole prerogative of banks.

An article from the « NZZ am Sonntag »