Pay with crypto to party and travel? Some younger consumers prefer this, but growth is slow

SINGAPORE – From buying a phone online to settling a bar tab at a nightclub, consumers and businesses seem to be more open to using cryptocurrency as a form of payment.

The first item Mr Yong Ming Yang paid for in cryptocurrency was a Web3 phone he bought online in the first half of 2024.

The 26-year-old, who works in the technology sector, told The Straits Times that paying with crypto is cost-effective and can be done in seconds, while one has to pay foreign exchange fees and wait one to three days for bank settlements in a normal international payment process.

So far, Mr Yong prefers stablecoins that are either USDC or USDT for overseas payments and XSGD for products in Singapore.

USDC is issued by payments firm Circle and exchange Coinbase, USDT is issued by blockchain platform Tether, and XSGD is issued by payments firm StraitsX.

“These are assets that are most likely to retain value and easiest to off-ramp (be converted into fiat),” Mr Yong said of his picks.

He is among a group of young and digitally savvy consumers who favour crypto transactions.

Nightlife group Zouk started to accept digital asset payments from February via a partnership with Triple-A, a firm that converts digital currencies into dollars with instant bank settlements.

Zouk’s senior director of operations David Long told ST that consumer behaviour is shifting, with two-thirds of the club’s core clients aged 18 to 35 identifying themselves as frequent users of digital wallets or crypto platforms.

He said one in three guests across different Zouk venues is interested in using cryptocurrency as a form of remittance.

Of the group’s international guests, Mr Long said the acceptance of digital payments was named a deciding factor when choosing between entertainment venues, especially those from countries with high crypto adoption rates such as the United States and South Korea.

Singapore-based Triple-A has been aggressively expanding its merchants list in Singapore for the last year or so. These include exchanges Coinbase and crypto.com, local bill payment platform AXS, and ride-hailing operator Grab.

Triple-A’s chief executive Eric Barbier said cryptocurrency as a form of payment is starting to gain ground in the luxury and travel space.

For instance, the firm has tied up with some online travel agencies like Alternative Airlines and Skylux, as well as luxury resort Soneva, to allow such payments.

“People in the crypto space made a lot of money and there’s a bull run (in the markets) and one way for them (to celebrate) is to buy something nice, a new watch and so on.

“Being able to pay with cryptocurrency is a more convenient way (to do this), compared with going to an exchange to do your onboarding process, sell your crypto, and then move the money into your bank account and use your credit card,” he said.

In 2024, the volume of cryptocurrency transactions at merchants linked to the firm rose by more than 60 per cent year on year.

Mr Barbier believes that the firm will be able to achieve “at least the same type of growth for 2025”. 

The optimism comes as Triple-A, which counts business-to-business transactions as a key driver of its business, is looking to expand to more places overseas in 2025, including in different US states.

Credit cards typically charge merchants about 3 per cent in transaction fees, while the firm charges at least half that, said Mr Barbier.

Still, some observers told ST that crypto payments are a fraction of the global payments market and the pickup is slow.

Mr Anton Ruddenklau, global head of fintech at KPMG International, said the payments market in Singapore is valued at US$26 billion (S$35.1 billion) and estimated to be US$1.2 trillion in Asean countries.

The crypto payments market is now worth just slightly less than US$1 billion, he said, adding that it would take a while for this method to become a primary choice as it hinges largely on mass crypto adoption.

Singapore’s payments landscape is relatively mature and highly competitive, and the market is smaller than that of its Asean peers.

So far, the growth of digital currencies like Bitcoin, USDT, XSGD or USDC is bigger outside of Singapore in regional markets like Indonesia, where mass retail payments are becoming more relevant, Mr Ruddenklau noted.

Traditional payments in the region are already at a 20 per cent compound annual growth rate, while that of crypto payment is expected to be about 13 per cent to 15 per cent in the next few years.

“It just doesn’t have the base of customers or the network effect yet to be as fast-growing as the rest of the industry,” Mr Ruddenklau said. He added that “a lot of people just want to pay for stuff and they don’t care whether it’s a fiat currency or a digital currency”.

Ms Dyane Uy, a PwC Singapore director specialising in financial services, said that while the adoption of digital asset payments is still limited in most markets, businesses are starting to see benefits, with potentially quicker international transactions.

With improvements in technology, regulation and consumer acceptance, crypto payments will become more common, she said.

PwC’s fintech leader Wong Wanyi said such payment methods are more convenient for those who do not hold local currencies, but there are regulatory requirements and operational challenges for merchants in accepting cryptocurrency as a payment.

She added that volatility in the prices of cryptocurrencies may also affect this trend. 

Whatever the case, Mr Yong is already looking forward to the day he can pay for daily expenses using cryptocurrency.

During the Web3 event Solana Breakpoint Singapore in 2024, he used XSGD on Solana to pay for orange juice sold via vending machines, as well as for purchases at participating vendors.

“I would love to see these payment mechanisms implemented across the country with user experiences as similar to PayNow,” he said.

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