Payment practices have taken ages to be perfected, whilst crypto tech has yet to mature.

by Philip Lee Abdullah

Continued from Part 1.


Point of Sale (POS) Devices

I am very curious and amazed at the same time as to how certain merchants would be able to keep track of their sale transactions. I am not surprised if one day in the future, these merchants would need to hire a qualified accountant to be cashier, and actuarist as operation manager (because of there are too many risks, get it?). The existing fiat e-wallets as it is have posted a trend of confusion. Have you seen nowadays how many devices are placed on the counter? There are a handful of POS devices on the counter, some to the point that it fills up half of the counter.

However, they are still doing fine because all of it are transacted in fiat value, that is very much fixed. Unlike cryptocurrency where on top of all the unrequired risks mentioned above, cryptocurrency is “yet” to be considered officially as legal tender. Well, some might say all you need is a mobile phone and you are good, but is that really the case? How then would transactions be recorded? Can the mobile phone / cryptocurrency e-wallet be linked to the POS. How much does the merchant would need to pay for this system? How much resources would the merchant need to expand in order to train these cashiers?

Right now the crypto payment solution providers are providing the POS devices at their own cost. What if they start charging merchants a rental fee just like how banks do for normal credit card EDC (electronic data capture) terminals? Who will actually pay for it? If they start imposing a minimum transaction volume each month on the POS devices in order to waive rental fees, I doubt if any merchant will use it as there are hardly any crypto transactions. I have seen cases where there is only one transaction recorded a month per store, and that’s being lucky! If it is already rare enough to come across a bitcoin payment, it will be even rarer to have customers use a particular token or altcoin issued by the crypto payment solution provider.

The questions again are – ‘Are these really what common merchants are looking for? Is this what your business is looking for’?


Merchant Operations

These days, acquirers ranging from retail banks to e-wallets to loyalty providers are aggressively courting merchants. They want to sign up merchants for acceptance and promotion, and often on exclusive basis. To compete for business, they are willing to undercut merchant discount rates (MDR), subsidise customer in-store usage with cashback, or put up heavy marketing to drive traffic. Unless a lot of customers demand for the crypto payment method, it is natural for merchants to go for the most ubiquitous option – that is, to please the majority. The incentives on top of it makes the decision so much easier.

While there are benefits of decentralisation, the truth is, most customers are not fussed about it. They do not complain if there is no crypto payment method. Instead and this is ironic, the complains arise because of crypto payment! This is due to platform downtime, which hold up the queue at the checkout counter. When these happen, there is often no service provider on standby to rectify the issue like contact centres of banks and card operators. As these are startups, their operational resources are thin and cannot offer support beyond normal working hours, even though retail times stretch beyond that. They also cannot afford to dispatch technicians for regular maintenance onsite.

It will solve a lot of problems if crypto payment can eventually be integrated into the national QR standard for Malaysia known as DuitNow QR. But there are many challenges leading to it, including hesitation by regulators as DuitNow is established by PayNet which falls under the central bank’s supervision. There is still some uncertainty pending on the status of crypto payment, which will hopefully be cleared up with the new Currency Bill mooted in Parliament.



I have had the advantage of working with accountants that are providing their services to cryptocurrency companies. There are so many uncertainties as how to close the account, what would be the real value of the services, profits, deficits and a whole load of other nightmares. At the end of the year, being a responsible business organisation, the merchants must close their accounts for taxing purposes.

The question is then, in providing services or goods and receiving cryptocurrency as payments, does it really go well with existing accounting conventions? Or it is actually an accounting nightmare due to the instability of the value of the coin / token, especially for brick and mortar establishments that have huge inventory?  The taxation of crypto has not been finalized in this country. Since it is prescribed as a security under the Capital Markets & Services Order in January 2019, it seems likely to be taxed as an asset. Though this could complicate tax reporting as digital assets like crypto used got means of payment is different from normal capital assets that are held as a store of value.

Also, since it is not accepted, at least legally, would this also create a problem for tax collection from the government paid by the merchants? Of course, there isn’t a straight answer to this yet as this has not been tested officially yet, at least to my knowledge. But for anyone that has the answer, please feel free to drop me a note to discuss on this point to further exchange and expand our knowledge.

However, I still have to ask, ‘Are these really what common merchants are looking for? Is this what your business is looking for’?



In summary, in my humble thoughts and opinions, blockchain companies should look into what the merchants’ really want or need, and not just focusing on the fact that “Merchants can help our company to expand our network, our usability, our eco-system, our fees, our billables, our fame, our user counts, our database”.

If your answer to each of the risks highlighted above is “not an issue for me, I can cope and deal with it”, then congratulations! You are one in a hundred thousand. Contact me, I will link you to amongst the best service providers that I know.

It is without a doubt that utilising blockchain technology as a ledger is advantageous, but having it as a merchant payment solution is really the way to go? Or you are just wasting your time and resources chasing a myth. I have had personal experience of looking for merchants, and believe it or not, the response is really not that well due to the afore-mentioned risks or roadblocks, even for those with a positive mindset. I verily believe that customizing the system using blockchain solutions to help your merchants to secure their transactions data would be a better business module, or innovate a universal POS system that can accommodate to all sort of e-wallets transaction using blockchain technology.

Disclaimer: The views and opinions expressed in this article are solely those of the author, and do not reflect the official policy or position of any organisation, employer or company.

About the Author: Philip Lee Abdullah is just a by-stander, currently working for multinational insurance company, however he was previously engaged as the in-house counsel for a multinational crypto solution provider.