Switzerland’s largest online retailer trials stablecoin e-commerce

Cryptocurrencies have accounting for CHF1 million in sales since being accepted by Digitec Galaxus in March 2019. © Keystone / Christian Beutler

Swiss online retailer Digitec Galaxus is poised to accept a new cryptocurrency for payments. A test transaction has shown the DCHF stablecoin, issued by Swiss bank Sygnum, to be just as viable as bitcoin and other cryptocurrencies already accepted by Switzerland’s largest online retailer.

Digitec Galaxus, has accepted the likes of bitcoin for more than a year using the services of Danish cryptocurrency payments platform Coinify. But as the value of many cryptocurrencies can fluctuate greatly in a short space of time, their use for everyday shopping has been questioned.

Earlier this year, Zurich-based Sygnum released a digital currency backed by Swiss francs deposited at the Swiss National Bank, and whose value is therefore locked to a corresponding amount of francs. 

This DCHF stablecoin is similar in design to the proposed Libra cryptocurrency, which is applying to the Swiss financial regulator for a license to operate in the country.

Galaxus, one part of the Digitec Galaxus group, recently conducted a DCHF test transaction along with Sygnum and Coinify. The trio claims that the experiment is the “world’s first” e-commerce transaction using a stablecoin issued by a regulated bank.

The system has the potential to “revolutionise the [$3.5 trillion] e-commerce industry” by forging “direct connections between consumers and online retailers”, the consortium says.

But it will still likely come at a cost to consumers. Coinify currently charges a 1.5% conversion fee to customers who use a range of cryptocurrencies to pay for goods on Digitec Galaxus. This compares to a 2% fee for using Paypal at Digitec Galaxus and a 2% fee plus CHF1.00 for invoicing. The retailer absorbs credit and debit card fees itself.

In February, Digitec Galaxus stopped using the Swiss payment app Twint, saying that it would not accept an exorbitant hike in fees.

Various cryptocurrency projects are vying to provide an alternative consumer payment method but have so far not taken off in large volumes. Cryptocurrencies have so far accounted for around CHF1 million in sales at Digitec Galaxus out of the more than CHF1 billion in annual turnover.

No date has yet been set for when DCHF will be available at Digitec Galaxus.

Digital currency tests

Several other experiments with digital currencies have been taking place around the world, some involving Swiss entities. Sygnum, which also has a base in Singapore, took part in the “Ubin” project to create a digital currency backed by the Singaporean central bank.

The Swiss SEBA bank has been chosen by the Banque de France, among other partners, to test its central bank digital currency in the financial system. 

The Swiss National Bank (SNB) is collaborating with the Bank for International Settlements in an innovation hub to explore use cases for central bank digital currencies (CBDCs).

The Swiss stock exchange wants to use an SNB-issued CBDC for transactions on its forthcoming SDX digital assets trading platform. The SNB is reluctant to directly issue digital francs to the general public, saying it would prefer limiting the use of any potential future tokens to professional traders.