In conversation with Ian Simpson
Armin Schmid is leading Bitcoin Suisse Pay, which allows merchants to easily accept payments with cryptocurrencies. He also helped launch the CryptoFranc (XCHF), the Swiss Franc-backed stablecoin. Prior to working for Bitcoin Suisse, Armin worked for SIX Payment Services in multiple roles as Program Manager for PSD2, TWINT and Paymit; before that, Armin was General Manager for PayPal in Switzerland and Austria and led Strategy & Expansion for eBay Europe.
1. From PayPal to SIX to TWINT and now crypto – you have seen just about everything in the digital payments space. Where are we right now in the evolution of money?
It is a great honor to be part of this journey. The evolution from the early days of monetary systems with basic trading instruments, coins or bank notes has evolved into fully digital and very efficient transaction systems.
The payment infrastructure is evolving constantly and will always need simpler, faster and more secure systems. For me, customer needs are at the core of new services where PayPal solved a major problem in eCommerce and mCommerce. TWINT created a simple peer-to-peer system and account payment service like Maestro. And now crypto payments are taking things to the next level with further security, privacy, and stability. We are at the very beginning of crypto payments with Bitcoin and Ethereum. Upcoming Layer 2 solutions like Lightning Network or stablecoins or even central bank digital currencies (CBDCs) will add new functionalities.
Most importantly, it will merge and the technology itself will move into the background and the service and usability for end customers will be at its core. In my opinion, interoperability will be absolutely essential.
2. Describe your own feeling about cryptocurrencies, blockchain and the entire space…
The first time I became aware of Bitcoin was in 2013 with the first hype of BTC – when the price was more than USD 1000. Back then, I did not understand too much, quite honestly.
The next wave in 2017 really sparked my interest and I started to look into this whole “crypto thing” in more detail. Back then, I worked for SIX Payment Services on account-based payment ideas which was connected to the Payment Service Directive 2 (PSD2), where the European Union has tried to open access to bank accounts and its data to 3rd party service providers.
To me, this did not really look like the future of payments. The decentralized approach of blockchain is much more in line with own vision of community-based infrastructure. Blockchains and their cryptocurrencies are also linked very much to the decentralized/Swiss/federalized approach which has its roots in direct democracy.
3. You used to work at McKinsey – so not exactly a libertarian rebel… How did you discover crypto and learn about it? What sources of information did you turn to?
In my youth, I was already an “independent thinker” and besides my studies at ETH Zürich, I lived for some time in Asia and the USA and became very open minded with regards to different cultures and people in general.
Back in 1998, I started my career at McKinsey & Company. I would actually say it was very good for my personal and business life. The whole value-driven approach was a big emphasis. McKinsey allows you to bring in your ideas, and everybody is heard, irrespective of background or seniority.
With such values, you train your mind to always be open to new things, ideas and people – and that means getting out of your comfort zone.
Of course, blockchain and crypto also fall exactly into such an area where you need to think outside the box. Back in 2017, there was such a hype, and I started to look into the reasons why and also people behind it all.
I guess you could say, I’m a “crypto immigrant,” not a crypto native – but that is fine for me. My main source of info was / is the internet and soon Andreas Antonopoulos with his videos and books.
4. Bitcoin Suisse Pay, where you are in charge, has a simple value proposition, but the set up isn’t quite so simple. Why is a company like Bitcoin Suisse necessary to make this all work?
Bitcoin Suisse is very much a tech company in its heart. This makes it so great to explore new options. Our customers inspire us also to look into solutions, like the city of Zug asked for a crypto payment solution. This was the beginning of Bitcoin Suisse Pay.
One key thing for us is to offer a solution for partners, merchants, and end-customers, which is simple to use, reliable and secure. The combination of experts from legal and compliance, crypto and IT, operations, user experience, etc. makes our solution unique as we further evolve the payment service with cryptocurrencies.
My aim is to try to bring everything together and support the team to deliver the ideas – I see myself as an orchestrator. ?
5. In November 2019, Bitcoin Suisse announced a partnership with Worldline, one of Europe’s largest payment service providers. What does this mean (in your opinion) for the future of crypto payments?
Worldline can support crypto payments on the road to mass adoption.
It is very essential for every payment method to leverage existing networks to reach customers, merchants receiving and end-customers paying with cryptocurrencies.
This is an iterative approach where availability creates opportunities. The most popular cryptocurrencies today such as Bitcoin or Ether are just the beginning of new token-based payment systems. Layer 2 solutions like Lightning Network, stablecoins like Diem or central bank digital currencies will improve existing services with enhanced privacy. These networks are essential for the future and key for adoption in Switzerland, in Europe and across the globe.
Worldline can help drive this forward.
6. What does the partnership with Worldline include? Which services can we expect?
We will start with a core integration into the Worldline services, where merchants can simply choose to accept cryptocurrencies, without having to worry about handling them. Besides service for credit cards, they will receive a payout from cryptocurrency customer payments in CHF or EUR. Bitcoin Suisse offers a B2B service to handle crypto and Worldline manages the merchant interaction and payout. We will start with Point-of-Sale (POS) and eCommerce in Switzerland.
The key is to offer a simple solution for all participants, where our partners can focus on their core competencies.
7. You have been involved in building some pretty amazing consumer products before – at PayPal and TWINT. What special challenges do crypto payments present for you now?
Crypto payments are still very technical, and the user experience has to improve. The challenge for crypto in general is to keep the balance between security, decentralized services, and user experience. At the moment, the user experience needs to improve with simplified mobile apps and services. The end-customer using crypto has to be aware of their duties to own responsibility when interacting with tokens.
8. When you observe the evolving landscape of payments, crypto and otherwise, what major trends do you see? More convergence? More interoperability?
Invisible payments are a main driver of innovation in the future. This includes machine-to-machine payments and micro payments. A blockchain based layer 2 service can be the door opener for those systems.
In addition, the interoperability of technologies will be a game changer. End-customers do not really care, how they pay, it just has to work – fast and reliably. Blockchain-based systems are there to enable that.
The evolution has started and will evolve further
9. Do you think that the giant market players like Visa and Mastercard can dominate when it comes to crypto payments as well? Or is there room for many smaller players and more diversity in payments thanks to cryptocurrencies?
Large companies like Visa or Mastercard have started to look into blockchain and cryptocurrencies a long time ago – mainly through investments into companies and patents. Incumbents always try to defend their position as long as possible before they turn to new services to keep up. Cannibalizing your own business is very difficult, and most players have not done this successfully. Visa and Mastercard, however, are trying to defend their position and are ready for the switch or merged services in the near future.
Smaller players can always benefit from their agility, but they are also dependent on mass market adoption via established partners. In my view, this is key also for our partnership with Worldline, where Bitcoin Suisse brings experience and Worldline brings its access to the merchants.
10. Critics say that crypto currencies like Bitcoin are better suited to being an asset rather than a means of payment. What is your take on this?
This is a fair statement.
Bitcoin and Ether are by far the most well-known cryptocurrencies. The evolution of Layer 2 solutions like the Lightning Network will add new functionalities and provide an improved user experience. Bitcoin is the mother of all blockchains and the most well-known, also outside the crypto industry. Therefore, it will hold onto its position. By the way, BTC was invented as the “internet money” as a peer-to-peer network. New protocols or solution will take over, and they may be more efficient and BTC may become less relevant for certain use cases like payments. We are not there yet though. Evolution will show how it goes forward.
11. Can you remember your first day at Bitcoin Suisse? How was it?
Sure, it was back in 2018 at Industriestrasse in Zug – a great day. The Bitcoin Suisse team was already very successful in the blockchain and crypto space and welcomed me with my outside-in experience in ecommerce and payments. My focus back then was on the setup of the Crypto Franc, the CHF-backed stablecoin. From that day forward, I had the pleasure to meet many experts in their areas, who supported me in my onboarding into this new, decentralized crypto space.
12. What is the biggest thing you have learned at Bitcoin Suisse?
Keep fighting! Try an alternative path if you hit a roadblock. I also learned a lot about blockchain and crypto. My main intellectual learning though is in the area of regulation, where my engineering and business background was very limited and required a lot of input.
13. What three words would you use to describe Bitcoin Suisse?
Persistence, innovation, growth
14. What advice would you have for someone joining Bitcoin Suisse?
Be open to learn from various experts. Bring your experience and share your knowledge.
Be flexible, when challenges crop up and just be open new and “alternative” ways to reach goals.
Flexibility is key!
15. In the best-case scenario, where do you see the world of money in 20 years? Will it look much different than it does today?
Looking back, 20 years ago, I had my first iPod 5 MB with a click wheel, a credit card with magnetic stripe, PayPal had just launched a few years before. The industry has evolved so much since then.
How could I have predicted the future? If we continue to evolve like this…who knows? Blockchain and crypto started to revolutionize the finance industry and will do so even more. Decentralized finance seems to be key, in my opinion. This is where the end-customer can take back power. In payments, invisible payments and micro-transactions will be the main difference.
16. What do you do to relax or “get away from it all?”
I try to stay healthy with sports. Swimming, kite-surfing and wakeboarding in summer, skiing in winter. My family with 3 boys aged 9, 12 and 14 years help me to stay young and fit. So far, I can keep up with them on the ski-slopes and with surfing, but soon…
17. In one sentence, crypto is _____?
…a wide open future…and a challenge.