Compass Coffee, the homegrown D.C. coffee chain, is allowing customers to start using cryptocurrency as a form of payment — a change it hopes will save big in credit card fees.
The company began accepting USDC, or U.S. digital coin, a stablecoin indexed to the U.S. dollar and not subject to volatility seen in bitcoin and other crypto, at its Half Street SE location near Nationals Park on Wednesday.
CEO Michael Haft told me move comes as part of a nine-month partnership the coffee brand made with crypto exchange platform Coinbase Global Inc. He said he's unfamiliar with other local businesses that allow customers to pay for goods or services with this type of currency.
Top of mind for Haft is that sales through USDC won't accrue the 3.75% fee Compass is charged on average for every purchase made with a credit card. The company, which employs 185 workers, posted $21 million in revenue last year, much of which came from purchases made via credit cards.
"One of the most frustrating things every month when I look at our income statement is seeing just how much we're paying to the credit card companies," said Haft, a Business Journal 40 Under 40 honoree this year. "We're a small business; it's hundreds of thousands of dollars a year."
On Wednesday, the first day Compass began accepting USDC, customers who paid with the digital currency received 90% off their order, among other perks. Haft said Compass will offer other incentives in the future to encourage customers to pursue the alternative payment method.
Eventually, customers will be able to use USDC at all Compass locations, which will reach 18 stores on April 1 following the opening of a West Falls Church drive-thru location. A point-of-sale terminal that permits crypto payments via a smartphone is needed, but the product is still in beta-level development and not ready for a wider deployment across Compass' stores.
"We intend to roll it out everywhere," he said. "It's really a matter of getting all the tech platforms to play nicely together."
But it's not just on the consumer side that Haft sees a benefit in adopting more use cases for crypto.
He envisions partnering with Compass suppliers to use crypto as well, noting it could be beneficial to the international coffee producers Compass buys products from. Using crypto for those transactions would allow suppliers to have immediate access to funds sent via a crypto exchange instead of relying on a wire service that could take several days to transmit capital.
"If I want to pay a coffee farmer in Guatemala, they don't have access to the U.S. wire system," Haft said as part of an example about the current pitfalls of relying on physical currencies. "If someone in Guatemala has access to an American bank account, then they're converting the currency and using the local banking infrastructure. There's a lot of steps, there's a lot of fees, and being able to go direct and cut out these intermediaries is a huge, huge benefit."
