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Demand for gold-backed payments is on a sharp upward trend as customers look for stability, with regulators’ attention likely to draw in. Hannah Duncan reports.

Surprisingly, gold is making strides into the retail payments space in Europe. “It’s becoming a payment method again, like it was thousands of years ago,” says Shahid Munir, co-founder of precious metal-trading platform Minted.  

The phenomenon has been facilitated by a handful of sparkling challenger banks, including Glint and VeraCash. Others, including Minted, are planning to launch gold payments soon. Similar to Nubank, Revolut and Chime, they bring unparalleled banking convenience to retail customers via mobile applications. But what makes them different is that users can convert money into gold and use it to pay.

“We [facilitate payments] with real, physical gold,” says Ignacio Sainz Iglesias, chief operating officer at VeraCash. “[Buyers are] debited in gold grams, rather than euros.” Meanwhile, vendors are paid instantly in cash. 

Soaring demand

As providers enjoy triple-digit growth, customers are fast spreading the word about the inflation-busting solution. “Just last quarter we grew in revenues and users by 130%,” says CEO and founder of UK-based Glint, Jason Cozens. “We’ve already got 150,000 users.”

VeraCash has also been riding the golden trend. The platform already has roughly 35,000 clients, according to Mr Sainz Iglesias, with average balances of “around €8000 and €9000”, but he expects that number to balloon as the company expands into the gold-hungry markets of Germany and Spain.

It is a development Joseph Cavatoni, global head of sales and US CEO of the World Gold Council, has been following closely. “We’ve seen some of the highest numbers in terms of [gold] demand trends,” he says. According to the council, the first quarter of 2022 saw demand for gold leap by 34% compared to 2021. Combine this with the option of paying and it is clear why customers are jumping on board. 

Mass appeal

“We’ve got people right across the spectrum,” says Mr Cozens, referring to the range of customers on Glint’s books. “Men, women, people across Europe, across the world. [Our] customers range from 18 years to 92 [years].” The bank balances are also diverse. “There are people who have £5 on their account, and people who have millions,” he adds. 

The amplification of these apps is going to empower a lot of people

Joseph Cavatoni

Many users spend gold like fiat currency, making the switch seamlessly. VeraCash’s customers tend to buy items online, costing around €100 each, but some make small purchases. “As we say [in France], you can use it to buy your baguette,” says Mr Sainz Iglesias.

Mr Cozens has also noticed his customers buy everyday items including meal deals, fuel and weekly shops. He is keen to capitalise on the big-ticket items too. Soon Glint will offer a direct debit service to encourage customers to pay their mortgages through the app. Minted’s Mr Munir, meanwhile, is looking to develop gold-backed insurance. A golden ecosystem is emerging, and it is open for all budgets.

This is a dramatic and refreshing change from the pre-pandemic years, when investment-grade gold was inaccessible for run-of-the-mill retail customers. “The amplification of these apps is going to empower a lot of people,” says Mr Cavatoni. 

In democratising gold, communities can buffer their income against the painful effects of inflation and do more with their hard-earned wages. Gold is also sharia-compliant, opening it up to Islamic communities.

Without missing a beat, customers can also use their card abroad, or transfer money without any of the usual fees. “You can send gold grams to other countries, with other currencies,” says Mr Sainz Iglesias, suggesting that gold could impact the foreign exchange markets, too.

The future of gold

Inflation is hitting painfully hard. Against this backdrop, gold payments will likely continue to rocket in popularity. However, Mr Munir believes incoming legislation could hamper progress: “If [gold payments] start venturing into the mainstream, I feel regulation will tighten.”

This is something the World Gold Council is keen to get ahead of. The organisation is fighting to strengthen both regulators’ and customers’ trust with better “standards, consistency and traceability”. It is even exploring the possibility of combining blockchain with physical gold. “We’re using [this] technology to advance the gold market apps,” explains Mr Cavatoni. 

So, will gold become a mainstream currency? And should banks join the rush to offer such payments services themselves? For Mr Sainz Iglesias, it is a no-brainer. “People in Europe are changing [the way they pay] and it’s an opportunity,” he says. “Why don’t we pay with an asset that’s really backed by something, rather than a currency whose value is imaginary a lot of the time?”

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