Musqet provides next-generation ePOS and financial services infrastructure to enable merchants to seamlessly accept Bitcoin payments alongside traditional card payments. The problem being addressed is that merchant acceptance of Bitcoin is not only technically difficult, but also involves a lot of friction on the part of the merchant from additional devices to accounting and reporting. But at this stage of Bitcoin’s adoption, many advocates prefer to perennially hold the asset rather than spend it.

Merchant-focused Bitcoin/Lightning companies all have a similar problem in hoping to generate traction: while there are theoretical cost and settlement benefits to accepting Lightning payments, even if one or both sides convert to fiat to avoid exposure to volatility, those likely to be in a position to pay via these means are such a small proportion of total payment volume that integrating acceptance is often likely to be more costly than any hoped-for benefit. Musqet has built a best-in-class merchant acquiring software within the traditional fiat payments context, which has Bitcoin and Lightning payment options within a unified payments interface. If the customer wants to pay with Lightning the merchant can make extra profit in markets where transaction fees are lower than card payments or, if the market permits it, offer a discount for payment in Bitcoin, or some mix of the two. The merchant can advertise this without having to force it, and without having to incorporate additional terminals, accounting systems, and reconciliation, and the many other headaches this decision would otherwise incur. From this starting point, Musqet can offer all kinds of Bitcoin-centric neobanking services such as collaborative custody, fiat loans against treasury, employee Bitcoin payroll, and more. Musqet stands to benefit from a gradual transition to a world where operating and trading on a Bitcoin standard is normalised by market forces as a natural part of its monetization, without needing to push merchants to make an either/or choice upfront. Perhaps counterintuitively, this arguably contributes more to accelerating the transition than the opposite approach, which risks pushing away merchants and customers alike.

The broader payments processing and merchant acquiring landscape is worth grappling with to fully appreciate the opportunity. Although the likes of Stripe, Adyen, and Square get a lot of public attention as fast growing “fintechs”, their market shares are still surprisingly small. The excitement of the space at large stems from payments being yanked away from analogue banks and onto internet-native platforms over the course of decades. The three just mentioned have (to extremely round numbers) payment volumes of $900bn, $500bn, and $250bn, respectively, whereas Fiserv (parent of First Data), FIS (parent of Worldpay), and JPMorgan Chase process well over $1tn each. Even Italian banking conglomerate Nexi, likely unknown to most of the audience, processes over $800bn. This reflects the exceptionally slow transition away from brick and mortar to ecommerce and omnichannel, and incumbent fiat banks struggling to deal with this massive technological shift in the vein of The Innovator’s Dilemma. This is all to excitedly observe that the “real” competition for Musqet is not Stripe or Adyen, it’s arguably JPMorgan, Barclays, Visa, Mastercard, and AmEx.

Musqet is tapping into the same wave of disruption as Square, Stripe, and Adyen and making a very similar pitch, only tacking on yet another disruptive wave in the form of Bitcoin, setting themselves up to benefit for decades to come. If and when regulators and governments remove capital gains taxable events from Bitcoin usage as a payment method in everyday trade and the world starts to treat Bitcoin as an alternative payment method in the same way as vouchers or gift cards are treated then Musqet is well-positioned to spur even greater growth for forward-looking merchants.

Musqet is a holding in Axiom Venture Funds I and II and Axiom GP Allen Farrington sits on the board