On being … in with the In Crowd?

By Ingrid Sapona

A couple weeks ago I read that an Ontario municipality (Richmond Hill) is going to provide residents with the option to pay their property tax using the cryptocurrency Bitcoin. As it happens, Richmond Hill’s the second Ontario municipality to do so – the town of Innisfil was the first to allow this. Innisfil has had a “Pay with Bitcoin” option on its website since April. 

My initial reaction was, “Say what?”, quickly followed by a suspicious “WHY?”

Seems a Toronto-based “payment processing company” called Coinberry has entered into agreements with these municipalities to facilitate such payments. Coinberry, which describes itself as a financial technology company, runs a platform where people can buy, sell, and “remit” Bitcoin. When a property owner clicks on the Pay with Bitcoin option on their municipality’s site, they’re then connected to the Coinberry app. The property owner electronically sends Bitcoin to Coinberry, who then converts the Bitcoin to Canadian dollars and pays the town.

Richmond Hill’s deputy mayor is quoted as saying this option’s no different than going to your bank and converting your Euros or Pounds into Canadian currency. That may be so, but Bitcoin’s been more volatile than traditional hard currency, so there’s some currency exchange fluctuation risk. Though Coinberry says it will “instantly” (that’s the word in their press release) convert the Bitcoin to Canadian funds, if there’s a price change during the transaction process, the property owner will have to make up any shortfall.

Given that the towns don’t actually end up with Bitcoin, Coinberry’s basically a middle man – an intermediary. Before Coinberry came to them with this “solution”, did Innisfil have a payment processing problem? Previously, Innisfil residents could “only” pay via phone or internet baking, credit card (using another third party service provider), cheque (via mail or dropped off in a box at the front entrance of the Town Hall), or pay in person using cash (presumably Canadian currency), cheque, or debit card at the Town Hall during normal business hours. And, if you have a mortgage, your mortgage company can pay your property tax. Come on – aren’t those enough options? I guess not…

According to Coinberry, credit card companies charge municipalities about 3% but Coinberry charges 0.5%. So, Coinberry’s service is arguably more cost effective than credit card payments. But I still have trouble seeing the need for such an option. Innisfil’s website explains that over 5% of Canadians currently own some form of cryptocurrency. Innisfil has about 36,000 residents and, assuming my interpretation of recent census data is correct, about 8,700 of them are home owners. So, maybe 435 Innisfil property owners hold some cryptocurrency. Interestingly, the lone Richmond Hill counsellor who voted against the idea did so because there was “no evidence whatsoever to support this new service”. I guess he doesn’t think they need to cater to the (apparently) 5% of Canadians who own cryptocurrency.

Cynics might wonder how much Coinberry “wined and dined” counsellors (if not actually greased some palms) in its effort to persuade these municipalities to offer this new “solution”. But even assuming nothing fishy was going on, what’s really motivating these politicians?

The answer appears to have a lot to do with wanting to be seen as modern and cutting edge. Innisfil’s website says it’s offering this because, “Innisfil facilitates innovative solutions to everyday issues that enhance our residents’ quality of life…”. Seems to me the folks whose quality of life might be improved by this venture is primarily folks who own Coinberry – not the town residents, but never mind.

Bragging rights also seem at play here. In a Coinberry-issued press release Innisfil’s mayor, who describes the new payment option as “exciting”, is proud to be the first to take this “bold step”. As she sees it, “By getting into this now, we are making sure our municipality is ahead of the game, and signaling to the world that we truly are a future-ready and innovative community.” I’m not sure what game they were concerned they might fall behind in, but never mind.

And it’s not just the towns that are claiming bragging rights. Coinberry now proudly boasts it’s “the only blockchain based cryptocurrency platform to have secured partnerships and provide solutions to two Canadian Municipalities – making it the leading and most trustworthy platform in Canada.”  No doubt Coinberry will use this as a selling feature to other towns – after all – who wouldn’t want to be associated with THE leading platform?

Don’t get me wrong – I think it’s good when politicians are open to change and innovation – and there’s nothing wrong with a town fostering the image of being hip. But, I can’t help think there are other pressing, real problems these politicians should be spending more time trying to find innovative solutions to.

© 2019 Ingrid Sapona