Decentralized Distrust: How Cryptocurrency Payments Undermine Firm Trust

The rise of cryptocurrencies is transforming how consumers trade, purchase, and pay for products. The current work explores how cryptocurrencies used as a payment method shape consumer-firm interactions. Through one large-scale pilot study, four experiments, and one field experiment, we demonstrate that consumers perceive cryptocurrencies as a riskier payment method compared to traditional payment methods. We introduce the Payment Method Technology Risk Transfer and demonstrate how this heightened risk perception, induced by a payment option, subsequently increases consumers’ perceived interaction risk when engaging with the same firm. These risk dynamics negatively impact and ultimately erode consumers’ evaluation of the firm offering the payment method. We further demonstrate two essential boundary conditions: When firms actively communicate the privacy benefits of cryptocurrencies as a payment method or when the firm has a higher baseline trust with consumers, the adverse effects of cryptocurrencies as a payment method are reduced. Our findings highlight the unintended risks associated with crypto payments and the importance of effectively managing consumer risk perceptions of digital currencies when used as a means of payment for products and services. This research offers novel insights into how digital currencies and innovative payment technologies influence the psychology of consumer-firm relationships, as well as strategies that firms can employ to manage consumer expectations and mitigate risk effectively.