Cointelegraph spoke with the founder of Fold, Matt Luongo, on how the company has been able to offer a 20% at Starbucks for Bitcoin users, its planned integration with Target, Whole Foods and other major retailers, and the problems still facing the growing Bitcoin ecosystem. 

“What we want to do is change [consumer] behavior.”

- Matt Luongo

Foldapp is a website that allows you to get 20% off Starbucks purchases by paying with bitcoins and scanning a QR code at the counter. The startup is not only looking to add merchants that accept gift cards, but is also developing an innovative method for familiarizing people with Bitcoin who have never used it before.

Cointelegraph:  First, can you tell me a little about yourself, your background and why you decided to start Fold?

Matt Luongo: I've worked in startups since 2010, as a founder and as an engineer. A few companies ago, I built a site to buy people's unused gift cards. I forgot about the project, but at the end of 2013 I revisited it. The old project used PayPal, which was a huge pain to work with, so I rebuilt it around bitcoin. After launch, I got some unexpected press and a ton of feedback validating the business.

I brought on two co-founders. I knew Corbin [Pon] and Chris [Martin] from Georgia Tech. Corbin and I had co-founded Scholrly, a research search engine, together and I wanted to work with Chris for a while.

We put our heads together, and tried to figure out what to do with all these gift cards. And we realized that if we did it right, we could actually use the gift cards and their in-store payment infrastructure to build something new — a way for people to spend bitcoin in-store and save money. We launched the project as Coin for Coffee, and as we grew we decided to rebrand to Fold.

“A lot of gift cards are all about you buying the card and then not using it. […] But for us, because of the way we work, we actually really want our customer to spend the card or refund it.”

Matt Luongo

- Matt Luongo 

CT: So it was very similar to a company like Gyft?

ML: We're much different than Gyft and we offered a couple of products. Card for Coin was the first one. Gyft sells cards directly from merchants, so they buy in bulk from Starbucks, for example. But what we do is we buy directly from consumers that don’t want their cards anymore.

On the payment side, it works differently than Gyft because they have databases of cards that they bought from a merchant and we have to source all of ours.

CT: So Foldapp manages to offer Bitcoin users a 20% discount at Starbucks by buying cards from people who don’t want the cards? How does that work?

ML: That’s exactly right. We find and source cards as cheaply as we can and then we pass that discount to the users of Fold. This is a straightforward way for us to make money and our interests are aligned with those of our users.

For example, a lot of gift cards are all about you buying the card and then not using it. So they kind of rely on breakage. But for us, because of the way we work, we actually really want our customer to spend the card or refund it.

So when you go with Fold to Starbucks, you’ll say “yea I want to spend 5 dollars” and you’ll send 4 dollars in bitcoin. But then after you spend, you have US$2.50 left, which you can refund and get the remainder back in bitcoin. And if people forget about their bar code for a while, we’ll actually email and say, “Hey you should go spend this.”

For us, the fact that we use this gift card infrastructure is very much a step along the way to this bigger payment vision and I think people will notice the difference.

CT:  How many people have used Foldapp so far?

ML: Thousands of people have used it to buy their coffee so far. Most purchases are small — in the $5 to $20 range — but our customers visit Starbucks two or three times a week, which is great. The thing that we’re really focused on is that we want customers who use us multiple times a week, and I think that metric has been more important than how many people have used it.

CT:  I have a friend who just said it worked at a South Korean Starbucks. Can it be used at every Starbucks location in the world?

ML: That's awesome! We don't work everywhere, but we've been keeping a list as people try us in new places around the world. So far, we've seen successful tests in Canada, the UK, Australia, Ireland, Hong Kong, Macau and parts of Mexico and Spain. I guess we should add South Korea to the list!

It’s based on how each Starbucks payment system works and that’s how it is for every brand; each brand will have different international coverage. With that said, I’m talking to partners in mainland China and a couple of other spots to improve our support for these locations.


CT: So it would depend on the location’s point of sale system?

ML: That’s exactly right. And a lot of these places don’t have scanners, but that’s okay. We can just change the interface for those locations.

“I think that all of the ideals that we as a community are working towards right now – they don’t convince people to switch payment methods.”

CT:  Has this strategy of offering a substantial discount with Bitcoin at such a popular location been effective in helping Bitcoin grow and spread awareness, or do we still have a long way to go?

ML: A little bit of both. The discount has been good from a commercial standpoint, but the downside that it’s almost too much of a discount. People aren’t used to saving that much money. It sounds weird, but usually you have to work to get 20% off at something. People will see 20% off and say, “This can’t be real, what’s going on here.” So we got to make sure people know this is legit and it makes sense how we are able to offer this.

But I want people like my mom to be spending bitcoin and I think that all of the ideals that we as a community are working towards right now – they don’t convince people to switch payment methods. It’s very hard for you to stop using a card or cash or whatever you’re familiar with, especially when you are in a line and whatever you are using doesn’t work and you’re embarrassed. So that’s really been our struggle and I think the struggle for consumer use cases with bitcoin.

So for me, it’s either got to be a significant discount — and I’m not talking 3% unless it’s a large purchase — or novel use cases are the way forward for bitcoin. For example, Gyft effectively gives you about 3% back. I don’t know if they converted a lot of people from spending dollars to spending bitcoins.

I do think that they did make people who already spend bitcoin very happy and I think they’ve done a good job selling gift cards, but what we want to do is convince people who haven’t touched bitcoin before to give it a try. And that’s a whole ecosystem which we’re working toward integrating and developing.

CT: You are also working to integrate with other retailers such as Target and Whole Foods. How has this process been coming along and when can we expect to see another business added?

ML: It’s been going well. Honestly, adding a new brand is not that tough from a technical standpoint. What’s been tough is that we have a lot of infrastructure to build. Foldapp is pretty much a prototype to see if people are interested in this. And now we’re moving towards scaling out, tons of people. So we’ve been focused on how we’re going to grow this without disappointing people.

New merchant support will launch with the mobile app. We're planning to launch the Android app with both Target and Whole Foods in the next few months. The app is just now rolling out to a small group of alpha testers, and once we've stamped out the bugs, we'll roll out the larger beta. Once the app is out, expect a steady stream of new merchants to be supported. We're focused on the largest retailers in the U.S. — nothing is off limits.

“We’ll probably be able to give people a better discount at Target than Whole Foods, but it’s just going to be what the market dictates.”

CT: Since you depend on customers selling you gift cards, can you theoretically run out of cards and not be able to offer a discount?

ML: Right now in the U.S., depending on whose numbers you trust, there are maybe 14 billion dollars in gift cards that go unspent. So there’s quite a bit for us to chew through.

But even without that, we can always fall back on a model that’s a little bit more conservative and closer to the traditional gift card players, where the margin on the discount we offer is a lot smaller. But really for us, this discount is a way to get people excited about bitcoin. Once we get enough people excited about bitcoin, I don’t think it will matter as much.

CT: So as far as Target and Whole Foods are concerned, we shouldn’t expect the same 20% discount? 

ML: It would be awesome if we could pull off 20%. To set people’s expectations, we’re talking 5% to 10%. We’ll probably be able to give people a better discount at Target than Whole Foods, but it’s just going to be what the market dictates.

“We’ve also been looking at Walmart, CVS, and Home Depot. […] The top 30 retailers in the U.S. are all in our sights.”

Another thing we’ll be doing pretty soon is letting these discounts float a little bit. So it sounds really good to say 20% off at Starbucks — it’s catchy, it’s simple. But I think in reality, what we’re going to do is we’ll always offer you the best offer we can when you walk into a store. So maybe that will be 20% at Starbucks one day, maybe it’ll be 15% or maybe 25%. We’ve also talked about fleshing out our rewards program so people who use us a lot get better deals.

CT:  Which other retailers have you been considering?

ML: So on deck we’ve also been looking at Walmart, CVS and Home Depot. Honestly, right now it’s been very U.S. focused, and eventually we’ll be looking more internationally, but the top 30 retailers in the US are all in our sights. What we want to do is change behavior. So that means places where you eat, where you get your coffee, where you get your groceries.

CT: Which major retailer do you think will be the watershed moment for you and Bitcoin as a whole, if added to Foldapp?

ML: For us, it's groceries and gas. We want people spending their bitcoin every day, and it having a real impact on their budget and lifestyle. And we want to have the merchants and coverage for people to rely on us for that.

But I think it’s going to take more than just flipping on merchants. I would love to say that “we are the killer app and we are going to drive bitcoin adoption.” But there’s stuff that needs to happen beyond just giving people a discount for spending bitcoin, particularly smooth interaction with wallets — a quick and easy way to buy, because even today it’s difficult.

My wife tried getting a refund from the app the other day and she had to put in a bitcoin address for a refund. That’s not acceptable. You can’t ask consumers to put a 32-digit address to get sent money. It’s not user-friendly at all. So that’s another focus of ours. We have been looking into ChangeTip, Netki and Onename that make payment addresses human-readable.

CT: When can we expect the Fold app to be released for iOS and Android?

ML: Android is definitely going to be soon; in the next month and a half. As far as iOS, we’ll see. We were originally planning iOS first, but Android has been great for us to develop on. We’re just going to play it by ear. It’s definitely in the pipeline and we have an app that’s maybe three quarters done, but that last quarter is difficult.

CT: It would seem that you don’t necessarily need a smartphone to use Foldapp. Can’t someone just come to Starbucks with a printed QR code for example?

ML: Yeah that’s exactly right. It’s not something that we’re trying to push forward, but if we saw a whole bunch of users who are interested in that, we would probably make that experience a little better.

One of the use cases that got us really excited is when we first started, was a guy in Canada who was homeless and didn’t have a smartphone, but he did have a laptop. So he literally used the app with some donated bitcoin by scanning his laptop. So yea, it doesn’t require a smartphone, but it’s certainly expects a smartphone. However, if people need a different solution, we’ll build one.

CT: Anything there else you’d like to add?

ML: People should expect to see some new brands soon. We have some pretty big announcements coming up — including integrations, progress on the mobile app, and support for new retailers. If you want to be first in line, sign up for the beta list at