The phrase “cryptocurrency” has firmly established itself in the popular mind during the past few years. The technological components of these new digital currencies are still beyond the comprehension of the majority of the general people. However, there is a growing perception that they will fundamentally change how we view and use money.
Cryptocurrencies such as Bitcoin and Ethereum have become the latest tech trend seen in years. It’s also very hard to ignore the impact blockchain technology has on eCommerce. Large eCommerce platforms have noticed and supported cryptocurrency payments from Coinbase, BitPay, and other crypto wallets – making it easier for customers to make online purchases.
The Significance of Cryptocurrency in e-Commerce
Online businesses now have a new payment method choice thanks to cryptocurrencies, which have opened a new manner of conducting transactions. In reality, a few well-known companies, online stores, and payment processors have already started taking cryptocurrency as payment:
In March 2021, PayPal introduced “Checkout with Crypto,” a tool that enables its US users to pay online merchants with their cryptocurrency currencies. At checkout, all cryptocurrencies are converted to fiat money without any additional transaction fees and can be saved straight within the PayPal digital wallet.
Expedia has started processing payments with (more than 30) cryptocurrencies for over 700,000 hotels and rooms through a partnership with cryptocurrency-friendly travel booking platform, Travala.
eBay made the announcement that they would be open to the idea of eventually taking bitcoin as payment. It is “something we are keeping an eye on,” in their own words.
Any merchant using a Shopify store can accept bitcoin because the marketplace transactions system allows cryptocurrencies as payment on its website.
In 2014, Microsoft became one of the first companies to accept bitcoin as payment for games, applications, and other digital products. Bitcoin can be used for a variety of services such as Microsoft 365, Xbox Live, or Skype.
Cryptocurrency and its Impact on eCommerce
The means of mutual payment between market participants is fiat money. Consumers like flexible payment options, whether they are purchasing physical goods or services. Digital currencies are no different, particularly in the world of e-commerce where flexibility is essential to improving user experiences and increasing conversions.
The emergence of cryptocurrencies has significantly improved the state of e-commerce by paving the way for a quicker and more practical method of making purchases. Owing to this, many significant businesses now accept cryptocurrencies as a form of payment. The following are some effects that cryptocurrencies have had on the world of e-commerce:
Everyone in today’s world wants everything as quickly as possible, and this is true of both traditional and online businesses. Buyers want the processing of their goods to happen as quickly as possible. The commodities wouldn’t be processed down if the payment didn’t arrive at the seller quickly. So, using a credit card or sending money had proved problematic in the past.
Traditional transactions can take several hours or days to reach the vendor via that method (for cross-border transactions), which would delay the shipment of the items up to the customer.
Blockchain technology enables quicker, more direct transactions that can help your company’s cash flow run more smoothly. With the use of cryptocurrency, processing can be done almost instantly, enabling e-commerce merchants to get paid as soon as feasible. This would speed up the process of getting the items to the buyer.
Reducing Transaction Fees
Governments or conventional financial institutions do not regulate cryptocurrencies. As a result, there are no transaction fees because there is no middleman holding the funds.
Transactions are Recorded
Every transaction is recorded in the blockchain, a safe online ledger. Users can securely exchange and store cryptocurrency thanks to blockchain technology. Every time a payment is made, an entry is published on the blockchain since it records every financial transaction.
The risk of fraud and cyber-attacks is drastically decreased when using blockchain technology because there is no central authority that can take money out of someone’s account without that person’s permission. Accepting crypto payments may improve how your brand is seen by the general public by lowering the likelihood of these security breaches.
Payment Chargebacks are Impossible
Chargebacks are not permitted on cryptocurrency transactions. Chargebacks reduce sales, put a merchant’s account in danger, and require time and effort to rectify. Crypto transactions are held in escrow until all parties confirm the transaction since cryptocurrencies are designed to function like virtual currency. The transaction cannot be changed once it has been confirmed and added to the blockchain.
The number of people that own and use cryptocurrencies worldwide is always increasing. Your target market may be expanded and you may see an increase in new customer traffic if you modify your platform to enable users to pay using their cryptocurrency wallet. Early acceptance of cryptocurrency payments could provide you an advantage over your rivals and win you a loyal customer base before others.
Potential Hurdles in Using Cryptocurrencies in eCommerce
Despite its recognition, there has been some hesitation surrounding cryptocurrency in the eCommerce sector. One is that the value of cryptocurrency might fluctuate greatly. The erratic value and ongoing product reevaluation are to blame for the digital currency’s instability. The mistrust of certain major participants in the sector is another potential danger. For instance, due primarily to volatility, Apple and Amazon have flagged potential risks. Overall, it appears that the solution might be based on the preferences of both buyers and sellers.
Definitely, there is still a lack of public faith in cryptocurrency, in part due to the difficulty of accessing the technical systems that support them as well as media cynicism. Whatever the root of the mistrust, implementing cryptocurrency payments won’t open up a sizable, untapped consumer sector just yet.
To “mine” cryptocurrency, powerful computers that use a lot of energy are needed (the process by which new coins are brought into circulation). For instance, it was just shown that Bitcoin uses more electricity annually than Argentina. Attaching your brand to a large carbon footprint could have an impact on your reputation, especially in light of the growing number of eco-conscious consumers. There’s no doubt that Elon Musk is aware of this. Tesla has vowed to refrain from conducting any Bitcoin transactions until more than 50% of tokens are mined using renewable energy, following the company’s $1.5 billion (£1.1 billion) Bitcoin investment.
Why Should Retailers Invest in Cryptocurrency?
Given how quickly the world is embracing cryptocurrencies, it is not difficult to understand why eCommerce companies would like to join the trend. Let’s explore the factors that lead leading e-commerce businesses to select cryptocurrency as one of their payment options.
According to Morning Consult Study, typical cryptocurrency owners are:
- 45% Millenials
- 55% have at least a bachelor’s or post-grad degree
- 27% are Hispanic, 20% are Black, and 19% are white.
These crypto owners are more ready and likely to spend twice as much, compared to regular credit card users.
Integrating Cryptocurrencies in eCommerce
Cryptocurrency payments have a good probability of quickly becoming the default for e-commerce businesses. Either a personal “wallet” or a third-party payment gateway can be used to integrate crypto. You may easily download the majority of wallets to your phone or computer, or you can get a hardware wallet. Numerous third-party processors, like Coinbase, BitPay, Coingate, Crypto.com Pay, and others, already offer automatic cryptocurrency to cash conversion. You can avoid price volatility by doing this.
Cryptocurrency, including Bitcoin, Cardano, and Ripple, is gaining popularity in the eCommerce industry. Transactions involving cryptocurrencies are rapid, simple, and safer thanks to encryption. Although it is not required when performing online purchases, using cryptocurrency could be a smart business move that improves the shopping experience for your customers.