How can cryptocurrency change the world of eCommerce?
As the world moves into the digital age, buying and selling goods and services online will be further innovated by the many advantages digital currencies bring.
Cryptocurrencies and eCommerce have the potential to be a match made in heaven. Both exist only in virtual form and their functions rely on the transfer of funds. When put together, multiple benefits emerge for both the merchant and the consumer.
Benefits of cryptocurrency in eCommerce
Market expansion: Borders are not an obstacle for cryptocurrencies. Providers that integrate crypto payments offer international customers an easy way to purchase products using a universal currency. The ever-growing community of cryptocurrency enthusiasts is also more likely to buy from cryptocurrency-accepting providers than their traditional competitors.
Fast transactions: As customers, we may not realize it, but credit card payments usually take several days to process. During this time, merchants are left in limbo as they wait for funds. With cryptocurrencies, transactions can take just a few minutes. These near-instant transfers help streamline cash flow and prevent problems caused by credit card processing delays.
Greater security: In the world of crypto, it is impossible to counterfeit coins or reverse transactions. Anyone can view every single deal ever carried out on the blockchain. So, any disputes or misunderstandings regarding payment can be instantly resolved, reducing the risk of fraud.
How do crypto payments work in eCommerce?
ECommerce merchants can accept cryptocurrencies in two ways: through direct payments using a personal wallet or a third-party payment gateway.
Using a personal wallet is a more old-school way of accepting crypto. It allows for complete decentralization of payments but can be inconvenient. Merchants must verify each transaction manually and if a wallet is not correctly backed up, funds can get lost.
Using payment gateways is a more straightforward and modern solution. Platforms like Coinbase or BitPay handle the entire process, just like credit card providers. Merchants can also choose the automated exchange option and receive payment in local fiat currency.
But they still resist these two cryptocurrency payment options. The effort involved in managing a personal wallet or integrating a new gateway for a small group of customers is too much of a hurdle for many eCommerce stores.
The scenario may change soon as the major traditional payment operators start introducing cryptocurrency payments.
Adoption by established payment providers
Recently, VISA and PayPal have announced that they will be jumping on board the crypto train.
VISA will make the USD-pegged stablecoin USDC available to settle transactions on its network. The project is still in its pilot phase but can provide a simple option to accept cryptocurrencies.
In 2020, PayPal introduced cryptocurrencies as an asset class to their platform. Now it launches crypto checkout. This new feature will allow users to pay directly with cryptocurrencies at more than 29 million merchants integrated with PayPal.
These announcements are in line with the general adoption of digital currencies by major financial companies. Recently, Mastercard and JP Morgan revealed similar plans.
Central banks around the world also work on launching their own crypto. Such currencies are called Central Bank Digital Currencies (CBDCs). This development can play a significant role when it comes to offering payments in digital currencies by established payment providers. Since CBDCs are backed by governments, operators will have fewer concerns implementing them as a settlement option.
You can find updates on the current status of CBDCs in countries around the world here.
It seems only a matter of time before cryptocurrency payments in eCommerce become the norm. However, traditional payment providers and CBDCs may still have an ultimate say on how soon that time comes. Until then, crypto enthusiasts will continue to buy products using the multiple options currently available.
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