Why More Businesses Are Choosing Crypto-based Payments?
Understanding the benefits of crypto-based payments for businesses
As mainstream adoption of crypto is growing, more businesses today are choosing crypto-based payments. According to Deloitte, nearly 75% of retailers plan to accept crypto payments in the next two years. In addition, many tech giants, in recent months, have also announced their plans to accept cryptocurrencies. Crypto-based payments eliminate the need for intermediaries such as banks and credit card companies, resulting in lower fees and quicker transactions. Further, they also offer faster transaction times, increased security, and access to a global market. They are also more secure than traditional payment methods because of their immutable nature. Additionally, accepting crypto payments is helping businesses reach new customers in the global market who prefer to use crypto for transactions.
In this blog, let’s discuss why more businesses are moving to crypto-based payments and the benefits it provides:
Eliminates banks as intermediaries
One of the primary reasons businesses are turning to crypto payments is to reduce transaction fees and improve transaction speeds. Traditional payment methods, such as banks and credit cards, charge merchants a significant percentage of each transaction, which can be costly. On the other hand, crypto payments eliminate the need for banks as intermediaries, resulting in lower fees and quicker transactions. According to a report by Forbes, “Banks make over $15 billion a year in overdraft fees.” However, the most common fee associated with crypto transactions are gas fees, which are basically the reward given to miners for validating the transactions and mining new blocks.
In addition, crypto payments significantly improve transaction times. Traditional payment methods can take up to several days to settle, while crypto payments are processed in a matter of minutes or even seconds. This makes crypto payments particularly appealing to businesses that require fast, efficient payments.
“Blockchain has the potential to cut costs, speed up transactions and promote greater financial inclusion by streamlining cross-border and remittance payments. These powerful innovations will transform payments infrastructure.” Lucy Gazmararian, Crypto and FinTech Advisory, PwC Hong Kong
Increased security and reduced fraud
Chargebacks are a common issue for businesses that accept traditional payment methods like credit cards. Chargebacks occur when a customer disputes a transaction and requests a refund from the card issuer. This can be costly and time-consuming for businesses as they may have to provide evidence to defend the transaction, not to mention the reputational risk for the merchants.
Crypto payments offer a solution to the chargeback problem. Since crypto transactions can only be authorized through a customer’s private key, there is no way for customers to dispute a transaction and request a chargeback. This provides a higher level of security for businesses, as they can be sure that once a transaction is complete, it cannot be reversed or disputed.
According to a report by PYMNTS, “When it comes to crypto payments, chargebacks don’t exist. Which is obviously a big deal given that chargebacks cost merchants $35 billion in 2021.”
Moreover, crypto payments do not require customers to share their personal and financial information, reducing the risk of identity theft and fraud.
Privacy-focused
Privacy is a crucial consideration for businesses when it comes to payments. Traditional payment methods require businesses to collect and store their customers’ personal and financial information, making them vulnerable to data breaches and cyberattacks. Moreover, customers may be hesitant to share their personal information, which can impact sales.
Cryptocurrencies offer a higher level of privacy compared to traditional payment methods. Unlike credit card transactions, crypto payments do not require customers to share their personal information, making them more secure and protecting their privacy.
Streamlines accounting and bookkeeping
Blockchain provides a high degree of accuracy and immutability, making it easier for businesses to track and audit their transactions. This is particularly useful for businesses operating in highly regulated industries, such as finance and healthcare.
According to a report by Deloitte, “Blockchain technology may represent the next step for accounting. Instead of keeping separate records based on transaction receipts, companies can write their transactions directly into a joint register, creating an interlocking system of enduring accounting records. Since all entries are distributed and cryptographically sealed, falsifying or destroying them to conceal activity is practically impossible. It is similar to the transaction being verified by a notary — only in an electronic way.”
Read our detailed analysis of how blockchain streamlines accounting here
How Cardstack can help?
Cardstack’s Safe Tools allow Web3 businesses to pay their globally dispersed teams, vendors, and freelancers in crypto while keeping track of all their payments from one dashboard for streamlined bookkeeping.
Want to join Early Access Community for Safe Tools? Register your interest here: https://hubs.li/Q01Kf2CW0
Read more about the future of blockchain technology below.
