The state of cryptocurrency in E-commerce platforms Is such that they complement each other quite nicely since they share the same home and both appeal to the digitally-savvy user.
As an e-commerce retailer, you should view cryptocurrency the same way you view your business. It’s an additional option for those looking for a fast and more convenient way to pay for goods and services. This shows the high demand for digitally-based payments among an online consumer base.
Though e-commerce is attracting customers across nations, it is not to be denied that the industry faces immense challenges on account of the fragile infrastructure of the traditional financial system.
The customers use their credit/ debit cards to make payments for their purchases online. The banks act as intermediaries to facilitate the digital transaction of cash across networks. The question is, how safe is a transaction in the presence of middlemen? What if you are to bear hidden charges for every such transaction you make? What if someone steals your card data to make use of the funds in your bank account without your knowledge?
Now, you need a superfluous solution that shall guarantee complete and security and transparency over monetary transactions. This is precisely where cryptocurrency jumps in to rescue you right on time.
Perks of Cryptocurrencies In E-commerce Platforms
Faster transactions
The crypto transactions are carried out at such an impossible speed that the traditional methods of transaction cannot come anywhere near it. The number of crypto transactions per second is at rise with the increase in the speed of your network connectivity. Now, which e-commerce customer will not be curious to give a shot at it for an online purchase he or she makes?
Transaction Fees
A credit card payment takes around 3% of the shopping expense to process the same. On the contrary, the customers need not pay additional charges towards transaction processing when they shop online using a cryptocurrency payment gateway. Yes, cryptocurrency makes it all happen by way of promoting direct transaction of cash between the participants and eliminating the presence of intermediates thereby.
Push Transactions
As the virtual currency works on a peer-to-peer base, the buyer and the merchant come in direct contact with each other. The push transactions of cryptocurrency make sure no storage of information happens anywhere along the line. With the loopholes sealed, there is no room for data breach when the customers pay for their purchases via digital means.
Reward programs
The e-commerce platforms provide special rewards to customers who opt for crypto payments. The reward shall usually be in the form of points or tokens that they can make use of on their next e-shopping venture. This ensures that the customers come back, again and again, to buy products online as they never run short of exclusive rewards. The coming back of customers means more cash flow into the e-commerce industry which in turn increases its overall market value in the long run.
Brand status boost
The recognition that comes with crypto purchases obviously brings more happy customers to the corresponding e-commerce space. Such happy customers shall recommend the same other crypto users they are in touch with. This brings in more customers and the more the customers, the more the business. Such a healthy expansion of business eventually fetches an exclusive brand status leading to even more business.
Challenges In The Way Of Cryptocurrencies
Although cryptocurrencies are gaining popularity across the globe, there are still some challenges that need to be addressed:
Unstable rates: Firstly, they are quite volatile. Every action taken by the federal government to control the virtual economy causes the rates of virtual currencies to fluctuate. This is the reason why online merchants are still wary of accepting bitcoin and other similar cryptocurrencies. Although, online merchants stand to make a profit if the value of the cryptocurrency rises but the losses can be overwhelming if the rates go down.
Lack of regulation: There is no single global regulator to monitor cryptocurrency transactions. This makes it difficult for online merchants to track fraud and other criminal activities.
No one to hold accountable: Due to the lack of a central governing body, the consumers also don’t have anyone to hold accountable in case of frauds or other criminal activities.
Volatility in Cryptocurrencies
Many new cryptocurrencies are being launched every day. But not all of them are effective in raising funds. Bitcoin has become viral and is probably the face of all cryptocurrencies. It is the highly sought digital currency across the globe. However, it is also an extremely volatile currency quite similar to every other virtual currency. The rate of these currencies keeps fluctuating rapidly. Every action taken by the federal government to control the virtual economy tends to cause huge waves in the crypto exchanges. This is definitely a cause of concern for online merchants who accept Bitcoins or other similar cryptos.
The most daunting question would be – Wouldn’t an online merchant benefit if the currency rates fluctuate? Not necessarily. It is true that an online merchant stands to make a profit if the value of the crypto rises.
But this profit has its limits. But if in case, the currency rate plummets then the potential loss can be overwhelming. Even government regulations are a risk to the crypto economy. For instance, if an online merchant accepts bitcoins today when the market is higher by 10%.
The merchant will receive 10% more value of coins. But there is a risk that the crypto market might come crashing down by 15% because of a fed imposed guideline. The merchant will incur a loss of 5% without even having a chance to react to this change. A stable crypto exchange is definitely needed to persuade online merchants to accept cryptocurrencies as a mode of payment.
Do Merchants Even Accept Cryptocurrency?
Some eCommerce pioneers have been accepting crypto payments for years, and there are many others that are just now jumping aboard. Here are some examples:
Overstock.com– One of the first and largest crypto merchants. CEO Patrick M. Byrne is a true believer.
Expedia– Shoppers can pay for hotel rooms with cryptocurrency.
Shopify– This hub for small business merchants has them covered with support for crypto payments.
Egifter– Shoppers can turn their coins into gift certificates for use with top brands.
Merchant-Ready Solutions
Depending on your target audience and risk tolerance, now may be a good time to become familiar with cryptocurrency, take the technology for a test run, and gauge consumer participation.
There are commerce-ready solutions available to help ease into this brave, new world. Crypto payment processors include services such as custodial wallets, storefront checkout integrations, and sometimes direct to fiat conversion and bank deposits to sidestep price volatility.
Here are some top providers to get in touch with serving the US and Western Europe:
Coinbase Commerce — The most prominent name for cryptocurrency in the US, which has relationships with Expedia and Shopify stores, recently launched this new service. It supports several cryptocurrencies.
BitPay Payments — Another provider in the US with plug-in integrations for Magento and other platforms. Includes conversion to Fiat and direct bank deposits. Accepts only Bitcoin and Bitcoin Cash.
GoCoin — Locations in US and Singapore. Used by the likes of Remax and Shopify. Integrates with Magento and other platforms. Supports multiple cryptocurrencies, and wire transfers to banks.
BitcoinPay — A UK based provider serving the Eurozone. Convert to local Fiat and deposit to banks.
CoinsBank — Another UK provider.
Final Thoughts
Digital payments appeared quite revolutionary when they were first introduced, and they also presented significant new challenges. With time, although some of the challenges still remain, a large majority of them have been addressed.
Today, a majority of transactions take place digitally, which has made our lives quite easier. Similar future is being predicted for the cryptocurrencies as well which offers great benefits to the eCommerce sector. Although there are a lot of challenges to overcome, it is expected that with time the challenges will be addressed. This will make the cryptocurrencies mainstream payment method for eCommerce shops.