The creators of the world’s first cryptocurrency, Bitcoin, wanted to provide an alternative to the existing payment options. In addition to this, the goal was to decentralize the concentration of money. Besides, it offers cross-border transactions at lower costs, quicker speeds, and provides anonymity to users.
Over the next couple of years, thousands of cryptocurrencies have entered the market. Hence, there has been a widespread acceptance of cryptocurrency. Considering the abundant influx of consumers in the crypto industry, businesses have wanted to utilize this opportunity. Thus businesses began providing the option to pay with cryptocurrencies like bitcoins, ether, and even stablecoins like USDT and USDC.
Reddit, PayPal, Dell, Microsoft, and Rakuten were some of the earliest businesses that believed in the power of cryptocurrencies. Accordingly, they started offering their consumers the option to pay with crypto. Now, there are multiple businesses accepting cryptocurrency across the globe, like Starbucks, Tesla, Coca Cola, etc. So now, consumers have more options for payment. Cryptocurrency payments have thus heavily influenced the payment technology landscape.
Businesses from different industries like retail, real estate, F&B, and many more today stand to gain multiple advantages from accepting cryptocurrency payments. Some of the key ones are –
Any business that offers its consumers the option to pay with bank credit or debit cards incurs transaction fees. And these fees include interchange fees, assessments fees, processing fees, etc. depending on the bank. Moreover, these fees range from 1.5% to 4.5%. And over time, this fee adds up and makes a significant dent in the profits earned. On the other hand, cryptocurrency transaction costs are lesser than 1%. This makes cryptocurrency payments more cost-effective.
2. Quicker Payouts
Faster transaction speeds are a boon to businesses accepting cryptocurrency payments. Crypto transfers are near-instantaneous. But, traditional payment options like credit cards or wire transfers have transaction delays of three to five days. Moreover, this is further delayed if there is a weekend or bank holiday from when the payment is made until the payment is released. Since cryptocurrency trading takes place round the clock, crypto payments are quicker.
3. No Chargebacks
If a consumer uses a credit card to make a purchase, and then files a dispute for the said transaction, it is called a chargeback. In such a case, the bank which issued the consumer’s credit card orders a chargeback. This chargeback is deducted from the business or merchant’s bank which had provided the goods or services to the consumer. Sometimes, consumers also file fraudulent chargebacks. In addition to losing the potential revenue on sales, the merchant also has to bear the transaction costs involved. Thus, chargebacks, even if genuine, end up becoming a problem for merchants.
Using cryptocurrency for payments comes with the added advantage of eliminating these dreaded chargebacks. Since crypto payments are immutable, it eliminates the possibility of a consumer filing a false chargeback claim. Also, since there is no third-party intermediary who handles payments, so all disputes are managed by the merchant directly. As a result of this, only the merchant or businesses may refund transactions that have already taken place, if deemed fit.
4. Improved Security
Since cryptocurrencies are based on blockchains, the transactions using cryptocurrencies are immutable. As a result of this, crypto payments cannot be changed or modified. Thus, the risk of fraud is drastically reduced.
According to a study conducted by Forrester Consulting 40 percent of cryptocurrency owners seek out merchants that accept cryptocurrencies. In essence, this translates to newer consumers for the business. Additionally, the study also found that the order values placed by these crypto owners are twice the average of order values placed by credit-card holders. Given that the global crypto adoption rate was 880% in 2021, it is evident that the multitude of consumers entering the crypto industry keeps growing. And so, offering crypto as a payment option would prove efficient for the long term.
All the above are key compelling reasons for businesses accepting cryptocurrency payments. But apart from these, there are other benefits like competitive advantage and more convenience for consumers. Businesses may utilize their own crypto wallets to facilitate cryptocurrency payments. However, working with a cryptocurrency service provider or a cryptocurrency payment gateway transfers the regulatory risk to the service provider, thus eliminating hassle.