Should Cryptocurrency Be Used As Payment Method For E-Commerce Stores?

Wednesday, June 1, 2022 - 4 min read

Cryptocurrency is one of the hottest technology trends of the past 5 years, going from being in doubt to being accepted by countries even boosting its growth within the country.

This has an impact on individuals, who still see them as an investment to generate profits, but it also has a big impact on individuals and businesses that are doing business because of the potential of cryptocurrencies to become a new payment method.

What Is Cryptocurrency?

Cryptocurrency is a digital currency based on complex coding. Instead of being managed by a centralized authority in the way of traditional currencies, cryptocurrencies use a decentralized system to record and verify transactions. In other words, all transactions are done peer-to-peer rather than being monitored by governments or banks.

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Cryptocurrencies have become legal and recognized in many countries recently, which has helped them gain acceptance by some of the biggest businesses in the world. Mastercard has announced that it will incorporate cryptocurrencies into its network and has placed big bets on NFT and several other cryptocurrencies.

Another testament to the recent development of cryptocurrencies is the announcement that Tesla will accept Bitcoin payments by CEO Tesla- Elon Musk. However, this statement was later corrected by him as not having immediate effect due to concerns about environmental issues in the Bitcoin mining process.

The Benefits That Cryptocurrencies Bring to E-Commerce

Have a better payment system

Cryptocurrencies are expected and very likely to become a "global payment system" that can be used in any country without depending on exchange rates, which can help streamline international growth for companies, while also providing an easier way to pay for goods purchased in other countries.

Cryptocurrencies are being seen as an alternative to traditional currencies. Many countries around the world are gradually adopting it because they bring many benefits to both customers and sellers such as: no middlemen, a decentralized system, easy to use and fast transactions.

Better data security

When using cryptocurrencies as a payment method, your e-commerce websites will enjoy a high level of security by blockchain technology in the form of a distributed ledger for data management. Distributed ledger technology (DLT) stores digital data in multiple places at the same time, unlike traditional databases that have a central data store.

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In a distributed ledger, when data is accessed, all nodes are processed and verified to confirm the accuracy of the data. Thus, making it the most secure way to store financial transaction details. That provides a safe shopping environment for your customers.

Reach more target audience

The use of cryptocurrencies helps merchants target a larger audience, including those who don't use credit cards, while also avoiding payment fraud during their transactions. when making a purchase.

Besides, the speed of transactions in cryptocurrencies also helps sellers. As a side benefit, the direct nature of cryptocurrency eliminates transaction fees, as it eliminates banking involvement entirely.

Reduced transaction fees

Credit card companies and payment apps like Stripe or Square charge a transaction fee of 3-5% per transaction. Many e-commerce companies add these fees to their product prices. Cryptocurrency transactions usually have no fees or only about 1%. However, there are fees for converting crypto to national fiat currencies like USD.

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The disadvantage

Price volatility

The biggest risk that merchants face when using cryptocurrencies as a payment method is that their prices are extremely volatile. An increase in price can help sellers make a big profit, but a significant decline can put them at risk when they need cash flow to replenish inventory and day-to-day operations.

Buyers are not well protected

Credit card companies have policies in place to protect buyers and provide refunds in the event that the product is spent illegally or the goods cannot be received. Cryptocurrency payments have no such measure if there is a risk. As a result, consumers may require more trust in the retailer or brand before using cryptocurrencies as payment.

While cryptocurrency adoption has yet to become mainstream, it has proven to be one of the most important technology trends to follow in the coming years, and ignoring it could make it difficult for merchants to follow. E-commerce operators lose customers to more nimble and innovative competitors.