The demand for crypto payments increased noticeably in 2022 despite some tokens’ dramatic decline in value and the crypto winter. In fact, according to a Fidelity study, 58% of global institutional investors invested in digital assets in the previous year, marking a 6% increase from the preceding year despite the unfavorable market conditions. Also, a Deloitte survey disclosed that roughly 75% of retailers have plans to accept crypto payments.
In this article, we’ll discuss how crypto payments have the potential to make a huge impact in the e-commerce industry.
What Does a ‘Crypto Payment’ Mean?
The term crypto payment refers to a transaction or purchase completed using crypto, such as Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
The first crypto payment dates back to 2010, when a programmer named Laszlo Hanyecz posted on the BitcoinTalk forum that he was willing to pay 10,000 bitcoins for two large pizzas. A fellow Bitcoin user took him up on his offer and ordered two pizzas for him from Papa John’s.
Why Are Crypto Payments Gaining Popularity?
Crypto payments have become more popular in recent years due to their low transaction fees, fast processing times, and increased security. Some users consider them as a great alternative to cash, which can be subject to high fees, chargebacks, and fraud. The rise of crypto payment apps like Kasta has also made it easier for users to facilitate cross-border cryptocurrency transactions.
At the same time, cryptocurrencies are not backed by any government or financial institution, and their value is determined by supply and demand in the market. These digital or virtual assets use cryptography to secure their transactions and to control the creation of new units.
A research study entitled Paying With Cryptocurrency reported that 85% of businesses with an annual revenue of $1 billion have initiated the acceptance of crypto payments as a strategy to retain and entice customers. Notably, the survey indicated that 82% of the merchants who participated did so to get rid of intermediaries.
How Can Crypto Payments Change E-Commerce?
Crypto payments have the potential to bring significant changes to e-commerce in various ways. Some of the potential impacts are as follows:
1. Faster transaction processing
Cryptocurrencies can facilitate instant transactions, allowing for faster settlement times, which can be particularly beneficial for cross-border transactions. This can provide a more seamless and efficient customer experience.
2. Lower transaction fees
One of the key advantages of crypto payments is that they typically have lower transaction fees than traditional payment methods, such as credit cards. This could lead to cost savings for both merchants and customers, potentially reducing prices for goods and services and increasing profit margins for businesses.
3. Increased customer privacy
Cryptocurrencies can provide users with a greater degree of privacy and anonymity, which can be particularly important for customers concerned about their personal information being shared or sold.
4. Enhanced security
The use of blockchain technology can enhance security by making transactions tamper-proof and immutable. This can help e-commerce platforms reduce the risk of fraud and chargebacks.
5. Global reach
Cryptocurrencies are borderless and can be used by anyone with an internet connection. This makes it easier for e-commerce platforms to reach customers in different countries, which may open up new markets and opportunities.
Will Crypto Replace Traditional Payment Methods?
Despite their potential to play a significant role in the future of finance, It’s uncertain whether crypto will entirely replace traditional financial systems. While some experts believe that they will, others hold a different opinion.
Cryptocurrencies offer several advantages, such as the ability to operate on a decentralized, peer-to-peer network, faster and cheaper transactions, and enhanced security. However, we still have to consider crypto laws and regulations that may create a huge impact on their widespread use.
Ultimately, the future of finance may depend on how they develop and how governments, businesses, and consumers adopt them. The extent of global crypto adoption, as well as the speed and scope of this process, may determine the role that coins and tokens play in shaping the future of crypto payments.
Final Thoughts
The possibility for crypto payments to revolutionize e-commerce undeniable. However, as mentioned, it may still depend on the development of a more stable regulatory environment and crypto adoption, both for individuals and businesses alike.