The exponential rise in popularity of Bitcoin and other cryptocurrencies has become impossible to ignore. Currently, the estimated number of cryptocurrency owners is 300 million worldwide. Furthermore, the value of crypto transactions amounts to $120 billion per day. These statistics, which are expected to continue to increase, underline the importance of this digital currency in the modern world. Consequently, all business owners should at least exploit the potential of cryptocurrencies in e-commerce, to implement them as a payment option.
What is the position of Cryptocurrencies in eCommerce?
Cryptocurrency is a (web 3) decentralized digital currency first introduced in 2008 by Satoshi Nakamoto. The value of crypto is that it is not centrally regulated by the government or any central body. Instead, trading takes place as peer-to-peer transactions conducted on blockchain consulting services. In 2022, the global cryptocurrency market size will be $1.8 billion. Without a doubt, the influence in the financial world is increasing, but what is the role of cryptocurrencies in electronic commerce?
As it stands, crypto is now a viable payment option for eCommerce transactions. Platforms like Shopify and WooCommerce now accept payments in digital currency. Bitcoin is expected to be the most accepted, but Ethereum, Ripple, and Binance Coin are popular alternatives. However, the adoption of cryptocurrencies in e-commerce is far from universal, as many brands, especially Amazon, do not want to accept this method.
What are the benefits of Cryptocurrencies in eCommerce?
Cheapest transaction costs
Perhaps the biggest argument for using cryptocurrencies in e-commerce is the relatively lower transaction costs. Transactions processed through banks, credit cards, and online payment platforms typically incur fees ranging from 1 to 5%. In contrast, fees for Bitcoin transactions are limited to a maximum of 1%. Therefore, it has a strong potential to increase companies' profit margins.
Promotes Inclusion
As mentioned above, digital currency holdings are growing rapidly. Therefore, the introduction of cryptocurrencies in e-commerce stores offers the opportunity to attract more customers who prefer such payment options. In some countries, cryptocurrencies have become so popular that they are becoming the first choice for the population. This trend may continue around the world. With Crypto, you therefore reach an additional target group of buyers.
Faster transaction speeds
Compared to credit or debit card payments, crypto transactions are processed faster. This is one of the main reasons for the increasing use of cryptocurrency software exchange development on e-commerce websites by retailers who want faster settlements. Interestingly, Bitcoin is the slowest cryptocurrency with 7 TPS. However, there are much faster alternatives, such as Monero, Ripple, and Solana.
Reduced security risks
The decentralized nature of cryptocurrencies means that less fraudulent activity takes place. User data is stored in crypto wallets, making it very difficult to steal. Therefore, the use of cryptocurrencies allows for more secure transactions, which many customers will appreciate.
Facilitate international transactions
By using cryptocurrencies in e-commerce stores, retailers can encourage customers to make purchases in different currencies. Instead of limiting them to paying in their local currency, your business could offer the alternative of paying in crypto, which is more universally accessible.
What are the disadvantages of Cryptocurrencies in eCommerce?
Fluctuations in Prices
The inconsistency of the exchange value of most currencies is the biggest obstacle to using cryptocurrencies in e-commerce. In 2022 alone, Bitcoin reached $60,000 and $18,000, with serious consequences. For example, a significant drop in price value means that retailers incur losses on goods sold when converting money to fiat currency. No doubt, such uncertainties in transactions are bad for business. Therefore, online stores should consider the stability of currencies before using certain currencies. However, developments in this area are moving very quickly. Now there are possibilities to carry out transactions with exchange rates calculated in real time and immediately receive the amount in the desired currency credited to the traditional bank account.
Negative public opinion
Although the number of cryptocurrency users is increasing, more and more people are wary of these currencies. There are several reasons for this perception, including limited regulation.
How to accept Cryptocurrencies in e-commerce stores?
Accepting cryptocurrencies on e-commerce websites (like Opencart accepts cryptocurrencies) is easy and can be summarized in 4 steps:
#1: Meet the need for the payment option
The sales department of every company can conduct analytical research on how the acceptance of cryptocurrencies in e-commerce stores will affect finances. Your company can also research how much customers are willing to pay with cryptocurrency.
#2: Research coins, wallet options and gateway
If cryptocurrency is going to work effectively for your business, it is best to carefully consider your options. Cryptocurrency in e-commerce can be affected by currency stability, transaction speed, transaction costs, etc., and all of these must be taken into account.
#3: Choose a wallet or payment gateway
A crypto wallet stores the coins, while a payment gateway makes it easy to convert the currency to dollars or preferred currency. Alternatively, many platforms offer wallet and payment gateway services.
#4: Integrate cryptocurrency payment into your website
Cryptocurrencies on e-commerce websites can be integrated using an API.
In conclusion, cryptocurrency in e-commerce is still a new concept that should be approached with caution. The advantages are quite tempting, but the disadvantages should not be overlooked. The concept of cryptocurrency as a means of E-commerce payment is still evolving, but the potential is still exciting.
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