Interest in cryptocurrency is growing, and fast. With some major brands like Visa recently announcing their adoption of this digital payment method, it is getting harder to ignore the impact crypto and blockchain technology could have on your eCommerce business.
Whether you’re just starting to learn about cryptocurrency or exploring how to accept this method of payment in your online store, it is important to keep on top of the trend that is unfolding. After all, awareness and understanding could help forge a valuable opportunity for your business in the future.
While some retailers might be skeptical about accepting crypto as they see it as a risk to their business, some see it as an opportunity to increase their bottom line. In this blog, we’ll explore the benefits and drawbacks that cryptocurrency presents, while also taking a look at how to accept them as payment on your online store.
Before diving into the pros and cons, it is imperative to first know what cryptocurrency is and why it is growing in popularity around the globe.
What exactly is cryptocurrency?
Cryptocurrency is decentralized digital money, based on blockchain technology. Unlike the U.S. Dollar or the Euro, there is no central authority, like banks or governments, that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet; which is part of why it is growing in popularity with corporations around the globe.
The cryptocurrency that started them all, is the one you are probably the most familiar with, Bitcoin; which was created in 2009 in a bid to decentralize the financial sector. Up until 2011, it was the only cryptocurrency in operation, but there are now more than 5,000 different cryptocurrencies in worldwide circulation, according to CoinLore. Some of the most noteworthy ones you might want to be aware of include Ethereum, Litecoin, and the living meme Dogecoin.
Cryptocurrency and the technology behind it are gaining traction in the eCommerce industry, and fast. But what are the benefits you should be aware of when considering accepting this type of payment on your online store?
Key benefits for considering cryptocurrency
A lot of trends come and go, but crypto seems likely here to stay, in some form. Not only can it help your eCommerce business expand its customer base but it can also increase its target audience, streamline your customer experiences, and more.
- Fast transactions + user checkout experience smoother: Blockchain, the technology behind cryptocurrency, is a distributed ledger that allows for quicker, more direct transactions that can help streamline your business cash flow. And for consumers, the immediate processing of cryptocurrency means orders can be shipped instantaneously and arrive sooner. Let’s walk you through an example. You are considering purchasing an SUV from a dealership. If you want to pay for your new vehicle the conventional way with cash or a credit card, you would have to deal with a financial institution; which comes with a lot of potential frustrations and wait time. However, if you choose to pay with a cryptocurrency, not only is it convenient and secure, but there is no middle man, no hold on the transaction and the payment is transferred instantaneously. This is already happening at independent dealerships around the country as customers are paying in full for their vehicles, instantly with cryptocurrency.
- Increase in traffic + opportunity to widen target audience: While many people buy cryptocurrencies as an investment instead of an actual payment method, others love buying products with cryptocurrencies because of the lower costs associated, more secure checkout, and the ability to have full control over their funds. By embracing crypto transactions you can widen your target market to these buyers leading to an increase in new customer traffic. It will also make it easier if you are looking to expand globally since crypto is not tied to a specific country’s exchange rate. This allows you to sell to merchants no matter where they are in the world with a single digital standard.
- Lower transaction fees compared to other options: The industry standard transaction fee from third-party gateways is normally 2.9% + $0.30. This fee is significantly reduced for cryptocurrencies to 1% if not lower; which is good news for you and your bottom line as it can help make your business more profitable.
- Clean, secure data: Blockchain technology not only increases accuracy but also decreases fraud. Unlike most traditional financial institutions, crypto transactional and consumer data is never saved on a single centralized service making it very difficult to steal or counterfeit. Also, crypto transactions do not require customers to input personal identifying information, which reduces the risk of fraud in digital transactions. You might find this beneficial for your marketing efforts. It might also help to avoid wasted spending.
- Crypto users are also very very loyal: The flexibility of having this payment option on your site enables customers to pay the way they want to, which provides a better all-around shopping experience and helps to increase conversion rates and reduce cart abandonment.
- Rise in value: Some of you might see the volatility of cryptocurrencies as a risk, which we will go into more depth in the next section, whereas some might see it as an opportunity for growth. The pie graph below from CoinMarketCap is just one example of how quickly Bitcoin, one of the most popular cryptocurrencies, has risen in value over the last couple of years:
Potential Setbacks of Incorporating Cryptocurrency Are Low
Despite cryptocurrencies being the latest trend in the online retail sector, there are pitfalls and reasons to be skeptical.
- Price volatility: We mentioned above that cryptocurrencies are currently on the rise in value, but the uncertainty of whether that upward trend will continue poses a risk for both businesses and consumers. In addition, if the value of a cryptocurrency has fluctuated since the time a consumer purchases and returns a product, things could get tricky.
- Customer confusion: According to a survey by Cardify, only 17% of investors that have bought cryptocurrency “fully understand” the value and potential of cryptocurrency. Not only do customers not fully understand the value, but they don’t understand how to use them. For instance, most consumers see cryptocurrency as an investment instead of an exchangeable asset. This perception will start to shift itself as more companies start incorporating crypto as a payment option similar to Tesla and Visa.
Payment Gateways Options for Accepting Cryptocurrency on Your Site
If you are considering accepting cryptocurrency on your site, here are some options to think about:
Magento 2 Payment Processing Service Options: ShapeShift is the newest third-party service offered on Magento 2 that processes transactions on your behalf. It aims to provide a fast, private and convenient way of swapping cryptocurrencies. This payment method allows you to accept Bitcoins, Ethereum, Litecoin, and over 300 other digital currency options.
Shopify Payment Processing Service Option: BitPay automatically converts payments to a currency of your choice (eight currencies available) and sends them directly to your bank account. A couple of cons of using BitPay is that they charge a relatively high transaction fee of 1%; which you will not see with ShapeShift and they only accept Bitcoin.
BigCommerce is also looking into developing an app that accepts crypto. Be sure to keep an eye on their progress in the event it meets your needs.
Bringing it All Together
If you are looking to expand your market share while also offering your customers a faster and more secure way to pay for your products and services, cryptocurrency could be the answer.
Keeping up-to-date with this trend will help you to adapt your eCommerce strategy quickly and get ahead of the competition. Ready to take your eCommerce site to the next level and incorporate cryptocurrency as a digital payment option? Connect with one of our experts today to discuss your needs!