Nine reasons cryptocurrencies are gaining significance as payment methods.
Rising Significance of Cryptocurrencies as Payment Methods
Payment in the business world has witnessed exponential growth in the last few years. The recent emergence of different payment models across eCommerce and brick and mortar stores has ignited the growth of dozens of payment processing companies to a billion-dollar valuation. Think fintech, artificial intelligence, big data cloud computing, blockchain, and cryptocurrencies as the key drivers of payment systems. Cryptocurrencies began the ‘blockchainification’ of enterprises, ushering consumers into the world of cryptocurrency payments.
Today, the payment industry is powered by mobile devices, personal computers and takes place either on the go or at home. Stores are open 24/7, and consumers are shopping almost every other minute. In this post, you will find the top reasons why cryptocurrencies are gaining significance as payment methods.
The blockchain takes minutes or even seconds to fully validate a block of transactions—methods such as banks and some payment applications subject users to waiting times exceeding hours to days. Cryptocurrency transactions are instant, real time and more convenient for both customers and businesses. For example, XRP, which is considered the fastest digital currency, can process over 1,500 transactions per second. The average ledger settlement or approval time for XRP is between 3-5 seconds. Other fast cryptocurrencies include EOS, Ethereum, and NEO.
Cryptocurrencies are not subject to large amounts of transaction fees. An enormous business might spend hundreds of thousands of dollars over the years in processing traditional payments. But with cryptocurrencies, this spending might be slashed by 75%. Thereby saving lots of extra cash for a business. Withdrawing crypto through a P2P network is also affordable compared to withdrawing cash through a traditional bank.
Broader Customer base
Introducing a new technology will automatically attract followers of that particular technology. Therefore, crypto-savvy people are likely to buy from your business once you introduce cryptocurrencies. Besides, flexible businesses that adapt to changing technology are customer-oriented and will attract more customers.
Discourage Abandoned Carts
According to Sleek Note, roughly 70 percent of online shoppers will abandon a cart. 55% of whom will abandon the cart due to having to re-enter credit or payment information twice. The study also suggests 65% of online shoppers will abandon a cart due to poor check-out user experience. This indicates roughly out of every ten shoppers, seven won’t complete a purchase. Accepting cryptocurrencies at checkout simplifies the payment process and reduces the abandonment of shopping carts. This also increases conversion and purchases.
Simplifying Cross-Border Payments and Business
Cryptocurrencies can be used globally because they are universally accepted. They are not limited by location, and their spending is also flexible. Payment is also instant and not bound by geographical distance. This means your business is going to interact with a new global market, hence increasing conversion. Furthermore, cryptocurrencies are easy to implement within a business. You can even find a third-party payment business willing to do all the work for you. In fact, more payment processors have begun supporting crypto features.
Preventing Fraud cases
Fraud intervention and prevention is an inbuilt mechanism in cryptocurrencies. This means fraudulent people will not ask for chargebacks even where goods have already been sent. Most traditional payment methods are highly affected by chargebacks, where someone reclaims money for goods sent and still retains the goods. The blockchain is immutable, which means a transaction, once completed, cannot be changed or altered. Thereby preventing such things as chargebacks. Furthermore, it is impossible to execute a transaction on the blockchain without funds in the first place -- which also reduces the chances of chargebacks and frauds.
Cryptocurrencies are centralized, while they are inherently volatile - the volatility is not influenced by parties or controlled by an entity as with fiat currencies. The circulation of cryptocurrencies is also not under the control of central banks or entities, who might manipulate the supply to their advantage. This makes digital currencies a safe haven in case of bad economic times. Remember, no other form of payment brings control to the average user and makes a user a central part of validating transactions within the ledger.
Crypto is Already Mainstream
Cryptocurrencies have already gone mainstream. An estimate by Statista suggests over 90% of Americans have already heard about Bitcoin. Institutions are already investing in cryptocurrencies, including Tesla and Microstrategy. Leading banking institutions in the United States, This such as Goldman Sachs and Morgan Stanley, are helping their wealthy clients learn and invest in cryptocurrencies. Both banks rolled out a bitcoin fund this year for aggressive risk-tolerant investors. A study shows at least 4 of every ten people are likely to make payments in crypto. This suggests the potential market that is up for grabs when a business begins accepting crypto.
Traditional finance has been the preferred method of payment for making both offline and online payments. And this has been the norm for a decent amount of time. However, the advent of cryptocurrencies is driving more users towards instant and affordable transactions through this revolutionary method. In fact, an art auction by the world’s most famous auction house called Sotheby became the first art auction to accept Bitcoin as a payment.