Digital Wallets and Cryptocurrency: the Future of Money

Fintech is one of the fastest-growing industries in the world right now. It’s critical for DTC brands to stay up to date with cryptocurrency technology.

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Bitcoin turned 10 years old in 2018. Whether you love it or are indifferent, cryptocurrency is here to stay — for better or for worse.

There has been a lot of hype, especially in recent years, about the impact digitally native currencies and digitally native payment processes could have on eCommerce. How will digital money shape eCommerce in the years to come?

The question has as much to do with other forms of digital payment processes as it does with cryptocurrency itself. Certainly, the dominant payment methods, credit cards and bank cards, are 40-year-old technologies. Perhaps it’s time to innovate those payment methods, particularly across eCommerce channels.

And those innovations are certainly happening. Financial technology, or fintech, is one of the fastest-growing industries in the world right now. That’s why it’s critical for brands to stay up to date with those technologies.

This piece will explore what’s on the near and far horizons in terms of payments, and what this could mean for eCommerce.

What Cryptocurrency and Digital Wallets Can Offer Brands

Should direct-to-consumer brands even consider alternatives to established payment methods?  After all, credit cards and tools like Apple Pay aren’t broken. Why fix them?

For starters, not every national market has the infrastructure to support these methods of payment processing. A digital currency could level that playing field so you could sell just as easily process payments from customers in Norway or customers in Kenya.

Even a payment option like Bitcoin lets small and medium-sized eCommerce operations expand into new markets across the globe. “Small businesses have bigger access to people all around the world – businesses from developing countries can find their audience in developed countries and therefore improve their sales and reach,” Brenda Berg writes for fintech firm Medici.

Casey Hynes at Forbes writes that mobile wallets have had a major role in the growth of eCommerce in Southeast Asia, particularly Vietnam (and its nearly 100 million people). “Even consumers who don’t hold formal accounts can open a digital wallet and top them up via local vendors,” Hynes writes. “The more eCommerce retailers that accept wallet-based payments, the greater access for Vietnamese consumers — and the greater profits for the sellers.”

Further, Steven Buchko at CoinCentral points out that emerging payment methods like Bitcoin can reduce the risk of fraud and lower transaction fees.

A digital wallet alone could also reduce cart abandonment by offering customers simple payment options. “On an average, an online shopper may have to go through 5–10 steps to carry out a purchase,” writes Venkatesh Rajendran. “This is a big reason why the shopping cart abandonment rate is so high especially when people try to purchase things from their mobile apps.”

But the impact of digitally native payment processing goes well beyond a shop’s UX. In fact, digitally native payments could create a whole new set of customer behaviors and expectations. This is why Jack Rheude of 3PL firm Red Stag Fulfillment argues that eCommerce may be the driver toward completely cashless societies.

Digital Wallets and Cryptocurrency: DTC Brands Must Prepare for the Future of Money

Innovative Fintech: What’s Available Now to Brands and Customers

We know fintech holds promise for eCommerce, but what’s available now?

PayPal is almost considered a legacy payment option these days, but the company continues to innovate. PayPal has recognized the importance of cryptocurrency, according to Nikhilesh De at Coindesk. The company has been accepting crypto payments since 2014, and in 2018 filed a patent to speed up crypto payment — a big investment in the future of fintech.

In a more extreme example, Matthew Elmas at Inside Retail reports on Australian-based BitShopping, an eCommerce store accepting crypto as its sole form of payment. Somewhere in the middle lies M-Pesa, Kenya’s mobile-native payment system that has proven itself over the course of a decade — 18 million users and 6 billion transactions in 2016 alone.

But innovative fintech doesn’t necessarily require an entirely new monetary system. A payment request API, for example, lets a customer’s web browser serve as the payment interface. This is something between a normal payment gateway and a truly digital wallet. According to Peter O’Shaughnessy at Samsung’s web browser team, his company’s API is already available in Chrome, in development with Firefox and Safari, and being adopted by companies like The New York Times, Monzo and more.

“This is better than standard autofill; allowing the browser to handle the input fields means that it can be totally accurate,” writes O’Shaughnessy. In practice, a payment API could improve a store’s UX for the consumer and reduce cart abandonment rates.

Many industry experts agree that internet-native payment options can only add value to eCommerce customers by bringing flexibility to the exchange. “We intend to continue to push for consumers to move to digital payments with affordable offers, from easy instalments to instant discounts and cashbacks,” says Vikas Bansal, head of emerging payments at Amazon Pay.

But flexibility is not the only benefit. Digital payment options can make things simpler for consumers. For example, in 2018 Mastercard and Visa moved to offer a combined payment button — a direct competitor to PayPal’s one-touch payment option. The card companies’ payment button will give consumers a respite from the “clutter that exists of multiple buttons” on any given eCommerce site, says T.S. Anil, head of payment processing and solutions for Visa.

Digital Wallets and Cryptocurrency: DTC Brands Must Prepare for the Future of Money

Moving Forward: A Balanced Approach for eCommerce Brands

It is clear that cryptocurrency and digital payment technologies hold promise for the future of eCommerce. But as exciting as these technologies are, brands should not give into a fear of missing out. Instead, brands should ask themselves what precisely they want to get out of an innovative payment technology.

For starters, if a digitally native payment method can help build trust with your customers and open up new channels or markets, it may very well be worth the investment. But very few need to set up Bitcoin payment processing today. Rather, they should keep an eye toward what’s on the horizon so they’re poised to take advantage of emerging opportunities.

Images by: Benjamin Dada, Andre Francois, Seteales

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