Few things have created as much buzz in finance, investments and online retail as the steady rise of cryptocurrency. Since its emergence in 2009, “crypto” has gone from a niche financial asset to a mainstream form of currency with many online vendors accepting cryptocurrency. Even the U.S. government is recognizing digital currency’s rising value.
With its viability as a new form of payment, it seemed inevitable that the worlds of cryptocurrency and eCommerce would merge. That is exactly what has happened, as the rising popularity of cryptocurrency has forced eCommerce brands to pay attention. Many major companies and payment processors now accept cryptocurrency payments, and it is little wonder why. By offering a new payment option with iron-clad security features, brands are improving their customer experience and boosting sales.
So, what is cryptocurrency, and why should brands consider accepting cryptocurrency as a payment option?
Key Cryptocurrency Terms, Explained
For eCommerce brands considering this new payment option, the ever-evolving world of cryptocurrency can seem confusing and complex. And for beginners, the learning curve can be steep. So, to become familiar with all things crypto, it helps to learn the language and the working parts first. Here is a brief overview of common crypto terms:
Cryptocurrency (or “crypto”) is digital or virtual money used over the internet as a method of exchange or payment. Cryptocurrency transactions are verified by a decentralized network without a central server. Banks or government entities do not control it. Instead, encryption regulates its use, controls its release and keeps track of every transaction.
Cryptography protects cryptocurrency by allowing secure encrypted messages between two parties. It keeps data or information secret from third parties, which makes it nearly impossible to counterfeit or double-spend. Through cryptography, digital currency transactions are pseudonymous, secure and trustless.
Blockchain refers to a shared database that records all cryptocurrency transactions. Blockchain technology lets users safely share and store any digital currency, and the information it records cannot be edited or deleted. Cryptography links the data that blockchains store (known as “blocks”).
A crypto wallet is a software or physical device that allows for cryptocurrency storage and sending and receiving crypto transactions. Crypto wallets keep private keys — the passwords that give people access to their cryptocurrencies — safe and accessible.
Today, there are over 4000 cryptocurrencies available worldwide, the most popular being Bitcoin. Bitcoin was the original cryptocurrency, but the term “bitcoin” has become a generic name that refers to all cryptocurrencies.
The Rising Popularity of Cryptocurrency in eCommerce
Crypto is showing it has staying power and is poised to become a major player in eCommerce. Economic experts predict the cryptocurrency global market will reach $57 million by 2025. Today, nearly 4% of the world’s consumers hold cryptocurrency, and 18,000 global businesses accept it as payment. Such businesses include major brands like Microsoft, Starbucks, Coca-Cola, Tesla, Whole Foods and Home Depot. Even niche eCommerce brands like Etsy, Rakuten, Overstock and Expedia have jumped on the crypto bandwagon.
How eCommerce Brands Can Start Accepting Cryptocurrency
The good news for eCommerce brands is that adopting cryptocurrency is not complicated. In fact, accepting crypto payments is as easy as integrating a BTC payment processor that offers crypto as an option. Most eCommerce platforms already have existing integrations, making setting up crypto payments much easier.
The crypto payment process is not much different from credit or debit card transactions. The processor displays the price for each product in fiat currency, such as US dollars or UK pounds. The price is converted into the equivalent crypto value when the user selects cryptocurrency as the payment method. The transaction is then processed through a payment gateway like any other payment and permanently recorded by blockchain.
When choosing a processor and payment gateway, it is important to research available options. Brands need a solution that is compatible with their content management system. Popular crypto gateways include BitPay, Blockonomics, Coinbase Commerce, Coingate, Crypto.com Pay and NOWPayments. When in doubt, a brand’s eCommerce solution provider can offer guidance and advice in choosing the right payment processor and gateway.
Advantages of Accepting Cryptocurrency
Cryptocurrency’s fast, easy and secure transactions make it ideal for eCommerce. While not without its risks, crypto’s positive benefits often outweigh the negatives. For forward-thinking eCommerce brands looking for a new approach to payment options, implementing cryptocurrency offers many advantages:
Quick transactions: Blockchain technology allows for faster, more direct transactions that streamline cash flow. Unlike credit card transactions that require numerous fields at checkout, customers simply use their digital wallets to complete crypto transactions. Fewer fields and faster transactions lead to better checkout experiences and increased customer satisfaction and retention.
Increased market expansion: Accepting crypto transactions can widen an online brand’s target market and boost new customer traffic. It gives brands access to a burgeoning market of tech-savvy consumers who have created a thriving crypto community. Plus, international transactions become simpler, cheaper and faster, making for easier cross-border expansion.
Heightened security: Due to their complex encryption, cryptocurrencies are challenging to steal and counterfeit, which reduces the risk of fraud. Since money exchange occurs immediately, it cannot be rescinded or forged, protecting merchants from fraudulent chargebacks or returns. In this way, all crypto transactions can be compared to cash transactions, as they are final.
Lower transaction fees: Credit card transaction fees can range between 3-5%, a charge that brands often fold into their product prices. In contrast, cryptocurrency transactions often have little to no fees, averaging around 1%, which saves merchants the costs associated with payment processing. For consumers, the result can be lower prices and better shopping incentives.
eCommerce brands on the fence about accepting cryptocurrency payments need to think about the future. Understanding crypto’s vast potential can give eCommerce brands access to valuable opportunities for future business. Plus, brands need to consider the prospect of an emerging metaverse, where crypto will be the main form of payment. When it comes to the marriage of cryptocurrency and eCommerce, the future is now.
Brands thinking about the future need an eCommerce provider that can help take them there. Scalefast’s end-to-end eCommerce solutions offer brands customizable, enterprise-grade eCommerce platforms built for growth. Talk to one of our experts and schedule a demo today.