Cryptocurrencies & Ecommerce: 5 Reasons To Understand Why Blockchain Technology Will Be Embraced by Ecommerce Giants
Billions of dollars are spent globally on e-commerce transactions. Whether if you are dealing with a retail giant or a small business, e-commerce has completely changed the way on which we purchase services and products. However, until this year, many ecommerce giants & companies were reluctant to accept cryptocurrencies as a payment method. The good news is that that this trend has reverted so far during 2019 and we see some huge companies such as AT&T and Amazon joining the crypto revolution. AT&T for instance, is accepting payments using Bitpay and Amazon accepts Moonpay as a payment option. So, what’s going on? Which are some possible reasons that could explain why major companies and service providers are beginning to accept crypto as a payment method?
Let’s go over some 5 important reasons that could explain why the ecommerce landscape is evolving when it comes to cryptocurrencies as a payment method:
1 – Traditional Payment Services Have High Fees
With traditional payment methods, merchants are subject to high fees many times in the range of 3% to 6%. For a business that sells thousands of products on a daily basis, this percentage represents quite an important figure. To make things worst, traditional payment services usually charge small businesses higher fees since they have lower volumes. Blockchain technology can indeed help on the process of reducing merchant costs, as Lightning Network implementation and other significant technical improvements provide scalability to Bitcoin’s blockchain while at the same time reducing exponentially transaction fees. A win-win situation for both merchants and customers as traditional middle-man fees are removed and replaced for a tiny fraction of the usual costs on a blockchain (transaction fees).
2 – Traditional Payment Methods Sometimes Are Not the Best Option for Retailers
Traditional payment methods are many times slow compared to cryptocurrencies. Though a purchase can be finished within a few seconds, money doesn’t work many times at the same speed, as it can take up to a couple of days on some cases for funds to clear and be released to the merchant. These typical drawbacks don’t exist in the crypto world. As long as a transaction is included within a mined block that is included on the main chain with a certain number of confirmations, that’s all a merchant needs to move on. There are no banking hours, holidays, delays due to funds clearances, etc.
3 – Chargebacks
Chargebacks have always been a huge problem both for small and big retailers and e-commerce websites. When a chargeback occurs, funds are returned to the customer’s bank account. In almost all cases, the merchant has to deal with this problem and absorb the costs. Even if a customer reports that their card was stolen, the merchant has to return the funds and absorb the cost from its pocket. Worst scenario, would entail a merchant that gets its account closed because of an excessive number of chargebacks. Crypto-assets are much harder to steal (compared to traditional options) if the owners take the right security measures such as using complex pins, multisig & hardware wallets. This all drastically mitigates the risks both for the merchant and the customers.
4 – Volatility Is No Longer A Major Threat
Volatility has always been one of the main problems for conservative businesses. However, services like Bitpay and Moonpay (among many others), can immediately convert crypto into FIAT hence eliminating crypto volatility. Additionally, stable coins are also a widely used option that anchors a cryptocurrency to a FIAT currency such as the USD or alikes for stabilization purposes. Money On Chain for instance, is a Bitcoin collateralized stable coin that solves the volatility problem using Bitcoin’s network security through RSK’s technology.
5 – Young Population Bets on Cryptocurrencies on Many Countries
Last but not least, a big percentage of worldwide young population (in the range of 15 to 35) prefer to keep from a moderate up to a big portion of their private savings in the form of digital assets. Under this scenario and with a growing projected demand for crypto assets in the upcoming years, companies have to adapt to its new consumer preferences.
Will digital assets become a widely accepted payment option by all major industry players around the world? Time will only tell but if we have in mind that Overstock, Amazon, AT&T, eGifter, NewEgg, Microsoft and many other heavy-weights endorse this and you take in consideration that there a lot of well-known brands that offer crypto-funded debit cards for daily transactions, the future certainly looks promising for crypto & e-commerce.