People have been purchasing goods and services by exchanging money, barter system, or other forms since life began on Earth. Trillions of dollars change hands every day in the global financial market. However, over 45% of third-party payment service providers and intermediaries suffer payment fraud and huge losses every year.
Most E-Commerce businesses use traditional methods like credit/debit cards, wire transfers, etc., to receive payments from consumers. Paper currency and traditional methods are centralized under banks that makes them vulnerable to cyber attacks and system failures. This is where cryptocurrency as a payment option can help solve multiple issues.
As time passes by, people tend to change their modes of payment. E-Commerce platforms are open for business 24 hours, and people prefer online payments these days. Cryptocurrencies offer a safe and secure portal for making payments as there is no involvement of banks, and everything is decentralized.
Even most top payment service providers like PayPound have started accepting payments in cryptocurrencies and also offer trading. Ever since the inception of cryptocurrencies, especially Bitcoin, they have rapidly gained popularity worldwide. It is the future of digital payments, and the sooner E-Commerce businesses adopt it, the better.
Understanding cryptocurrency payments
Basically, a cryptocurrency refers to a digital token that is stored using shared ledger technology called a blockchain. The blockchain is maintained through complex algorithms and powerful computers. This makes it difficult to alter or change the blockchain. All data and information related to crypto transactions stay safe and untouched here.
Merchants and customers can make transactions with each other without involving banks, as these currencies are decentralized. Apart from purchasing services and goods, people can even trade these digital assets to make a profit. Every transaction is transparent because the transaction history and address of cryptocurrency holders are public.
There is very little human input in crypto payments, and this minimizes the risk of errors. Multiple network nodes examine and confirm crypto transactions which makes it impossible to change or alter any transaction data. Currently, blockchain-based payments are slow, but work is in progress to accelerate the cryptocurrency payment market.
With over 2300 cryptocurrencies currently in circulation, there is no doubt that we need to start using them in our day-to-day life and business. Also, apart from online businesses, crypto is increasingly being incorporated in offline payment systems also.
How do cryptocurrencies affect the digital payments space?
As we read above, high-profile businesses and payment getaways have started accepting cryptocurrencies. This is because of the various advantages it has over traditional payment methods. Here is how cryptocurrencies can shake up the payments space.
· Make international transactions simple
Conventional or traditional payment systems make international transactions and money transfers really difficult. Cryptocurrencies like Bitcoin can easily be converted to money at a low processing cost and quick execution times. This makes them better for cross-border, international money transactions.
Most traditional methods take a long time to process international transactions and also charge high fees for them. Cryptocurrency payments make cross-border transactions much easier.
· E-Commerce businesses are strengthened
During today’s digital age, most people prefer to shop from online stores and E-Commerce businesses. When people start using cryptocurrency to buy stuff online, they will get used to it because of its high processing speed and reduced risk of fraudulent transactions.
Both merchants and consumers don’t need to worry about their personal information and transaction data. Also, as cryptocurrency is decentralized, it does not need to follow international rules, bank guidelines, or trade restrictions. Businesses can focus on improving their quality instead of worrying about payments.
· Increase in global remittance
Most money transfer firms like Western Union, Moneygram, etc., were really expensive as they charge high commission fees from people who need to send money to a different country. Moreover, these transfers were never completed on time and were delayed in most cases.
Foreign money transfers and remittances are helped a lot by cryptocurrency transactions as they occur almost instantly in real-time and do not charge high commission rates. Users can also process money transfers directly from their smartphones which was not possible using old money transfer companies.
· Faster and secure transactions
Crypto payments are very fast and are processed in negligible times as compared to other payment options. You do not need to wait for several days or weeks for your payments to be processed and completed. Most common methods like bank transfers, credit/debit cards. Etc. are centralized and at risk of security failures.
This is not the case with crypto transactions because all data is stored on a decentralized blockchain. It is almost impossible to mess with this blockchain which makes transactions totally secure and safe. Also, cryptocurrencies help in stabilizing unstable currencies.
· Expand to a bigger market and audience
A study shows that the crypto payment industry will increase by 25%, up to $4.4 Trillion, in the coming four years. Thus, businesses that implement its use will have the upper hand over competitors. Popular payment systems like Mastercard have started supporting cryptocurrencies because around 40% of consumers worldwide were interested in using crypto as a payment option.
Over 75% of youth want to know more about digital assets and their uses. Thus, by providing cryptocurrency payment options, you can attract more and more users and expand your business to a newer, more sophisticated audience. Cryptocurrencies promote freedom and treat a person from one country and another from another country equally.
People prefer making payments in a secure way that reduces the risk of fraud and money laundering. Based on the needs and requirements of today’s population, cryptocurrencies are emerging as the best payment option for both merchants and consumers.
As we read above, there are lots of benefits of using crypto for making payments over traditional methods. It is nice to see that high-security payment systems like Mastercard, PayPound, etc., have started accepting cryptocurrencies for faster and secure transactions.
It is certainly an effective and cheaper payment option that will be used by most E-Commerce and offline businesses soon. Cryptocurrencies are changing the digital payments landscape and will continue to do so. The sooner we adapt, the better for us.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Fast Amplify journalist was involved in the writing and production of this article.