People have been exchanging money, bartering, and taking part in other trades for purchasing goods and services since the beginning of time on Earth. Every day, trillions of dollars pass through different hands in the global financial market. However, over 45% of third-party payment service providers and intermediaries are victimized by payment fraud, resulting in dangerous losses every year.
Most E-Commerce firms rely on traditional means such as credit/debit cards, wire transfers, and so on to receive payments from customers, while banks concentrate on paper currency and conventional methods, making them vulnerable to cyber assaults and system breakdowns. This is where cryptocurrencies as a payment option may play a role in the resolution of a multitude of difficulties; because there are no banks involved and everything is decentralized, cryptocurrencies provide a safe and secure platform for processing payments.
Even most top payment service providers like PayPound have started accepting payments in cryptocurrencies, and additionally 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
Essentially, 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 which ensures that all data and information related to crypto transactions stay guarded and untouched.
Merchants and customers can make transactions with each other without involving banks, as these currencies are decentralized, and 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 miscalculate or alter any transaction data that may result in inaccuracies. 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, especially since apart from online businesses, crypto is increasingly being incorporated in offline payment systems also. Additionally, purchasing services and goods aside, people can even trade these digital assets to make significant profits.
How do cryptocurrencies affect the digital payments space?
As we read above, high-profile businesses and payment gateways 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 a hassle; they take a long time to process and also charge high fees for them. Whereas cryptocurrencies like Bitcoin can easily be converted to money at a low processing cost and quick execution times. This makes them better, quicker and more efficient for cross-border, international money transactions.
- 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 online, they’re more likely to enjoy its high processing speed and reduced risk of fraudulent transactions.
In addition, both merchants and consumers don’t need to worry about their personal information and transaction data. And because of its decentralization, cryptocurrency transactions do not need to follow international rules, bank guidelines, or trade restrictions, which helps businesses focus on improving their quality instead of worrying about payments. What’s more is that cryptocurrencies help in stabilizing unstable currencies.
- Increase in global remittance
Most money transfer firms like Western Union, Moneygram, etc., were really expensive and charged high commission fees from people who needed to send money to a different country. Besides, these transfers were never completed on time and were delayed in most cases.
Foreign money transfers and remittances are aided 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 occur at the speed of light 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 protected.
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. That said, businesses that implement its use will have the upper hand over competitors. Reputable payment systems like Mastercard have started supporting cryptocurrencies because around 40% of consumers worldwide were interested in using crypto as a payment option. Further 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 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 and 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.