Being an online merchant, you must have come across the terms blockchain and cryptocurrency on social media or from your friends and family. And with the buzz around it, you might have even considered accepting crypto payments on your store.
In fact, with global brands, marketplaces, and payment processors like Etsy, Starbucks, PayPal, and others announcing their adoption of crypto, this digital payment method is attracting more online retailers toward cryptocurrencies.
This makes it harder for anyone to ignore cryptocurrencies. You may not start accepting it as a payment method, but it is a good idea to be well-informed about it to make decisions when the time comes.
In this article, I will give you an overview of cryptocurrency – its advantages, disadvantages, and how you can start accepting crypto payments.
If you are ready, let’s start with the basics.
What is Cryptocurrency?
In simple words, a cryptocurrency is a digital form of currency (i.e., code-based currency) that is built on blockchain technology – a distributed open ledger managed by a network of computers spread worldwide.
The best part of cryptocurrencies is that they are not regulated by any central authority or financial institutions such as banks and credit card companies. It brings the power of financial management into the hands of users themselves.
Cryptocurrencies are secured by strong cryptographic algorithms which ensure safe online transactions for merchants and customers. It lets anyone buy goods and services online from anywhere without involving any middle agents like banks to complete the transaction successfully.
Advantages of Accepting Cryptocurrency Payments
Now let’s come to the most important question – Should you accept crypto payments?
Well, there’s no definite answer to this – it ultimately depends on your target customers; if they support cryptocurrencies, they are most likely to prefer making payments in crypto.
In fact, according to a report, 93% of cryptocurrency holders plan to use cryptocurrency to make purchases in the future. This is why I think every MSME business should be ready for this transformation in consumer purchasing behavior.
That being said, let’s take a look at the benefits of accepting crypto payments –
1. Attract tech-savvy consumers
If you want to target tech-savvy consumers, allowing payments in cryptocurrencies would be a great way to start. Even though with the ongoing crypto buzz, retail investors are also getting into the space, they are most likely into it to make money, not to use it for spending. They are tech-savvy or crypto enthusiasts who will be using it for online payments.
2. Broader Market Reach
Cryptocurrencies are borderless currencies, i.e., consumers from anywhere in the world can make online payments without any jurisdiction interference.
Another way to see it is that there are many countries where consumers don’t have access to banks, credit cards, and debit cards to make online payments. Crypto payment methods open doors for them to explore the world of online shopping. Thus, accepting crypto payments allows you to tap into an untouched market.
3. Faster Payment Processing
The payment processing duration between banks and credit card companies can vary from a couple of days to weeks. This creates a serious issue of cash flow for small businesses.
Cryptocurrencies solve this as the crypto transactions are processed in real-time i.e., you will receive funds instantly into your crypto wallets.
4. Lower Transaction Fees
The transaction fees incurred by crypto payment are significantly low in comparison to what traditional payment methods cost.
With cryptocurrencies, you may still have to rely on a third-party payment gateway such as NOWPayments, but you have complete freedom over how you want to accept payments & how much you are willing to pay.
5. Better Security
Unlike credit card payments, cryptocurrency transactions can’t be reversed unless the merchant does it themself. This gives online retailers much greater protection against eCommerce fraud and theft.
Disadvantages of Accepting Crypto Payments
With all the above benefits, cryptocurrencies have a fair share of risks and disadvantages that you should know before accepting them as a payment method.
So, let’s look at the two most talked about disadvantages that come with Cryptocurrencies payments for online business –
1. High Price Volatility
Unlike national currencies such as US Dollar (USD) or Indian Rupees (INR), the value of cryptocurrencies is not static. In fact, it is so volatile that the amount customers pay can drop in value the very next moment (or can rise to a higher value).
So, if you hold the crypto payments, the possibility of a significant drop in value is high; this can be frightening for small businesses that rely entirely on day-to-day earnings to pay for inventories, vendors, and employees.
However, to tackle this, popular crypto payment gateways also allow you to instantly convert crypto payments into stablecoins or fiat currency. This way, you will have a stable value for the payments you receive, but it will incur higher transaction fees.
2. No Consumer Protection
In the crypto world, once someone gets a hold of your crypto funds, there’s no one to help you recover them. However, in traditional payment methods, banks and credit card companies offer this security to consumers.
So, in case a merchant doesn’t deliver on its commitments, the consumer cannot ask the bank or anyone to recourse the transaction if paid in crypto. This can stop consumers from using crypto payments on newer sites. So, before you start accepting crypto payments, you first need to win the trust of your customers.
Popular Cryptocurrencies for Ecommerce Sites
There are over 10,000 cryptocurrencies in the crypto market, and the number is growing every day. This makes it literally challenging for anyone to keep track of all the currencies.
That’s why, for online merchants, I would recommend keeping your eye on the top 10 coins in the market. These coins are the most popular ones in the market, and it is most likely that your target audience is also holding them and can use them for payments.
Here are the 5 most popular cryptocurrencies that eCommerce brands are accepting as payment-
1. Bitcoin
Bitcoin is the first cryptocurrency that came into existence, and it is the most popular one as well. Its creator, Satoshi Nakamoto, drafted a whitepaper entitled “A Peer-to-Peer Electronic Cash System” in 2008. Nakamoto hoped to create a system that would decentralize the financial sector and give power back to people through a digital transaction system. The currency began to be used in 2009.
2. Ethereum
Ethereum is the 2nd largest cryptocurrency on the leaderboard after Bitcoin. A programmer, Vitalik Buterin, is the person behind the idea of Ethereum. He thought that Bitcoin and blockchain could be used to decentralize the entire financial ecosystem. And thus, Ethereum came into existence in 2014.
It is a decentralized public ledger for verifying and recording transactions. The network’s users can create, publish, monetize, and use applications on the platform and use its Ether cryptocurrency as payment.
3. Dogecoin
Dogecoin originated as a meme coin, but with the support from the likes of Elon Musk and Mark Cuban, it gained popularity and is now counted as a valid currency. The brands like AMC Theatres are already accepting it as a payment method.
However, there’s still a lot of speculation around its value and fundamentals behind it. So, do your due diligence before adding it as your payment method.
4. Litecoin
Litecoin is a cryptocurrency that was founded in 2011, two years after Bitcoin. The creator basically copied the code of Bitcoin and increased the maximum supply to 84 million coins.
When it was launched, the crypto community called it the lite-version of Bitcoin, and thus the name Litecoin came. Since its launch, it used to be one of the top 10 largest cryptocurrencies, but its rank slipped down as the crypto market evolved. However, because of its faster transaction speed and limited coins, many eCommerce merchants prefer to accept it for payments.
5. Stablecoins
Stablecoins such as USDT, USDC, and DAI are the type of cryptocurrencies that are backed by real-world assets like Gold or US dollars. Unlike other cryptocurrencies such as Bitcoin, Ethereum, and others, Stablecoins are not volatile in nature and usually stable in value.
Apart from these coins, there are several other ones that you can consider accepting on your eCommerce site. However, it is highly recommended that you do your own research about the currencies before adding them as your accepted payment method.
How to Accept Cryptocurrency Payments?
Accepting cryptocurrencies on eCommerce sites is simple and very easy. Several eCommerce platforms readily support crypto payments, such as –
- WooCommerce
- Shopify
- BigCommerce
- Magento
and the list goes on…
To enable crypto payments on these platforms, you will need a trusted crypto payment gateway that supports your eCommerce platform and allows your preferred currencies.
A cryptocurrency payment gateway enables customers to pay in cryptocurrencies and helps you with –
- Converting your crypto prices into regional currency to display on the checkout page.
- Automatically convert the crypto payments into fiat or stable coins (if you want)
- Safely transfer the payments to your crypto wallet.
- Invoicing and accounting for sales tax and regulatory compliance.
While choosing the right payment solution for your store, you must consider factors like transaction fees, payout frequency, supported countries, and customer support.
NOWPayments, Coingate, and CoinPayments are some of the most popular crypto payment gateways that support major eCommerce platforms and provide dedicated plugins and extensions for easy setup.
And, if you are using PayPal as your payment solution, you can now start accepting crypto payments from US customers and hopefully from other countries soon.
Finally, once you find the right payment solution for your eCommerce platform, connect it with the site, add product pricing and you should be ready to accept 100+ cryptocurrencies, including the ones mentioned above.
Ready to Use Cryptocurrency in Ecommerce?
Whether you are into cryptocurrencies or not, the truth is that the crypto market is growing, and it doesn’t seem to disappear anytime soon. In fact, I believe cryptocurrencies will be the mainstream payment method, if not today, maybe later, but it will happen for sure.
So, it is better to keep yourself updated with the latest trends in the crypto world and be ready to adapt to the transition in the payment method to stay ahead of the competition.
However, if you are ready to accept cryptocurrencies now, you will have to promote it heavily and educate your customers to win their trust. If you choose to do so, here are a few hand-picked articles that you should read next –
