The Benefits of Accepting Cryptocurrency PaymentsWendy Wang
Cryptocurrency is breaking barriers in the payment technology landscape. With the rise of digital payments, consumers now have the option to pay with cryptocurrency. Although cryptocurrency isn’t necessarily a new form of money, it delivers an entirely different approach to how consumers typically pay. In this blog post, businesses will learn the advantages of accepting cryptocurrency payments from customers — such as lower processing fees, reduced chargebacks, fast funding, fraud protection, and more.
What is Cryptocurrency?
You may have heard of Bitcoin, the most commonly used form of cryptocurrency to this day. But, what exactly is cryptocurrency? And how do we use it to pay for goods and services? Let’s get down to the basics. Cryptocurrency is a decentralized form of digital payment that is processed over the internet and operates without the presence of a central bank or government entity. Popular among investors, a recent survey revealed that one in 10 people in the U.S. currently invests in cryptocurrency. In addition to utilizing cryptocurrencies as an investment strategy, currency holders can purchase everyday goods and services with these digital tokens or coins. Since cryptocurrency transactions are not verified by a central bank, they are recorded in a blockchain — which is a form of ledger technology that hosts a virtual record book of all of your transactions. All assets can be traded and tracked through a blockchain network, while key data is stored securely and cannot be modified. This technology effectively mitigates risk, reduces fraud, and cuts down costs for all parties involved.
The Evolution of Cryptocurrency and the Rise of Cryptocurrency Acceptance Among Businesses
Introduced in 2009, cryptocurrency isn’t particularly new to the payment technology landscape. Though cryptocurrency is a long-standing payment option in the financial sector, innovations in additional cryptocurrencies and its rising adaptability by merchants have made it increasingly popular. Its rise to popularity began shortly after launching Bitcoin software to the public in 2009 along with popular alternative cryptocurrencies like Litecoin and Namecoin. By 2021, roughly 106 million people worldwide used cryptocurrency exchanges, and it was estimated that around 328,370 bitcoin transactions were processed daily last year. As cryptocurrency becomes more accessible and widely accepted among businesses, consumers are eager to adopt its broader scope of payment flexibility and lucrative investment opportunities. Some of the early adopters of cryptocurrency as a form of payment were WordPress, Newegg, Expedia, and Microsoft.
With cryptocurrency usage increasing and becoming more highly regarded as a legitimate payment method, businesses in a myriad of industries — including SMBs — have started accepting it as a form of payment. As a result, it has generated lucrative opportunities for merchants in industries ranging from retail, healthcare, food, travel, real estate, and many more. Today, more than 18,000 companies accept cryptocurrency as payment for their product or service. With the uptick in consumer demand, it seems likely that cryptocurrency acceptance will only continue to grow in the foreseeable future. In a recent survey conducted by PYMTS, more than half of respondents note that they are mainly interested in using crypto online, and a third of respondents indicate that they are interested in using crypto equally in-store and online.
The Benefits of Accepting Cryptocurrency
With cryptocurrency payments on the rise, more merchants are now looking to implement payment processing technology that allows them to accept cryptocurrencies. Although businesses can use their own digital cryptocurrency wallets to accept payments, working with a payment technology provider — like a payment gateway — shifts the regulatory risk when facilitating transactions. As previously mentioned, since there isn’t a financial institution regulating every payment, adding a payment gateway creates a “middle man” by providing an additional layer of responsibility for transaction management. Furthermore, customers can enjoy even more payment options such as credit cards and mobile wallets.
In addition to providing greater payment flexibility, the following are many more key benefits for merchants who choose to accept cryptocurrencies through a payment gateway:
Merchants can experience greater profitability and benefit from lower processing fees when accepting crypto payments. Notably, cryptocurrencies have lower transaction fees than credit and debit cards. Compared to credit card or debit card fees that usually incur 2-3% for each transaction, cryptocurrencies fees are generally less than 1%.
Dealing with chargebacks — which are customer filed disputes on credit card transactions — can be extremely burdensome and result in substantial revenue loss for businesses. Falling victim to credit card disputes, merchants lose billions of dollars a year dealing with costs associated with chargebacks. A Mastercard study showed that the global chargeback volume is expected to hit 615 million in 2021, and the total number of chargebacks filed in the US alone is estimated to grow to 409 million by 2023. Since cryptocurrencies aren’t facilitated by a bank or financial institution, there is no entity with whom the cardholder could file a dispute to reverse the transaction. If the customer wants a refund, they have to dispute their claim directly with the merchant.
Many merchants that want to start accepting cryptocurrencies are concerned about market volatility that could affect their funded transactions. To address this concern and protect against price volatilities, many crypto payment gateways will convert cryptocurrency transactions into U.S. dollars for instant and reliable payouts. Merchants can depend upon steady funding and mitigate the risks associated with market value fluctuations. Additionally, this casts a better safety net against inflation.
Cryptocurrency derived its name from cryptography, which is a technique to encrypt sensitive information and private keys. Private keys are given to currency holders that solidify ownership and access to their blockchain. To make a payment using cryptocurrency, the customer simply selects their digital wallet and authorizes the payment. There’s no need to provide sensitive payment information, as is the case with credit card payments.
Easy to Implement
Payment gateways that support cryptocurrency processing can easily integrate with e-commerce platforms, point-of-sale systems, hosted online checkout forms, billing or accounting software, and much more. These simple, all-in-one integrations allow for easy settlement and reporting for all transaction types.
Instant Cash Flow
Unlike the traditional credit card or ACH funding cycle which can take a few days, cryptocurrency payments are transferred in real-time as soon as the transaction is administered. This leaves merchants with faster access to assets on hand and a steadily revolving cash flow.
How Merchants Can Accept Cryptocurrencies
Merchants are positioning themselves to adopt innovative technologies that better serve the increasing number of cryptocurrency holders. A recent study revealed that more than half of cryptocurrency owners are more likely to buy from merchants that accept the payment method, and 47 percent of owners seek out merchants that accept cryptocurrencies. The report discovered that two-thirds of cryptocurrency owners and more than half of nonowners agree that not enough merchants accept crypto payments.
Whether you’re a large or small business owner, it’s relatively simple to start accepting cryptocurrency. Integrating with a payment gateway that supports cryptocurrency is a fool-proof solution for businesses that accept payments online, such as online storefronts and service providers that collect invoices. Businesses should look for a crypto payment gateway that not only facilitates immediate payments between the merchant and customer, but also provides greater functionality and convenience to all parties involved. The key benefit of using a payment gateway is the flexibility it provides for creating a custom payment collection process – whether that’s online checkout, invoicing, or subscription enrollments. Of course, these gateways also support other leading payment types such as credit cards and mobile wallets.
Another great option available to merchants who want to accept cryptocurrencies is to use a hosted checkout form like Cardknox’s PaymentSITE form. Hosted checkout forms can be easily embedded into an existing website or used as a standalone web page that can be shared via text or email. These forms are fast and easy to set up, and they are fully secure. Hosted checkout forms like PaymentSITE that support cryptocurrencies feature a cryptocurrency button alongside the standard credit card fields and mobile wallet checkout options. To make a payment, the customer clicks the cryptocurrency button, enters their information, and the payment is transferred instantly.
What the Future Holds for Cryptocurrency Processing
With the widespread adoption of cryptocurrency among key industry leaders such as Microsoft, Amazon, and Wikipedia, it is imperative that merchants are at the forefront of digital payment acceptance. We can only expect cryptocurrency payment technology to continue to revolutionize the way customers pay. As we’ve discussed in this blog, implementing a cryptocurrency payment processing system can add worthwhile value for merchants such as lower fees per transaction, reduced chargebacks, increased fraud protection, and accelerated cash flow. With cryptocurrency becoming more commonplace as a medium of exchange, merchants can future-proof their business and increase their bottom line by taking the necessary steps to bridge the gap between digital currencies and evolving consumer demands. By accepting cryptocurrency as a form of payment, you’ll be able to reach more customers, broadening your audience and exposure for your business. To find out more about our tailored solutions to prepare merchants for cryptocurrency acceptance, contact us today to help you get started.