Cryptocurrencies and blockchain have been among the most-hyped technologies over the past year. There’s little denying how the technology has brought about disruption in various industries. Even traditional institutions are now working on their own blockchain-driven efforts.
Unfortunately, only a select number of smaller businesses are jumping on the crypto bandwagon. In fact, smaller enterprises often see little reason to digitize their processes much less adopt more bleeding-edge technologies such as blockchain even though digitization has become all the more important to any venture these days.
Consumers are now quite tech-savvy and expect businesses to at least have a channel that could handle online transactions. This is why players in the payments sector have been quite aggressive in building and improving upon their respective platforms in order to accommodate the diverse ways consumers prefer to transact and pay.
Cryptocurrencies may have their fair share of criticisms when it comes to payments. Leading coins like Bitcoin and Ether often suffer from long confirmation times. Their prices can also be too volatile for merchants to support. Fortunately, subsequent crypto projects and ventures now offer ways to address these limitations.
Crypto adoption is increasing. As such, business entrepreneurs should finally consider committing to blockchain adoption even if only to support crypto-based payments.
Here are four reasons why.
1 – “Stablecoins” and pegged cryptocurrencies
Volatility has been an enemy of cryptocurrencies as payment method. The price of cryptocurrencies can swing wildly within the course of the day making it difficult for merchants to manage prices and anticipate its impact on cash flow.
Stablecoins and pegged cryptocurrencies now offer ways to solve these issues. These cryptocurrencies are pegged to the price of a particular commodity or asset. Tether‘s USDT, for instance, is pegged to the US dollar. These cryptocurrencies make spending easy for users since they don’t have to worry about computing prevailing crypto prices or conversion rates.
More recent projects like T.OS seek to provide means for each territory to have crypto coins pegged to the local currency. The project’s T.OS Payable (TOSP) token essentially works as blockchain-based e-money that merchants could easily use and support as a payment method. Businesses also don’t have to worry about currency fluctuations since the tokens are pegged to the local currency. T.OS also uses a hybrid blockchain that makes transactions speedy.
2 – Increasing utility
Crypto payments are already gaining significant traction thanks to projects that bridge the gap from traditional payment methods. Ventures like TenX make crypto assets spendable even for day-to-day transactions. These services offer cards that are funded by users’ crypto assets which can be used in point-of-sale terminals and machines that support card payments.
Merchant services for blockchain payments are also increasing. BitPay, for instance, offers means for merchants to accept Bitcoin and Bitcoin Cash as payments. It also has integrations with popular shopping cart services and engines used by many e-retailers like Shopify and Magento.
Crypto payments services also typically charge cheaper rates compared to traditional card companies. They also provide easier means to convert merchants’ income from crypto to fiat giving businesses better liquidity for their cash flow.
3 – Chargebacks and fraud protection
Another key advantage crypto payments bring is security. Crypto payments inherently feature blockchain’s capabilities such as transparent record keeping. Businesses transactions can easily be tracked, audited, and validated.
Chargebacks have become a plague for businesses today especially with the rise of digital transactions. Fraudsters would typically use stolen card information or simply demand refunds in order to get the items for free. Card companies often rule in favor of these “customers.” Merchants are left shouldering the cost of lost goods and even shipping. Merchants can lose eight percent of their annual revenue dealing with fraud.
Unlike card transactions, crypto payments are irreversible and final. Crypto payments services are now also integrating blockchain-based identity in order to bolster fraud prevention. These help merchants avoid the risk of chargebacks.
4 – A “crypto rich” market
Supporting crypto payments also gives businesses access to the new “crypto rich” demographic. Early adopters of coins such as Bitcoin and Ether profited greatly from the meteoric rise of prices of these coins.
However, the options to withdraw and convert them to fiat currencies remain limited. Most exchanges have daily withdrawal and transaction limits. Anti-money laundering laws also vary per territory that cashing in just one Bitcoin can be a red flag considering its price in fiat.
Asset holders are left with little choice but to spend their crypto assets through businesses that support them. If a business accommodates crypto payments, then it has the opportunity and serve a segment that has the purchasing power and wealth to be repeat and loyal customers.
What’s there to lose?
It is understandable for businesses especially smaller enterprises to be more prudent in adopting new technologies. However, the advantages of supporting crypto payments are now increasing and the typical pain points of early adoption are now being addressed by newer services and projects.
Business owners must carefully understand that the upsides of supporting crypto as payment option for their customers are only increasing. Adopting these payment solutions may even become their competitive advantage as consumers begin to embrace crypto.
The difficult thing is not to learn, the difficult thing is to know how to teach.
Editor and coordinator of the free book “La era de las BLOCK punto COM”
CEO of bitcoiner.today