If you own an e-commerce retailer or brand that caters to Gen-Z shoppers, then incorporating cryptocurrency as a payment method might be a benefit to your business. Cryptocurrency is a virtual form of currency that can either be invested or used to buy goods. It’s built onblockchain, a decentralized and distributed ledger that includes “blocks” of transactions that are safely connected into an uneditable chain (hence, the term ‘blockchain’). Cryptocurrency is forecasted to have347.73m users by 2027, and currently, the most popular form isbitcoinbut others, such as ethereum and dogecoin, have become prominent in digital marketplaces. So, how can a brand or retailer utilize cryptocurrency on their website and what are the pros and cons of making it part of your business model?
How to Incorporate Cryptocurrency into E-commerce Orders
There are a few ways in which brands and retailers can begin incorporating cryptocurrency as a payment option, both of which require a third-party exchange. Organizations should pick an exchange that integrates with their e-commerce platform and allows businesses to collect payments that can be converted intofiat currencyand bank withdrawals. Currently, Shopify, WooCommerce, and Magento, among others integrate easily withcryptocurrency exchanges.
Suppose a brand or retailer would rather not rely on a third-party exchange and would prefer to receive cryptocurrency manually. In that case, they will have to create a Bitcoin address for each website purchase and offer instructions for the amount of money shoppers should send. However, this can produce a lot of confusion and headache for both the businessandits customers.
Advantages of Incorporating Cryptocurrency
So, what are some of the reasons to include cryptocurrency in your e-commerce payments?
We all want our products as quickly as possible, and crypto payments allow for a much more seamless transactional process. When purchasing with crypto, there is immediate, precise data regarding the shopper and inventory levels; this heightened processing speed enables quicker purchasing times and therefore, faster delivery. Crypto also allows merchants to get their funds immediately after a shopper purchases an item without having to depend on a middleman while maintaining a record of the transaction.
Blockchain’s decentralized and distributed ledger systems enable participants to check and validate the authenticity of a product, activate or validate the product across the global supply chain, and determine fraud. Additionally, blockchaingives insightinto refurbished items, such as the number of people who have handled the product and the number of times it was returned. This could be a potential value-added system to track high-end electronics like mobile phones.
Since blockchain enables data procurement, brands and retailers can more seamlessly cater to their shoppers in a more personalized way, nurturing loyal customers.Personalizationis the backbone of today’s successful brands and retailers, so the more creative companies are with enticing repeat customers and securing loyal shoppers, the better off they’ll be in the eyes of consumers.
Traditional e-commerce payments go through a financial model via credit cards or debit cards, which unfortunately include high transactional fees, fraud, and delayed payments. There is an increase in e-commerce chargebacks due to various conditions, invalid credit cards, and purchases with stolen cards. However, crypto payments have minimal processing fees and a reduction in chargebacks due to real-time, fast, secure, accurate, immutable distributed data for validation and confirmation.
Disadvantages of Incorporating Cryptocurrency
As with any innovation, there are some disadvantages to using cryptocurrency that brands and retailers may want to consider before they decide to add it as a payment option.
No Steady Value
Cryptocurrency value changes from one moment to the next, sometimes by thousands of dollars within a few hours. This rapid fluctuation could mean that a customer buys a product with a fair price using cryptocurrency one minute, but if the value takes a dive, brands and retailers may lose money.
Because cryptocurrency is such a new frontier, rules regarding taxes and fees may be complicated and differ from territory to territory. This lack of uniformity may create even more confusion when filing a US tax return, for example, since the IRS now expects businesses to disclose whether they use cryptocurrency.
It’s Not the Norm (yet)
Cryptocurrency is still a new form of payment; as a twenty-nine-year-old avid online shopper living in a huge metropolis, Istillhaven’t used it! Therefore, brands and retailers should consider their target audience. If they sell products that are geared more towards older, less tech-savvy consumers, then it may not be an intelligent business move to spend the time incorporating cryptocurrency into their organization. However, if a brand or retailer targets technologically adept Gen-Z or millennial shoppers, it might be worth investing in this new form of payment option.
As the e-commerce landscape continues to grow and change, cryptocurrency is destined to become a more popular form of payment, with250,000 transactions per dayin 2022. It’s up to brands and retailers to decide whether they want to add this innovation as an option or wait a bit longer to begin incorporating it into their business plans. But as more and more netizens utilize crypto, it is key for every brand and retailer to stay in the know about this type of currency and blockchain in general.