Unless you’ve been living under a rock, you will have no doubt felt the buzz surrounding blockchain and cryptocurrency. The rise of digital wallets is making way for more convenient and instant payment systems, and as a result, disrupting the way we conduct business. Given cryptocurrency is automatically converted into local currency for merchants when using a payment processor, accepting this form of payment can be pretty seamless for retailers. Despite this, most are yet to get on board.
If you’re an e-commerce retailer selling online, adopting cryptocurrency as a payment method can enhance your customers’ journey and expand your consumer base by offering more choices at the checkout. To get started, here’s are a few reasons to implement this service into your e-commerce business.
What is Cryptocurrency
To start, it might help to define cryptocurrency. Plain and simple, cryptocurrency is a digital currency that is not controlled by any bank or government but rather uses encryption techniques to regulate its use and generate its release.
Every transaction that occurs is verified by users on a network, and generally those transactions become public record to prevent the coin being spent multiple times by the same user. The key to using cryptocurrency is understanding that each coin is unique and some coins offer more protection and privacy than others.
How to use Cryptocurrency in eCommerce
E-commerce and cryptocurrency complement each other quite nicely since they share the same home, and both appeal to the digitally-savvy user. As an e-commerce retailer you should view cryptocurrency the same way you view your business. It’s an additional option for those looking for a fast and more convenient way to pay for goods and services. This shows the high demand for digitally-based payments among an online consumer base.
With cryptocurrency there is no need to go to a bank, withdraw money or even enter a credit card number before submitting a payment at checkout. The same demand that has propelled the online retail world is driving digital payments and, if done so the right way, this could serve as a great compliment to your existing services.
Benefits of Cryptocurrency in E-commerce
- Broader Market
Accepting cryptocurrency as a payment method will give you access to a whole new market of tech-savvy consumers who have created a community within the cryptocurrency market. Given the option to pay through a digital wallet or a credit card platform allows you to dip into broader markets and appeal to consumers all around the world.
- Fast Transactions
Unlike credit card systems that take a few days to batch out and process, cryptocurrency is processed immediately, giving you instant access to funds. Fast transactions can help streamline your businesses cash flow.
- Low Fees
Another benefit of offering cryptocurrency as a payment method are the low fees associated with each transaction. The fees can range depending on whether you accept cryptocurrency to your personal wallet or through a third-party provider like Coinbase, but you will likely still find them significantly less than the fees of services like PayPal or Credit Card providers.
- More Security
After you complete a transaction with cryptocurrency it becomes difficult to reverse, unless you have the consent of the merchant. This offers retailers more security when it comes to ecommerce fraud, since there is no middle force, such as a bank, that is able to withdraw the funds from your account without your consent.
How to Accept Payments in Cryptocurrency
There are two ways to accept cryptocurrency in your e-commerce store: through your personal wallet or through a third-party payment processor.
If you’re going to accept cryptocurrency through your personal wallet, you’ll need to step up a virtual wallet. Most wallets can be quickly downloaded to your phone or computer, or you can get a hardware wallet. A hardware wallet is a physical safe that stores the cryptocurrency in the device on a special hard drive. It’s really the only secure hardware device that lets you store a user’s private key.
Otherwise you can use a third-party payment processor, such as Coinbase or BitPay, and they will handle the entire payment process, just as credit card payment processors do. One benefit of using a third-party payment processors instead of a personal wallet is that they can instantly convert the cryptocurrency into fiat, saving you from any price volatility. Choosing a wallet and provider can be a tricky process, so you can begin your search with more well-known wallets, such as Coinbase or Copay. Remember that not all wallets and exchanges are reliable since anyone can start their own cryptocurrency trading exchange platform. If you're interested in doing this, you can look into hiring a blockchain developer.
Top 4 Cryptocurrencies to be Aware of
Digital currencies are an ever-changing realm, with new currencies being launched weekly and current currencies constantly losing and gaining value. As of mid-July 2018, the below coins are the top four largest currencies based off of market capitalization:
Bitcoin is the coin that started it all. Before coming to life its creator, Satoshi Nakamoto, drafted up the idea in a paper 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.
Ethereum was a coin created based off of the invention of bitcoin. Its creator, Vitalik Buterin, wanted to develop a platform that would transform the internet entirely. He imagined Ethereum to be a platform that would be used for more than the financial transactions than Bitcoin allows. The Ethereum platform is now a place for developers to create decentralized applications such as contracts or codes without using third-party platforms.
XRP, also known as Ripple, is an independent digital asset that is housed in the decentralized cryptographic XRP Ledger, which is run by a network of peer-to-peer servers. XRP was designed for users to send money digitally and not be subjected to the high transaction costs and conversion times that bitcoin has. XRP can be publically bought and sold, and is a coin that allows people to send money quickly all over the world, in a secure way. Often times XRP is confused with its creator, Ripple Labs, but it should be known that the currency is completely independent.
While Bitcoin Cash is very similar to Bitcoin, there’s notable differences that set them apart. Bitcoin Cash allows for more transactions to be processed by increasing the size of the blocks. By increasing the number of transactions Bitcoin Cash hopes to be able to compete with the industry giants like Visa and PayPal.
To learn more about accepting payments in your website, you can download our free ebook on Digital Wallets and Alternative Payments below.