As has played out over and over across the payments landscape, end-users ultimately want simplicity.
After all, no payment innovation can scale if it isn’t easy and intuitive to use.
That has proved to be troublesome for the adoption and utility of cryptocurrencies as a form of payment for everyday goods and services. Many blockchain and crypto adherents pride themselves on their engineering and technical know-how, embracing terms like “hashing,” “public/private keys,” “digital signatures” and “zero-knowledge proofs,” which are complex and not intuitive for most users.
For consumers, the process of setting up wallets, securing private keys and understanding blockchain technology can be daunting. For merchants, integrating cryptocurrency payment systems requires technical knowledge and resources, which can be a barrier to adoption.
But with the news last week (June 13) that Helio updated its Solana Pay plugin for Shopify to broaden the scope of accepted cryptocurrencies and introduce new merchant-centric features, the benefits and opportunities presented by cryptocurrencies in the eCommerce sector are waiting to be harnessed.
That’s because Shopify isn’t alone in supporting crypto payments. Other companies and platforms that accept crypto also include Newegg.com, PacSun, JomaShop, Microsoft and Dish TV.
Still, crypto payments in eCommerce are a trickle — not yet a flood. And a number of challenges must still be addressed for widespread adoption.
Read more: Stripe Is Bringing Back Crypto Payments, Citing ‘Real Utility’
One of the most compelling advantages of using cryptocurrencies in eCommerce is the potential for significantly lower transaction fees.
Traditional payment methods, such as credit cards and online payment platforms, often impose fees ranging from 2% to 3% per transaction. For small businesses and high-volume merchants alike, these fees can quickly add up, eating into profit margins. Cryptocurrencies, on the other hand, typically offer lower fees, especially for international transactions, making them an attractive alternative for cost-conscious merchants.
“It’s important to know that crypto is not just bitcoin and Doge and NFTs,” Sheraz Shere, head of payments at Solana Foundation, told PYMNTS. “… Blockchains are really alternative rails for payments and financial assets … An issue has been that the technology has not been user-friendly, it’s all been designed by engineers … to be very tech-centric and not use case or UX centric.”
Additionally, when it comes to crypto’s benefits, “a lack of familiarity can lead to a lack of comfort, which will often lead to a lack of adoption,” Ajay Rajani, vice president of expansion and crypto at Tala, told PYMNTS.
And in a digital age where instant gratification is increasingly the norm, the speed of cryptocurrency transactions offers a notable advantage.
Read more: Would You Sell Your House for Bitcoin? People Do
Traditional banking transactions can take several days to clear, particularly for cross-border payments. Cryptocurrencies can circumvent this delay, often processing transactions in a matter of minutes. This speed can be particularly beneficial for time-sensitive purchases, such as event tickets or last-minute travel bookings.
As it relates to cross-border payments, another crypto benefit is that cryptocurrencies are inherently global, not bound by national borders or subject to exchange rate fluctuations. This universality is a boon for eCommerce platforms that operate internationally, enabling them to accept payments from customers anywhere in the world without the need for currency conversion. For consumers, this means greater access to international markets and products, fostering a more interconnected global economy.
For merchants, one of the most appealing aspects of cryptocurrency transactions is the elimination of chargebacks. Traditional payment methods allow customers to dispute charges and potentially reverse transactions, which can be costly and time-consuming for businesses. Cryptocurrency transactions, once confirmed, are final, providing merchants with greater certainty and reducing the risk of revenue loss due to chargebacks.
Read more: Use Cases for Blockchain Gain Momentum as User Experience Simplifies
Despite growing interest, cryptocurrencies are not universally accepted. Many eCommerce platforms and brick-and-mortar stores still do not accept digital currencies, limiting their utility for consumers. For merchants, the limited acceptance of cryptocurrencies by suppliers and service providers can make it challenging to use digital currencies for operational expenses and supply chain needs.
The volatility of cryptocurrencies remains a significant hurdle. The value of digital currencies can fluctuate wildly within short periods, creating uncertainty for both buyers and sellers. For consumers, this volatility can impact the purchasing power of their crypto holdings. For merchants, it can affect revenue and profit margins, making it challenging to price goods and services accurately — as well as hard to decide which crypto tokens to accept.
Separately, scalability remains a significant challenge for many cryptocurrency networks. During periods of high network congestion, transaction times can increase and fees can rise, making it less efficient to use cryptocurrencies for payments.
Additionally, the relatively low level of understanding and adoption of cryptocurrencies among the general public remains a barrier. Many consumers are hesitant to use a payment method they are not familiar with, and educating them about the benefits and usage of cryptocurrencies can be a significant challenge for merchants.
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