• Vitaliy Shtyrkin, CPO at B2BINPAY


• 23.10.2024 12:15 pm
#ECommerce #CryptoAdoption

With over 833.70 million cryptocurrency users worldwide as of 2024, the integration of digital currencies into mainstream financial and e-commerce systems is just a matter of time. In fact, 50.6% of shoppers now believe that cryptocurrency is the future of payments, and 45.8% think that simply using crypto will help increase its overall adoption. 

For e-commerce businesses, cryptocurrency represents both a challenge and an opportunity. Although crypto adoption has grown, many businesses are still cautious about fully integrating cryptocurrencies into their operations. 

Instead, we might see a rise in hybrid solutions such as crypto on-ramps. By doing this, businesses will engage with the crypto space without fully committing to direct cryptocurrency payment processing.

Benefits of Full Crypto Implementation

Cryptocurrency exchanges typically charge lower fees than traditional credit card processors, with some exchanges charging less than 1% per transaction, and even 0.01% for transactions of stablecoins. To compare, credit card companies charge 1.9-3.5% — this can translate into significant savings for businesses with high transaction volumes.

Businesses can send, store, exchange, and accept digital payments anytime and from anywhere. This is particularly important for companies with global reach. What is also important is that in crypto transactions, there are no upper limits on transfers, which allows businesses to move any amount of money as needed, and transactions are processed much faster than traditional bank transfers.

Unlike traditional transactions, blockchain-based payments are irreversible, which reduces the risk of chargebacks—a common issue in e-commerce. For shoppers, privacy and security are also crucial, as crypto allows them to make transactions without exposing such private information as email, phone number, or other financial information. 

Offering cryptocurrency payments can also attract a new segment of tech-savvy customers and customers from regions with restricted access to traditional financial services or where currencies are unstable. So, e-commerce platforms that adopt crypto payments can capitalize on this growing market, increase customer loyalty, and expand their reach to a global audience. Especially since 39% of 26-35-year-olds plan to increase their crypto spending. Some e-commerce platforms already offer incentives such as discounts and rewards for using cryptocurrencies, both attracting crypto users and motivating others to adopt this payment method. 

So why haven’t more e-commerce businesses implemented full-fledged crypto processing yet? What is holding them back?

Barriers to Direct Crypto Integration in E-Commerce

The main reason is, in fact, just a misconception. Many think that to use crypto one needs to understand the basics of blockchain or the technical details of cryptocurrencies. However, if we look around, it seems that most people don’t fully understand the intricacies of traditional fiat payment systems either. But, yet, everyone uses them, right? It is just a matter of time when people will stop viewing cryptocurrencies as something distant and uncertain, belonging to a far-off, unknown future.

A real issue that can arise is the difficulty of automatically differentiating incoming payments from various customers. So, if a business only has five senders, it’s quite easy to track who sent the funds. However, when a company scales to 1,000 payers, it becomes impossible to manage using just a blockchain wallet without a transaction management system. The solution here is evident, yet not simple. It lies in the automatic generation of unique deposit addresses for each individual sender, which is essential for properly organizing and processing payments.

Another difficulty is that when payments are received in cryptocurrency, they remain as individual deposits, rather than being consolidated into a usable lump sum. For example, if 1,000 customers each send $100, the business ends up with 1,000 separate transactions rather than a consolidated $100,000. 

Also, due to the decentralized nature of cryptocurrencies, it is difficult to perform thorough anti-money laundering (AML) checks on incoming payments. Without KYT (Know Your Transaction) procedures, businesses have a risk of receiving funds from illegal sources. Even a small illicit payment can flag the entire wallet as connected to criminal activity, which will lead to the freezing of all funds.

The Future of E-Commerce and Crypto Adoption

Many users already distrust centralized institutions. Surveys show that 36.3% of shoppers are against government control of money, and 35.4% don’t trust banks. These numbers are expected to increase further. Hence, looking forward, the adoption of cryptocurrencies in e-commerce is expected to continue growing. By 2030, the blockchain-enabled retail market is projected to exceed $70 billion, with more than 8 out of 10 e-commerce industries like medical devices expected to offer crypto payments by 2024.

One of the most promising strategies for e-commerce businesses is to adopt a dual approach that combines direct crypto payments with crypto on-ramps. On-ramps allow customers to purchase cryptocurrencies using traditional payment methods and then use those digital assets to make purchases. 

The dual approach allows businesses to diversify their payment options while soothing the risks associated with cryptocurrency volatility. By offering on-ramps, e-commerce businesses provide customers with greater flexibility and accessibility, which can lead to increased sales and customer loyalty. This will benefit both crypto users and customers who are less familiar with the technology.