Most websites accept many different payment options. They take Visa, Mastercard, Amex, Paypal, Amazon Payments, debit cards, and other forms of payment. Some websites even accept ACH transactions. But these are all ways to transfer fiat currency from one person to another. What about crypto?
The Benefits of Fiat Currency
The beauty of fiat transactions is that they are universally accepted. Billions of people have bought into government-backed stores of value. They trust the brand of a country like the United States as a stable entity that brings value. People recognize the US dollar, the Euro, and other capital as a legitimate currency that will hold its value. These countries and organizations have been around for a long time, and using credit cards and other tools to convert fiat into tangible goods feels natural to most people. Furthermore, as a consumer, you have some protection when it comes to credit card transactions. If a merchant fails to deliver, you often have recourse. You can demand a refund, and you’ll often get it. This can be a problem for online merchants in particular.
Ecommerce Transactions and Crypto
If you’re a merchant and you accept credit card payments (as do most ecommerce vendors), then you’ve likely experienced some chargebacks. You provided a good product or service to your customers, yet for whatever reason, some of them reversed the charges, costing you money. While this is great for consumers, it is not always good for merchants. Sometimes, this is straight fraud. Other times, there was just a communications problem, and when that happens, merchants lose. Crypto is different.
If a customer buys merchandise using Bitcoin, Ethereum or some other cryptocurrency, the sale is generally final. They cannot reverse those transactions once the funds hit your digital wallet. You as the merchant should of course provide good customer service. You can therefore refund orders when honest customers make such requests. But now, you can also reject shady requests for refunds, and you eliminate the chargeback problem.
Some industries have fully adopted Bitcoin as a method of payment. For example, credit card companies don’t generally approve some types of products, despite their legality. As a result, adult entertainment companies, CBD, and the lesser known kratom companies will accept bitcoin as payment.
One drawback to crypto transactions is that they can be expensive. Each digital currency has its own rules about mining fees for transferring coins from one wallet to another. Bitcoin is notorious for this, though the somewhat new Lightning Network has helped to solve this problem. On the other hand, some cryptocurrencies are very cheap to process. For example, Ripple costs $0.0037 per transaction on average. Compare this to the 2-3%+ fees that credit card processors will charge, and the savings can be enormous.
There is one major problem: crypto is volatile. Bitcoin can drop 20% or more within one day, due to market activity. As a result, many merchants will immediately convert their crypto to fiat to mitigate the associated risk.
Will the Martech Industry Adopt Bitcoin & Crypto?
While it’s still relatively new, it’s already happening. Merchants are slowly accepting crypto on their websites, and it’s growing. In fact, as the dollar has been losing value in the pandemic economy, people have been shifting their savings into gold, silver, … and crypto. Merchants that accept Bitcoin and other digital coins will benefit from this growing market.
