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From flight tickets, salaries, and tuition fees to Subway sandwiches and Elon Musk’s perfume — these days you can use crypto to cover most of your everyday expenses. Microsoft, Google, Starbucks and numerous other large brands are supporting crypto as a payment method. This list is expanding every day: It seems the current crypto winter and black swan events like the recent FTX collapse haven’t managed to halt the adoption of digital asset payments.
While BitPay reported a 15% year-over-year (YoY) increase in monthly transaction count in September, Visa’s crypto-linked card usage surged from $1 billion to $2.5 billion in payments between the company’s fiscal Q1 2021 and Q1 2022.
At the same time, our data showed an increase in transactional volume increased by more than 100% between Q3 2021 and Q3 2022, with a 94% growth in transaction count.
However, crypto adoption in e-commerce is happening at a slower pace. Considering its huge potential for crypto, will the trend of crypto payments’ adoption continue in the e-commerce industry?
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Should crypto payments be used in e-commerce?
First, while e-commerce has a continuously growing share of all retail sales, many large market players have overestimated the pandemic-fueled surge in this field. Meta’s Mark Zuckerberg is among them. He laid off 11,000 employees partly due to the tech giant’s false expectations that the digital shopping boom’s pace would not slow after quarantine’s end.
According to Statista Digital Market Outlook, e-commerce revenues were set to fall for the first time ever, with analysts expecting a 2.5% YoY decrease in 2022. Similarly to global e-com revenue, online grocery sales in the U.S. declined by 3.7% between October 2021 and October 2022.
Retailers must come up with new strategies to attract customers. And it seems the adoption of crypto payments might be one of the ways that could give a much-needed boost to the e-commerce market.
Many benefits to crypto
Compared to traditional payment methods like bank transfers and card payments, cryptocurrencies offer a wide range of benefits. Merchants can reduce costs while processing digital asset transactions with a payments partner at around 1% per transaction (compared to the 2.87% to 4.35% charged by conventional processors). And transactions arrive near-instantly to merchants’ accounts.
Moreover, digital asset transactions are secured by public-key cryptography and are executed by a decentralized network of validators via immutable blockchains. While analysts consider the latter computer systems highly secure, another advantage is that merchants do not face any risks of chargebacks with crypto payments.
Also, as crypto payments are truly global without geographical restrictions and surcharges for cross-border transactions, merchants can leverage them to scale their business and access more opportunities for international expansion.
Amazon seems to double down on crypto
If we look at e-commerce giants such as Amazon, we can see a strong interest in crypto that started years ago. Of course, this is also a big deal for the digital asset market. For example, last year, Bitcoin surged 14% after a new job posting signaled Amazon’s intent to dive deeper into the cryptocurrency industry.
In addition, the e-commerce giant participates in the ECB’s digital euro trial. These together signal a continuing strong interest in digital assets within the company.
Considering its 13% share of global e-commerce GMV, online retailers will likely follow in Amazon’s footsteps in this field. However, they have to move faster with crypto adoption to keep up with the pace of this trend.
The perfect moment for crypto adoption
While crypto prices are highly volatile at the moment, many individuals and industry projects see this as an opportunity for investments and preparations for an incoming bull run.
In addition to investors and crypto firms, online marketplaces and e-commerce brands should also think long-term and embrace the trend early. Like all industries, the cryptocurrency market is always going through cycles.
Since every new cycle comes with its own trends — such as NFTs, DeFi, Play-to-Earn gaming and others — e-commerce businesses will have more opportunities to capitalize on.
However, crypto adoption’s pace in e-commerce might indeed be slow. Online retailers might be asking themselves: Why should I integrate cryptocurrency payments if most of my clients use credit cards?
But this is a huge misconception. The number of crypto holders is rising rapidly, and those who refuse to adopt this innovation are missing out on a ludicrous opportunity. At the same time, you can leverage cryptocurrency payments to offer more ways for your customers to pay.
Crypto not too volatile
And here is another misconception: Crypto is too volatile to be useful for everyday payments. On the one hand, it is true enough that holders of “standard” cryptocurrencies like Bitcoin, Ether and Dogecoin face increased volatility risks. However, the statistics of BitPay show that Bitcoin accounts for 52% of the sales volume and 60% of the payments volume, respectively. Current crypto users are not afraid of price changes, and some even benefit from it during trading.
And if one still wants to ensure risks, they can use digital assets pegged to the value of major fiat currencies like USD and EUR.
Moreover, merchants can use the services of dedicated cryptocurrency payment processors to eliminate all risks of price volatility. These solutions freeze the exchange rate for several seconds at the time of customers’ payment and use it to instantly convert customers’ crypto to fiat currencies right after each sale. As a result, the processor takes on all volatility-related risks from merchants.
Big brands will speed up adoption
From fast and inexpensive fees to secure transactions and a lack of chargebacks, crypto payments offer a multitude of benefits for retailers. And as the largest market players are showing a growing interest in them, online retailers must embrace digital asset payment methods to keep up with the pace.
Eventually, the majority of big brands will adopt crypto payments. As they show the best practices for other market players, this will be the point where mass adoption will take off, giving e-commerce the much-needed boost for its international expansion.
Dmitry Ivanov is CMO at crypto payments ecosystem CoinsPaid.
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