How Cryptocurrencies Will Impact The World of E-Commerce
While many companies are still not ready to embrace the concept of digital currencies, others are already dipping their toes into this colossal trend.
Today, cryptocurrencies are now seen as viable payment solutions in the global market. In fact, increasing numbers of online merchants are adopting these blockchain-powered technologies that are said to bring invaluable benefits, such as added security, increased flexibility, and improved operational efficiency. Even blue-chip organizations like Tesla, Microsoft, Amazon, and PayPal have already jumped on the bandwagon, helping to bump up the market value of cryptocurrencies to over £1 billion.
It cannot be denied that digital currencies can potentially become integral components of the e-commerce industry in the coming years. But while it might take a while before they become commercial standards, experts believe that businesses can hugely benefit from exploring these revolutionary solutions right now. But what key benefits can e-commerce businesses actually gain by integrating these modern payment solutions?
Reduced Risk Of Cyber Attacks
The problem with using traditional currencies in online transactions is that they are more vulnerable to attacks, such as fraud, phishing, and data loss. Fortunately, cryptocurrencies are supported by advanced encryption technology, also known as cryptography, which ensures all transactions are 100% secured. Through cryptography, transactions are made anonymous or “trustless”, which means customers are not required to provide certain information to be able to transact with e-commerce stores. This decentralized system used by cryptocurrencies provides an added layer of protection for both customers and merchants as it prevents unauthorized parties from accessing their sensitive data. Furthermore, this trustless environment that cryptocurrencies operate under eliminates the need for centralized authorities in the process of authenticating virtual transactions, which are often the root cause of cybersecurity issues.
Accelerated Processing Time
Cryptocurrencies operate through distributed ledgers, specifically blockchains, which help expedite online transactions. Through blockchain technology, transactions can be carried out and processed in just a matter of minutes. For instance, Ethereum boasts an average transaction confirmation speed of 6 minutes while Litecoin guarantees an average transaction confirmation time of 30 minutes. Bitcoin and Litecoin, on the other hand, have an average transaction confirmation time of 60 minutes and 30 minutes, respectively. Each digital currency has its own average transaction time depending on its protocols. But rest assured, compared to traditional payment methods, cryptocurrencies offer a faster processing time for e-commerce businesses. The transaction speed for traditional payment methods, such as credit cards, generally takes at least 24 hours to more than three days before e-commerce merchants can actually access their sales revenue. This is because credit card payments have to go through different authentication steps from banks before their funds are made available. But with cryptocurrencies, because of the absence of intermediaries, merchants don’t have to wait long before they can access their revenues from digital transactions.
More Flexible Shopping Experience
There are over 4,000 cryptocurrencies circulating in the market right now. Bitcoin, Ethereum, Ripple, and EOS are just some of the most popular virtual coins. Cryptocurrencies offer customers a wide range of options to carry out their online transactions. Providing them with multiple choices can definitely help increase conversion rates for e-commerce businesses as well as reduce cart abandonment rates, which are often brought about by checkout and payment issues. Indeed, this added flexibility in the shopping experience can remarkably boost customer satisfaction.
Absence of Costly Fees
E-commerce merchants can enjoy reduced transaction costs by using digital currencies. These payment solutions charge lower fees compared to those imposed by credit card companies and other payment services. For instance, payment processing applications charge 3-5% per transaction while cryptocurrencies charge at least 1% per transaction, which can benefit customers and merchants alike. Aside from the marked-down transaction fees, cryptocurrencies automate certain internal processes, so businesses don’t need to shell out extra bucks to hire additional staff to get the job done.
Fewer Transaction Limitations
Digital currencies provide opportunities for e-commerce merchants to reach customers who are not fond of using credit cards, payment gateways, and other payment methods. Introducing cryptocurrencies is a great way to gain new customers, particularly those looking for a more convenient, secured, and modern payment alternative. Moreover, embracing digital currencies makes it easier to accommodate customers from all parts of the globe. Through virtual currencies, there are fewer limitations when processing international transactions, which can result in significant profit growth for businesses.