Cryptocurrencies, such as Bitcoin, Ethereum, USDT, and USDC are becoming more popular and accepted as a form of payment by businesses. Crypto payments can offer several benefits for businesses, such as:
· Secure and fast transactions, without intermediaries or fees: Crypto payments are based on blockchain technology, which is a decentralized and distributed ledger that records and verifies every transaction. This eliminates the need for intermediaries, such as banks or payment processors, and reduces the risk of fraud, chargebacks, and data breaches. Crypto payments can also be processed faster than traditional payment methods, especially for cross-border transactions, which can take days or weeks to settle. For example, a business in Japan can receive a crypto payment from a customer in Brazil in minutes, instead of waiting for the banks to clear the funds.
· Global accessibility, regardless of location, currency, or bank account: Crypto payments can also expand the customer base and market reach of businesses, as they can accept payments from anyone, anywhere, anytime, regardless of their location, currency, or bank account. Crypto payments can also enable financial inclusion and empowerment for the unbanked and underbanked populations, who may not have access to traditional payment services or face high barriers to entry. For example, a business in Kenya can accept crypto payments from customers who do not have a bank account or a credit card, and offer them lower prices and better services.
· Innovation and differentiation, by offering new and attractive services: Crypto payments can also help businesses stand out from their competitors and attract new and loyal customers, especially the younger and tech-savvy generations, who are more interested and familiar with cryptocurrencies. Crypto payments can also enable businesses to offer new and innovative services, such as loyalty programs, rewards, discounts, and donations, using crypto tokens and smart contracts. For example, a business in the US can reward its customers with crypto tokens that can be redeemed for future purchases or donated to a charity of their choice.
However, crypto payments also have some challenges and risks for businesses, such as:
· Volatility and risk, which can affect profitability and cash flow: Crypto payments are subject to high price volatility and fluctuations, which can affect the profitability and cash flow of businesses. For example, if a business accepts Bitcoin as payment, but the price of Bitcoin drops significantly after the transaction, the business may lose money or incur losses. To mitigate this risk, businesses need to have hedging strategies, or using stablecoins, which are cryptocurrencies that are pegged to a fiat currency or a basket of assets.
· Regulatory uncertainty and compliance, which can vary by country and jurisdiction: Crypto payments are also subject to regulatory uncertainty and complexity, as different countries and jurisdictions have different laws and rules regarding cryptocurrencies and their taxation, reporting, and accounting. For example, some countries may ban or restrict the use of cryptocurrencies, while others may require businesses to obtain licenses or register with authorities to accept crypto payments. Businesses need to be aware of and comply with the relevant regulations and obligations in their markets
· Technical barriers and education, which require knowledge and skills to use and integrate: Crypto payments also require technical knowledge and skills, both for businesses and customers, to use them effectively and safely. For example, businesses need to choose a reliable and secure crypto payment processor, wallet, and platform, and integrate them with their existing systems and processes. Customers need to have a crypto wallet, buy and store cryptocurrencies, and scan QR codes or enter addresses to make payments. Businesses also need to educate and inform their customers and staff about the benefits and risks of crypto payments, and provide support and guidance when needed.
Crypto payment adoption among businesses is growing rapidly, creating new opportunities and possibilities. According to a report by Statista, about 30% of e-commerce businesses accepted crypto as of February 2022, and 80% plan to accept crypto by the end of 2024. The most crypto-friendly industries include travel, e-commerce, non-profits, and gaming. Some of the emerging trends and innovations in the crypto space include
· Increasing adoption of crypto payments by major brands, such as PayPal, Tesla, Starbucks, Microsoft, and Visa: Some of the well-known and established companies that started to accept crypto payments in 2023 include PayPal, Tesla, Starbucks, Microsoft, and Visa. These companies not only boosted the credibility and legitimacy of cryptocurrencies, but also increased the awareness and demand for crypto payments among their customers and partners. For example, PayPal enabled its users to buy, sell, and hold cryptocurrencies in their accounts, and use them to shop at millions of merchants worldwide2.
· Expansion of crypto payment options among businesses, by supporting multiple cryptocurrencies, stablecoins, and wallets: Businesses are also offering more choices and flexibility for their customers to pay with cryptocurrencies, by supporting multiple cryptocurrencies, stablecoins, and wallets.
Demand for non-custodial services, which allow businesses to receive and manage their crypto funds directly: Businesses are also looking for more control and autonomy over their crypto payments, by opting for non-custodial services, which allow them to receive and manage their crypto funds directly, without relying on third-party intermediaries or platforms. Non-custodial services can offer more security, privacy, and transparency for businesses, as they do not have to entrust their assets to centralized exchanges (CEXs) that may be vulnerable to hacking, fraud, bankruptcy, or regulatory actions. By using non-custodial services, , such as . inabit.com, offers a secure cloud self custody, businesses can avoid these risks and enjoy the full benefits of crypto payments
· Growing number of crypto-friendly brick-and-mortar locations, such as crypto ATMs and point-of-sale terminals: Businesses are also making crypto payments more accessible and convenient for their customers, by installing crypto ATMs or point-of-sale terminals in their physical locations. Crypto ATMs allow customers to buy or sell cryptocurrencies using cash or cards, while crypto point-of-sale terminals allow customers to pay with cryptocurrencies using their mobile devices or cards. According to Coin ATM Radar, there were over 28,000 crypto ATMs in 84 countries as of January 29, 20244, a significant increase from the previous years.
Crypto payment adoption among businesses is a promising and exciting trend, that can offer several benefits and opportunities for businesses. However, crypto payments also come with some challenges and risks, that need to be addressed and overcome. To achieve wider and mainstream adoption, businesses need to have compliance measures, and education and awareness initiatives, or use crypto financial management platform, such as inabit that offer solutions and features that can facilitate crypto payment adoption among businesses.
