Cryptocurrencies have quickly risen in popularity over the past decade. In 2017, the popular cryptocurrency Bitcoin garnered international attention after reportedly being worth the equivalent of $16,000. The price of a single Bitcoin has since fallen to about $3,000 and is still fluctuating.
Although some economic experts believe cryptocurrencies are not sustainable, the market for virtual money continues to grow. The main reason? Anonymity. We live in a world where data breaches are becoming a regular part of our society. Therefore, whenever a customer shares their personal information while checking out on an eCommerce website, they are putting their data at risk. A cryptocurrency can help slice that risk. The different encryption methods used by cryptocurrencies make the money untraceable to one person.
Benefits of Cryptocurrencies
Although cryptocurrencies have a negative reputation, there is one sector that can highly benefit from them – eCommerce. There are numerous benefits to adding a cryptocurrency as a checkout option on your website. Not only will you attract die-hard cryptocurrency fans, but you will also be able to reach people who don’t have access to standard banks.
Reaching Non-Traditional Customers
If your eCommerce website does not currently have a cryptocurrency option, it’s likely your customers have some kind of bank account set up with you to shop. For people with poor credit, a lack of trust in financial institutions, and people in smaller countries, placing money in a bank isn’t always a viable option. One way around this are sites like PayPal, but even PayPal asks to connect to your bank account.
By allowing customers to utilize cryptocurrency, you are accepting their payment without having to go through their bank. This could lower the amount of transaction fees you pay. Credit card companies charge up to 3% in fees. Bitcoin, in contrast, only charges 1%.
Reward Programs
Another benefit to having Cryptocurrencies as part of your eCommerce business is an extensive reward program. Currently, if you have a rewards program you likely give your customer rewards that are exclusive to your company. You may offer them 15% off after they spend $150. With cryptocurrencies, you can offer reward programs that go beyond your storefront.
Some companies are comparing cryptocurrency-based reward programs to frequent flier miles. When a customer spends with you, they can be rewarded by their crypto account, instead of by your storefront. This would incentivize customers to use their cryptocurrency more frequently and would encourage more eCommerce businesses to jump on board.
Issues with Cryptocurrency
Although cryptocurrencies come with many benefits, it is a new market, so it still has several issues. While some of these issues have to do with perception, there are some problems that your eCommerce company can face as well.
On the perception front, cryptocurrency isn’t seen as a reliable option by many economists. While most forms of currency are protected by a government or agency, it isn’t always clear what or who is backing up cryptocurrency. Furthermore, the price of the currency changes too frequently. Looking back at 2018, Bitcoin saw a $13,000 price decrease across the year. That is not encouraging to investors.
Not Enough Processing Power
Cryptocurrencies have been around for about a decade, but has really only been seen as a viable option for the past 5 years. In that short amount of time, hundreds of thousands of customers have hopped aboard the cryptocurrency train. Since there are so many new accounts, the cryptocurrency companies are not ready for the load. This causes transaction processing to be extremely slow at times.
This can be dangerous for eCommerce companies. In our fast-paced world, customers aren’t willing to wait for more than a few seconds before abandoning their cart altogether. If your checkout process seems slow because the cryptocurrency takes too long to process, you may end up losing customers.
Too Many Different Currencies
If you want to start accepting cryptocurrency on your eCommerce website, you will have to specify which currencies you will accept. Not all cryptocurrencies are made equal. There are over 1600 different types of cryptocurrencies. The top three are Bitcoin, Ethereum, and Ripple.
If you try to accept all types of cryptocurrencies, then you will likely overload your system. Furthermore, the more options you open your eCommerce up company to, the more likely you are to eventually encounter a fraudulent currency.
However, if you do not offer enough cryptocurrency options, some of your customers may feel left out. They may decide to shop with another company that offers their currency of choice.
If you have a Magento website, the CoinPayments extension can help you accept multiple cryptocurrencies as a form of payment. The extension supports 70+ cryptocurrencies, and provides a unique $tag for accepting payments.
For more information on the latest trends in eCommerce, visit Wagento.com.
