Ecommerce business owners always look for an edge over their competition in this challenging, but lucrative space. One way to come out ahead is to accept various payment methods on your website. But should you accept crypto payments?
State of the Ecommerce Industry
Ecommerce is evolving, and people are shopping online more often. With the state of the pandemic, people are shopping online with even greater frequency. Some of them are even buying products to cope with their anxiety, such as kratom or CBD. In this space, crypto payments are common, but are they worth it?
Popular Payment Methods and Standards
Most websites accept credit card payments and PayPal. Many also accept Amazon Pay and Square. A few accept bitcoin, ethereum and other crypto payments. This is almost a requirement in some industries, where it’s a violation of the terms of service of MasterCard, Visa, and Amex. For these industries, ACH transactions (check by phone/e-checks) are a traditional workaround. But, they’re slow, often taking a week or more before funds are available.
Reasons for Accepting Crypto Payments
Although crypto payments aren’t nearly as fast as credit card transactions, they can usually process within a matter of minutes, or hours. This is far better than slow ACH transactions, and fast enough for a mail-order business where funds don’t need to be captured in real-time as they would at a bricks-and-mortar point-of-sale purchase.
Bitcoin, Ethereum, and many other cryptocurrencies are here to stay. They’re not going anywhere, and people are beginning to explore using them for more than just stores of value. They’re making transactions, and if you give customers a reason to utilize their crypto, they might. This is especially true if people begin to fear the collapse of the dollar and other fiat currencies. They’ll begin to move more of their wealth into precious metals, stocks, and crypto. But unlike other investments, crypto is highly liquid. You can actually spend it, without first selling your investment for fiat, prior to your purchase.
Negative Impact of Accepting Crypto Payments
When it comes to ecommerce, you have to think about conversion. Accepting multiple payment options will often improve conversion for a website, where people can easily pay for their goods using their preferred method. But, when you present users with too many choices, they may get confused. If your website accepts credit cards, Paypal, Amazon, ACH, and Crypto payments, the result could be that the user gets analysis paralysis and ends up not buying anything.
Crypto is also still volatile. Bitcoin has been known to fluctuate 20% or more in value in a single day. What this means is that if you don’t have the temperament for such volatility, then you’ll need to convert your crypto to fiat on at least a daily basis.
Sometimes, crypto processing can be expensive, particularly with Bitcoin. You’ll want to compare the network fees for moving digital currency between wallets, and compare them to the fees associated with credit card transactions. Then, weigh the costs and make a decision.
Last, it’s possible that regulations may one day suppress the legal use of bitcoin and other cryptocurrencies in some way.
Verdict on Accepting Crypto Payments on Your Ecommerce Website
There are a number of pros and cons to accepting crypto payments on your website. Generally, the pros will outweigh the cons for certain industries in the short term. In the long term, we might look at crypto payments in the same way that people looked at mobile web design when it first came out. The technology is new, but eventually it may be widely adopted. When that happens, you’ll want to be ahead of the curve.