When the value of one Bitcoin reached a high of $16,522 in January this year, consumers took notice. Now it’s time for retailers to take notice of cryptocurrencies.
While the value of Bitcoin has nearly halved since that January high to fall to around $9,000, in January 2017 it was $900 per Bitcoin. The longer-term trend is growth in value and therefore popularity of this digital currency, which is something retailers can’t ignore.
There are many other cryptocurrencies such as Litecoin and Ethereum, all of which have recently increased in value on the back of Bitcoin. With all these digital currencies it’s hard for e-tailers to know where to start. And, of course, there are the large fluctuations in value to factor in.
However, one thing is for certain – as cryptocurrencies become increasingly mainstream they will allow new and beneficial interactions between consumers and retailers.
The introduction of Bitcoin into the business world makes transactions for products and services, wherever the buyers and retailers are in the world, even faster. Bitcoin transactions are broadcasted nearly instantly and are confirmed within ten minutes.
Ease of access and global currency
In the digital and increasingly fibre broadband age anyone can download cryptocurrency software for free and start sending and receiving digital currencies. And because cryptocurrency is global, e-tailers don’t have to worry about the extra admin and additional cost of converting payments from or into local currencies
It’s more cost effective for consumers and businesses to use cybercurrencies when it comes to transactions. Services like BitPay take a flat 1% settlement charge. Whereas credit cards can take up to 3% in processing fees. Yet, it’s important that if you take payment using a cryptocurrency that you clearly advertise that fact. It’s surprising how many retailers don’t highlight the available payment options which could lose them potential customers and therefore valuable revenue.
Cryptocurrencies help provide protection against fraud and deliver an unparalleled transparency in transactions. Bitcoin payments are irreversible and secure, meaning the cost of fraud is no longer pushed onto the shoulders of merchants. The funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Also, the way the payment takes place in a decentralised blockchain provides a level of encryption that’s impossible to break.
E-tailers can’t hide from the fact that as more consumers start to buy and become more comfortable with digital currencies, they will expect retailers to accept payment by Bitcoin or another cryptocurrency soon. Of course, there are issues with the fluctuations in the value of cryptocurrencies, the large number in the market and talk of potential regulation of these currencies. But the market will soon settle down.
There are big benefits for online retailers, particularly those who are among the first to take the plunge and offer payment in cryptocurrencies. Payment in digital currency is the future, and if e-tailers want long-term growth they must look seriously at accepting such currency as payment sooner rather than later. It’s a payment system that’s set to benefit everyone in the digital age.
Mark Fitzsimmons is managing director at Xigen.