What’s in store? Crypto payments!
Did you know that you can buy Bitcoin from 7-Eleven in The Philippines? Or that in France some of the largest retailers are planning to accept Bitcoin in 2020? Or how about Crypto.com’s Pay Checkout plugin which is now available for WooCommerce merchants?
If you didn’t, it’s no big deal, but it’s good to be aware that while cryptocurrency has risen and fallen, in the payment space it has only been on the rise, and this bodes well for the industry.
But what’s so special about making payments using crypto? In China, they have Wechat Pay and AliPay. Chances are you have a credit card. Or what about just paying in plain old cash? But there are actually a lot of reasons why cryptocurrencies are great for payments.
Benefits of crypto payments
Let’s start with fees. From 2017 onwards, merchants paid a staggering $90 billion to Visa and Mastercard in credit card swipe fees alone. What if we take debit and credit card fees, ATM fees, transfer fees, overdraft fees, and other fees into the equation? Transactions with crypto, however, are cheap. Wallets often free. Crypto payment systems undercut conventional payment providers significantly. This is not just attractive for consumers, but also for retailers who usually operate on thin margins.
We know banks track and store much of our personal and financial data, and while convenient, payments apps for mobile transactions can take data analytics to even higher level. Cryptocurrencies, however, allow for a much higher degree of privacy. Transaction data is limited to addresses and numbers, rather than the identity and spending habits of the user.
Unlike conventional systems, cryptocurrencies are based on the blockchain, which is a distributed, decentralised ledger. It is incredibly hard to hack and due to the permanent nature of blockchain transactions and the solutions it offers to the double-spending problem, crypto payment systems are less vulnerable to fraud.
Unless stored in a centralised wallet system, users hold custody over their own funds and are responsible for safeguarding them.
While it may take days with banks to transfer across borders, and high-interest rates may apply when using a credit card, crypto payments and transactions are instantaneous: the blockchain is border agnostic.
Furthermore, even when traveling, when making payments in crypto exchange rates are of no concern. And even if the user wanted to exchange one stablecoin for a stablecoin pegged to another local currency, the rates are negligible compared to those that apply in forex based systems.
This is exactly what we’ve noticed at Bitspark, where users can exchange a wide variety of stablecoins pegged to local currencies and make transactions across borders fast and cheap.
Stability of cryptocurrencies
A common concern when it comes to crypto payments is volatility. In an everyday context, this may be valid - we only need to think back to the first purchase ever made with Bitcoin where a staggering 10,000 Bitcoin was paid for a pizza (now worth $70 million USD) - and this is why stablecoins have such an important role to play in driving the adoption of crypto payments.
However, in more extreme cases, such as the one in Venezuela where people are suffering from hyperinflation, more volatile currencies such as Bitcoin have proven highly attractive for payments.
Getting more people to use crypto
With Bitspark we’re learning firsthand how crypto is driving financial inclusion. One of our partners, Okra Solar, offers off-the-grid solar solutions in remote regions in the Philippines, and since most of the communities lack access to financial services, they pay for their utility bills with Philippine Peso pegged stablecoins, with transactions conducted on our operating systems.
This is also why Libra has been such a big deal: it opened the eyes of many crypto skeptics to the potential of cryptocurrency adoptions by the billions of bankless social media users.
Building an ecosystem
There are many more reasons why crypto is attractive for payments, but it’s also good to remember that it is an important development for the wider ecosystem. With more payments around the world, there is an increased need to exchange small and large sums of crypto. That in turn strengthens the market, provides more liquidity, and continues to call crypto exchanges and payment providers to higher standards which raises the legitimacy of the industry as a whole.