While initial attempts at creating a viable digital currency date back to as early as the 1980s, as noted by Marca, it wasn’t until bitcoin’s launch in 2009 that the concept of “crypto payments” began its slow creep into the mainstream consciousness — albeit not without a bit of convincing.
Since then, the values of both bitcoin and most other cryptocurrencies, which are a type of digital currency not reliant on a central authority like a bank, have faced (like so many other volatile markets) their shares of ups and downs. Most recently, after an all-time-high market valuation of $3 trillion in 2021, that number plummeted to just under $1 trillion in a matter of months — a crash that led to a period CNBC now describes as a “crypto winter” for investors.
But whether you’re bearish or bullish on the crypto market as a viable investment, there’s one constant most analysts can agree on: No matter if the price is up or down, more and more consumers are curiously buying, selling, and investing in cryptocurrencies year after year.
For example, a 2015 Pew Research study found that 48% of American adults had heard of bitcoin, with only 1% reporting they ever collected, traded, or used the digital currency. In 2021, a follow-up survey by the same firm found that 86% of respondents had now heard of the coin, with 16% reporting they’d purchased some amount in the past — a sign, no doubt, of rapidly expanding adoption.
What does this all mean for brands and retailers? With all the focus on cryptocurrency as an investment vehicle, it’s easy to overlook its critical feature: making digital payments.
As such, companies report they’re quickly scrambling to integrate cryptocurrency purchases at their points of sale, hoping it will provide some competitive edge against their competitors. Nearly 75% of retailers across the U.S. report that they’re making some kind of investment to support crypto payments over the next two years, according to a June 2022 Deloitte study.
It all begs the question: Should integrating crypto payments be a serious priority for any online business? For your online business? Read on to find out.
How Does Cryptocurrency Work?
Before we dive into the benefits of crypto payment adoption, it’s probably worth looking under the hood to review some of the basic concepts that make cryptocurrencies possible in the first place.
For starters: What exactly distinguishes cryptocurrency from the paper currency you carry in your wallet? Or the digital records in your debit account?
The simple answer? Ledger-keeping methods. While traditional transactions all rely on a single source of authority for verification (for example, your bank), cryptocurrency uses peer-to-peer computing power to create a completely decentralized, encrypted ledger to record all transactions.
This shared database, known as a “blockchain,” allows for irreversible data to be stacked on top of each other in “blocks,” providing a real-time snapshot of assets, transactions, and holdings at all times. Without delving into too much technical detail, this type of structure allows for both trust and privacy — users know their assets are secure but also largely untraceable by any central banking authority.
In effect, the creators viewed it as a way of bringing a true “cash” experience to digital purchases — without any banking middlemen involved.
Should Accepting Crypto Payments Be a Priority for Your Business?
Businesses of any size will likely see some degree of competitive advantage by incorporating crypto payments into their customer experience — especially as more and more retailers adopt the practice. However, the payoff and level of priority will likely be relative to the size of your operation and its annual revenue.
While a number of large enterprises have embraced third-party platforms that support dozens of coins (like BitPay, Coinbase, or SPEDN), many smaller businesses may find an easier — and far more popular — integration solution: becoming a PayPal merchant.
Checkout With Crypto (With PayPal)
The electronic payment service company launched its Checkout with Crypto service in late 2021, suddenly providing the millions of online retailers who use their services an opportunity to receive crypto payments.
The system works by converting a range of coins (bitcoin, ethereum, bitcoin cash, and litecoin) to fiat currency on the fly and provides an easy way for your company to start catering to crypto-minded customers. Even early adopters of direct bitcoin and crypto payments, like Overstock.com, have moved to accept PayPal as their go-to crypto payment services provider.
If you’re considering crypto payment integration, try a low-stakes trial run with PayPal Checkout, assess your customer’s level of interest, and — should there be actionable demand — expand to more expansive services if warranted.
Which Big Brands Are Embracing Crypto Payments?
A number of large enterprises now provide customers with the option of crypto payments, including many major players.
Microsoft was one of the first well-known brands to accept bitcoin payments — as early as 2014. Initially, users could use crypto to make purchases on Xbox Live and the Microsoft Store.
“The use of digital currencies such as bitcoin, while not yet mainstream, is growing beyond the early enthusiasts,” a corporate vice president shared with CNN at the time.
As an early adopter, the brand encountered some initial challenges: For one, they later ended bitcoin purchases on Xbox Live, citing crypto market volatility. While the company hasn’t released any figures related to its crypto purchasing experiment, it’s worth noting that users can still use bitcoin to buy apps, movies, games, and more in the Microsoft Store App, eight years later.
Like Microsoft, the beloved online retailer of consumer electronics and computer hardware has been a longtime adopter of crypto payments since 2014.
Impressively, unlike other adopters, the NewEgg site doesn’t require a third-party app. Instead, If your digital wallet software is stored on your computer, users can simply click a “pay with bitcoin” button at checkout. The site can also provide you with a scannable QR code for wallets stored on smartphones or take payments from web-based wallets.
The once floundering movie theater chain — now known as one of the most successful examples of a meme stock — recently announced that it’s offering customers the opportunity to buy movie tickets with cryptocurrency via their smartphone app. And in a nod to widespread requests from their “very online” fans, the company later began accepting payments from some of the more unconventional cryptocurrencies out there, including dogecoin.
The company first started allowing customers to make crypto payments in October 2021 — but only in exchange for gift cards. AMC continues to expand its crypto payments, suggesting its attempts to cater to crypto-savvy consumers might be resonating.
Are Crypto Payments Really the Future of Retail?
In the near term, it’s almost certainly too early to say for sure. While many brands and retailers are embracing new payment platforms to accommodate their customers, the extent to which crypto payments themselves drive new business is not entirely clear.
However, as cryptocurrency increasingly creeps into mainstream buying habits (and given the low barriers to entry for integration, such as PayPal), it’s a likely no-brainer to get your brand on board with as many electronic payment platforms as possible — including those offering crypto payments.
The world of commerce has changed — and will continue to change — but has your organization evolved to meet the shifting demands of shoppers? Download Salsify’s “Complete Guide to Omnichannel Strategy for Commerce” for a step-by-step guide for building an effective omnichannel commerce strategy.
- Posted in: Australian eCommerce