Why Merchant Adoption of Crypto Payments is Key to Mass Adoption in 2020 and beyond

By Nash Foster, CEO and Co-founder of Pyrofex

Why Merchant Adoption of Crypto Payments is Key to Mass Adoption

The crypto community is fond of talking about what crypto needs to achieve mass adoption—the point when people can use crypto to pay the babysitter or split the bill at dinner. These conversations are often lopsidedly focused on the benefits to consumers: more control over data, and more private transactions, etc. We forget that every transaction takes two parties, a sender and a receiver or a buyer and a seller. In order to actually achieve mass adoption, we not only need to educate consumers on the value of their data and of financial empowerment, but also merchants and vendors to the benefits of accepting cryptocurrency payments.

So, Why Should Merchants Accept Crypto Payments?

Though business owners unfamiliar with crypto may require a little hand-holding, any merchant who cares about ROI might want to pay attention. Accepting crypto payments saves money in transaction fees. In contrast to credit card payments, which require merchants to pay a 3% fee on every transaction, there are no fees associated with accepting crypto payments. The customer may pay a small fee to cover the “gas” required for the transaction to be validated by the nodes in the network, but the merchant earns the full amount on their price tag.

Chargebacks are one of the biggest problems merchants deal with in e-commerce, costing businesses time and money. Payments made with cryptocurrency are final, so though merchants can still issue refunds if they choose, chargebacks would be a thing of the past.

In a similar vein, blockchains are fraud-resistant by design, so identity theft is much more unlikely. Credit card companies invest heavily in fraud prevention mechanisms and pass those costs on to merchants, but with crypto payments businesses need not rely on credit card companies at all. The decentralized structure of blockchains means that the network validates transactions so there is no single point of failure and a combination of forces are at work to ensure bad actors can’t get away with malicious behaviors.

Strengthening Bonds Between Merchants and Consumers

Blockchain, the technology underlying cryptocurrencies, has the potential to disrupt more than the payments processing side of e-commerce. Currently retailers depend on giant intermediary platforms, such as Amazon, to sell their products. These third party platforms hold the most power in the retail dynamic because they have access to both consumer and merchant data. Merchants can view the data that the platform chooses to grant them access to, while consumers generally have no control over the way their data is being leveraged.

People are just now beginning to realize the value of their data and are demanding more transparency and control as to how it is being used by the platforms collecting it. By eliminating dependence on third parties to mediate transactions online, merchants and consumers can transact directly. Blockchain technology could allow users to choose what data to share or keep private from merchants, thereby endowing users with more empowerment over what will soon be their greatest asset. Merchants could incentivize consumers to share data through tokenized payments, discounts, or other offers, but it would be the user’s choice whether or not to take vendors up on such offers.

Businesses Should Get on the Bandwagon Before it’s Too Late

As more consumers realize the value of crypto payments for more private, cost-effective transactions, businesses would be wise to meet their demands. Those who don’t will be left behind. By the end of 2017, an estimated 4.3 million people owned cryptocurrency, and one survey found that roughly 40% of those familiar with crypto would be open to using bitcoin for transactions and purchases. Such trends suggest a readiness for decentralized payments in day-to-day transactions today, not in the distant future.

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