In our digital world, we can clearly see that more and more blockchain-based projects are being launched, especially cryptocurrencies.
Their popularity is steadily increasing, and many users are starting to learn about them and even trade or use them. In fact, 86% of Americans confirmed in a survey that they heard at least a little about cryptocurrencies, including 24% who said they had heard a lot about them.
And with the growth in popularity, people started to use them, even going as far as making regular crypto payments, such as paying bills, buying groceries, or paying for services.
So, just like the whole crypto industry, crypto payments are becoming extremely common. Let’s see the reasons for saying this and what opportunities they bring to the market.
What Is a Crypto Payment?
Payments in crypto work almost the same as the traditional payments we are used to. The only differences in crypto transactions derive from cryptocurrencies’ essential benefits, including being easy to use, secure, and more private, among many others.
Thus, a crypto payment is a much easier way to transfer funds or make payments cheaper and quicker, using cryptocurrencies and the benefits they come with.
Basically, you no longer have to wait for a third party, such as a financial institution, to process your transaction, as cryptocurrencies are decentralized and therefore do not depend on any central authority. Instead, transactions are verified and validated by a network of computers comprehended as nodes.
Do Companies Accept Crypto Payments?
Even though you may not hear so often about companies accepting crypto payments you should know that there are many crypto-friendly companies. What’s more, their number is constantly increasing. A 2022 report by Deloitte shows that nearly 75% of retailers plan to accept crypto transactions within the next two years.
Among the companies accepting payments in digital assets for specific products or services are Microsoft, AT&T, Shopify, and Overstock.
In order to accept such payments, these companies often turn to crypto payment gateways, which offer cryptocurrency payment processing services for businesses.
Those crypto payment companies usually bring cryptocurrencies closer to mass adoption by setting up crypto transactions for any online or physical store.
Benefits of Payments In Crypto
Since such prominent and influential companies have started accepting crypto as a payment method, it is understandable that they have seen some of the benefits this practice comes with. However, this system may still seem complicated for companies that need to implement it.
Here are some of the main benefits of paying in cryptocurrencies:
Increased Transaction Speed
Suppose you have considered transferring money from the US or paying for products in a European country. In that case, you should know that in most cases, processing the transaction through traditional financial institutions and traditional methods may take longer than you expect. In the best-case scenario, it still takes at least a day, if not 3-5 days.
Relying on a crypto payments provider, your transactions can go through nearly immediately.
By paying with cryptocurrencies, once the transaction is confirmed on the network, which generally takes a few seconds to a few minutes, your money is ready to be used.
Based on blockchain, crypto payments immediately confirm the products’ validity or authenticity, allowing consumers a wholesome sense of trust.
Blockchain technology’s data structures have inherent security qualities based on consensus, cryptography, and decentralization principles. Each new block of data links to all the previous blocks so that it’s nearly impossible to tamper with. After a block gets validated and agreed upon by a consensus mechanism, it guarantees that each transaction is proper and accurate. So, there is no point of failure, and a user can’t change the transaction records.
Lower Transaction Fees
The fee charged by crypto payment providers is often several times lower than that of traditional payment methods.
It’s no secret that mainstream financial institutions often charge fees for the transactions we make. A $25 fee for a modest transaction should not surprise us.
That’s why trading cryptocurrencies can save us from high fees. However, remember that the demand on the blockchain can increase transaction costs.
You Can Penetrate New Markets and Demographics
Cryptocurrencies have no border, meaning a company can use crypto to buy or sell internationally, no matter where they are, without additional fees.
When making international payments, you don’t have to worry about converting to the local fiat currency. Also, you provide a new solution for your customers, thus improving the customer service experience.
Easy to Implement with a Crypto Processor
Creating a self-hosted, open-source payment processor and the entire development process becomes a burden. So, for many newcomers, a crypto processor is more straightforward than setting up and managing a wallet.
It is much easier for this process to be done through a crypto payment processor, as most of these services offer the ability to collect payments in multiple currencies.
Besides, a crypto payments processor will have a customer support team to assist you with any technical problems.
How Do Crypto Payments Perform?
In terms of theoretical benefits, these can be easily seen. However, paying in crypto has already been on the market for a few years, so how popular is this solution?
Coingate, one of the leading crypto payment processors, recently published a report on the performance of crypto payments in 2022. These stats are related to information on crypto retail transactions, Lightning Network performance, most popular payment cryptocurrencies, and overall interest in crypto payments from businesses.
- In 2022, CoinGate merchants collected 927,294 payments, marking a 2.7x increase over the annual average and a 63% increase over 2021. By 2022, the average per year was 312,500 payments.
- In 2022, Bitcoin accounted for nearly half (48%), of all transactions, which is down compared to 2021 by about 7.6%. The second most popular cryptocurrency used in 2022 was USDT (14.8%), followed by Ethereum (10.9%), Litecoin (9.6%), and TRON (5.8%).
- The most noticeable growth in popularity is among USDT, accounting for 12.5% more in 2022 than in 2021, when it accounted for only 2.3%. Thus, it can be seen stablecoins are becoming widely used.
- In 2022, payments made via Bitcoin Lightning Network increased by 97%. They accounted for 6.29% of all orders yielded in Bitcoin, up from 4.53% in 2021.
- The CoinGate network saw a 48% increase in newly registered merchants in 2022 compared to 2021, thus highlighting the apparent desire of many companies to adopt crypto among their payment methods.
- In 2022, the strongest driver for implementing crypto payments was service accessibility for unbanked customers and those concerned about privacy.
Although 2022 was a year severely affected by the bear market, this did not stop crypto payments from growing in popularity.
We can also see that crypto provides viable alternative payment mechanisms worldwide. The implementation of payments in digital assets has been a priority for many companies. In the coming years, estimates are still in favor of the growth of crypto payments.
It remains to be seen what surprises the next years will bring.