In the fast-paced world of e-commerce, traditional payment methods observed as inefficient and restrictive. Below are some key challenges that modern e-commerce businesses face with these conventional systems, supported by use cases and relevant statistics.
1. High Transaction Fees
Pain Point:
Bank-funded methods like credit cards and payment gateways such as PayPal have a very high transaction cost that may fall between 2-4%. Such fees negatively impact the business since they may limit its profit margin, particularly for small and medium-scale enterprises. Moreover, international payments come with extra costs such as the expenses of exchanging one currency for another.
- Use Case: PayPal’s Fee Structure
- PayPal charges a standard 2.9% + $0.30 per transaction in the U.S. For cross-border payments, an additional 1.5% fee is charged. To international businesses, such fees prove to be expensive.
- Stat: According to a survey in the year 2023, the SMEs operating in the U. S. had an average of 2. 6% in processing fees for online credit card payments costing them billions annually in aggregate.
The Solution:
By providing cryptocurrency payments, UniPayment’s cryptocurrency payment gateway reduces transaction fees. The fees as low as 1% applied to crypto transactions mean that company can save money. Furthermore, there is no middleman, which led to the elimination of fees linked to exchange rates or payment gateways.
2. Delayed Settlement and Cross-Border Payments
Some of the common problems observed include the use of traditional banking systems leading to delayed settlement of funds, which is even worse if the transfer is across borders.
Pain Point:
Cross border transaction causes several headaches to e-commerce businesses, including currency conversion charges, fluctuation of the exchange rates, and long clearance times taking up to 3-5 days. These delays affect cash flow, while international fees complicate expenses.
- Use Case: Shopify Cross-Border Payments: Merchants who opted for conventional payment gateways complain of slow transactions coupled with high charges when undertaking cross-border transactions. Cross-border transactions have been cited to take an average of 5 days to be settled; this impacts the cash flow of the merchants.
- Stat: According to a Statista report published in April 2022, 60% of global companies stated that they had been delayed in cross-border transactions, and 42% cited slow bank processing as the cause.
The Solution:
UniPayment also allows accepting cryptocurrencies across the globe without the interference of traditional banks and conversion of currencies. Purchases made through cryptocurrencies take a short time to complete, boosting cash flow substantially. Considering that it is decentralized, there are no exchange rates to be worried about when transacting across borders; thus, saving costs.
3. Security and Fraud Risks
Traditional payment gateways are frequent targets of fraud, resulting in chargebacks and disputes. According to the Nilson Report, global card fraud losses hit $32.34 billion in 2020. E-commerce businesses are at higher risk due to increasing demand for online transactions, making businesses more prone to data breaches and fraud.
Pain Point:
E-commerce businesses suffer from billions of dollars in annual fraud and chargeback costs, impacting their revenues.
- Use Case: E-Commerce Fraud for Retailers
- An online retail company, for instance, recorded a 30% rise in payment fraud in 2021. However, despite these anti-fraud measures, the merchant had to sustain losses emanating from fraudulent chargebacks, reducing their annual revenue.
- Stat: According to Juniper Research, e-commerce merchants incurred a loss of $20 billion globally through online payment fraud in 2021, up by 14% from the previous year.
The Solution:
UniPayment relies on the concept of blockchain where transactions are irreversible and are protected by cryptographic algorithms. This gets rid of chargeback and at the same time significantly lowers the possibility of fraudulent transactions.
4. Customer Demand and Brand Loyalty
Customers demand more cryptocurrency payment options as they incorporate cryptocurrencies into their daily lives. Offering crypto payment choices fulfills this urgent need and contributes towards brand recognition among tech-savvy and younger customers.
Pain Point:
Most consumers in emerging markets have no bank accounts, credit cards, or PayPal-like services to complete online purchases. This restricts the pool of customers for e-commerce companies, especially for those aspiring to enter the international market.
- Use Case: Tesla’s Bitcoin Experiment
- Tesla accepted Bitcoin payments for a short span in 2021 and claimed to have noticed higher interaction from digitally-savvy consumers and Bitcoin lovers at that time. It proved that the market was ready to explore other forms of Payment segmentation.
- Stat: According to a study by PYMNTS, 16% of U.S. consumers (46 million) purchased cryptocurrency as of 2021. And, 40% say they would prefer to shop at merchants accepting cryptocurrencies over those that do not.
The Solution:
Allowing businesses to accept cryptocurrencies as a means of payment, thus expanding the customer’s reach, including developing nations. As adoption grows in places such as Africa and Southeast Asia, e-commerce retailers can expand their sales by accepting payments not dependent on banks.
5. Attracting High-Value Customers
Crypto holders are usually from high-income groups and are willing to spend significantly more if allowed to pay using cryptocurrency. These customers can be of so much value to e-commerce businesses since they are relatively knowledgeable about what they purchase and why.
Pain Point:
A growing client base is willing to make purchases with cryptocurrencies of choice, especially millennials and Gen Z. Lack of acceptance of the cryptocurrency payment methods could lead to the exclusion of this potential customer group.
- Use Case: Newegg’s Experience
- Electronics retailer Newegg also stated that its average order value rose when it allowed customers to pay with digital currency. Consumers are more inclined to make high-valued transactions like computer gaming equipment or better still, expensive electronics, thus have larger transaction value.
- Stat: Coinbase has also revealed that people using cryptocurrency have an average household income of $111,000 per annum, which is higher than those who have not engaged in cryptocurrency transactions. They are more likely to engage in high-value purchases for their businesses hence increasing the overall business profitability.
The Solution:
UniPayment enables organizations to easily implement and accept digital currency payments on their current systems. They are also allowing e-commerce businesses to accept Bitcoin, Ethereum, and other cryptocurrencies as payment, making it possible for businesses to meet a particular customer demand and outrun their competition through integration with high-technology payment systems.
6. Mitigation of Currency Fluctuations in Cross-border e-commerce payments
Global payment transfers are characterized by foreign exchange and fluctuation, which puts both the merchants and customers at a loss. Since cryptocurrencies do not involve the use of third parties such as banks and currency exchange services, cross-border transactions are easier and cheaper to conduct. As the number of online transactions increases, the incidents of fraud and chargeback also are on the rise. Not only does a chargeback mean a loss of revenue but it also comes with administrative costs and measures against fraud recovery are usually costly. The e-commerce industry itself is estimated to lose about $6.3 billion every year to scams and sales disputes, and the current payment system gives incomplete protection against such a problem.
- Use Case: CheapAir’s International Bookings: The online travel booking site CheapAir has been offering the opportunity to pay in Bitcoin since 2013. When CheapAir implemented the Bitcoin option for international bookings, it eliminated the most common problem with foreign exchange rates and ensured that the customers who were booking flights and hotels in different countries did not face any inconvenience while making the payments.
- Stat: A 2021 report from Deloitte revealed that currency fluctuations were a major challenge facing merchants in cross-border e-commerce payments, with 45% of affected merchants citing it as an issue. The use of cryptocurrencies also ensures that businesses cut on volatile fluctuations associated with fiat currencies hence enhancing stability in the international markets.
The Solution:
The use of blockchain technology allows cryptocurrencies to prevent chargebacks because once a payment has been made, it cannot be reversed. All transactions are automatically authenticated and thus have a higher level of security.
7. Complexity in Managing Multiple Payment Gateways
Multi-channel payment solutions enhance the ease of payment by bringing together all existing payment forms including cryptocurrencies. This eliminates the problem of dealing with many gateways for the various regions or devices and increases the ease of operation. Besides, organizations that implement flexible and multi-channel solutions are more equipped to expand and ride on new phenomena like social commerce, and Web3.
Pain Point:
- Some e-commerce sites need one or more payment gateways in several areas and currencies. It means an increase in the complexity, the maintenance costs, and the administrative burden.
- Stat: McKinsey studies prove that sellers with multi-channel payment systems enjoy a 30% rise in customer loyalty and a 20% decrease in the cart abandonment rate, which propels businesses to implement such systems to retain the market edge.
The Solution:
UniPayment integrates all the cryptocurrencies into a single unified platform while enabling the company to accept all the formed cryptocurrencies without the need for having different payment gateways for every one of them. This also eliminates complications and tracks financial activity as well as enhances payment operations.
Today, customers interact with brands across desktop, mobile, and in-app, this means that businesses need to offer a smooth payment process no matter the channel. Handling payments through the above-mentioned channels with the conventional systems is cumbersome.
Conclusion
The adoption of cryptocurrency payments offers modern e-commerce businesses several benefits, from lower fees and faster settlements to enhanced security and global accessibility. With increasing customer demand and the opportunity to tap into new markets, integrating crypto payment gateways can help businesses stay competitive while improving operational efficiency. The data shows that adopting crypto payments is not just a trend—it’s becoming a necessary move for businesses seeking to thrive in the future digital economy.
