Some crypto communities often focus heavily on growing
business adoption, with maps now
compiling
businesses worldwide that accept different
cryptocurrencies as a payment method.
But if a business accepts cryptocurrency payments only to
dump them on the market, it may undermine the entire
effort, as the assets are just being sold back on the
market right after payment.
Moreover, a business accepting cryptocurrency payments
through a third-party processor isn’t adhering to the
cryptocurrency ethos of managing their own private keys,
meaning controlling their wallet fully.
On the flip side, proponents argue that the mere act of
enabling cryptocurrency payments opens up new avenues for
consumers to transact in crypto, bringing in a new,
long-awaited use case.
Do businesses accepting crypto boost adoption?
On its surface, a business accepting cryptocurrency
payments would boost adoption. Still, if the digital
currency received is immediately sold back on the market,
it’s generating as much demand as it is supply. This
simultaneous buy-sell cycle may not significantly
contribute to cryptocurrency adoption.
Additionally, it isn’t clear how relevant a business
accepting cryptocurrency payments can be for actual
adoption, as users are unlikely to go through the process
of buying cryptocurrencies if they can just pay in their
local fiat currency.
The essence of adoption doesn’t merely reside in the act
of acceptance by businesses; it fundamentally lies in the
ease of access and willingness of consumers to transition
to cryptocurrencies for their transactional needs.
A study by leading research and advisory firm Forrester
Consulting
revealed
that merchants accepting Bitcoin BTC tickers down $36,566
attracted new customers and sales.
The study found that cryptocurrency payments bring in up
to 40% of new customers for merchants, with crypto
customers spending twice as much as those using credit
cards.
Speaking to Cointelegraph, BitPay chief marketing officer
William Zielke referenced the Forrester Consulting study
and said cryptocurrency payment processors give
cryptocurrency spenders a fast, easy way to pay for large
ticket items and everyday purchases.
Zielke said that during the first half of this year,
BitPay saw a 10% uptick in new customer sign-ups compared
to the previous year despite the volatile cryptocurrency
market. He added that while some brands may already have a
technically savvy user base when they start accepting
crypto, other merchants may end up introducing new users
to crypto:
“Alternatively, merchants like AMC Theatres connect with a broad base of customers who may need to be better-versed in the crypto world. Partnering with big brands like AMC Theatres is an excellent way to boost consumer adoption since it introduces crypto payments for everyday purchases.”
Sankar Krishnan, head of digital assets and fintech at
consulting firm Capgemini, told Cointelegraph that money
serves “both transactional and savings purposes” and that
he would argue that “cryptocurrency captures greater
interest from consumers today as they anticipate its value
will rise in the future.”
Nevertheless, Krishnan said it’s crucial to acknowledge
the risks associated with cryptocurrencies, including
their extreme volatility, which means that the mainstream
adoption of cryptocurrencies for everyday transactions is
“still a work in progress.”
Per Krishnan, when cryptocurrencies “become a more viable
option for day-to-day purchases, we can expect more
payment providers to embrace and facilitate cryptocurrency
transactions.” He added, however, that whether a business
keeps the cryptocurrencies it accepts for goods and
services or sells them right away “is linked to the
company’s treasury strategy.”
According to the Capgemini executive, the price volatility
of cryptocurrencies heavily influences this choice, as the
market can move in either direction between the firm
accepting payment and selling the digital assets, which
would only be beneficial if it were actively engaging in
crypto trading.
A business accepting cryptocurrency payments and selling
the crypto right away, Krishnan said, also “sends a clear
message to the market that they do not anticipate the
cryptocurrency’s value to appreciate in the future.” Per
his words, it’s a “de-risking move” the business makes.
Speaking to Cointelegraph, Justas Paulius, CEO of
cryptocurrency payments processor CoinGate, took a
balanced approach and said that it can’t be proven whether
this buy-sell cycle has “a small, large or no impact at
all as there are many factors that need to be considered
first, for example, which cryptocurrency is being used,
how and where it is being sold, and how much.”
Paulius added that consumers “tend to re-purchase
cryptocurrency they’ve spent soon after,” suggesting that
when businesses accept cryptocurrency, there’s indeed
higher demand. He said, however, that the advantage may be
in the generated liquidity:
“Whether the currency is being bought or sold, these actions from both sides create better liquidity in the market and, in a way, balances each other out, also helps determine the true price of a currency at any given moment.”
Businesses accepting cryptocurrency payments may nevertheless boost adoption in other ways, including by simply spreading awareness of their support for cryptocurrencies or specific payment processors that may offer other services.
Crypto payment processors as on-ramps
Cryptocurrency payment processors may allow businesses
that do not accept cryptocurrency payments directly to
allow consumers to pay with them. Major automobile
manufacturer Honda, for example, does not accept crypto
payments, but through FCF Pay, people can use Bitcoin and
other
cryptocurrencies to buy a Honda car.
Paulius noted that awareness spreads as “people see these
payment options being introduced by small and large
businesses every day,” which signals a growing demand for
digital assets. These signals, he said, could see
businesses’ competitors become “intrigued and curious.”
He added there’s “little-to-no downside to enabling a
crypto payment method,” but instead “brings several
tangible benefits” to businesses that do. According to the
Forrester Consulting study, accepting crypto does seem to
bring in more customers who spend more.
Third-party payment processors, BitPay said, help
businesses stay compliant with all local regulations to
facilitate accepting cryptocurrency payments while
promoting new businesses to the cryptocurrency community
as they start accepting crypto payments:
“Leveraging third-party payment processors allows businesses to accept crypto payments without the need to touch or hold crypto, removing the volatility risks. The quick integration times and easy setup make it a simple, fast alternative to using your own wallet. Companies utilizing a processor also escape having to track their costs based on different coins for tax purposes.”
Why pay with crypto?
Even if businesses accept cryptocurrency payments — via
their own solutions or third-party payment processors —
one question remains: why would consumers choose to pay
with cryptocurrencies over their local fiat currency,
especially if they don’t previously own crypto?
Paulius said that in some cases, banking is not an option,
and cryptocurrencies could be a much-needed solution.
Refugees or people stuck in dire situations in countries
foreign to them or where the financial system isn’t
functioning could rely on a decentralized network for
their payments.
While Paulius conceded that “it is not common for
consumers to buy cryptocurrencies just to use them for
retail payments,” it noted it’s “likely in several cases,”
as some people value their privacy greatly.
“Many of those people use cryptocurrencies for buying VPNs, hosting solutions, proxies and similar services just because they can remain pseudonymous and disclose less or none of their personal information to fewer third parties.”
Cryptocurrencies, Paulius concluded, can also be a faster
way to make transactions. Speaking to Cointelegraph, Ilya
Volkov, CEO and co-founder of YouHodler, said that in the
city of Lugano, Switzerland, BTC and Tether USDT tickers
down $1.00 can easily be used in various shops and
restaurants via the same point-of-sale terminals used for
traditional card payments.
Per Volkov, some startups are working on ways to use these
terminals to let users pay directly from their MetaMask
wallets.
Companies can provide a way for consumers to use
cryptocurrencies, making these digital assets more
familiar and useful. Additionally, third-party processors
make it easier and less intimidating for businesses to
start accepting cryptocurrencies, which might encourage
other companies to do the same, seeing the growing
interest.
The path to mainstream adoption is more complex, however,
as what is done with the cryptocurrency and whether
consumers even choose to pay in crypto play a pivotal
role.
While more sophisticated and tech-savvy consumers will
likely use cryptocurrency payments to protect their
privacy, cryptocurrencies could also provide a lifeline in
more extreme scenarios. Whether they’ll be accepted as a
payment method when showtime comes remains to be seen.