CfC St. Moritz | Cryptocurrency Payments: The Future of the Payment Industry

In 2022, a major study by Deloitte regarding crypto payments found that 75% of retail businesses plan to introduce crypto payments during the next 24 months. The study surveyed 2000 senior executives, which shows a clear tendency toward accepting crypto payments among the upper management of retail businesses.

In this article, we’ll learn why crypto payments are beneficial for businesses and what are their key characteristics are.

Why Are Crypto Payments Good for Businesses?

The popularity of cryptocurrency is rapidly on the rise, with over 400 million people around the world owning some type of crypto. The rise of crypto adoption also means that more and more customers are beginning to demand cryptocurrency payment options in everyday life.

A cryptocurrency transaction is quite easy to initiate. Users can send a crypto transaction with just a few moves from their mobile crypto wallet app to a vendor, regardless if the vendor has an online platform or a physical point of sale. Companies can integrate crypto payments through specialised crypto payment gateways that are becoming a key sector of the crypto market because they enable businesses to quickly accept cryptocurrency and convert it to fiat money. This makes the whole process extremely simple because after a simple API integration a business can start accepting various popular digital currencies, practically effortlessly.

With crypto payments, companies can grow their profits by catering to a broader customer base that prefers to spend crypto instead of fiat currency. Numerous businesses around the world are jumping on the crypto payment bandwagon and data shows that more than 15,000 businesses of all sizes and from various industries, already accept Bitcoin.

All types of businesses can benefit from crypto payments, but the feature is especially useful for e-commerce store owners, iGaming platforms, Forex platforms and other companies that depend on a high-frequency of transactions. In the retail sector, any type of business can integrate both online and physical payments as an additional feature, and the best part is that cryptocurrency payments are much cheaper and faster than using a bank.

The Key Characteristics of Crypto Payments

These are the key characteristics of crypto payments that make them a highly beneficial choice for many businesses

Much Lower Fees
A cryptocurrency transaction on most of the leading blockchains suitable for crypto payments is extremely cheap. It’s usually less than a fraction of a US dollar, and even crypto payment gateways charge much lower service fees compared to standard bank account transactions or payment card processors that sometimes charge 5% or even more.

Blockchains don’t charge percentage fees. Instead, the fees are calculated based on current traffic and congestion parameters. The fees don’t depend on the transaction value, which means that companies can conduct major business transactions and pay just a few cents per transaction instead of a significant bank processing fee.

Immutable Transactions Without Middlemen
Cryptocurrency transactions are immutable, which means that once a payment gets processed through the blockchain, it can’t be reversed. When a blockchain transaction is approved by the network and added to the next data block, it can’t be altered. This is extremely useful for businesses accepting crypto payments because they don’t depend on intermediary payment service providers or banks to process transactions. Thus, there’s no delay in payments, and funds are never reserved by a payment processor.

When a payment goes through the blockchain and arrives into your company’s crypto wallet, the funds are immediately available for spending.

Lighting Fast Transactions
High speed is a key characteristic of some of the leading blockchains used for facilitating crypto payments. For example, networks like Solana, Polygon, and Avalanche take just one to two seconds to achieve transaction finality. This is possible thanks to the fact that blockchains have numerous decentralized network nodes responsible for checking and processing transactions. With so many active nodes, the validation process can go extremely fast. In comparison, bank account transactions can take hours or even days when it comes to cross-border transfers involving multiple intermediary banks.

On the other hand, bank card payments are much faster and allow users to make a payment nearly instantly. However, the status of the receiver’s bank account balance can take much longer to get updated due to the reserved funds mechanism that immediately registers that a user has spent money with a ban card, but the money doesn’t immediately arrive in the merchant’s account. With crypto payments, there aren’t payment delays.

Also, the blockchain consensus mechanism of fast blockchains is designed to make the validation process fast and reliable, primarily focusing on checking whether the transfer is legitimate and not a fraudulent attempt at double-spending the same funds.

High Network Throughput
VISA, one of the largest global payment services, has a network throughput of approximately 65,000 transactions per second. At the same time, networks like Polygon and Solana also have a similar throughput capacity but at much lower transaction costs and faster transaction speed.

There are numerous additional blockchains that have a similar or even higher throughput, which, when paired with lower costs and higher speed, clearly indicates the technical superiority of crypto payments compared to traditional payment gateways.

Blockchains Are Operational 24/7
Banks have daily working hours, and they usually don’t work during weekends. This means that transactions can only go through during their working hours due to the centralized network architecture, which is closely monitored by bank officials and needs manual supervision.

Blockchains operate 24/7 thanks to their numerous network nodes that ensure that even when some nodes aren’t active, the network stays up and running. Thanks to the constant availability of crypto payments, businesses can maximize their profits and accept payments at all times, which is especially useful for companies that conduct business online.