The business has gone through a revolution in the last few years. From blockchain, and FinTech to AI and cryptocurrencies the world of commerce is moving faster than ever. But, if there are any buzzwords set to shape 2021, cryptocurrency will definitely at the top of the list. This means cryptocurrencies are hot news in today’s time.
The reason why crypto has become hot news in the world is that big companies and brands have started using it as their payment. You will wonder but Visa and renowned vehicle company tesla will also make use of and accept cryptocurrency in payment for its vehicles. However, merchants may be wondering if cryptocurrencies are perfect for mainstream eCommerce. So, the answer is straight no. Let’s know why.
Before starting on why you shouldn’t use eCommerce, it is essential to know what cryptocurrency is. What is Cryptocurrency?
Cryptocurrency is the type of payment based on a decentralized digital ledger system that’s used to make secure, encrypted payments between individuals or businesses. It uses blockchain technology to record transactions and verify the ownership of currency in real-time. This helps tokens from being stolen.
Like in traditional payment systems, where transactions and data are controlled by the bank only, cryptocurrencies are held in a peer-to-peer network. This ties together many users all of which have a role in verifying and encrypting new payments. This process helps a lot in making payment secure and almost impossible to hack without alerting everyone in the network.
Why You Should Avoid Cryptocurrencies in E-Commerce?
You might be understood now that what is cryptocurrency is and how it works like regular payment methods. But you don’t know that there are cons to using crypto when it comes to eCommerce, and that’s why we will discover those cons here to make sure that why you shouldn’t use crypto.
When it comes to eCommerce, most of the customers use credit cards or use cash on delivery. Well, the reason why credit cards are at the top of the priority is that they earn cashback and point-based rewards. Issuers offer these incentives to encourage consumers to pay with cards. There’s no large-scale crypto equivalent to the city’s double cash or Amazon’s prime rewards visa, or any of the hundreds of other popular loyalty programs. The lack of those programs is a disincentive to use crypto for routine payments.
This is the reason why crypto is not being used in eCommerce and why consumers choose other payment methods over crypto. Even eCommerce store owners want consumers to use other payments to earn some money on every purchase.
No consumer safety
Another reason is consumer safety! Yes, you cannot expect a customer to use crypto without convincing them about safety, and easiness. Chargebacks are expensive and time-consuming for merchants. Nonetheless, they are an important part of the credit card system, and knowing that they are not responsible for fraudulent credit card purchases gives customers confidence.
Cryptocurrencies have no such safety and the customer has no recourse if the merchant doesn’t have to deliver on its commitments. Merchants have no legal or contractual obligation to refund a crypto purchase, although they may choose to do it. A consumer could presumably sue a merchant, but it’s unlikely.
Not used everywhere
This is the most common reason why you cannot consider crypto for eCommerce. Well, cash and credit cards are universal, while cryptocurrency isn’t. there a slew of crypto, but using crypto payments for retail purchases remains an anomaly.
You know and can understand that only a handful payment gateways process crypto transactions. Meanwhile, cryptocurrencies are too difficult for consumers to obtain and for merchants to accept. And this is the reason why you will get regular payments in eCommerce stores rather than cryptocurrency payments.
Not choice of method
Cryptocurrencies are available in many forms and there are almost 5,000 cryptocurrencies. As a merchant, you will never like to waste time on processing those currencies and even merchants are largely unsure how to process thousands of available options.
This means, there’s no fixed payment method for crypto, and new coins pop up seemingly daily. And that’s the reason it becomes tough for merchants to accept different cryptocurrencies and processes. There’s also a problem if a customer wants to pay with the latest cryptocurrency and you don’t have a payment gateway that process. At that time, what you can do is consider national currencies and most large financial institutions deal with currencies, at most.
At next, cryptocurrencies rates are too expensive for online purchase and are about 1 percent, roughly 1 percent lower than most credit cards. However, accepting crypto becomes expensive when integrating and maintaining a separate payment gateway and adding currency-conversion fees.
Later, converting cryptos to currencies is the real catch and problem. Well, merchants should carefully consider that cost as the rates are generally high, wiping out the savings from the low transaction fees. Hence, having crypto for eCommerce can be too expensive than regular payment methods.
Not enough protection
This is the most cause why eCommerce is not implementing crypto. Well, crypto is essentially digital cash, and stolen credit cards and bank accounts are a headache. However, unless the account holder was negligent, the issuer or bank will return the money, but not so with cryptocurrencies. Once stolen, cryptos are gone forever and with no recourse. Hence, holders of cryptos must add safety measures to protect their accounts.
Complications and regulation
There are only a few countries that might accept crypto as national and local governments worldwide are contemplating taxing, banning, limiting, or controlling cryptocurrency. Many countries are in the early stages of creating their national cryptocurrencies, called CBDCs. Meanwhile, merchants should know what are the complications and regulations the government has marked before making use as consumers should also let the dust settle.
Hence, eCommerce retailers who want to expand and provide convenience to customers with easy-peasy payment methods and great shopping experiences shouldn’t consider cryptocurrencies. Well, we have discussed the major reason that may cause you difficulty and can also create the best shopping experience for customers.
Need help in getting knowledge more about cryptocurrency for eCommerce? M-connect Media can help you as we have an in-house team of eCommerce experts with wide experience and expertise. We can assist you with the pros and cons of crypto for your eCommerce store. Give us a call to know more about us.