Cryptocurrency was first introduced in 2009, with the launch of Bitcoin, and while it took a few years to gain traction, it was soon hailed as being a potential replacement for fiat currencies and traditional payment methods. Its low-cost, rapid transactions, and its decentralized nature have helped it draw a lot of attention, and it has become popular in some circles, but it certainly hasn’t taken over the financial world yet.
The use of cryptocurrency has picked up a head of steam. Overseas transactions are faster and cost less than with traditional payment methods. Some e-commerce sites offer discounts for crypto payments due to the money they save. Similarly, the best Bitcoin casinos pass the savings they make from cryptocurrency transactions on to their players in the form of bigger bonuses and improved jackpots.
Typically, it can take several days for credit card transactions to verify and process. The payment is accepted at the time of purchase, but the retailer needs to wait until the money is received before they can access the funds. Even payments in the same country can take several days before the funds are accessible to the recipient. Cryptocurrency payments take minutes, at the most, to complete, so the retailer has access to their money much sooner.
Credit card payments are also more expensive. Processing fees range from around 1.5% to 3% or more. Cryptocurrency payments do attract charges, which are paid by the sender and currencies like Ether attract charges of less than 0.1%.
Network fees, sometimes called gas fees, do vary according to how busy the network is and how quickly the sender wants the recipient to receive the money, but these fees are considerably lower than credit card charges. Additional fees may be levied by the payment gateway that a retailer uses, however.
E-commerce websites use payment gateways on their websites. These gateways act as intermediaries. When a person makes a payment on a website, the money is actually sent to the gateway account, where it is transferred to another payment network before being sent to the recipient.
Gateways are necessary for traditional currencies as well as for cryptocurrency payments. Stripe is one of the most popular payment gateways and generally attracts charges of 1.5% or more, but it does offer additional protection such as chargeback and fraud protection, which is critical to online retailers.
BitPay has become the most popular cryptocurrency payment gateway and has roughly similar charges to those of Stripe. However, using BitPay or any similar solution means that the retailer does not have to directly take cryptocurrency payments and funds can be automatically converted to their local currency before they receive them.
The average consumer is unlikely to make the switch to cryptocurrency just for use on e-commerce websites. The number of e-commerce sites accepting cryptocurrency payments is growing, including the likes of Etsy, Adidas, and H&M. Tesla also accepts cryptocurrency, although only for merchandise and not for its electric vehicles.
However, these companies do not really offer any benefits to crypto shoppers. Online casinos and some gaming websites do offer bonuses or discounts for crypto shoppers, which can make the use of Bitcoin and other cryptos more popular.
However, cryptocurrency is still more widely seen as being a form of investment or as offering an opportunity to make a profit, especially since the introduction and rise of Bitcoin ETFs.
Processes for holding and paying using cryptocurrency are improving, and more and more people hold some cryptocurrency, with an estimated 6.8% of the global population with some form of cryptocurrency holding.
As such, the use of cryptocurrency is likely to keep increasing but, for now, at least, traditional payment methods like credit cards and even bank transfers remain more popular.
