Do businesses accepting crypto boost adoption?
Cryptocurrency enthusiasts often argue that businesses need to start accepting crypto as payments to accelerate its adoption and boost usability. To this end, some crypto communities focus heavily on expanding business adoption, compiling lists of businesses worldwide that accept different cryptocurrencies. However, if businesses accept crypto payments only to dump them on the market, it may undermine the entire effort.
Moreover, a business accepting cryptocurrency payments through a third-party processor isn’t adhering to the cryptocurrency ethos of managing their own private keys. On the flip side, proponents argue that the mere act of enabling crypto payments opens up new avenues for consumers to transact in crypto, bringing in a new, long-awaited use case.
On its surface, businesses accepting cryptocurrency payments would boost adoption. However, 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 crypto adoption. Additionally, it isn’t clear how relevant businesses accepting crypto 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.
A study by leading research and advisory firm Forrester Consulting revealed that merchants accepting Bitcoin (BTC) attracted new customers and sales. It 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.
Third-party payment processors, such as BitPay, help businesses stay compliant with all local regulations to facilitate accepting crypto payments while promoting new businesses to the crypto community. Additionally, they allow businesses that don’t accept crypto payments directly to let consumers pay with them. For example, major automobile manufacturer Honda doesn’t accept crypto payments, but through FCF Pay, people can use Bitcoin and other cryptocurrencies to buy a Honda car.
When cryptocurrencies become a more viable option for day-to-day purchases, more payment providers are expected to embrace and facilitate cryptocurrency transactions. However, whether a business keeps the cryptocurrencies it accepts for goods and services or sells them right away is heavily influenced by the price volatility of cryptocurrencies.
Businesses accepting cryptocurrency payments may boost adoption in other ways, including by simply spreading awareness of their support for crypto or specific payment processors that may offer other services. Additionally, leveraging third-party payment processors allows businesses to accept crypto payments without the need to touch or hold crypto, removing the volatility risks.
The use of third-party payment processors, however, dilutes the foundational ethos of cryptocurrencies centered on decentralization and self-sovereignty. Using them also means businesses rely on an external platform to receive crypto payments, which could be hard to change in the future if necessary.
Why pay with crypto?
Even if businesses accept cryptocurrency payments, one question remains: why would consumers choose to pay with cryptocurrencies over their local fiat currency, especially if they don’t previously own crypto? In some cases, banking is not an option, and cryptocurrencies could be a much-needed solution. Additionally, some people value their privacy greatly and use cryptocurrencies for buying VPNs, hosting solutions, proxies and similar services.
Cryptocurrencies can also be a faster way to make transactions. In the city of Lugano, Switzerland, BTC and Tether (USDT) can easily be used in various shops and restaurants via the same point-of-sale terminals used for traditional card payments.
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.