Stablecoins – an edge over cryptocurrencies

While the advantages and disadvantages of stablecoins have been debated by many, their skyrocketing popularity is doubted by none. Stablecoins are a class of cryptocurrencies backed by fiat currencies like the US dollar, and with a redeemable value of 1:1 against it. Since their value is pegged to national currencies, they are relatively less volatile than other cryptocurrencies like Bitcoin and Ethereum, infamous for their incredible price swings.

As such, stablecoins are regarded as a more useful mode of transaction than highly volatile cryptocurrencies. They come with most of the powers of cryptocurrencies but also bring a lot more steadiness in value. Consequently, stablecoins have facilitated a major expansion in the volume of trading digital assets, with their easy liquidity or convertibility into liquid cash.

Stablecoins – backed by top players

The sensational rise of stablecoins has been further accelerated with top players in the financial sector, like Visa, embracing them.

In a brand new initiative, Visa announced that it will support settlements for the USDC stablecoin, where merchants can engage in lightning-fast B2B cross-border transactions easily. To support high-speed performance, Visa has extended its USDC settlement capacity over Solana’s blockchain network. The global payment giant has also launched pilot projects with top merchant acquirers like Nuvei and Worldpay to empower its clients to choose stablecoins over fiat currencies for transactions.

This has come as breaking news in the crypto market and encourages us to step into a brand new era of digital economy. The consequences of Visa’s move have been rather stupendous for stablecoins, especially USDC and Solana. SOL, the native currency of Solana, experienced a tremendous surge by almost 2 percent after Visa’s announcement.

Stablecoins – increasing popularity and B2B benefits

When cryptocurrencies started gaining popularity in the 2010s, they gained major interest from businesses worldwide. This is because cryptos could potentially solve many problems of small and medium businesses when it comes to global trading. However, cryptos were not as stable or dependable as fiat currencies, which made them unsuitable for B2B payments.

When stablecoins emerged, they became game-changers in the B2B sphere. Offering the best of both – cryptocurrencies and fiat currencies, stablecoins empower businesses that want to engage in seamless cross-border trade. Actually, stablecoins bring far more benefits to businesses than investors and traders. Some of the most significant B2B benefits of stablecoins include:

• Efficiency, speed, and lowered costs of cross-border transactions, without the extreme price swings of cryptocurrencies. While cross-border fiat transactions take ages to execute, stablecoin payments are settled in just a few minutes. The sheer speed of stablecoin payment execution is unbeatable, ranging from instantaneous to a meagre few minutes.

• Option to instantly liquidate stablecoins into fiat currencies whenever needed. Since most small and medium businesses tend to function within budget constraints, liquidity is highly crucial for smoothly flowing business operations. Businesses can convert stablecoins into any local currency irrespective of their geographical location. This allows small businesses to function independently of their local markets, and also offers them the flexibility to reach out globally.

• B2B customers get a more affordable and faster payment option, which is not the case for cross-border fiat transactions. Payments in fiat currency come with various fees, which take away a meaty portion of transaction value. They need the approval of central banks and other financial institutions, which delays the process. However, stablecoin transactions involve just the blockchain platform as the sole intermediary. The only transaction cost is the fees for using the blockchain platform, which is significantly less compared to the speed and efficiency.

• With seamless and quick cross-border transactions using stablecoins, businesses have the power to build and maintain healthy trade relations with all parties. And very importantly, stablecoins allow businesses to receive their generated revenues in a matter of minutes. So, they can make salary payments on time, pay supllier bills, ensure healthy cash flow, and cover all liabilities smoothly and efficiently.

That being said, it is important to note that stablecoins are after all, cryptocurrencies, and their transactions are irreversible. In order to encourage wider B2B adoption, it is crucial to have comprehensive global protocols for stablecoins that are flexible yet consistent, risk-based, and emphasize their use cases. Stablecoins, like all other cryptocurrencies, are exposed to operational risks like cyber-attacks and frauds, which highlight the need for robust regulatory treatment of these digital assets.

Final words

Along with strong governing policies, the best way to ensure a scam-free B2B payment environment is through the use of blockchain escrow platforms. Top blockchain escrow service providers, like Uniscrow,ensure the highest standards of stablecoin payment protection in B2B cross-border transactions for their customers. By implementing audited smart contracts in their escrow that manage USDC on the Polygon blockchain, Uniscrow supports quick, seamless, and safe transactions.

It offers the perfect platform for small and medium businesses to capitalize on the rise of stablecoins in the B2B market, with affordable and secure blockchain escrow services. After all, stablecoins are the next big thing in global trade and the key to future B2B cross-border payments.

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In this hyper-digitalized era, as online commerce shatters border barriers and expands to cross the 6.3 trillion USD mark in 2023, adopting different payment methods can be exponentially profitable. E-commerce retailers realize the importance of flexibility in payment methods can drive higher conversions, boost acceptance rates, and regulate customer loyalty as well as help control expenses. Though cryptocurrency or stablecoin transactions rarely happen beyond the NFT marketplaces and Metaverse apps, integrating them into today’s e-commerce ecosystem can prove to be revolutionary.

As per research conducted by Visa, nearly 30 percent of consumers in emerging markets, who know about stablecoins, want to spend them. Observations from these studies are prompting the top e-commerce organizations to consider stablecoins and other cryptocurrencies in their business. A Deloitte study found that almost 75 percent of e-commerce retailers plan to integrate cryptocurrency payments by 2024.

Why stablecoins?

Top brands such as Gucci, Balenciaga, and Adidas have already dipped their feet into experimenting with payment methods that support cryptocurrencies. However, the world’s favorite Bitcoin and Ethereum are known for their incredible price volatility, which makes these a risky payment option for buyers. However, using stablecoins can be a more viable option for companies adopting crypto payments.

The value of stablecoins is pegged to the US dollar, in fact, they can be considered a digital version of the dollar. Stablecoins are entirely reserved in bank accounts by actual US dollars and can be redeemed 1:1 against fiat currency for use on blockchain networks. These dollar-backed digital assets support low-cost, high-speed, and always available perks of cryptocurrencies but without extreme price swings. And since cryptocurrencies operate anonymously, issues related to financial integrity might pose some risk for consumers. However, that will not be the case for fiat-backed stablecoins.

As such, the role of stablecoins is rapidly evolving to replace fiat currency as the chosen currency for e-commerce globally.

The increasing adoption of stablecoins in e-commerce

Global sportswear bigwig Adidas, which has already embraced Metaverse with NFT drops, also plans to embrace stablecoin payments soon. Director of Omnichannel Payments of Adidas, Marko Ivanovic says that stablecoin adoption is soon going to be their main payment method because this is what their customers prefer.

From major tech companies to airlines, more and more businesses across industries are showing greater acceptance of stablecoin payments in exchange for their services or products. For instance, online travel platform CheapAir, and streaming platform Twitch which is supported by Amazon, are now accepting payments in stablecoins like USDC and BUSD.

PayPal’s new stablecoin program is one of the “most important moves” by the organization. The company CEO feels that since stablecoins are directly linked with the US dollar, they can potentially shape the future of US payments alongside traditional fiat currency issued by the Federal government.

Advantages of using stablecoins in e-commerce

While stablecoin acceptance among e-commerce merchants will be primarily driven by consumer demand, it will also benefit retailers by lowering operational costs. As compared to traditional payment methods, transactions over a stablecoin blockchain will be significantly more cost-effective when it comes to unit costs and processing bulk transactions simultaneously. This will be especially suitable for small business owners, who can generate higher profit margins, by cutting down on transaction overheads once they start accepting stablecoins from customers. So, along with satisfying the demands of modern consumers for their benefit, stablecoin transactions will also be profitable for e-commerce brands.

Stablecoins also have the potential to replace credit cards for a diverse range of online transactions. Unlike credit or debit cards, stablecoins will not be stuck by restrictions due to geographical locations. Consumers, no matter their country of residence, will not be mandated to avail of traditional banking facilities to engage in e-commerce shopping. Also, merchants will be able to avail benefits 24×7 and not be required to invest in any setups or expend monthly fees for credit card processors.

As more countries embrace stablecoins, these digital assets can be represented using more fiat currencies. This will offer supreme payment flexibility to e-commerce consumers; they will be empowered to use stablecoins backed by their local currencies. Not to mention the fact that stablecoins will be functioning atop smart contracts, which are the building blocks of the underlying blockchain platform that ensures overall transactional security.

Stablecoins in e-commerce – The Road Ahead

Smart contracts and blockchain is instrumental in shifting to decentralized payment in e-commerce. But, it is imperative to set standardized governance and regulatory policies that ensure the legitimacy of stablecoins and cryptocurrency transactions worldwide. Only then can stablecoins rightfully take over fiat currencies and offer consumers the confidence to make everyday payments using these digital dollar-backed assets.

Aided by a robust DeFi governance framework and a reliable escrow services provider, e-commerce merchants can position themselves for readily embracing stablecoin payments. Choosing a legitimate escrow service platform like Uniscrow will facilitate smooth and lightning-fast stablecoin transactions, along with payment protection and user privacy. It is also the best way to ensure protection against fraud and payment errors at the same time offering maximum transparency to both, consumers and retailers.

Despite initial hiccups, experts are positive that with further innovation in technologies, stablecoins will soon take over the ecommerce landscape as the preferred method of payment.

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