With cryptocurrencies experiencing phenomenal popularity all over the world, they will soon revolutionize existing financial systems. When it comes to e-commerce, using cryptocurrencies for online purchase payments will be a major turning point in the world economy.
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.