Are Businesses Accepting Crypto, Really Fuelling Crypto Adoption?

  • November 14, 2023
  • Jennifer Moore
Are Businesses Accepting Crypto, Really Fuelling Crypto Adoption?

Crypto enthusiasts argue that businesses accepting crypto payments is crucial to boost adoption. Thereafter, to make it more useful, and create stronger demand for these currencies.

If a business accepts cryptocurrency payments merely to sell them off immediately, it could undermine the entire effort. Since the assets would then be sold back on the market right after payment. Additionally, by utilizing a third-party processor to accept cryptocurrency payments, businesses are not adhering to the cryptocurrency ethos of fully controlling their wallet and managing their private keys.

There is a debate among cryptocurrency enthusiasts about whether businesses should start accepting cryptocurrency payments to boost adoption. Some argue that this could create strong demand and usability for cryptocurrencies. However, others caution against accepting payments through a third-party processor. Thereafter, immediately dumping them on the market undermines the entire effort. In this context, we explore the impact of businesses accepting cryptocurrency payments on the overall adoption of digital currencies.

Do Businesses Accepting Crypto Payments Boost Adoption?

Although accepting cryptocurrency payments by businesses may seem like a way to boost adoption, it may not necessarily be as effective as it appears. This is because if the digital currency received is immediately sold back on the market, it may not create any additional demand for the currency. Hence, the simultaneous buy-sell cycle may not contribute significantly to cryptocurrency adoption.

Furthermore, it is not certain how much of an impact businesses accepting cryptocurrency payments can have on actual adoption. Users are less likely to go through the process of buying cryptocurrencies. Especially, if they have the option to pay in their local fiat currency.

The true essence of adoption does not simply depend on businesses accepting cryptocurrencies; it is primarily determined by the ease of access. Thereafter, the willingness of consumers to switch to cryptocurrencies for their transactional needs.

Forrester Consulting Study on Businesses Accepting Cryptocurrencies

Forrester Consulting, a renowned research and advisory firm says businesses that accept Bitcoin reports attracting new customers and increasing sales. Thereafter, the study reveals that cryptocurrency payments have the potential to bring in up to 40% of new customers for merchants. Crypto customers spend twice as much as those who use credit cards.

William Zielke: The Chief Marketing Officer of BitPay

William Zielke highlights the convenience of cryptocurrency payment processors. Especially, for those who wish to make purchases of both high and low value.

According to Zielke, BitPay observed a 10% increase in new customer registrations during the first half of this year. This is in comparison to the previous year, despite the unstable nature of the cryptocurrency market. While some businesses may already have a tech-savvy customer base that uses cryptocurrencies. However, others may end up introducing new users to the world of crypto.

Zielke suggests that partnering with major brands can help promote the adoption of cryptocurrencies among a wider audience. By collaborating with such businesses, it becomes easier to introduce crypto payments to make everyday purchases. Moreover, encourages more people to become familiar with the world of crypto.

Sankar Krishnan: Head of Digital Assets & Fintech Capgemini

Sankar Krishnan believes that money has both transactional and savings purposes. He argues that cryptocurrency is gaining greater interest from consumers today. Because they anticipate its value will rise in the future.

According to Krishnan, it is important to recognize the potential risks that come with using cryptocurrencies. One such risk is their high volatility, which makes it difficult to use them for everyday transactions. As a result, the widespread adoption of cryptocurrencies is still a work in progress.

Cryptocurrencies are a more practical option for everyday transactions. Therefore, payment providers will likely become more open to facilitating such transactions. Furthermore, he says that whether a business chooses to hold onto the cryptocurrencies. As it receives goods and services or sells them immediately is dependent on its treasury strategy.

The decision of whether to hold onto or sell the cryptocurrencies a business receives for goods and services. It is heavily influenced by the price volatility of these digital assets. If the market moves in an unfavorable direction between the time the firm accepts the payment and sells the cryptocurrencies. However, it may not be beneficial to hold onto them, unless the company is actively engaging in crypto trading.

If a business accepts cryptocurrency payments and sells digital assets immediately. It sends a clear message to the market that it does not anticipate the cryptocurrency’s value to increase. This move, as Krishnan describes it, is a “de-risking move” that the business makes.

Justas Paulius: CEO of CoinGate

Justas Paulius, the CEO of CoinGate, a cryptocurrency payments processor, offered a more balanced perspective on the matter. He states that it is difficult to determine whether the buy-sell cycle has a significant impact or not. These factors include the type of cryptocurrency being used, how and where it is being sold, and the amount of the cryptocurrency. 

Paulius also noted that consumers tend to repurchase cryptocurrency soon after spending it. Thereafter, this indicates that there is indeed a higher demand for cryptocurrency when businesses accept cryptocurrencies. However, he emphasized that the advantage may come from the generated liquidity.

Paulius added that regardless of whether the cryptocurrency is being bought or sold. Both actions contribute to improved liquidity in the market. This, in turn, helps balance out the market and determine the true price of a currency at any given moment.

Accepting cryptocurrency payments can have other advantages for businesses as well. Thereafter, even if they choose to sell the digital assets immediately. One such advantage is the potential to increase awareness of their support for cryptocurrencies or specific payment processors that offer other services. This, in turn, can help boost the adoption of cryptocurrencies among consumers and other businesses.

Businesses Accepting Crypto for Crypto Payment Processor’s Adoption

As cryptocurrency payment processors become more popular, businesses that do not directly accept digital assets may opt for their integration. Even though major companies like Honda do not accept crypto payments, they can still offer such an option via FCF Pay. Thereafter, it allows customers to buy a car with Bitcoin or other cryptocurrencies. This trend is causing a growing demand for digital assets, as more and more businesses introduce crypto payment options every day. 

According to Paulius, this could attract the attention of competitors who may become curious about this growing trend. Businesses that enable a crypto payment method have nothing to lose. Thereafter, can only gain from the several tangible benefits it brings. One study by Forrester Consulting found that accepting crypto payments could lead to an increased customer base and higher spending.

BitPay on Adoption of Crypto Payment Processors

According to BitPay, third-party payment processors can assist businesses in staying compliant with local regulations while facilitating the acceptance of cryptocurrency payments. This not only enables businesses to process crypto payments but also promotes them to the cryptocurrency community as they begin to accept digital assets.

When businesses use third-party payment processors, they can accept cryptocurrency payments without having to directly handle the coins. This eliminates the risks associated with volatility. The integration process is fast and easy, making it a convenient alternative to setting up your wallet. Additionally, companies that use a processor don’t have to worry about tracking costs for tax purposes based on different types of coins.

Gracy Chen: Managing Director of Bitget

According to Gracy Chen, the managing director at Bitget, introducing new things requires a lot of user education to establish trust and awareness. Chen believes that businesses using third-party payment processors can play a crucial role in promoting cryptocurrencies and making them more mainstream.

It is important to consider that while third-party payment processors can serve as entry points to the cryptocurrency industry, they go against the fundamental principles of decentralized and self-sovereign currencies. Additionally, using these processors means that businesses have to depend on an external platform to receive crypto payments, which can become problematic if there is a need for change in the future.

Justus Paulius: CoinGate CEO on Businesses Accepting Crypto

According to Paulius, in certain cases, it may be more advantageous for businesses to manage their wallets. In such cases, open-source solutions can be used to run their processors. However, this approach comes with additional risks such as compliance with AML screening and KYC management requirements. Paulius also noted that businesses often prefer to accept multiple cryptocurrencies while receiving periodic payouts in a single currency, such as U.S. dollars or euros, to their bank accounts. Achieving this can be challenging when managing their wallets.

In addition, Paulius pointed out that businesses also require easy integrations, transaction notifications, and the ability to refund customers and accept payments across different networks, all of which are made possible through payment processors. Although integrating cryptocurrency payments with third-party processors may come with certain costs, Paulius argued that they are still more cost-effective when compared to processing card payments.

While accepting cryptocurrency payments can be a challenge for most businesses, determining what to do with the received amounts can also prove to be difficult. Although most companies prefer to convert the funds immediately, there is the possibility of exploring other options.

Why Consumers Should Choose Paying With Cryptocurrencies?

Although businesses accept crypto payments through their own or third-party payment processors, it remains unclear why consumers would prefer to pay with cryptocurrencies instead of their local fiat currency, particularly if they don’t already possess any crypto.

According to Paulius, cryptocurrencies could be a much-needed solution in cases where banking isn’t an option. For instance, individuals in countries where the financial system isn’t functioning, refugees, or people trapped in dire situations in foreign countries, could rely on decentralized networks for their payments.

While Paulius acknowledged that people don’t usually purchase cryptocurrencies for retail payments, he stated that it’s likely in certain cases where people place a high value on their privacy.

“Numerous individuals use cryptocurrencies to purchase VPNs, hosting solutions, proxies, and comparable services, primarily because they can remain pseudonymous and reveal little or no personal information to fewer third parties,” as per Paulius.

According to Paulius, cryptocurrencies can also provide a faster way to conduct transactions. Ilya Volkov, CEO and co-founder of YouHodler stated in an interview with Cointelegraph that in Lugano, Switzerland, BTC and Tether USDT can be conveniently used in numerous shops and restaurants via the same point-of-sale terminals used for traditional card payments.

Volkov further mentioned that certain startups are developing methods to enable users to pay directly from their MetaMask wallets using these terminals.

Also Read-  As 2023 Draws to a Close, Here’s What You May Observe in the Crypto Industry

To Conclude

In conclusion, companies can facilitate the use of cryptocurrencies, making these digital assets more familiar and useful to consumers. Moreover, third-party processors can make it less daunting for businesses to start accepting crypto, potentially encouraging other firms to do the same, given the growing interest. However, the route to mainstream adoption is intricate since the use of cryptocurrency and whether consumers opt to pay in crypto are crucial factors. While more sophisticated and tech-savvy consumers are likely to use cryptocurrency payments to protect their privacy, cryptocurrencies could also serve as a lifeline in more extreme situations. Whether they will be widely accepted as a payment method in the future remains to be seen.

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