Photo by Traxer on Unsplash
October 14, 2024
Should More Retailers Accept Cryptocurrency as Payment?
Business News Daily describes cryptocurrency as a digital form of currency that uses peer-to-peer blockchain technology, operating independently of central banks or government control. Transactions occur directly between buyers and sellers, bypassing traditional third-party payment processors.
Since Bitcoin was first introduced in 2009, cryptocurrency is now traded around the clock and gaining broader acceptance as a payment method.
Retailers are increasingly adopting cryptocurrency as a payment option to cater to customer preferences and stay competitive in a digital marketplace, according to Retail Technology Innovation Hub. The outlet notes that accepting crypto is “seen as one of the best means to futureproof a business.”
This shift also reflects a growing recognition of crypto’s practical benefits, including low transaction fees and its suitability for international money transfers. Recent surveys show that nearly 25% of consumers have used digital currencies for remittances, while sectors like online gaming are also embracing crypto. Regulatory changes, such as the UK’s new classification of digital assets as personal property, are further legitimizing its use in retail.
Incorporating cryptocurrency alongside traditional payment methods offers retailers significant advantages. With lower fees compared to platforms like PayPal, crypto transactions can reduce costs for businesses. Additionally, the security provided by blockchain technology ensures transaction transparency and protection against cyber threats, such as stolen credit card numbers. The borderless nature of cryptocurrencies also enables retailers to expand their global reach without incurring currency conversion fees, positioning crypto as a valuable tool for growth in the retail sector.
Additionally, e-commerce platform BigCommerce reports the following potential benefits:
- Customer privacy: Cryptocurrency transactions do not require personal information, protecting customers’ financial data from third parties like banks and advertisers.
- Transaction speed: Payments are processed almost instantly without intermediaries, allowing for quicker transfers and often lower fees compared to traditional payment methods.
- Easy integration: Cryptocurrency can be easily added alongside other payment options (e.g., credit cards, PayPal), enabling a streamlined checkout process for a global customer base.
According to Deloitte, an estimated 2,352 U.S. businesses accepted Bitcoin as of late 2022, excluding Bitcoin ATMs. An expanding number of companies worldwide are utilizing Bitcoin and other digital assets for various investment, operational, and transactional needs. A Deloitte survey of 2,000 senior U.S. consumer business executives found that many merchants are adopting digital currency payments both to gain a competitive edge and in anticipation of continued growth in digital currency usage.
In November 2023, Sherwen shared that more than 15,000 businesses globally accepted Bitcoin as a form of payment. Some of these include Starbucks, Home Depot, and Whole Foods. In the UK, however, cryptocurrency acceptance in the retail sector was nearly nonexistent at the time. Many mainstream retailers remain wary of cryptocurrency, viewing it as a risk.
Some global banks even classify crypto transactions as fraudulent. In the e-commerce space, however, acceptance is growing. While Etsy doesn’t directly support Bitcoin payments, individual merchants can offer it at checkout. Shopify also allows online sellers to accept cryptocurrency, indicating a more open approach in the digital marketplace.
Business News Daily explains that cryptocurrency is known for its significant price volatility, which can lead to unpredictable value changes. For instance, Bitcoin surged from mere pennies in 2009 to over $64,000 per coin in February 2021, only to plummet to below $28,500 per coin by May 2023. To mitigate this risk, experts recommend quickly converting cryptocurrency back into local currency.
Additionally, Cryptocurrency transactions still face some security risks, as digital wallets are vulnerable to cybercriminals and are not insured like fiat currencies. Companies like Coinbase are working on measures to protect assets, such as insurance for losses. Regulatory uncertainty also looms, with lawmakers developing new rules. Businesses must adapt to these changes, as the IRS classifies cryptocurrency as “property” or a “digital asset,” subjecting transactions to taxation.
Discussion Questions
What impact does the growing acceptance of cryptocurrency in retail have on consumer trust and the shopping experience, especially given rising data privacy concerns?
How does cryptocurrency volatility affect retailers’ pricing strategies, and what risk mitigation measures can they implement?
As regulations evolve, what strategies should retailers adopt to navigate compliance while maximizing the benefits of accepting cryptocurrency?
Poll
Loading …BrainTrust
Kenneth Leung
Retail and Customer Experience Expert
David Spear
President, Retail, OrderlyMeds
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Recent Discussions
More Discussions
Has Kroger Discovered the Limits of Automated Warehouses?
Kroger is winding down its relationship with Ocado, citing cost overruns and a reorganization of its…What Can Ross Do To Cement its Recent Success Story?
Ross has seen strong sales and projects this trend to continue. How can it best cement…Is Cyber Week Set To Smash Sales Records This Year, as Salesforce Suggests?
Salesforce suggests that Cyber Week will set records in terms of sales this year. Is this…
In theory this sounds like a good idea, especially because of the lower transaction fees. In practice, I think it’s challenging and overhyped. The main issue is that of volatility – which means retailers would need to account for and manage the swings in the value of their balances. When the rest of your business is run in real-world currency, that’s an issue. Stablecoins could be a solution, but they are not without their own issue and only using these restricts payment choice. It’s also critical to put crypto in perspective; the market is not as big or as widespread as many think. The total value of all crypto in circulation is around $2.2 trillion. Last year retail sales alone were $8.3 trillion in the US. It is also the case that most people are paid in dollars or their local currency, so using crypto for everyday purchases is an unnecessary hassle.
At this point, I don’t see any general reason retailers should start taking crypto currency. That said, those who first step in that direction must do so only because they know it matters to their specific customers.
cryptocurrency is known for its significant price volatility, This sentence should be enough for retailers to put up the stop sign. I suppose it can be argued the risk is minimized if the crypto is quickly exchanged into…well, actual money, but why go to all that trouble? Retailers have an obligation to offer reasonable means of payment, not to cater of every scheme that comes along…I wouldn’t recommend accepting barter(ing) either.
There will be a time in the future when alternative means of currency such as cryptocurrency may make sense, and even become common place, but likely only for certain products and services. While the numbers shared for retailers and transactions already taking place seem impressive, for the most part let’s be real – many retailers today have enough to manage with their current POS systems and associate training challenges – it would take a specialized process and role to deal with something like crypto in a typical retail environment. In addition to the retailer stating they can handle it, the consumer would have to trust it.
You can make a case that U.S.-based companies doing business internationally are already dealing with foreign currencies and exchange rates. But that’s different from the sort of volatility associated with cryptocurrency. Most retailers (who, after all, use dollars and cents to price their goods and services) would be smart to stay away.
Dick is correct – currency headwinds are already a headache for retailers trying to bring foreign funds home. At best, they lose a few percentage points in an already low margin business, at worst they leave the money in foreign countries for years (a la tech companies), trying to time exchange rates. Better to avoid adding additional uncertainty and volatility to their business model.
Innovation is constant and should always be on the forefront of retailer’s minds. Think back to when credit/debit cards were introduced. There was angst in the market about security, long-term viability, fee structures and employee training. Today, the innovations with Crypto aren’t that different save its volatility. The dramatic swings in value create an enormous obstacle for mainstream acceptance and until this form of currency can prove its stability, retailers would be wise to invest their hard-earned dollars in proven initiatives.
First, I don’t see cryptocurrency “gaining acceptance” among average consumers. Call me uniformed. Second, I don’t see enough of a desire or attraction among consumers to use it. While cryptocurrency offers certain advantages to both consumers and businesses, the currently-available payment methods appear to this veteran to be enough to quell threats to security and to losing cash. Cryptocurrency may be the currency of the future, but that future is not yet, not for another five to ten years.
Retailer should remain caution when it comes to accepting cryptocurrency. At this stage, there should be little concern about missing the wave, since adoption by mainstream retailers is very modest. While there may be some benefit to accepting cryptocurrency to expand payment options, it also comes with a host of complicating factors – like the wild swings in valuation – that make accepting it not worth the trouble for most retailers. No retailer will lose a sale today because they don’t accept cryptocurrency.
It has been a while since ECON101 but I seem to recall that “money” stores value, is an accepted measure of such and is a widely accepted medium of exchange. I think the word “currency” in cryptocurrency is a bit misleading and if retailers will accept crypto then they should consider also accepting other currencies like Bolivars and Zimdollars! But, as always, there’s value beyond the frothy hype so I’m eager to see where the underlying technology of crypto-blockchain eventually settles.
I would say no, or better put, not yet. Cryptocurrency adoption in retail comes with significant challenges:
Retailers need to weigh these risks carefully before diving into crypto acceptance.
There is more to transactions than just fees. The issue with crypto is the value fluctuations and most retailers aren’t structured to handle that. For specific retailers that target holders of crypto (maybe luxury goods retailers) maybe it makes sense, but I don’t see retailers needing to take crypto as day to day tender
Cryptocurrency has an image problem, in part because of the perceived (and real) volatility. Until that goes away this idea is a nonstarter. Interesting, but not operational.
Crypto is the currency of the world. It’s not like going to a country where the US dollar is strong, and you get bargains because of the exchange rate. It’s consistent from country to country. The problem is the inconsistency of its value. The value fluctuates to the point that it is high risk. Furthermore, we haven’t experienced the tipping point where Crypto is used by enough consumers and accepted by retailers where it becomes and acceptable form of payment.
Cryptocurrency is becoming more popular, but I think it’s too early for most retailers to jump on board. The price swings are unpredictable, and there are still too many security concerns and regulatory quests that need to be addressed. While it could become a viable option in a few years, I don’t see it gaining much traction among retailers right now.
Those who love crypto will embrace it. But those ‘low fees’ come at a cost, both for the consumer and the retailer. The anonymity provided by crytpo means reversing or refunding charges will require new policies and procedures – ones it make take retailers a while to get right. This could impact the customer experience. And volatility is definitely an issue. If you hold assets in crypto, you can see a big rise or drop in value very quickly. To hedge against this, retailers may need to implement new financial policies and procedures that moved crypto holdings into more stable assets on a regular basis. My guess is only the most digitally mature retailers will take it on, and only if it’s important to their ideal customer profile.
Retailers accepting cryptocurrency can gain a competitive edge by offering lower transaction fees, faster payments, and global reach without currency conversion costs. However, price volatility and regulatory challenges remain key concerns. Businesses adopting crypto should prioritize secure wallets and consider quick currency conversion to manage risks. As adoption grows, integrating cryptocurrency could be a smart move to future-proof retail operations. For those looking to explore crypto in a secure and user-friendly way, check out Amatoshi.