Cryptocurrency has affected all sorts of UK business sectors in recent years. From how phenomena like Ripple has pushed banks to adopt faster payment times to how decentralised ledger technology has transformed
security for many firms – business is definitely feeling the crypto effect to a significant extent.
But how has cryptocurrency affected the world of e-commerce? What effects has crypto had on the methods of payment which e-commerce stores have to accept – and how important is the security element of this question? This article will go into more depth to explain just what crypto’s effect on this sector has been.
Methods of payment
The first major way in which e-commerce has had to adapt to the cryptocurrency revolution is, of course, in terms of payment methods. Ever since bitcoin was used to pay for a pizza in 2010 in its landmark first-ever use for goods and services, it has become steadily more and more popular. Many users are now using this bitcoin robots list and other tools to enhance their crypto profits – and they need somewhere to spend them.
For an e-commerce store, there are advantages and disadvantages to accepting bitcoin. The advantage is of course that it opens up the pool of potential customers more widely. For a store which sells something personal or otherwise sensitive, offering bitcoin payments means that customers who highly value privacy are perhaps more likely to shop there given crypto’s nature as a decentralised, private tool.
But in other ways, it’s a minefield. It might require special payment processing tools which can be
time-consuming or expensive to first set up, for example. Also, cryptocurrency can be highly volatile: its value can fluctuate on a regular basis, and if an e-commerce store owner has not had a chance to convert crypto proceeds back into cash, a value drop could mean a significant revenue decline for that store.
E-commerce store owners who accept crypto have also had to carefully think through the security elements involved. In some ways, having a crypto wallet can lead to security vulnerabilities of one type or another. SIM-swapping, for example, refers to a crime in which an insider at a telecoms firm betrays the confidence of a customer and allows a hacker to get into the customer’s mobile phone and consequently to steal their crypto. From an e-commerce owner’s perspective, these sorts of vulnerabilities are not insurmountable and could be worth it if transaction costs are hefty enough, however, they do require some time to be spent to get around them.
But it’s not just the modes of payments themselves which have been affected by the rise in cryptocurrencies. The lengths of time which are needed to process these transactions are also in the spotlight thanks to crypto, also the ways in which it has transformed payment processing. The most famous example of this is Ripple. Ripple is a cryptocurrency service designed to offer payment and financial services institutions a chance to send money around the world using blockchain and to make the necessary improvements to the liquidity of those institutions.
For a major e-commerce business which previously had to rely on traditional banks for payment for goods and services to arrive from another country, this is a godsend. Ripple has been known to deliver transaction times of just a few seconds – which, from a cash flow perspective, could make all the difference to an up and coming or even an established e-commerce brand. And with more and more banks now working alongside Ripple to enhance the offer to customers, it’s likely that an increasing number of e-commerce stores will soon begin to benefit from speedier transaction times.
Crypto, then, has had a profound effect on the way in which e-commerce stores operate. The most obvious way in which this has happened, of course, is in terms of the methods of payment accepted at e-commerce checkouts. But there has also been a range of effects noticed in other ways, too: payments can arrive in company bank accounts more quickly thanks to the arrival of Ripple and similar services, meaning that the whole payments process – rather than just the point of sale – has the potential to become more and more streamlined and cost-effective in the coming years.