Pay and drop? Businesses that accept crypto payments will influence adoption

Cryptocurrency enthusiasts often argue that businesses need to start accepting crypto as payment in order to grow.

Some crypto communities often focus on growing business adoption, with maps currently compiling businesses around the world that accept various cryptocurrencies as a form of payment.

But if a business accepts cryptocurrency payments just to dump them on the market, it can undermine the entire effort as the assets are sold back into the market after the payments are made.

Additionally, a business that accepts cryptocurrency payments through a third-party processor does not follow the encryption process of managing their own private keys, which means they have complete control over their wallet.

On the other hand, proponents argue that the mere act of enabling cryptocurrency payments opens up new ways for consumers to transact with crypto, bringing with it a long-awaited new use case.

Businesses embracing crypto boosting adoption?

On top of that, business accepting cryptocurrency payments will increase adoption. Still, if the received digital currency is immediately returned to the market, it is generating as much demand as supply. This simultaneous buy-sell cycle may not contribute significantly to cryptocurrency adoption.

Additionally, it is unclear how relevant a business accepting cryptocurrency payments is to actual adoption, as users are unlikely to go through the process of purchasing cryptocurrencies if they can only pay in fiat currency in their local area.

The essence of adoption is not only in the act of adoption by businesses; It basically depends on the ease of access and willingness of consumers to shift their transaction needs to cryptocurrencies.

A study by Forrester Consulting, a leading research and consulting firm, found that merchants who accept Bitcoin (BTC) attract new customers and sales.

Research shows that cryptocurrency payments bring up to 40% of new customers to merchants, and twice as much spending with crypto customers than those using credit cards.

Speaking to Cointelegraph, BitPay Chief Marketing Officer William Zilke cited research from Forrester Consulting as saying that cryptocurrency payment processors offer cryptocurrency issuers a quick and easy way to pay for big-ticket items and everyday purchases.

Zielke said that in the first half of this year, the BitPay dynamic cryptocurrency market saw a 10% uptick in new customer registrations compared to last year. He adds that while some brands may already have a technically savvy user base when they start accepting crypto, other merchants can introduce new users to crypto:

“Alternatively, merchants like AMC Theaters will reach a wider audience of customers who need to become more familiar with the crypto world. Partnering with big brands like AMC Theaters is a great way to increase customer adoption as it introduces crypto payments for everyday purchases.”

Sankar Krishnan, head of digital assets and fintech at consultancy Capgemini, told Cointelegraph that the currency is used for both trading and savings purposes, adding that “cryptocrypto is attracting more interest from users today because they expect its value to increase in the future.”

However, Krishnan noted the risks associated with cryptocurrencies, including their high volatility, which means mainstream adoption of cryptocurrencies for daily transactions is “still a work in progress.”

Per Krishnan, as cryptocurrencies become “a more viable option for day-to-day purchases, we can expect more payment providers to accept and facilitate cryptocurrency transactions.” He added that whether a business holds or immediately sells the cryptocurrency it receives for goods and services “depends on the company's treasury strategy.”

According to the Capgemini executive, the price volatility of cryptocurrencies has a significant impact on this choice, because the market can move in any direction between accepting payments and selling digital assets, it will only be useful if he actively participates in crypto business.

A business that accepts and sells cryptocurrency also “sends a clear message to the market that they don't expect the cryptocurrency to appreciate in the future,” Krishnan said. In his words, what the business does is a “risky move.”

Speaking to Cointelegraph, Justas Paulius, CEO of cryptocurrency payments processor CoinGate, took a balanced approach and said that it can't be proven that this buy-sell cycle has “little, big or no effect because there are so many factors.” First things to consider are, for example, which cryptocurrency to use, how and where to sell it, and how much.

Paulius added that consumers “tend to repurchase cryptocurrency that they spent recently,” suggesting that there is indeed a strong demand for businesses to adopt cryptocurrency. But he said the benefit could be in the resulting liquid:

“Whether the currency is being bought or sold, these actions of both parties create a better exchange of money in the market and help them balance each other and determine the correct price of money at any given time.”

Businesses that accept cryptocurrency payments can increase adoption in other ways, such as simply by spreading awareness of their support for cryptocurrencies that other services can provide, or even by promoting certain payment processors.

Crypto payment processors such as on-ramps

Cryptocurrency payment processors can allow businesses that do not directly accept cryptocurrency payments to allow consumers to pay with them. Major car manufacturer Honda, for example, does not accept crypto payments, but with FCF payments, people can use Bitcoin and other cryptocurrencies to buy Honda cars.

Paulius explained that “as people see these payment options being introduced every day by small and large businesses,” the spread of awareness is spreading, indicating that the demand for digital assets is growing. He said these signs could see the business's competitors become “interested and curious”.

He added that there is little to no harm in enabling a crypto payment method, but it brings many tangible benefits to businesses that work instead. According to a study by Forrester Consulting, crypto adoption seems to bring more customers who spend more.

Third-party payment processors, according to BitPay, introduce new businesses to the cryptocurrency community as businesses begin accepting crypto payments and help them comply with all local regulations to facilitate accepting cryptocurrency payments.

“Using third-party payment processors allows businesses to accept crypto payments without ever having to touch or hold crypto, eliminating volatility risks. Fast integration times and easy setup make it an easy and fast alternative to using your own wallet. Companies that use processors also avoid having to track their spending based on different coins for tax purposes.” They escape.

Speaking to Cointelegraph, Gracie Chen, managing director at cryptocurrency exchange Bitget, said that “adoption of new things requires extensive user education to build awareness and trust” and that businesses using third-party payment processors “can play a big role in the public eye.” Cryptocurrencies”

While third-party payment processors seem to be the go-to for the cryptocurrency space, it's important to note that their use undermines the fundamental ethos of decentralized and self-sovereign cryptocurrencies. Using them means that businesses rely on an external platform to accept crypto payments, which may be difficult to change in the future if necessary.

Paulius said that, in some cases, it may be more beneficial for businesses to manage their wallets. He said these companies can only use open source solutions and run their own processors.

The move, however, comes with additional risks, such as AML [Anti-Money Laundering] Screening or KYC [Know Your Customer] Management must still follow the law and comply with regulations. He added:

“Businesses want to accept multiple cryptocurrencies at once, but receive periodic payments in a single currency, such as US dollars or euros, to a bank account, which is difficult to set up on your own.”

Paulius explained that businesses want easy integration, transaction notifications and the ability to receive customer refunds and payments across multiple networks, all facilitated by payment processors.

Despite the costs associated with integrating cryptocurrency payments with third-party payment processors, Paulius said, “they're still less expensive than processing card payments.”

While accepting cryptocurrency payments can be challenging for most businesses, deciding what to do with the amount of money you receive can be just as difficult. Most companies that accept crypto payments will exchange the money immediately, but what if they don't?

Why pay in crypto?

Regardless of whether businesses accept cryptocurrency payments – through their own solutions or third-party payment processors – one question remains: Why would consumers choose to pay in their local fiat currency, especially if they don't already own crypto?

Paulius said that in some cases, banking is not an option, and cryptocurrency can be a very important solution. Migrants or people from foreign countries or people stuck in difficult situations where the financial system does not work for them can rely on a decentralized network for their payments.

“It's not uncommon for consumers to buy cryptocurrencies to use for retail payments,” Paulius admits, adding that some people value their privacy “and it could be on different issues.”

“Many of those people use cryptocurrencies to buy VPNs, hosting solutions, proxies and similar services because they can remain anonymous and disclose little or none of their personal information to a few third parties.”

Paulius concluded that cryptocurrencies could be the fastest way to make transactions. Speaking to Cointelegraph, Uhodler CEO and founder Ilya Volkov said that BTC and Tether (USDT) can easily be used at the same point of sale terminals in various shops and restaurants in Lugano, Switzerland. For traditional card payments.

At Volkov, some startups are working on ways for users to use these terminals to pay directly from their MetaMask wallets.

Companies can provide a way for consumers to use cryptocurrencies, making these digital assets more common and valuable. Additionally, third-party processors make it easier and less intimidating for businesses to start accepting cryptocurrencies, which may encourage other companies to do so given the growing demand.

The path to mainstream adoption is more complex, but will play a significant role in whether it's done in cryptocurrencies and whether consumers will even choose to pay in crypto.

While more sophisticated and tech-savvy consumers may use cryptocurrency payments to protect their privacy, cryptocurrencies can provide a lifeline in dire situations. Whether or not they'll accept it as a payment method when showtime comes up remains to be seen.