By Masha Beetroot on July 14th, 2020
The payments industry is evolving at a fast rate.
Both consumers and businesses are transferring an increased amount of funds across borders. According to Statista, the total value of cross-border payments is expected to grow from $21.78 trillion in 2016 to $30.2 trillion by 2022.
The rise of the fintech market – that is expected to reach $460 billion by 2025 with a Compound Annual Growth Rate (CAGR) of 11.67% – promotes innovation among finance and payments organizations, which further facilitates the evolution of the industry.
Despite the significant progress in the payments industry’s development, companies within the sector are still facing major issues, such as limited transparency, high transaction fees, and slow transfer processing times.
With the birth of Bitcoin in 2009, cryptocurrencies have appeared on the financial market, disrupting the sector with innovative features and unique technology in the form of the blockchain.
With benefits like high transparency, low transaction fees, and alternative investment options, cryptocurrencies can make a fine addition to the services of traditional finance companies and payment service providers.
We’ll discuss all these benefits in this article. Let’s dive in!
Simplified Yet Programmable Payment System
Compared to traditional solutions, cryptocurrencies allow businesses to accept payments via a simplified network.
While traditional payments solutions are utilizing closed systems, cryptocurrency applications are generally open-source while everyone has a copy of the global ledger with every record on the blockchain being available for the public to audit.
Due to the above-mentioned features of the blockchain, crypto transactions are verified almost instantly via a global payments network that functions every hour in a day and every day in a year. Also, as cryptocurrency transactions can’t be reversed, businesses implementing digital asset payments face no risk of chargebacks.
As of today, crypto solutions offer near-instantaneous transaction settlements, as well as competitive fees that allow merchants to save up to 70% on payment processing costs.
Furthermore, cryptocurrencies are exempt from the multitude of banking charges, including ATM, credit card, inactivity, and overdraft fees.
Instead, established crypto payment gateways offer a competitive 0.5-1% fees for processing digital asset transactions while providing a simple, yet highly customizable payment network that is easy to integrate for business use.
Furthermore, in the past few years, the cryptocurrency ecosystem has grown significantly. As a result, more developers have joined the space, while an increased number of innovative digital asset solutions have appeared on the market.
As cryptocurrencies are address-based, users don’t have to worry about submitting Know Your Customer (KYC) documents or go through a tedious registration process to create a digital asset wallet. Because of the same reason, crypto payments are pseudo-anonymous by nature.
While cryptocurrency payment networks are simplified, they are also programmable.
Businesses can utilize advanced features, such as multi-signature wallets that offer an additional layer of security to its users (as at least the majority of the shared accounts’ holders need to sign a transaction to be processed successfully).
While smart contracts – computer code that automatically executes a digital agreement between the parties when the conditions are met – offer a multitude of benefits and use-cases for businesses, the DeFi industry – a movement that groups together the decentralized versions of traditional finance applications – is growing at a rapid rate, expanding the functionality of crypto applications.
Furthermore, as multiple industry-leading tech companies offer ready-to-go blockchain solutions (e.g., Microsoft Azure, Amazon AWS), it’s now easier than ever for enterprises to implement distributed ledger technology and cryptocurrency payments into their financial solutions.
Due to all these benefits, cryptocurrencies are a good fit for businesses that accept digital payments from their customers.
Millennials Prefer Digital Currency Over Traditional Finance
In the past, it was the standard to physically visit a local bank branch to deal with your administrative matters.
However, with the rapid advance of financial technology in the recent, a part of financial services – such as e-wallet and crypto solutions – allows users to deal with their banking matters in a fully digital way without leaving their homes.
And, if a financial solution lacks the above-mentioned digital services, as much as 92% of millennials will choose the solutions of a competitor bank that offers them.
Millennials don’t like the habit of physical bank branch visits or handling their finances in a traditional way. Instead, they prefer to go as digital as possible and have their own control over their funds.
According to a recent report, the majority of millennials have lost their trust in the traditional financial industry. Based on the findings of the study, 75% of affluent and 58% of non-affluent millennials fear that the global financial system is being vulnerable.
The trading platform eToro’s survey further revealed that the distrust of millennials is at such high levels that 43% of them trust crypto exchanges more than stock exchanges, despite the fact that the prior services had been exposed to numerous high-value cyberattacks in the past.
ETF Store President Nate Geraci’s statements also indicate that millennials prefer to hold Bitcoin over traditional safe-haven assets, with 90% of the investment advisor’s clients favoring BTC over gold.
Furthermore, iTrustCapital’s survey revealed that millennials consider crypto as one of the best investments during the coronavirus outbreak.
Therefore, due to the increased crypto interest of the generation, adopting digital assets could help your business in attracting millennial customers.