Cryptocurrency isn’t a new phenomenon – Bitcoin, the first and most famous of its kind dates back to 2009 – however the current ‘cryptocraze’ has captured the attention of mainstream media and the general public. This means that financial broadsheets, money blogs, and red tops alike now report daily on Bitcoin and the many altcoins available today, but should online retailers be jumping on the bandwagon?
There are thousands of online stores that have already taken the leap of faith; Overstock.com (which sells everything from sofas to satchels) was the first major retailer to accept Bitcoin as a payment type in 2014, and many others including Expedia and Microsoft have followed suit. However, if you look beyond businesses that want to be seen as pioneers, it’s clear that eCommerce isn’t quite ready to embrace cryptocurrency despite the promise of lower transaction fees, and this is largely down to its hyper-volatile value. The dizzying highs and lows of digital currencies in the last 12 months alone make them appealing to high-risk investors that hope to cash in and out at the right time, but such fluctuations can be a costly nightmare for retailers as the actual worth of cryptocurrency used to pay for orders can decrease before transactions are even confirmed (verification can take hours).
In addition, while people are buying and selling cryptocurrency, it’s not clear if many are actually spending it which is why it’s now deemed by many – including Visa – as an asset rather than a payment method. Payment gateway Stripe, which serves over 100,000 businesses, announced last month that it’s scrapping Bitcoin payment support as from April and stated that: “We’ve seen the desire from our customers to accept Bitcoin decrease. And of the businesses that are accepting Bitcoin on Stripe, we’ve seen their revenues from Bitcoin decline substantially. Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense.”
Low use cases and rollercoaster value aside, increasing regulation is also a very real problem for cryptocurrencies due to growing concerns surrounding money-laundering, tax evasion and the gold rush hype leading to unsustainable debts. China is clamping down on cryptocurrency trading and Russia has signalled it will follow, the Lloyds Banking Group and Virgin Money have banned Bitcoin purchases via its credit cards, and Coinbase, the US-based cryptocurrency exchange and wallet service, recently announced that it’s been forced to hand over details of 13,000 of its customers to the IRS.
These combined factors mean that, at present, cryptocurrency has very little appeal for online retailers, which is why we don’t have immediate plans at Visualsoft to pursue cryptocurrency payment options for our clients. However, the potential disruption of a virtual currency is undeniably significant and has certainly peaked the interest of financial industry – so we will however keep a watchful eye on the sector. Even traditional banks such as the Bank of England, Bank of Canada and Sweden’s Riksbank are reportedly exploring ‘central bank cryptocurrencies’, which if successful, could be game-changing for online transactions. Two decades of experience has taught us that change happens quickly in eCommerce, so if and when cryptocurrencies are embraced by financial institutions, and genuinely offer real opportunities for merchants, we’ll be ready to adopt them within our platform.