21st January, 2022
Travel companies continue to evaluate factors associated with crypto acceptance for transactions as its adoption is growing around the world. Why to go for it as a merchant – because of the cost advantage? Chargeback management? New customers or order value? What’s the UX and conversion like?
As explained during Ai’s webinars late last year, when merchants opt for crypto acceptance, there are options where they don’t “touch the crypto” and associated risks are ruled out. Other highlights include no price risk, no chargebacks, next day ACH and the company charges 1% fee.
Merchants are also keeping a tab on the user base.
So who is paying with crypto today?
In its latest report, Nuvei shared that there an estimated 300 million crypto users worldwide. Only 15-25% are using crypto for merchant payments. Crypto users are relatively homogenous: generally young (#millennials) men with average annual incomes in excess of $100K.
According to a separate BitPay survey, approximately 70% of users use crypto only as a store of value or for speculative investment, while only approximately 25% users use it for making payments online.
Merchant rationale
Referring to the rationale behind merchants accepting crypto payments, Nuvei referred to one group with a “vested interest in the success of the ecosystem, either as owners of digital asset businesses or as significant holders of cryptocurrencies. These merchants “truly believe in foundational premise behind blockchain and are positioning businesses to be crypto native from the ground up”. Another group – intends to “make a statement and create a buzz, plan to expand addressable target market by attracting crypto native demographics to purchase their products/services, target incremental sales and margin from new customers” etc.
A couple of highlights:
- In addition to high-risk verticals, there is also emergence of crypto exchanges and non-fungible tokens (NFTs), rapidly emerging as merchant acceptance verticals.
- In mainstream eCommerce retail verticals though, crypto payments are largely absent today.
Nuvei’s report also clarifies certain misconceptions (related to crypto settlement, environmental concerns, fraud and chargebacks) and shared certain regulatory restrictions (taxation, banking restrictions, mining restrictions etc.), AML risks and other issues that are main reasons behind low merchant acceptance for crypto payments today.
The report refers to certain adoption waves and development scenarios (regulatory clarity, NFTs to ride the wave of crypto acceptance, the role of card schemes, the role of Internet giants etc.) in taking crypto acceptance forward. “There are many positive waves of disruption/ adoption gathering pace that we anticipate ultimately driving more mainstream acceptance and demand. The pace of this adoption will be a function of how these waves coalesce to drive momentum,” concluded the report.
By Ritesh Gupta
Ai Team
