As newer more cost-effective technologies emerge within ecommerce trends disrupting retail, online retailers must consider how such advances can help them grow and increase revenue. Bitcoin is increasingly being adopted by big online merchants.
While widespread adoption of the cryptocurrency has been slow, the march has been steady behind acceptance and the growing financial influence of millennials. As more and more businesses realize the benefits of the technology, the relationship between Bitcoin and ecommerce becomes inevitable.
Bitcoin is a digital currency that has no middleman and no transactional fees. It's no secret that credit card transaction fees eat away at the retail industry's profits. In fact, depending on the number of transactions and the type of credit card used by the consumer, fees could be anywhere from 2 to 4 percent. Eliminating this fee can quickly add up to significant cost savings for online retailers. In addition, as cryptocurrency transactions don't rely on bank processing times, goods can be shipped to customers right away, bringing more immediate gratification for ecommerce customers.
Unlike tradition payment methods, Bitcoin works by creating records of transactions between different addresses. If a shirt is purchased by a consumer through an ecommerce clothing store that accepts Bitcoin, the transaction registers as an increase in balance for the retailer and a decrease in the balance for the consumer. The transaction is also stored in a vast public ledger or blockchain. A more efficient process, blockchain can save both retailers and consumers valuable time and money by reducing transaction approval times while eliminating redundancies and the potential for processing errors or fraud.
Security is a primary issue for a growing ecommerce customer base. According to CreditDonkey, 46 percent of Americans were the victims of credit card fraud in the last five years. Online shopping is the most common outlet for this type of the crime and it is getting worse. However, the blockchain technology behind Bitcoin can virtually eliminate this problem. Blockchain uses a decentralized peer-to-peer ledger network. Each member of the blockchain must "agree" on the validity and monetary value of each transaction. This makes it extremely difficult for cyber criminals to manipulate cryptocurrencies for fraudulent purposes. Since consumers now do a significant amount of their shopping online, retailers that can provide a high level of security are sure to have an advantage when it comes to minimizing chargebacks, attracting and retaining clientele, both now and in the future.
Part of Bitcoin's appeal is its global reach. Independent of any individual currency or federal trade regulations, Bitcoin can be used by anyone, anywhere in the world. Online retailers who only accept local currencies could be missing on a much wider demographic of customers. As a result, ecommerce retailers around the world, offering everything from dental services to hotels accommodations, have begun to accept the global currency in an effort to expand their consumer base. In addition, several countries now use Bitcoin for official government transactions. However, the United States has the highest Bitcoin trading volume and number of users worldwide.
As the retail industry realizes the benefits of blockchain technology, use of the cryptocurrency is sure to increase and may eventually become the norm for online transactions. Early adopters of Bitcoin will be well-positioned to gain market share and increase earnings as both consumers and other online retailers look to them as innovative leaders ready to bring ecommerce into the future.
Onestop is an end-to-end ecommerce solutions provider, managing a portfolio of more than $350 million in gross merchandising value (GMV). As a partner of international retail brands, Onestop monitors developments and innovation in cybersecurity and payments to keep clients on the cutting edge of customer demands and market conditions.