Lots of breaking news are taking place in the cryptocurrency ecosystem. Cryptocurrencies are gradually being implemented in various countries. Digital currencies are taking their place in e-commerce platforms’ agenda as well. That said, what is the significance of using cryptocurrencies in cross border e-commerce? What are the benefits of cryptocurrencies for cross border e-commerce?
Integration of cryptocurrencies to cross border e-commerce environment would undoubtedly carry the ecosystem to higher levels. As virtual currencies become ever widespread around the developed countries of the globe, this fact seems to carry e-commerce to a significant level even in underdeveloped countries. Still, the countries, have many doubts about cryptocurrencies. The most important of all is the security! Nonetheless, cryptocurrencies undoubtedly have a promising potential for the cross border e-commerce companies that desire to market their products abroad.
Cryptocurrencies Are Spreading all over the Ecosystem
Cryptocurrencies are increasingly gaining importance in the world of finance. We’re experiencing a period where cryptocurrencies are gaining respect in public as well as being in great demand not only for organizations but also for individual investors.
Cryptocurrencies, especially the bitcoin that rank the top levels regarding market size, are ever increasingly being used in online shopping. It is estimated that the number of crypto users around the world is approaching 5.5 millions. Many companies both globally and in Turkey accept payments in cryptocurrencies. Taking their payments in cryptocurrencies is an exciting opportunity not only for gigantic retail companies but also for small and medium sized enterprises.
World’s most popular social media giant, Facebook, also entered the crypto world with Libra. The foundations of Libra are laid, and it’s announced to be launched in June 2020. Libra will be supported with a “foreign asset basket” as well. Approximately 100 companies including giant companies such as MasterCard, Visa, PayPal and eBay will support Facebook’s crypto, which got reaction from central banks for being rooted in the private sector.
Furthermore, giant companies like Starbucks and Amazon are interested in blockchain technology along with cryptocurrencies, along with Facebook. Which means that cryptocurrencies will not be luxurious anymore, but become an item of necessity. Receiving payment via cryptocurrencies offers pretty attractive options for e-commerce and cross border e-commerce websites.
Companies Accepting Payment in Cryptocurrencies
World’s popular shopping websites accept payments in cryptocurrencies. Some of these companies can be listed as;
- Digitec Galaxus
- Save The Children
What is the Alternative to Banks in e-Commerce?
The e-commerce industry achieved a tremendous growth over the years. And it will keep on growing over the course of oncoming days. The market value of retail e-commerce amounted US $ 2.3 trillion in 2017. The value of this figure is expected to reach US $ 4.88 trillion in 2021. E-commerce offers a greater customer potential as it provides an ease of access to products.
Cross border e-commerce is moving towards a significant role in cross country trade. It should still not be denied that the fragile infrastructure of the industry’s traditional financial system is also facing major challenges. Customers use their credit or debit cards to pay for their online purchases. Banks act as intermediaries to facilitate digital transactions.
At this point, certain questions come to mind:
- How secure are the e-commerce transactions made through intermediary institutions?
- Are you obligated to pay any hidden costs for each transaction made?
- What happens if the money in your bank account or your credit card information is stolen?
- Is it possible to find a solution that guarantees full security and transparency in monetary transactions?
- How might the cryptocurrencies contribute to this ecosystem?
Benefits of Cryptocurrencies in cross border e-commerce
It all started 10 years ago with the birth of Bitcoin. And today, numerous organizations and investors around the world own millions worth of cryptocurrencies. Virtual currencies step by step are getting close to the traditional gears of economy. Virtual currencies hold numerous benefit potentials for the e-commerce industry. As the use of cryptocurrencies in e-commerce field increases, a decentralized online marketplace is being generated.
The benefits of cryptocurrencies for cross border e-commerce can be listed as:
- Rapid transaction: Cryptocurrency transactions allow for much faster transactions compared to traditional financial systems. Number of cryptocurrency transactions achieved in seconds increases depending on the network connection speed. No cross border e-commerce customer could be left unsatisfied with this transaction speed!
- Transaction fees: Certain transaction fees apply as an e-commerce payment is made by a credit card; depending on the policy of the bank where the transaction is made through. Cryptocurrencies utilize a gateway to make online shopping possible. Therefore, no transaction fees or additional fees raise during the process. The cryptocurrency allows for making payment by discarding the intermediaries.
- Push operations: The virtual currencies are used on an inter-party basis. For this reason, the buyer and the seller directly contact each other. Cryptocurrency push transactions allow for making transactions without storing any information at any point through the cross border e-commerce pipeline. No possibility of data breach is present when the customers purchase through digital channels.
- Award programs: Customer satisfaction is highly important for e-commerce. E-commerce or cross border e-commerce platforms offer special rewards to customers opting for paying in cryptocurrencies. Prizes generally come in form of points or tokens the customers can spend during their prospective e-shopping experience. The mentioned award model is appealing for the customers, compared to the traditional credit card payment method that doesn’t offer any rewards. Moreover, the model makes the customers return to the cross border e-commerce site that offers rewards over and over again. Having customers return for e-shopping means having a greater cash flow for the e-commerce industry. Which increases their total market value in the long run.
- Brand prestige: E-shopping with cryptocurrency means having more customers in e-commerce field. It also means developing a cross-border customer portfolio for cross border e-commerce investors. Benefits of shopping with cryptocurrencies make the customers opt for the brands more. And more customers lead to increased trade. Organizations expanding in such an healthy way bring themselves an exclusive brand status and prestige.
- Free advertising: Cryptocurrency organizations may provide free ads for cross border e-commerce companies.
Disadvantages of Cryptocurrencies in Cross Border E-commerce
Accepting cryptocurrencies in cross border e-commerce might be a big step for growing your online business. Over the last few years, many consumers started using cryptocurrencies such as Bitcoin, Ethereum, and Litecoin in e-commerce, rather than traditional payment methods. Cross border e-commerce companies also have the chance to make more profit in the cryptocurrency ecosystem.
Nevertheless, it also have some disadvantages;
- One of the biggest drawbacks of cryptocurrencies is the price volatility. This might cause damage to companies and customers.
- Depending on the cryptocurrency you prefer, getting prepared for this system can be challenging in terms of cross border e-commerce operations. You can create your own crypto-wallet to receive direct payments. This is the most difficult option; but it offers the best margins.
- It will not be easy for the consumers to give up their usual payment options and choose/decide on the crypto currency option.
- Each country has their own specific cryptocurrency regulations. Some countries do not allow the use of cryptocurrencies. Those who allow the utilization of cryptocurrencies apply strict rules. Cross border e-commerce companies might have difficulties in meeting these requirements.
- In order for cryptocurrencies to be used in e-shopping payments, an e-commerce infrastructure suitable for cross border e-commerce processes should be available. And this may require an additional investment for cross border e-commerce.