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Stablecoins are becoming an important solution for businesses looking to simplify and enhance their payment processes. In Singapore alone, stablecoin payments reached $1 billion a few weeks ago. This is because stablecoins are now seen as a better alternative to traditional fiat payments and volatile cryptocurrencies. They have already become mainstream digital tools used on a daily basis for everything from payments to shopping, and the e-commerce space is no exception.
But how exactly will they transform the e-commerce industry? Let's break it down.
Current status of cryptocurrency payments in electronic commerce
Cryptocurrency payments are gaining momentum around the world. According to a recent survey, 64% of consumers are interested in using cryptocurrencies and stablecoins as a payment option. This becomes even clearer when you look at the $4.2 billion in cryptocurrency payments processed through Visa crypto-backed cards in the first quarter of 2023.
Adoption rates are even higher among younger generations, with 40% of 18-35 year olds planning to use cryptocurrencies and 10% planning to use them regularly. Additionally, 31% of them expect to make consistent cryptocurrency payments within the next 12 months. On the business side, around 74% of retailers say they plan to start accepting cryptocurrency payments within the next two years.
Currently, countries such as the United States, Canada, Australia, the European Union, Israel, and the Central African Republic are leading the way. However, new players like China and Russia have already started considering unified cryptocurrency regulation through the BRICS alliance.
But despite progress and strong indicators, adoption remains uneven. However, it is clear that its proliferation is inevitable, thanks in large part to stablecoins such as Tether (USDT) and USD Coin (USDC).
Stablecoins: Transforming e-commerce payments
Stablecoins can easily be the most convenient payment method. why? To state the benefits of stablecoins concisely and clearly, here is what stablecoins offer:
- Faster and more secure payment options.
- A simple and stable entry point to digital payments.
- Eliminated translation and exchange rate fluctuations.
That's wonderful. This last advantage alone could significantly increase the adoption of cryptocurrencies among companies operating in multiple markets.
Also, let's put ourselves in the shoes of an e-commerce business owner for a moment. In e-commerce, payments have to go somewhere. Imagine you are processing a large number of orders and payments keep going to your registered fiat account. Wouldn't it be more convenient if you could send it directly to your cryptocurrency wallet? Not only would it be a simpler transaction, but it would also give you more control over your funds and streamline the entire process.
To be more precise
Because stablecoins are tied to fiat currencies such as the US dollar or the euro, they are less volatile and, as the term suggests, more stable compared to other forms of cryptocurrencies. Of course, this is a huge advantage and important factor for your business. You can rely on stablecoins as a payment option, as their low volatility allows you to secure profits without the risk of sudden changes in value.
Additionally, stablecoins like USDT and USDC are expanding beyond just major blockchains like Ethereum, and include faster and more cost-effective blockchains like Polygon, Solana, Avalanche, Optimism, and Algorand. But it's now available.
Each blockchain has its own advantages, for example Polygon completes transactions in 2.1 seconds per block and has an average transaction cost of only $0.015. At the same time, Solana's average transaction fees are as low as 0.000014 Solana (SOL), or $0.00189, nearly 900 times cheaper than Ethereum.
This expansion to different blockchain networks makes stablecoins more accessible and practical for a wider range of businesses. For e-commerce, stablecoins eliminate many of the complications associated with traditional payments, such as chargebacks, delays, and high transaction fees.
Most importantly, cross-border payments, a major challenge for e-commerce retailers, can be greatly simplified using stablecoins. Stablecoins offer a more seamless way to process international transactions, as they are not subject to conversion or exchange rate fluctuations in the same way as fiat currencies.
In other words, stablecoins open the door to a global customer base without the hassle of traditional payment systems.
The future of stablecoin adoption in e-commerce
The regulatory framework has been, and continues to be, one of the biggest challenges for cryptocurrency adoption. However, as regulations continue to evolve, more regions are adapting cryptocurrencies to suit their business needs. Stablecoins in particular are well-positioned to play a leading role in this transformation. What we are witnessing is a gradual normalization of cryptocurrencies. As mentioned at the beginning, Singapore is a great example.
Digital assets are no longer considered niche or speculative, but essential to the future of financial payments.
We are already witnessing the emergence of new stablecoins. However, it is anticipated that in the near future they may be tied to non-fiat assets. Therefore, we expect the stablecoin ecosystem to further expand across more blockchain networks and the broader use of these currencies by businesses around the world.
Stablecoins are no longer a distant possibility; they already exist, and the possibilities are endless. By providing a stable, secure, and cost-effective alternative to traditional fiat payments and volatile cryptocurrencies, it provides businesses with solutions to many of the challenges faced in e-commerce. With faster transactions, lower fees, and increased accessibility, stablecoins are an easy way to improve payments for all businesses, not just e-commerce, and bring new retailers to crypto.
It is only a matter of time before stablecoin payments become a mainstream option for e-commerce. The future is definitely digital, and stablecoins are leading the way.
