When an American online retailer became the first major merchant worldwide to accept cryptocurrency as payment in 2014, it was big news.
Since then, digital currency has entered the mainstream. Globally 220 million people use cryptocurrency now, and customers are paying for everything with it, from travel to sports tickets to mobile phone services.
A radical shift has occurred in less than a decade, with once-wary customers and retailers increasingly viewing digital currency through an optimistic lens.
Cryptos and stablecoins welcomed
There is a major distinction between these two forms of digital currency. Cryptocurrencies are digital assets developed and maintained on decentralized blockchains that can be used as a medium of exchange.
While, stablecoins are one type of asset-backed cryptocurrency, whose value is typically pegged to the value of an underlying asset (e.g. US dollar or other currency).
Since the introduction of Bitcoin in 2008, customers have played a strong role in driving interest and adoption of digital currencies.
More recently we have watched COVID-19 transform the world, causing many companies to accelerate digital transformations and customers to embrace new, digital forms of money, leading to a recent boom of the crypto industry – somewhat curtailed recently.
Around two-thirds (64%) of our surveyed merchants indicated that their customers have significant interest in using digital currencies for payments, and 83% expect consumer interest in digital currencies for payments to increase or significantly increase over the next 12 months.
Although digital currency payments may not yet be an everyday occurrence for the average customer, overall interest in digitally native solutions is significant, especially among younger generations.
It’s a sign to retailers that those that fail to embrace the customers’ demand of this trend run the risk of being left behind and losing out on profits.
There are also shared expectations of broad adoption in the future. Around 85% of surveyed merchants expect that digital currency payments will be ubiquitous among suppliers in their industry in five years.
In line with the above, more than 85% of the organizations are giving high or very high priority to enabling cryptocurrency payments, while roughly 83% are doing the same for stablecoins.
As such, and likely driven by larger retail adoption/availability of cryptocurrencies, it seems as though these assets have a role as the primary starting point for adoption.
Merchants ready for digital currencies
Nearly three-quarters of those surveyed reported plans to accept either cryptocurrency or stablecoin payments within the next 24 months.
Overall, merchants broadly agree that organizations accepting digital currencies have a competitive advantage in the market (87%).
In fact, an overwhelming majority of those who currently accept cryptocurrency as a payment instrument (93%) have already seen a positive impact on their business’s customer metrics, such as customer base growth and brand perception, and they expect this to continue next year.
While it may be anticipated that optimism would not be as strong among small and midsized consumer merchants, the majority of SMBs surveyed expect the adoption of digital currency payments to have a positive impact on their organizations.
Merchants are eager to adopt digital currency payments for a variety of reasons. They see that the market is rapidly changing and want to support customer preferences.
They expect to derive value from their digital currency adoption in three distinct ways: improved customer experience (48% of respondents), increased customer base (46%), and brand is perceived as cutting edge (40%).
In addition, merchants are motivated by the prospect of enabling immediate access to funds (40% of respondents), taking advantage of blockchain-based innovations in decentralized digital finance (39%), and allowing in-house management of the revenue cycle/treasury/finance department (39%).
It is worth noting that 86% see a significant benefit to their finance and cash management for accepting digital currency payments.
In fact, 26% have already integrated digital currencies in their finance functionality such as revenue cycle and treasury, and 61% plan to do it over the next 24 months.
Originally merchants were driven to enable digital currency payments as a marketing technique, but that is clearly changing as merchants now show an interest in benefits such as speed of payments and cost efficiencies.
There is also a sense, however, that longer-term strategic value is driving current adoption of digital currencies, and not shorter-term cost savings.
Retailers hold an increasingly optimistic view of digital currency as a form of payment and are quick to recognize this as a business imperative.
Current spends are still on the smaller side but growing significantly. Not surprisingly, the larger companies are more likely to be making significant investments in their digital currency adoption plans.
Over half (54%) of large retailers (with revenues of $500 million and up) have invested more than $1 million on enabling digital currency payments, while only 6% of small retailers (with revenues of under $10 million) did so.
To read the whole Deloitte survey CLICK HERE
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