Before the pandemic, the world was on a path to increasing globalisation, with international travel increasing and companies expanding beyond their own borders earlier and earlier due to the technology that is available to them.
Although COVID slammed the brakes on this trend, the world is tentatively emerging from lockdowns and business is starting to pick up and it won’t be long before international expansion becomes the focus. For an increasingly global economy, we need global payments solutions and this is one area of focus within the crypto community given some of the shortcomings of the existing financial system.
For this post I teamed up with Mercuryo, who are helping to bridge the fiat and crypto worlds, to shine a light on the increasing use case for crypto in business payments.
If your parents haven't told you about crypto investments recently, most likely, you haven't talked to them for a long time.
The truth is that absolutely everyone is passionate about cryptocurrencies – from retail investors to banks, startups, and governments. But can cryptocurrencies offer something truly valuable? Well, let's see.
The Future of Business Payments
The B2B2C (business to business to consumer) sector is thriving, and some suggest that every B2B and B2C company will eventually switch to the more effective B2B2C model. It promises to be more cost-efficient, boost customer engagement, and speed up business processes. The new way of processing business transactions will most likely benefit all the market participants.
The current state of B2C and B2B payments is far from ideal, and a global payment infrastructure doesn’t exist. Today, payment providers and banks worldwide are still disjointed, like pieces of the puzzle that can’t be matched. Numerous payment-related problems along the way slow down business scaling and discourage entrepreneurs from going international.
If your company is located in India and you want to send a money transfer to your partners in Spain, it can be tricky and pricey. Fiat-based cross-border payments are made via cumbersome and strictly regulated systems like SWIFT. They aren’t automized and, thus, are slow and expensive. Certain bank payments may take up to a week to process and rest assured it comes with a high price tag. On top of that, you need to mind an average 4% failure rate.
Compliance plays a significant role as well. Banks often choose to close accounts for SME clients as the latter cannot properly handle compliance risks. Now, if your business does manage to get a green light, prepare to pay a handsome fee not only for your money transfers but also for the currency exchange.
And that’s when cryptocurrency may take the stage. One of the possible solutions is to use stablecoins with their value-saving nature as rails to merge the world of fiat and crypto. Sending global money transfers using crypto is ridiculously cheap and nearly instant, and stablecoins eliminate the volatility concern. Mass payouts, fiat accounts linked to crypto balances, various settlement options, the possibility of issuing your own crypto-backed debit cards – those are only a few products that can revolutionize the global payment infrastructure.
What businesses might need cryptocurrency?
Absolutely every business, we could say. But that would not be true – crypto can be applied to anything, but not anything will benefit from that.
When we talk about the value, we mean the apparent need for transparency, speed, transaction scalability, and low costs. So which industries will find cryptocurrencies helpful? Read on.
Unexpected, right? Now think about how huge and opaque the market is.
Imagine that you are in Thailand, and you need to have medical treatment – for example, in Germany. Transactions are expensive, and if you transfer tens of thousands of dollars using traditional methods, you will lose money on commission. Moreover, until the other party confirms the receipt of payment, you will be in the dark where your money is.
Well, not all of us, in principle, can afford treatment in paid clinics. But for sure we all shop online. When you realize that from 2% to 5% of all business revenue is spent on payment processing, you will go crazy.
However, it's better to think about how to implement crypto solutions so that both businesses can reduce the cost of accepting funds and provide customers with more options for payment.
In addition to low commissions (some of the coins offer low fees!), e-commerce platforms can quickly implement a loyalty system based on crypto tokens that can be sold for real money. I mean, we are all pretty tired of these pseudo-bonuses that can be spent on purchases in a ratio of 1 to 10.
And this, in principle, is already happening. For example, Shopify experimented with Cryptocurrency Checkout. If this feature continues to develop, the company will be able to simplify transactions with merchants, and at the same time, attract more B2B2C customers from markets where cryptocurrencies are already being used massively – and thus increase turnover for its B2B customers.
The gig economy is another rapidly growing sector with global ambitions; and yet, it also lacks proper payment infrastructure. Freelancers from all industries are willing to take on occasional (or regular) gigs to make a living. The wages system is getting less attractive for both employers and employees, and sites like Upwork are quickly filling the gap. Uber, Airbnb, and numerous delivery services also represent a part of the gig economy, but even such well-established companies struggle with instant payouts.
Despite an evident need for same-day payments, that increases trust, loyalty, and even quality of work, instant payouts are still limited. Outdated infrastructure and paper-based workflow stand in the way of efficient payment procedures.
Well-structured cryptocurrency-powered solutions can help gig platforms open crypto wallet for their freelancers and use them for instant mass payouts. Freelancers and other gig workers can choose to withdraw their money from their platform’s account to a bank account, credit card, another crypto wallet or make purchases via co-branded crypto cards linked to their wallets.
Banks and neobanks
The introduction of crypto solutions from major banking platforms is a matter of time.
Let's be honest – traditional financial instruments are outdated. Fintech startups are introducing innovative products, for example, BNPL, and the demand is spiking. Those who won't adjust to this demand will leave the market.
Obstacles and Solutions
However, to offer a financial product, companies need to obtain licenses in different jurisdictions, spend a lot of money and time developing the infrastructure, and ensure high-security standards. So the entrance barrier seems relatively high.
It is hard enough to enable your business to work with digital assets in crypto-friendly countries that have a set of regulations, but discovering new markets is a much bigger challenge.
Even if you manage to obtain a license allowing your company to process crypto-related payments, you will have to face the harsh reality of the unregulated market that doesn’t want to step into unknown territory.
You’ll have to set up a solid compliance department to find a bank willing to open an account for crypto-related business. Get ready to spend months searching for payment providers who will dare to work with you, and when you do find one, make time for a lengthy, bureaucratic onboarding procedure that may take months, if not a couple of years.
But why would you develop everything from scratch when there are already ready-made solutions like the ones offered by Mercuryo? They are all designed for different business needs, but the ultimate goal of every product – is to provide tools that will help businesses enter the global market and boost revenues.
One of Mercuryo’s recent noteworthy integrations was carried out in collaboration with the 1inch project. A popular DEX aggregator launched its own wallet app but had a hard time acquiring customers from the non-crypto space. The wallet only offered crypto-to-crypto exchanges, filtering out potential new clients with no access to digital assets.
Mercuryo integrated its widget that enables fiat-to-crypto rails. The service allowed 1inch customers to buy popular coins such as ETH, DAI, and USDT with fiat money. Widget successfully tackled the issue of the platform’s customer acquisition and turned out to be one of the first-ever solutions in the DeFi industry to bridge fiat and crypto.
Does revenue boost and going global sound like something you were dreaming about? Let's talk