Important Considerations for Adding Crypto Payment Services to Existing Traditional Finance Solutions

Cryptocurrency adoption is a crucial goal for all enthusiasts, including individual users and corporate stakeholders alike. Although the crypto community is continuously growing, deep worldwide adoption still requires a lot of effort and commitment. One major way to ensure a successful increase in adoption is to integrate existing traditional services with cryptocurrency functions. Although this sounds simple, there are several factors to consider.

Adoption is easier for assets like Bitcoin (BTC), Ether (ETH), or XRP because they are already very popular and are the largest digital assets by market capitalization. However, there are newer assets with commendable features that are a lot less popular. These assets are strong investment choices designed to address challenges with older options. Some of the new cryptos are up to 100x faster, support community participation through decentralized governance, enable non-fungible tokens (NFTs), and offer exciting staking rewards, sometimes above 1200%. (Source: https://www.techopedia.com/cryptocurrency/new)

Whether through established cryptocurrencies or emerging assets, supporting crypto adoption in the traditional sector should be prioritized. However, achieving this goal requires adequately considering several important factors.

Understanding Market Demand

Deciding to offer crypto services to traditional users should begin with understanding market demands. Some industries may be more tech-focused and are, therefore, willing to accept cryptocurrencies. For instance, firms in the finance sector may be more willing than others, especially if their core offerings involve cross-border payments that are now being simplified using digital assets.

Choosing the Right Cryptocurrency

Companies must understand the demographics of their target audiences, whether or not they are tech-savvy, and if they are likely to lean more liberal than conservative. Where market research suggests possible willingness, the right cryptocurrency to use is another critical point. People might be more willing to use Bitcoin because it has a wider audience and is the most popular option to offer crypto newbies. However, assets like Ethereum may be a better option because of its functionality with smart contracts and decentralized finance (DeFi) in general.

Several other factors can influence choosing the right crypto. Apart from market capitalization that may inspire more confidence, some assets are considered more volatile than others. A solution to this is using stablecoins that maintain their value as they are pegged to fiat currencies.

Another factor to consider is scalability. Although Bitcoin is popular, it is not the most scalable, and can only handle about 7 transactions per second (TPS). On the other hand, an option like Solana (SOL) can handle up to 65,000 TPS.

Regulatory Compliance

In many jurisdictions, laws governing the use and application of cryptocurrency are not robust and can differ significantly. This creates a compliance problem because companies are unclear about how best to integrate digital assets with traditional functions. Since crypto law continuously changes, adjusting these services to meet legal requirements may be expensive.

Nonetheless, companies interested in integrating crypto can achieve these goals by paying attention to specific provisions. For instance, most jurisdictions that allow crypto have specific anti-money laundering (AML) requirements that providers must follow. These requirements usually include know-your-customer (KYC) information to help prevent the use of digital assets for illegal activities.

In addition, some regions require a company handling crypto to obtain specific licenses. Furthermore, there may be tax obligations separate from regulations that apply to fiat. Understanding these requirements and applicable costs helps companies decide whether or not crypto integration will be affordable and worthwhile. Navigating these specifics may require the services of a legal advisor with specific experience in crypto and blockchain.

Crypto Payment Gateway

A crypto payment gateway is a service that receives crypto payments and immediately converts them to fiat before depositing funds to the company. These services help to take the stress of integration off the company.

Choosing the right payment gateway should also be carefully done after analyzing the pros and cons of each one. For instance, BitPay is one of the oldest options and may bring a level of trust and experience to a company’s services. However, Coinbase Commerce is affiliated with one of the world’s largest cryptocurrency exchanges, which could be advantageous for companies that may also need specific services from a crypto exchange. Companies must also consider several other factors, including security, transaction fees, and general ease of integration.

User Experience (UX)

Convincing people to use crypto may be difficult because of a general lack of understanding. According to a UK survey from 2023, nearly half of all people who have heard about cryptocurrency do not understand how it works. This presents a challenge when encouraging people to adopt digital assets, especially since the average user may find a crypto platform’s user interface somewhat challenging to understand.

For a better chance of success with integration, the focus should be on simplicity. Choosing how to pay for goods or services should be straightforward, with easily identifiable options in the local fiat and supported cryptocurrencies. Unlike fiat transactions, making a mistake can cause irreparable loss.

In addition, app designers should allow users to easily convert fiat to crypto and vice versa to enhance transparency. Furthermore, it is important to extensively educate users on conducting crypto transactions and advertise the many benefits.

Security

Security is essential when dealing with cryptocurrency transactions because assets lost are difficult to recover. In addition, hackers have extensively targeted crypto transactions, sometimes preying on poor security measures implemented by the average customer. Companies integrating crypto can reinforce their apps through encryption and multi-signature wallets. Other simpler measures like transaction monitoring and two-factor authentication (2FA) should also be considered.

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