Crypto payments: the cryptocurrency payment landscape10/08/2022
Learn more about crypto payments and how cryptocurrencies are evolving in Brazil and around the world from investment opportunity to payment method.
We have been tracking the cryptocurrency growth and adoption for a while. Initially viewed only as an investment in countries like Brazil, digital currencies are becoming an increasingly common payment method. These are called crypto payments.
Technology is a major part of this trend. Your online business can accept cryptocurrency to pay for products and services with a PSP or payment gateway. Continue reading to find out how to accept crypto payments is crucial for cross-border digital businesses.
Crypto payments: the benefits for e-commerce and other digital businesses
Crypto payments can be an option if the e-commerce business involved is able to offer secure and irreversible transactions. The crypto payment processor must have an accurate data verification system. The process can be simplified using solutions like QR Code or Payment Link. According to CoinMap, over 900 Brazilian businesses currently accept crypto payments. Learn more about the benefits of this trend:
- Attract more customers
- Customers pay in crypto and businesses receive in BRL, regardless of currency market volatility.
- Reduce operating costs
- Borderless sales: Crypto currencies are accepted worldwide
- They are immune to chargebacks.
Crypto payments globally: crypto decentralization remains a challenge in Brazil
El Salvador, in Central America, became the world’s first country to make Bitcoin – a digital currency – legal tender. This was intended to provide an alternative to the fees charged on remittances. A large proportion of the country’s GDP – approximately US$ 24 billion – is made up of remittances from citizens who live overseas.
Despite not being a part of Argentina’s economic policy, Bitcoin and other crypto currencies are widely used to protect personal savings from inflation, especially after the government clamped down on people buying dollars.
In countries that have seen a sharp rise in inflation, like the United States, employers can already pay their staff in crypto. The “Era of Uncertainty: Stablecoins” report by eMarketer forecasts a 350% rise in the US crypto user base by 2023.
According to blockchain analysis platform Chainalysis, Vietnam, Pakistan, Ukraine and Kenya had the highest level of crypto adoption in 2021. Brazil is currently ranked 14th.
Digital Real: The Brazilian CBDC
Brazilian legislation is still finding it difficult to embrace decentralized crypto currencies such as bitcoin. For example, according to the Consolidation of Labor Laws (CLT), all wages must be paid in legal tender, i.e., the BRL. However, as more people in Brazil are investing in crypto and cryptocurrencies are allowed to circulate here, it is not uncommon to find businesses that accept crypto payments. Paying a boleto with crypto is another popular alternative in Brazil.
Meanwhile, the Central Bank has already issued guidelines for the Digital Real – Brazil’s digital currency – and initial tests are expected to take place in 2023. The main difference between the Digital Real and other popular cryptocurrencies is the Central Bank regulatory framework involved, which is intended to provide legal security for transactions using the digital currency.
Crypto payments are another option for the unbanked.
The example set by El Salvador points toward a solution for the unbanked. Only weeks after adopting bitcoin as legal tender, one third of the country’s population (2.1 million people) was already using a digital cryptocurrency wallet. According to Nayib Bukele, El Salvador’s President, 70% of the population is unbanked.
16% of the Brazilian population is currently unbanked. This figure was 30% back in 2017. Figures are from Capco’s “Financial Inclusion – Evolution and The Digital Push” report. New technologies such as Pix and social isolation during the Covid pandemic have both been directly responsible for the rise in financial inclusion.
For example, people who wanted to receive Emergency Assistance from the Federal Government had to create a digital account using the Caixa Tem app. Over 39 million families received their first Emergency Assistance payment in 2021.
Meanwhile, Pix – which has also been integrated into the Caixa Economica Federal app – was an instant hit in Brazil: Over 450 million Pix keys were registered by the end of May.
Online crypto payments: What to expect?
Crypto payments are at the heart of the payment ecosystem discussion. Big banks that have long controlled the monetary system are also keeping an eye on this trend. Super apps – that integrate financial services and retailers – are a potential solution financial institutions could use to attract new customers, especially from Gen Z.
There is still much to discuss in terms of fraud prevention because decentralized crypto wallets are subject to fraudulent transfers. Crypto security tends to increase when regulators and innovators collaborate. A safe and secure cryptocurrency payment market also requires investor education.
As Brazil embraces crypto payments, you can accept the country’s most popular payment methods and give customers a transparent and fluid purchasing experience with automatic currency conversion for prices and related fees. Learn more about Bexs Pay and eliminate the borders between your digital business and the Brazilian market by integrating smart and tailored solutions that meet your customers’ needs. Contact our specialists!