Jan 29, 2019 at 09:50 // News

Coin Idol Author

The use of Blockchain technology and Cryptocurrencies has been significantly increasing among different companies, institutions, people and businesses, due to the hype surrounding it in terms of its major benefits including more secure transactions, an increase in userbase, lower fees, averting chargebacks and quicker funds clearance.



Putting the hoopla about digital currencies and the high growth rate of e-commerce aside, merchants are still experiencing four big challenges as far as adoption is concerned: Integration of digital currency payment; Speed of digital currency payment; Price volatility of digital currencies; Digital currency to fiat settlement.

Crypto to Fiat Settlement

Several merchants prefer to exchange digital currency to fiat currency such that they can settle their business expenditures using fiat. The challenge that the merchants face is that they can’t be sure of the exact amount of fiat money he or she will get in the end.

The above models show how custodial payment gateways profit from exchange rates. From model 1, we can see that the percentage spread on the exchange rate is given to the user who is carrying out the payment and the merchant is being paid using fiat currency. From model 2, the percentage that is displayed on the exchange rate is only applied to the withdrawal process which leads merchants to make losses on the exchange rates.

These custodial payment solutions providers have many models to generate profit from the exchange rates, Medium reports .

Speed of digital currency payment affects business operation.

The figure above indicates the transaction life cycle of a cryptoasset payment. The payments can only be confirmed after the transaction is included in a block. The transaction speed depends on the free market as well as the memory pool.

Also, payment confirmations are prioritized based on the total amount of fees being paid hence there is a limitation. For instance, the average block time for Bitcoin (BTC) is 10 minutes (600 seconds), Dash is 2.5 minutes (150 seconds), and GroestlCoin is 1 minute (60 seconds).

Price Volatility of Digital Currencies

Volatility goes with time. The higher the time a free market digital currency stays in the wallet of a merchant, the lesser its price becomes predictable pertaining to fiat.

Price volatility in the digital currency market contributes much to reducing merchant adoption.

According to the coinmarketcap world chart, the big price volatility that happened between October 2017 and June last year furnishes digital currency as an unrealistic method of payment in B2B & B2C markets.

Nevertheless, the global market cap is today seeing relatively stable prices which has increased expectations that digital currencies are going to be widely adopted and used for payments this year.

Integration of Digital Currency Payment into Their Business

Several businesses lack the requisite technical expertise to integrate digital currency payments into their endeavors. Payment processing is a broad subject, for instance, it involves receipt acknowledgement, invoicing, Instant Payment Notification (IPN), accountability, etc.

Merchants require an uncomplicated blockchain tech payment solution which can be easily integrated into their current systems in addition to the already existing traditional and digital payment alternatives. Just giving an address which accepts digital currency payments can’t solve this hurdle.