As digital currency becomes more mainstream, paying with this currency is now an option at a growing number of major retailers. Here’s what you need to know.
1. Pricing for Goods and Services
When you buy goods or services using digital currency, pricing works like it does if you buy from a foreign store. The store might offer a digital currency price or offer an equivalent price based on its principal currency. The difference is what happens when the exchange rate changes.
If the store price equals one coin, you pay one coin no matter how much the coin’s value fluctuates when exchanged for local currency. For example, if the store’s item price is $100, you pay one coin when the coin equals $100 but a little over 1.1 coins if the coin’s price drops to $90. The conversion rate is based on the coin’s market price when you purchase from the store.
2. Transaction Speeds
Making purchases or sending money with digital currency is a true game-changer. Currently, the verification process used for digital currency transactions can take a few extra minutes to complete. However, some wallets and payment processors get around this by pre-verifying and tracking how much digital currency you own.
In the future, as digital currency becomes even more accepted, it’s expected that transactions will occur at a faster rate.
3. Accepted Currency Types
While the possibilities seem endless when using digital currency, it pays to check ahead before making a transaction. Just because a company takes one type of digital currency doesn’t mean they’ll take them all. They might have chosen to accept ETH or BSV but won’t accept a lesser-known coin.
This is much like a company choosing to accept foreign currencies. They might have an account with one country’s currency but not another. Their payment processor may only convert certain currencies. Over time, the acceptance of a more significant number of cryptocurrencies will increase as it continues to enter the mainstream.
“Processors will drive cryptocurrency payments by converting and settling to merchants like foreign currency.”
Victor Cook, Lead Engineer, Fabriik.
4. No Traditional Banking Fees
When you swipe a credit card, the company usually pays about two to four percent of the transaction fees to the credit card company and bank. That cost gives them the benefit of having guaranteed funds as soon as you swipe your card, even if you pay your credit card later or not at all. It also saves the company from having to handle cash.
Digital currency fees vary based on how your merchant is collecting payments. Some pay no fees at all except a small spread on the conversion rate to the fiat currency. This may or may not matter to you as a consumer unless perhaps the company offers discounts for using payment methods that cost them less in fees.
5. Mobile Pay Options
In the past, paying for products and services or sending money overseas was typically made directly with a merchant or financial institution. With digital currency entering mainstream markets, you have the option to use your smartphone or another internet-connected device to pay for goods or services with cryptocurrency.
Other than a general convenience, mobile payments also allow conducting international transactions to other countries regardless of the local currency. This offers an advantage for those who want to conduct business globally or send money overseas.
6. Irreversible Transactions
Digital currency transactions aren’t reversible by design. This works both ways. If you’re a seller or get paid in digital currency, you don’t have to worry about the other person trying to take your money back. If you’re the buyer, you need to trust who you’re dealing with. If you pay with a credit card and don’t get what you ordered, you can file a chargeback with the credit card company. With digital currency, there is no intermediary to file a chargeback with.
7. Easy International Payments
Digital currency offers many advantages for those who need to make international payments. Whether you’re looking to buy a product, pay a bill, or send money to a relative, it’s never been easier. You can send digital currency through the Internet from anywhere, at any time, regardless of time zone.
Most cryptocurrency transactions are conducted through a safe and reliable system — be sure to look for a regulated exchange to ensure this. There’s no need to make a special trip to use money transfer services or incur excessive fees. And international transfers using digital currency are often much faster than using fiat currency.
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