As businesses and customers around the world are beginning to adapt to a cashless society, the use of digital currency is growing in popularity across our global marketplace. Let’s take a closer look at the impact of digital currency on digital marketplaces.
What is digital currency?
Digital currency is a unique form of legal tender that is only available in electronic or digital form, rather than physical form. Also known as cybercash or electronic currency, digital currency is only accessible via computers or mobile phones that are connected to their designated networks or the internet.
Digital currency can be used to pay for goods or services instantaneously, and is also able to be used in certain online communities, such as social networks or gaming sites. Any two parties that are connected to the same network are able to transfer digital currency, even if they are not in the same country.
Digital currencies are usually the cheapest method of trading money because they do not require an intermediary, such as a clearinghouse or a bank. Digital currency can also provide users with transparency and the ability to keep a record of their transactions.
How will digital currency affect the digital marketplace?
E-commerce’s ability to embrace new technologies and forms of payment has made it one of the fastest-growing sectors in B2C and B2B commerce. The global buzz around digital currencies has shaken up the digital marketplace as the commerce sector begins to recognise its many advantages.
Customers are looking for more ways to pay for goods and services online due to a variety of concerns, which digital currency has the ability to solve. This includes:
Many e-commerce customers hold key concerns around shopping online and the potential risk it poses to their personal data protection and privacy. Modern payment processing companies are known to use centralised databases to store personal customer data, such as credit card and debit card details. However, a number of large-scale attacks have compromised the safety of these databases, causing customers to lose confidence in this method of payment. In fact, according to recent industry research, only 26% of Australian customers trust money transfer services and financial institutions such as Mastercard and Visa.
Digital currency, however, is extremely resistant to attacks from hackers as customers’ private payment information is kept completely anonymous during transactions through its storage on decentralised databases.
Chargebacks and fraud have been a consistent problem for online businesses, as they can lead to financial and reputational losses. However, transactions that are carried out using digital currency are irreversible, and so customers are not able to cancel their transactions after they have paid, ensuring businesses receive owed funds.
Businesses are not the only ones that suffer from online fraud. According to ACCC figures, Australian consumers lost $634 million to online fraud last year. The secure nature of digital currencies and the privatisation of user data can assist consumers in avoiding online fraud also.
Online debit and credit card payments usually require an intermediary that charges a fee, such as a bank or a clearinghouse. These fees can be expensive, especially when international payments are made, as cross-border payment processing charges and currency conversion premiums apply. However, digital currency does not require any intermediaries, which can lead to larger profits for digital marketplaces and lower prices for customers.
The number of customers that are willing to use alternative payment methods is on the rise, and so allowing payments via digital currency can help you attract customers looking for a cheaper and more secure payment solution.
With so many reasons to incorporate digital currencies into everyday life, it is easy to see how they have moved so quickly towards becoming a mainstream financial product that is revolutionising digital marketplaces.
Ready to welcome new customers to your business, or want to revolutionise your personal finances? Ask us today about how to start your digital currency journey.