Cryptocurrencies are still an unexplored universe for many individuals and businesses, yet their use continues to grow. This progressive acceptance of cryptocurrencies is not only based on the potential opportunities for immediate financial gain, for example, through their unexpected increase in value.
The use of cryptocurrencies has very specific advantages. As regards to payments between parties, the benefits can be seen in: (i) lower costs and (ii) speed of transactions. In the field of international payments, blockchain technology payment is unrivaled, at least, currently.
Today, most transactions are carried out through bank transfers or credit and/or debit card payments. This applies to large transactions between multinational companies as well as to sales made by small merchants, either in the traditional way or via e-commerce.
Conventional banks or credit cards companies use systems for these kinds of transactions that are based on technology from another era. What was once fast and cheap can now be slow and expensive.
From a cost perspective, cryptocurrency payment service providers charge lower fees than banks or credit cards. The advantage of speed is evident in the quickness of transactions. With cryptocurrencies, transfers are executed immediately or within minutes, while bank transfers can be executed immediately (rarely) or in hours, even days in the case of international transfers. If we consider that the invested money can generate rewards, the time that the money is traveling (from one account to another) is wasted investment time.
For a selling party there is also another benefit related to the impossibility of chargebacks. Once the transaction has been credited, it is not possible for a buyer to reject or chargeback the transaction.
Another benefit is the streamlining of currency conversion. International transfers usually involve the payment of fees to banks, plus possible fees associated with exchange rates if applicable. Both are potential saving opportunities if cryptocurrencies are used.
The disadvantages of using cryptocurrencies are linked to the low level of knowledge, the lack of or new regulations and the absence of protection against potential fraud.
However, a symbol of the thriving development of cryptocurrencies in the field of commercial transactions is shown by the fact that large companies are working on this technology (there are several examples that include Visa, Mastercard, Microsoft, Paypal, etc.).
We are facing a volatile scenario, which nevertheless continues to grow. It is possible that as awareness, education and the aforementioned advantages materialize, we will see a greater acceptance of cryptocurrency transactions.
At BACS we are working to get businesses to start doing payments with this new technology: blockchain. In this way businesses will be able to reduce transaction costs as well as international obstacles. For this purpose, BACS counts with the advice of technical and legal experts, as well as with an International Court to solve possible disputes that may arise between the parties.