The use of cryptocurrencies for B2C payments is common, with big names like Ralph Lauren, H&M, Adidas, and Starbucks accepting them both with customer payments but also vendor and partner payments. According to the International Accounting Bulletin, the retail and e-commerce segment tops the list of industries adopting crypto transactions. Food and dining, hospitality, travel, and internet and online services sectors follow closely.
With crypto gaining widespread acceptance in the B2C space, its emergence as a player in B2B shouldn’t come as a surprise. The potential of B2B crypto payments may be even bigger and more transformative. The use cases in this segment include cross-border payments, vendor payouts, and employee payouts. Not surprisingly, many B2B businesses have already hopped on the bandwagon.
A recent GoodFirms survey found that 44% of the B2B respondents were using cryptocurrency as a transaction mode. While 56% were yet to consider this option, the numbers are still beyond impressive. Notably, 78.4% of the businesses included in the survey were from the Software and Services industry.
If you are a B2B business owner, you can guess how big crypto payments can get in the future. However, you may have valid questions regarding adopting B2B crypto transactions despite the complexities involved.
In this article, we will explain why you should consider joining the crypto payment bandwagon.
Widespread Acceptance
Deloitte notes that Bitcoin and other digital assets are becoming mainstream for operational and transactional purposes. A growing number of companies worldwide are accepting them. In fact, 85% of merchants consider crypto payments as a way to build new customers.
Besides the early players like Bitcoin, other options like Ethereum, Tether, Ripple, and Solana are gaining precedence. Solana, for example, is a relatively new currency known for using a combination of proof-of-stake (PoS) and proof-of-history (PoH) consensus mechanisms.
According to Binance, Solana has a $71.71 billion market cap as of September 2024 which has garnered a lot of interest from institutional entities. Its protocol is designed to serve small-time users and enterprise customers alike, with the aim of making decentralized finance accessible on a large scale.
More digital currency options mean B2B companies can engage with new industries and markets. They can keep pace with the technological preferences of potential customers and tap into new opportunities for growth.
Transaction Speed and Efficiency
Statista suggests that the B2B payment market size is expected to surpass $300 billion by 2030. Cross-border payments make a significant part of these transactions. The not-so-great thing about these transactions is that they are slower than their domestic counterparts. They may take days to process, burdening businesses with delayed payments.
The remarkable speed and efficiency of crypto transactions are one of the standout benefits of using them for B2B payments. Since crypto transactions (both domestic and cross-border) are settled instantly on the blockchain, businesses get rapid access to funds. This improves cash flow management and accelerates business operations.
Speed is not the only consideration when looking at crypto transactions versus traditional financial mechanisms and institutions. Cost plays a huge part as well with crypto boasting much lower fees per transaction than bank transfers and credit cards.
Another benefit of using crypto for B2B cross-border payments is that it addresses the issue of fluctuating currency conversion rates. Transactions with traditional currencies often become complex, expensive, and time-consuming due to the conversion hassles.
According to Investopedia, changes in exchange rates can affect the overall operations and profitability of companies. In the current globalized economy, this risk extends beyond multinational companies and affects small businesses as well.
Fortunately, crypto B2B payments can address this risk. Cryptocurrencies need not be converted because their values are the same worldwide.
Security and Transparency
Security concerns are another reason for business owners to worry, considering the size and frequency of B2B transactions. Forbes reported that 65% of companies acknowledged their battle with B2B payment fraud. Such incidents may happen when vulnerabilities within the procure-to-pay process are exploited.
There are larger concerns as well with credit card payments being fraudulently reimbursed by the banks after delivery of products or services. These are known as credit card chargebacks in which case the issuing bank will reimburse the customer without any investigation. Businesses then need to go through the painstaking and arduous task of proving they provided the goods or services that they were paid for. Even if they are able to do this, many businesses never get paid back leaving them with a loss on the books and no recourse.
Cryptocurrency transactions ensure security with the use of blockchain technology. The risk of fraud and unauthorized tampering is reduced as each transaction gets recorded on a decentralized ledger. B2B businesses processing high volumes and values of payments can rest assured about a secure system.
Transparency is another plus of crypto transactions for B2B businesses. The decentralized structure of a blockchain makes the operational data of a project accessible to every network user. It means that business owners can track all the transactions in real-time.
Lower Transaction Costs
The GoodFirms Survey cited above highlights that the high transaction fees of traditional financial payments are a major reason for the crypto transition. These fees can significantly impact the overall transaction cost. 47.3% of businesses consider this a reason for opting for cryptocurrency transactions.
Crypto transactions are an economically attractive option for B2B businesses as they minimize the need for transaction fees, making them cost-effective. Compare this to the credit card transactions fees of 2% to 5% for each transaction and you will see that crypto saves a lot of money. Moreover, traditional transactions involve intermediaries such as banks or other financial institutions. These are eliminated when transacting with cryptocurrencies, further reducing the costs.
The Final Word
Cryptocurrency has gained popularity as a transactional option for B2B businesses in recent years. With the benefits these currencies offer, this mode of payment is here to stay. In fact, it has the potential to future-proof B2B businesses with speed, efficiency, security, and cost-effectiveness in transactions. Not adopting crypto payments may mean missing out on a competitive advantage in the future.
