Against a backdrop of growing adoption of cryptocurrencies, their users have become a new category of customers for businesses. The ability to pay for goods and services with digital assets is being rolled out not only by small local players but also by tech giants such as Amazon.
ForkLog, in collaboration with Whitepay CEO Gleb Udovichenko, examined why people are increasingly choosing high-risk assets as a payment method and what businesses gain from crypto integration.
Digitalisation of processes
The global economy is rapidly digitalising. Banking services have moved into the smartphone; in the Diia app, Ukrainians can not only view documents but also register a FOP or obtain a mortgage. At the same time the National Bank is testing the e-hryvnia, and President Volodymyr Zelensky signed the law “On Virtual Assets”.
The broad adoption of cryptocurrencies in Ukraine stems in part from their ability not only to raise income but also to provide an entry into investment processes. Moreover, transferring part of one’s holdings, for example into stablecoins, helps alleviate concerns that a bank might close along with deposits.
Most cryptocurrency owners do not merely store savings; they trade on exchanges, engage in staking or DeFi-lending. When they need to withdraw digital assets to bank accounts they encounter high fees and, in some cases, the traditional financial system obstructs such transfers.
As a result, a number of tech giants, such as Amazon, have given users the ability to pay with cryptocurrencies, recognising the growing potential of this payment method.
Market status
The number of cryptocurrency transactions is rising year by year. Stablecoins have overtaken the largest payment networks in this metric: $18.2 trillion for the USDT issuer Tether against $14.1 trillion processed by Visa and $7.7 trillion on the Mastercard network.
According to Chainalysis, developing economies are more actively participating in the new financial sector. In 2022 Ukraine ranked third in the global cryptocurrency adoption index.
Blockchain technology is drawing regulatory attention: about 98 countries are developing CBDC. One of the leaders is China, actively testing the digital yuan.
Cryptocurrencies have already been integrated by more than 380 Ukrainian companies and charitable funds, including MebelOk, Stylus, CACTUS and Tabletochki. Their list grows as more entrepreneurs recognise the benefits of integrating a crypto-payment gateway for accepting digital assets.
Why cryptocurrency for business?
Integrating crypto payments into a business can attract new users unwilling to spend time converting tokens into hryvnia. Moreover, it is an effective marketing move to raise brand awareness: cryptocurrencies can be used in loyalty programs, offering discounts on future purchases.
A further tangible benefit for business is the low cost of transactions. Cryptocurrencies are decentralised, hence there are no intermediaries and no additional fees. For comparison: the cost of most Bitcoin transactions is up to 1% of the transfer amount, while the average fee in traditional payment networks is between 1.5% and 3.5%.
Additionally, cryptocurrencies allow accepting payments from customers in any country where digital assets are permitted. Business owners can avoid worrying about exchange rates of national currencies and, in some cases, earn extra profit. For instance, the USDT rate can be more favourable than the hryvnia’s rate against the dollar.
How to start accepting cryptocurrency?
There are several options for accepting cryptocurrency:
- POS terminals for in-store payments, externally resembling devices used for card payments;
- a payment page on a website for online cryptocurrency payments;
- a payment gateway for WooCommerce.
Crypto-processing enables converting digital assets to hryvnia and back, as well as accumulating it in e-wallets. All information about balances, fees, connected terminals and transaction history can be viewed on the provider’s dashboard in the merchant account.
For example, Whitepay’s POS terminal is equipped with a display showing key information and the current exchange rate. In total, more than 140 digital assets are available for payment.
To pay with cryptocurrency a client must scan a QR code generated by the system with their electronic wallet and transfer the required amount to the merchant’s address. The price of goods or services is calculated at the current exchange rate. If the transfer is successful, the system generates a receipt with the transaction hash that can be tracked.
Legal status of cryptocurrencies in Ukraine
In February 2022, the Verkhovna Rada passed the Law “On Virtual Assets”, which aims to bring the market out of the shadow economy. The document is now being amended to reflect the European regulation MiCA. The process of legalising cryptocurrencies is not yet complete, but their use is permitted in Ukraine.
At the same time, income received in digital assets must be declared, even in the absence of clear directives. For this, cryptocurrency is converted into hryvnia and taxed according to the taxpayer group to which the business belongs.
In early March 2023, cryptocurrency platforms reported a temporary suspension of operations through hryvnia bank cards. In a comment to ForkLog, Whitepay CEO Gleb Udovichenko said that most of their clients were not affected by the restrictions.
“Whitepay has never worked with sanctioned companies or the gambling industry. Additionally, we are in dialogue with the NBU to create a new model for integrating cryptocurrency and hryvnia in the context of legalising crypto-operations in Ukraine,” he added.
Risks and takeaways
The main thing to remember is that cryptocurrencies are volatile. There is also the risk of reputational crises for projects. These risks can be mitigated by converting received digital assets into fiat immediately. On balance, the advantages outweigh the downsides.
Accepting crypto payments can be an additional way to elevate a business by reducing operating costs, expanding the customer base, and improving competitiveness. However, it is important to understand the regulatory landscape and comply with all applicable rules.
To start accepting cryptocurrencies, a company should define its goals, study legal aspects and risks, choose a payment gateway, and train staff to work with the technology. Because the crypto market is still evolving and carries risks, firms should be prepared for challenges and changes in the future.