October 28, 2024

Cryptocurrency in Retail: Trends, Adoption, and Insights

Cryptocurrency is moving from niche to mainstream and retail is leading the charge. As digital currencies mature, both small and big businesses around the world are adding crypto payments for their customers. The crypto landscape in retail is changing fast with a growing number of merchants and consumers adopting the technology. In this article we’ll look at the current state of crypto in retail, 2023-2024 trends and stats that show the payment system is shifting.

Retailers are no longer viewing cryptocurrency as an investment but as a payment method that has real benefits. Early adopters in the retail space like Overstock.com started accepting Bitcoin as early as 2014. This was seen as innovative, albeit a bit risky, since cryptocurrency prices were so volatile. But the digital payments space has evolved to mitigate many of those initial challenges with the creation of stablecoins, improvements in blockchain transaction processing, and the emergence of payment processors that convert crypto to fiat. Now it’s easier for retailers to add crypto payments without the price fluctuations affecting their bottom line.

Consumer demand for more payment options has forced many retailers to look into cryptocurrency. PwC research in 2023 found that a large percentage of millennials and Gen Z consumers (who are more tech savvy) want to use cryptocurrency for purchases. That’s further supported by multiple surveys that show consumers aren’t just interested in holding digital assets for long term investment but also want to spend them.

Global Adoption of Cryptocurrency in Retail

As of 2024, 560 million people own cryptocurrencies which is 6.8% of the global population. This surge in adoption is largely driven by consumer interest in using digital currencies for payments, 65% of crypto holders want to use cryptocurrencies for everyday transactions. Cryptocurrency adoption rate is growing faster than traditional payment systems, with a compound annual growth rate (CAGR) of 99% from 2018 to 2023 compared to just 8% for traditional payment methods.

Countries accepting crypto

[El Salvador made headlines in 2021](https://www.nber.org/digest/202207/el-salvadors-experiment-bitcoin-legal-tender) by becoming the first country to make Bitcoin legal tender. While its adoption has been met with both enthusiasm and skepticism, it remains a significant milestone. Following El Salvador's lead, the Central African Republic (CAR) became the second country to make Bitcoin legal tender [in April 2022](https://www.lemonde.fr/international/article/2022/04/27/the-central-african-republic-adopts-bitcoin-as-a-legal-currency_5981757_4.html).

While these two countries remain the only ones to have fully embraced cryptocurrency as legal tender, others have also started to integrate digital currencies into their economies:

United Arab Emirates (UAE): UAE accepts Bitcoin for real estate transactions, with several companies allow property purchases with BTC
Turkey: Turkish real estate market accepts crypto payments, recognizing the potential of digital currencies
Switzerland: Swiss real estate can be bought with crypto through asset tokenization
Japan: Japanese airlines like Peach Aviation accept Bitcoin for flight bookings
Germany: Burger King Germany tested Bitcoin payments on their website and app
Canada: KFC Canada allowed customers to pay with Bitcoin for a limited time for the “Bitcoin Bucket” meal

For more information on these developments, you can refer to this coinweb article.

Major Brands Accepting Cryptocurrency

Cryptocurrency payments are going mainstream as big brands are jumping on the bandwagon. Several well-known brands including Microsoft, Twitch and AT&T have started accepting crypto as a form of payment alongside other emerging brands in hospitality, e-commerce and travel. The growth of crypto payments isn’t limited to big corporations; many small and medium sized enterprises (SMEs) are also offering this option as crypto-savvy consumers are demanding it.

Merchants who have integrated crypto payments are seeing huge success. For example, Hostinger, a web hosting company, got nearly a quarter of all cryptocurrency paying customers on CoinGate. Other companies like IPRoyal, a proxy service provider, reported that over 30% of their transactions were in crypto.

Cryptocurrencies Used for Payments

The landscape of cryptocurrencies used for payments is expanding. Bitcoin, the original cryptocurrency, is still a big player but has seen a decline in its share of crypto payments. In 2023, Bitcoin accounted for [35.6% of all transactions](https://coingate.com/blog/post/crypto-payments-report-2023), down from 54.8% in 2021. Stablecoins, especially USDT (Tether), are gaining popularity due to their price stability. USDT accounted for [25.4% of payments in 2023](https://coingate.com/blog/post/crypto-payments-report-2023) and surpassed Bitcoin as the most used cryptocurrency for payments in late 2023

Other cryptocurrencies such as Tron, Litecoin and Ethereum are also commonly used for payments, with Litecoin maintaining its third place ranking. Ethereum has seen a slight decrease in its share, falling to 9.3% in 2023. TRON is gaining popularity especially in regions where blockchain based platforms are used for small transactions

Merchant Readiness and Adoption Rates

Merchant acceptance of cryptocurrency has been a key indicator to its adoption in retail. Several studies and surveys in 2023 and early 2024 have provided insights into this trend.

Global Merchant Adoption

[A Deloitte and PayPal study published in June 2023](https://deloitte.wsj.com/cmo/the-crypto-advantage-for-retailers-01666195967) surveyed 2,000 retail executives in the US. 75% of them plan to accept cryptocurrency or stablecoin payments in the next 2 years. This is a big jump in merchant readiness compared to previous years

75% of retailers eyeing crypto payments within 24 months: Deloitte (cointelegraph.com)

Here are the key findings from the Deloitte study:

83% of retailers expect consumer interest in digital currencies to increase in the next year.
49% of retailers believe accepting digital currencies will improve the customer experience.
40% of retailers think accepting cryptocurrency payments will give them a competitive advantage.

Regional Adoption

While global trends show growth, there’s a lot of regional variation:

According to BTC Map, the number of merchants globally accepting Bitcoin payments increased significantly in 2023. By the end of the year, there were 6,126 listed businesses, up from 2,207 at the start of the year. The United States and Europe led in merchant adoption, while Central and South America also showed strong numbers

Additionally, in regions with high inflation and currency volatility, such as South America and parts of Africa, crypto payments offer a hedge against local currencies. Brazil, for example, has a crypto ownership rate of nearly 17.5%, with a growing number of retail businesses accepting Bitcoin and stablecoins.

The Role of Payment Processors in Cryptocurrency Adoption

Enabling Crypto Acceptance

Payment processors serve as intermediaries between businesses and the cryptocurrency ecosystem, facilitating crypto acceptance by managing the technical complexities of transactions. By lowering the technical barriers, they enable more businesses to adopt cryptocurrency payments.

Boosting Adoption and Liquidity

By enabling crypto transactions, payment processors bring in more customers to merchants. Studies show businesses that accept [Bitcoin can see up to 40% more new customers and two times](https://bitpay.com/resources/forrester-report-says-bitpay-adds-new-sales-and-2x-aov/) the average order value compared to credit card users. Payment processors provide a seamless and fast payment experience so more consumers will adopt crypto for everyday purchases and larger transactions.

Integration and Security

Payment processors provide simple solutions for businesses to accept crypto without having to hold or manage digital assets themselves. This makes onboarding for retailers easy and fast. Plus they ensure secure transactions and comply with regulations so businesses have a compliant framework that reduces fraud and increases transaction security.

Why Retailers Are Embracing Cryptocurrencies

There are several reasons retailers are going crypto. One of the biggest is consumer demand, especially from millennials and Gen Z who are more tech savvy and open to decentralized payment systems.

Another is lower transaction fees compared to traditional payment methods. Crypto payments allow merchants to bypass the fees associated with credit card processors which can range from 1.5% to 3.5%. By accepting crypto retailers can offer lower prices and be more competitive in the market.

Furthermore crypto payments can facilitate international sales. For merchants looking to go global, crypto provides an alternative to expensive currency conversion fees and long processing times of cross border transactions. Blockchain’s borderless nature allows businesses to accept payments from customers in different countries instantly and expand their customer base.

The Role of Stablecoins in Retail Payments

One of the biggest innovations in cryptocurrency payments for retail is the rise of stablecoins. Stablecoins are cryptocurrencies pegged to the value of traditional assets like the US dollar or euro, so they don’t have the volatility of most digital assets like Bitcoin and Ethereum. This price stability makes stablecoins a great option for both merchants and consumers, the benefits of blockchain without the price swings.

USDT (Tether), USDC (USD Coin) and DAI are the most used stablecoins in retail. In fact USDT surpassed Bitcoin as the most used cryptocurrency for retail payments in 2023, it now accounts for more than 75% of stablecoin market value.

This trend will continue through 2024 as more consumers and businesses look for practical, low risk ways to use crypto.

Stablecoins have several benefits for retail transactions:

Instant Settlement: Traditional financial systems take days to settle cross border payments, stablecoin transactions are instant so businesses can access funds faster.
Low Transaction Fees: Since stablecoins run on blockchain technology they eliminate the need for intermediaries like banks, so fees are much lower.
Accessibility: Stablecoins give the unbanked or underbanked a way to participate in the global economy, which could open up new markets for retail businesses.

Barriers to Mainstream Adoption

Despite the growth of crypto adoption, there are still many hurdles to overcome before crypto can be a mainstream payment method. One of the biggest is price volatility. Stablecoins are a more reliable option but Bitcoin and Ethereum are still super volatile and some retailers and consumers don’t want to use them for daily transactions.

Another is regulatory uncertainty. Different countries have different views on the legality and taxation of crypto and that creates challenges for businesses wanting to integrate crypto payments. For example, El Salvador has made Bitcoin legal tender, while China has banned the use of cryptocurrencies for transactions altogether.

Security and fraud prevention is a concern for businesses that adopt crypto. Blockchain is secure but the irreversible nature of crypto transactions can make businesses vulnerable to fraud if they don’t know how to protect their digital assets.

Future Outlook for Crypto Payments

The trend of cryptocurrency adoption in retail shows no signs of slowing down. As we move further into 2024 and beyond, several developments are likely to shape the landscape:

Increased stablecoin usage: Stablecoins, pegged to fiat, will see more adoption as they fix the volatility problem of other cryptos.
Central Bank Digital Currencies (CBDCs): As more countries explore and launch CBDCs, they’ll get integrated into retail systems.
Better User Experience: Technological advancements will make cryptocurrency transactions as smooth as traditional payments.
Regulatory Clarity: Clearer and more uniform regulations across jurisdictions will drive adoption and innovation.
Integration with Existing Payment Systems: More payment processors and point of sale systems will add cryptocurrency options, making it easier for merchants.

Conclusion

The retail landscape of cryptocurrency has changed a lot in 2023 and early 2024. While full adoption is still a work in progress, the trends are showing more and more acceptance and integration of digital currencies in everyday commerce. As technology improves, regulations mature and demand grows we will see more and more use of cryptocurrencies for retail transactions.

In summary, the future of cryptocurrency in retail is looking good. Businesses that get in early can benefit from a growing market as more and more consumers use cryptocurrency for daily purchases. The road to mainstream adoption may be long but the combination of growing consumer demand, tech and regulation is promising for cryptocurrency in retail.