This is the new normal.
Around the world, small businesses are closing shop, and non-essential workers are being either laid off or asked to go on unpaid leave, due to the effects of the coronavirus pandemic.
The International Monetary Fund has declared that the world is in a global recession, which means countries will need fiscal or monetary strategies to stimulate their respective economies.
Until our medical experts find a cure or vaccine for COVID-19, businesses will have to deal with the impact of physical-distancing policies, which often result in the halt of businesses and trades deemed as non-necessities.
Digital-first businesses or brick-and-mortar industries that have gone the digital route are still thriving amid reduced demand. After all, life must go on, at least in some form. For traditional businesses, this means finding innovative ways to continue earning revenues, such as dealing with customers through online or alternative channels.
Either way, social distancing is changing the way we do business — even for traditional businesses. Case in point: Paying through traditional currency is seen as a risky move since physically handing paper money and coins can result in the transmission of pathogens like the coronavirus.
As such, businesses have shifted to cashless transactions such as mobile and digital payments.
Here are some ways through which the digital-payments industry is enabling businesses to survive and even thrive during these times.
New digital-payment technologies offer near-instantaneous settlement
For many merchants, one of the biggest challenges in using digital payments is the length of settlement. Small businesses especially need to stay liquid, and having to wait for long settlement times means they are unable to utilize the received payments in business operations or paying for their own vendors and supplies.
New fintech providers combine the use of digital currencies with settlement partners (such as banks, financial institutions or other fintech providers) in ensuring a high speed of fund settlement.
Dmitry Fedotov, Business Development at BC Vault, a hardware wallet platform with offices in Slovenia and Hong Kong, says that partnership and integration within the fintech ecosystem had resulted in a very high level of convenience for users. “This gives the user the chance to be able to do even more things with the product in the same ecosystem.”
He cites how interconnectivity and collaboration with industry players can automate exchange between cryptocurrencies and with fiat money, which includes fiat money. This enables “exchange of crypto coins from currency A to currency B fully in the native application itself.”
With the latest innovations in digital-payment platforms, merchants don’t have to go through the extra effort of exchanging their digital currency into their local currency. Nor do they have to wait lengthy clearing times, which can be a cause for delay in fulfilment or resupply.
Digital currency is increasingly more secure
Because of the cryptographic nature of digital currency like cryptocurrencies, they are inherently secure, especially with distributed consensus mechanisms and immutability (thus irreversibility) of transactions. For both merchants and users, this ensures the integrity of transactions, leading to more confidence in transacting online.
Though there had been news of crypto hacks and thefts, especially in the early days of the industry, digital wallets today provide increasing levels of sophistication in terms of security.
For one, hardware wallets are increasingly becoming popular. These are devices that store the private key that cryptographically signs all transactions, which make secure cryptocurrency payments possible. Meanwhile, online wallets are also providing better security features.
“Software wallets can implement the option to securely connect to a hardware wallet for signing of transactions and accessing services in the software app whilst hardware wallets would keep all private keys secure on the device, therefore enjoying the best of both worlds; the great usability, features, native support of assets and integrated services of software wallets and the unparalleled key isolation an offline device offers,” says George Kimionis, founder and CEO at Coinomi, a multi-chain cross-platform wallet.
Alen Šalamun, chief technology officer at BC Vault, adds some valuable insights regarding the importance of security: “Hardware wallets store the private key separately from the potentially vulnerable computer/smartphone and never expose the private key. They take in requests for transactions and send back signed transactions. This means that a remote attacker controlling your computer/smartphone is unable to gain access to the private key.”
Adoption, integration of digital payments is growing
Even as digital-payment platforms offer higher levels of convenience and security than before, the biggest challenge would be mass adoption. Users will be unable to transact with digital currencies if merchants do not accept such payments. For merchants, having a wider user base means more potential customers.
“We believe the integration of one type of wallet to another one can be an extra push towards mass adoption. Our common goal is to implement crypto into daily life,” says Konstantin Gladych, CEO at Atomic Wallet, a non-custodial multi-asset wallet based in Estonia, and who is also Cofounder and former CEO of Changelly.
For digital wallet companies, this means being able to interface with services like e-commerce providers, exchanges, and even payment gateways. “Clearly, this is a factor that leads to mass adoption of Blockchain technology. People will be more comfortable to try out the technology and get more benefits,” says Son Truong, marketing manager of Bacoor Inc., a digital-wallet company with offices in Japan, Malaysia, and Vietnam.
Truong adds how the digital-payments industry is growing, even amid the current economic hardships the world is facing. “At this very moment, more companies and investors are joining the industry. If we take a look back to five years ago, the market cap was approximately U.S. $3.8 billion. Now, it has increased 55 times, which is U.S. $165 billion at the time of this conversation despite the downtime.”
Digital wallets are highly integrated into mobile devices, mobile lifestyles
Increased adoption also means having the convenience of accessing digital funds on devices that we are already familiar with. “We’ve definitely come a long way since the early days when accessing the blockchain via a wallet was a privilege of the few. Today anyone can securely set up a wallet in minutes, with just a smartphone,” says Coinomi’s Kimionis.
BC Vault’s Fedotov says that digital platforms will need to work closely with the community to ensure that users are well-familiarized with the digital-assets industry. “We try to make things clear and also provide deep-down information on complicated things. Basically 80-90% of all support questions arise from lack of knowledge about how blockchain/crypto fundamentally works.”
The global recession is making a big impact globally, with ripple effects across industries. Digital businesses are not exactly immune to this, but solutions like digital payments can empower both digital and brick-and-mortar industries into providing innovative services to their customers.
With better security, increased partnerships, and more participation from the community, such solutions can help the industry survive and even thrive amid the current economic climate.