Why Online Merchants Should Accept Dai For Crypto Payments

14 July 2020

More and more merchants accept crypto payments today, thanks to the decentralized finance (DeFi) movement and the many benefits crypto provides to e-commerce retailers and customers alike. An estimated $4 billion in Bitcoin (BTC) alone was sent through payment processors in 2019.1https://www.coindesk.com/bitcoin-usage-among-merchants-is-up-according-to-data-from-coinbase-and-bitpay

But while DeFi offers greater security, efficiency, and control than the traditional financial system, there is a hurdle to accepting crypto payments: Most cryptocurrencies are volatile, so to avoid the possibility of received funds losing value, merchants must exchange payments for a stable currency quickly, and then pay the associated fees.

That inconvenience and cost can be avoided by accepting payments in MakerDAO’s Dai stablecoin, which is soft-pegged to the US Dollar. Dai offers the benefits of crypto (speed and transparency) and fiat currency (reliable price) while avoiding the risk and costs of traditional internet payments (chargebacks and high transaction fees). In other words, Dai is the ideal crypto solution for e-commerce. 

The Growing Trend of Accepting Crypto Payments For E-Commerce

Overall, e-commerce is growing rapidly. Forecasts from last summer suggest over 60% year-on-year growth to 2022, with global retailers expected to take $5.7 trillion in payments by then.2https://www.forbes.com/sites/ilkerkoksal/2019/08/23/the-rise-of-crypto-as-payment-currency/#5509766e26e9 Crypto payments account for just a tiny proportion of that total, but rising adoption rates suggest that crypto is proving its worth as an efficient day-to-day payment method.

Given that Bitcoin was conceived as a form of peer-to-peer electronic cash,3https://bitcoin.org/bitcoin.pdf it should come as no surprise that it and other cryptocurrencies are gaining ground as a means of online payment. 

BitPay, a popular service that enables stores to accept crypto payments without worrying about volatility, processed $1 billion in transactions last year4https://www.theblockcrypto.com/linked/68529/bitcoin-makes-up-over-90-of-payments-processed-by-bitpay, matching the amount from 2018.5https://www.theblockcrypto.com/linked/7643/bitpay-sees-record-year-for-revenue-in-2018

Similar services also show growth. Coinbase Commerce, which recently added Dai as a payment method, has seen a total of $200 million spent through 8,000 integrated merchants.6https://cointelegraph.com/news/coinbases-retail-payment-portal-passed-200-million-in-transactions CoinGate, which launched in 2014 and offers settlement to fiat or selected cryptocurrencies, has grown to accept over 50 different digital coins and tokens, including Dai.7https://coingate.com/supported-currencies

All of these merchant services have something in common: They contend with crypto’s volatility by providing the ability to exchange tokens for fiat, necessarily introducing fees and points of centralization.8https://support.bitpay.com/hc/en-us/articles/115002990803-What-is-the-Network-Cost-fee-on-BitPay-invoices-and-why-is-BitPay-charging-it- Dai sidesteps those problems because Dai payments don’t need to be exchanged. 

Using Dai is much like using cash: It can be held without risk or penalty, and spent on goods and services. Merchants can choose to exchange Dai to fiat—or not.  

As the leading decentralized stablecoin and the most used cryptocurrency in the DeFi space, Dai offers the ideal combination of features for e-commerce merchants, giving them the best of both the crypto world and fiat world.

Nine Reasons Why Merchants Choose to Accept Dai Payments

Dai provides a unique series of benefits to online retailers and their customers. These include:

  1. Low volatility. Most cryptocurrencies fluctuate in value according to market conditions. Dai is a stablecoin that mitigates volatility through an autonomous system of smart contracts called the Maker Protocol, as well as through decentralized community governance. This means that merchants can receive it and then hold it indefinitely, without the need to exchange it for other fiat currencies, as they do when accepting Bitcoin payments. 
Dai provides a unique series of benefits to online retailers who accept crypto payments, and to their customers.

2. Avoid high payment processing fees. Small businesses can face steep credit card payment processing fees, depending on the volume of transactions and other factors.9https://www.fundera.com/blog/credit-card-processing-fees Crypto gas fees are typically much lower. 

3. Low network fees. Dai transactions incur a small flat fee (Ethereum’s transaction fees are a fraction of Bitcoin’s network fees10https://ethgasstation.info/), paid by the sender.

4. No chargebacks. All Dai payments are transparent and permanent because the token is hosted on a decentralized blockchain. There are no middlemen involved in transactions, and merchants know that once a payment is made, it cannot be canceled or reversed. The only way a customer can receive a refund is if the merchant issues one.

5. Mobile payments. Dai is integrated with many wallets, making it easy for customers and merchants to transact via mobile phones. Forbes suggests that 72% of online purchases will be made via mobile devices by next year.11https://www.forbes.com/sites/ilkerkoksal/2019/08/23/the-rise-of-crypto-as-payment-currency/#5509766e26e9

6. Positive brand identity. Merchants that support crypto payments are likely to be seen as more innovative and tech-savvy than their competitors. 

7. New markets. Crypto has become increasingly popular with millennials.12https://cointelegraph.com/news/millennials-3-times-more-likely-to-invest-in-crypto-than-gen-x-survey Dai can help merchants increase their exposure to this demographic. 

8. Improve social value. Your business will directly or indirectly help customers who use Dai avoid the problems of hyperinflation in their countries. Dai has an active user community in Latin America for this reason. You would potentially be well-placed to help these users obtain the goods and services they need, or at the very least, help provide awareness and liquidity for the currency they use to hedge their local currencies.

9. Easily added. Several merchant platform plug-ins and services enable the addition of Dai as a payment option quickly and easily. Experienced e-commerce platform developers can choose to self-integrate Dai using public APIs and Maker documentation.

Coinbase Commerce enables its merchants to accept Dai and other cryptocurrency payments.
Coinbase Commerce enables its merchants’ customers to pay for goods and services in Dai and other cryptocurrencies.

Accept Dai And Other Crypto Payments Easily

There are many benefits to accepting Dai payments on your e-commerce website, including low volatility, minimal fees, and no chargebacks. Thanks to the many powerful plug-in tools available, adding Dai as a payment option is fast and can help open your business to new markets in a matter of minutes.  

Integrate Dai into your business and start accepting crypto payments now!

14 July 2020