How Crypto Exchanges Can Leverage Digital Payments?

The crypto trading sector is growing rapidly, and according to some statistics this trend will continue. According to Statista, the revenue for the Cryptocurrencies segment is projected to reach US$34.72bn in 2022, with an expected annual growth rate of 16.43%, resulting in a projected total amount of US$74.30bn by 2027.

As a business that trades in the crypto sector, this upward projection creates a sigh of relief knowing that the industry will continue to grow. But, with this rapid growth will come new challenges, and one way to mitigate potential problems is through digital payments. 

Making use of Embedded Finance can help businesses that trade in the crypto industry to offer their customers a better, faster and more affordable way of trading.

What is Embedded Finance?

Embedded Finance is essentially the provision of financial services provided to non-financial companies. They are able to offer core financial services to their end-users by integrating with financial institutions through APIs. Simply put, companies can build financial products on top of their existing product ecosystem.

The biggest benefit of making use of Embedded Finance is that it allows businesses to make use of existing technology. There is no need for them to create solutions to fit their needs, and 99% of the time embedded finance products such as accounts, payments and cards can be customised to suit every need of a business.

Another major benefit of making use of embedded finance is that there is no need to acquire a financial licence (Bank or EMI), which is required when a business deals with transactions.

Learn more: Why Embedded Finance is a good option for your business?

So, what problems do crypto exchanges face?

As mentioned before, crypto exchanges and the industry face many challenges, with most able to be mitigated through digitisation. Here are some of the challenges that may present when trading in the crypto industry.

Fees, fees, fees

For many in the industry, it becomes a difficult task to keep trading fees low, as overhead costs need to be calculated and covered for a crypto trading business to be successful. Many who trade in the sector feel that trading fees are high, and that they don’t get the full value of their trade. Moreover, additional fees for depositing and withdrawing funds can be very hefty for many investors. Because crypto industry is still considered as a grey area then many crypto exchanges and their investors are forced to pay up to 6% commission for deposits/withdrawals.

Security

Dealing with personal data online can feel risky, and many feel that online crypto trading is a risk and that their personal data could get stolen easily. Though crypto trading is regulated, the fear of personal data being stolen is rational. There are, however, many ways to try and prevent it, but hackers and fraudsters evolve to find a work-around. 

Customer satisfaction

It is difficult to keep all customers satisfied in the crypto industry, especially because of the high-stakes. One way to prevent customers from being dissatisfied is by ensuring that they get the best customer service, regular updates and communication, and offer a user-friendly interface. 

Embedded Finance: Solution for crypto exchanges 

Embedded Finance brings many benefits to any industry, but not quite like the crypto industry. The move towards digitisation and mainly online trading has opened the doors to many problems. But, embedded finance has created many solutions for the problems that pop up as the industry continues to transform. 

Say goodbye to high fees and say hello to new revenue

Dealing with embedded finance providers allows a crypto trading business to offer competitive rates when it comes to deposit and withdrawal fees. This is mainly due to the fact that fintech organisations can offer their services at a lower rate than a traditional bank. 

So, not only does making use of a digital payments platform lower the fees for a crypto business, but  also ensures easy integration and a fully fledged product that functions almost as a plug and play. 

As the crypto business can integrated a whole account-payment system in its product ecosystem, it can also put their own margins on certain transactions. For example, the cost of SEPA withdrawals is 0.2% for the crypto exchange. They can put a margin of 0.3% in order to earn for every withdrawal made through their platform.

Also, this function can also be used to offer a superior value to the investor. The crypto exchange can bear the costs for deposits in order to allow traders to deposit their money free of commission on their platform. You can mix and match this solution in order to provide best value to your business and your customers.

Security 

Many who trade in crypto are still uncertain about the security of their personal data. Luckily, many security features are already present in the crypto realm, and combined with a digital payment platform, this doubles the security measures and ensures that the personal data of all traders is protected. By integrating a BaaS solution, your business can be sure that security and compliance meets the highest standards.

Customer satisfaction 

Partnering with a digital payments platform can help reduce dissatisfied customers through their excellent customer experience and attention to detail when it comes to the user interface. 

The fact that it is possible to make use of a completed product ensures that a crypto trading business is making use of an interface that has already been tried and tested. It can limit down time and ensure that the interface is easy to understand and navigate. 

More and more people abandon their payments journey if they are redirected to other pages outside the platform. By leveraging embedded finance solutions, your business can create the full payments journey within your ecosystem. Your traders will not need to leave your platform ever again.

If you decide to implement an embedded finance solution for your crypto business sometime in the future, be sure to set clear goals in order to achieve the best value of embedded finance.

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