Imagine being in a busy digital marketplace. We have stores, services, subscriptions, and games, including your favorite cafe. They all offer at least a dozen different payment methods. There are traditional banking options such as funds transfer, credit/debit cards, mobile payments, ‘send money to a friend’ services, and more recently, the option to pay with digital currencies such as Bitcoin and Ethereum tokens. Additionally, in Australia there are options such as PayID that allow you to make and receive payments via your mobile number or email.
Now, all these methods have their own advantages and disadvantages. But the question is: to what extent do cryptocurrencies have the same capabilities as other current digital payment methods? And when is one PayPal better than the other?
What is PayID?
Before considering cryptocurrencies in comparison to all other currencies, it is helpful to have a concrete example of a non-cryptocurrency digital payment to compare against. PayID is just one example.
PayID allows you to choose an easy-to-remember identifier, such as a mobile phone number or email address, and associate it with your bank account. So when you want people to pay you funds, they just need to use your identifier, not their banking or routing details. When transferring funds between participating banking institutions, transactions take only a few seconds.
For example, in the world of online gambling, Pay ID online casinos offer gamblers a convenient, safe, and quick way to fund their accounts. In fact, all you need is a mobile number or email address and you can deposit instantly and often for free. Furthermore, according to esports insider listMost of these Pay ID online casinos offer substantial bonuses that can be used to play different types of gambling games, from classics to new ones. This means that such experience provides a solid basis for comparing digital payments via banks (such as PayID) and digital payments via cryptocurrencies in today’s society.
Advantages of modern digital payment methods
Now, let’s talk about what actually works when using methods like PayID, mobile wallet payments, and instant bank transfers.
1. Speed and convenience
Through PayID or similar channels, transactions can be made quickly, in most cases within seconds, regardless of the bank involved. This is because you don’t have to enter your account number over the phone or via email. Therefore, usability is high.
2. Well-known and widely accepted
This type of payment is user-friendly and sits on top of existing payment infrastructure, supported by banking infrastructure and regulatory frameworks. Therefore, it means there is no need to learn new systems as most of us are already working together.
3. Strong consumer protection and regulation
“Just as a merchant might prefer a particular restaurant, you might prefer a particular bank.” Daniel Weber, CEO of Wise said in a statement announcing the new banking partnership. “If you’re working with a particular bank, you have all of that bank’s infrastructure at your disposal.”
In reality, banks have obligations, fraud prevention, deposit protection in some cases, and standard dispute resolution processes. Using bank-linked digital payments means you are operating within a known regulatory environment.
4. Low barriers to entry
You may not need to be a cryptocurrency expert at all. Just install the banking app and create a PayID. You probably already have everything in place. It also feels less risky because it’s “just a banking transaction.”
5. Ideal for everyday transactions
For regular transactions like paying rent, sending money to friends and family, or refunding accounts such as online games or portals, digital bank payments work well.
Disadvantages of modern digital payment systems
Of course, even with positive experiences, there are trade-offs. The following points require particular attention.
1. Reliance on centralized infrastructure
This payment system is handled by banks, payment processors, and in some cases national banking systems. This means relying on centralized systems that operate during business hours or whose rates are geographically limited.
2. Fees and cross-border speed reductions
Even if domestic trade is quick, cross-border trade often reverts to slower, more expensive methods. There is also banking transactions Items that may result in processing delays or fees. In general, digital bank transfers may be more expensive or have limitations when going outside of a domestic environment.
3. Privacy and data issues
Banks and payment services are involved, so record-keeping, data collection, authentication, etc. are required. Some users may prefer that their trading history is less visible.
4. Limiting innovation and adoption
PayID is a smart system, but it’s also region-specific (in this case Australia) and not all merchants will accept it in all regions. Therefore, you may run into problems if you try to use it for more specialized or globally oriented purposes.
5. The complexity of chargebacks and fraud
Although banking institutions offer some protections to consumers, digital payments remain vulnerable to fraud. Additionally, you can take into account instant or instantaneous transfer of funds and enjoy limited-time protection against fraudulent transactions.
Advantages of cryptocurrency payment
Now, let’s move on to the cryptographic aspect. There are several possible benefits when making payments in cryptocurrencies (i.e., using blockchain tokens to make payments).
1. Borderless & 24/7 access
Cryptocurrency payments do not depend on bank hours or geographical borders. This is as long as you have wallet As long as you have an internet connection, you can make payments from anywhere in the world, 24 hours a day, 365 days a year. Regular payments can be subject to delays and timing constraints, especially when sending money across borders.
2. Lower fees/transparency (in some cases)
Cryptocurrency trading, especially across borders, can be cheaper for many businesses in that they can cut out some intermediaries. This is because it costs up to 3% to transfer, say, 200 USD through banking channels, whereas it only costs up to 1% (or so) with cryptocurrencies.
3. Independence and new possibilities
Cryptocurrencies offer features not found in traditional payments, such as smart contracts, programmable payments, irrevocable settlements, and financial access to people underserved by banking systems.
4. Speed (network dependent)
Settlements may not necessarily be instantaneous, but most cryptocurrency networks, like payment channels, work independently of banking cycles and may allow for faster settlements than previously possible.
5. New use cases and flexibility
Crypto is programmable cash, enabling new flows such as micropayments, conditional payments, global micropayments, and decentralized platforms. This is more flexible than just the funds transfer type functionality of traditional systems.
Disadvantages of virtual currency payments
Also, no payment method is completely secure. Below are the important drawbacks of making payments through cryptocurrencies.
1. Volatility of value
Various digital currencies tend to have large price fluctuations. This means that accepting a trade now may result in a different price in the future. This poses a challenge when considering “payments” compared to “speculation” in digital currencies.
2. Limited acceptance and on-ramp/off
Also, not all sellers accept payments in cryptocurrencies. Additionally, exchanging cryptocurrencies for fiat currencies and vice versa has its own costs. So even if you own cryptocurrencies, trading them is not as easy as trading with fiat/digital banking systems.
3. Regulation and legal uncertainty
Regulatory policies for encryption also vary by country. There are also issues such as taxation, money laundering, consumer protection, and returns.
4. Security risks and technical complexity
Blockchains may be secure, but there are significant risks to wallets, exchanges, or human error. Additionally, users must learn how to use private keys and use third-party storage options.
5. Irreversibility and lack of consumer protection
Once a cryptocurrency transaction is verified, it cannot be reversed. While this isn’t a huge issue for sellers, it can be a hurdle for customers if they need a refund or chargeback.
6. Energy and environmental issues (especially networks)
Depending on the type of cryptocurrency market, a large amount of energy may be involved in either cryptocurrency mining or consensus validation.
So…which one should you use and when?
Considering all this, the question becomes how to make a decision between crypto payments and alternative digital payments.
When it comes to making and receiving payments in everyday settings (like buying groceries or settling a debt with a friend), systems like PayID and instant bank transfer are undoubtedly the fastest and easiest.
in cross-border businessor if you are interested in leveraging new transaction flows (micropayments, decentralized apps) in international transactions, then cryptocurrencies come into their own.
Cryptocurrency may prove attractive if you are dealing with a merchant that accepts cryptocurrencies, or if you want to own tokens that can be used for payments.
However, if you prefer stable values and want to avoid surprises, it is a better choice. digital Payment based on fiat currency. Cryptocurrencies also involve risks associated with fluctuations in value, which are of no interest in commercial transactions.
Overall, the ideal tool will depend on the job.