Why Google Will Be Accepting Crypto
Despite the rocky path cryptocurrency has been taking as an investment vehicle, its adoption as a payment method continues to move forward. Just recently, Google announced that they would be working with Coinbase to start accepting cryptocurrency payments for their various cloud services.
This is yet another big milestone for the normalization of crypto as a commonplace payment method, and it could have an influence on other tech companies’ decisions as to when and how to start offering crypto payment options to their own customers. What are the implications of the cryptocurrency payment deal Google made with Coinbase?
- What Deal Did Google and Coinbase Make?
- Why Did Google Decide to Start Accepting Crypto?
- How Will Coinbase Benefit from Their Deal with Google?
- What Implications Could This Deal Have for E-Commerce Merchants?
Cryptocurrency has been having a tough year, but there have been bright spots. One of these was the Ethereum merge, which shifted that cryptocurrency’s blockchain toward a more environmentally-friendly model that uses much less energy to process transactions. Crypto is still trading to the tune of $90 billion dollars per day, and while high-profile currencies like Bitcoin may have fallen dramatically from their recent heights, crypto certainly isn’t going anywhere.
What we are seeing is growing momentum behind the push to make crypto a mainstream payment method, especially in the emerging Web3 and the Metaverse.
Cryptocurrencies and their close relatives, the digital artifacts known as NFTs, have unique applications in virtual worlds and decentralized networks. They offer consumers a way to own and control digital funds and property without having to rely on a third-party provider that holds the actual data.
For many consumers, Google is the web, and their embrace of crypto payments is a stamp of legitimacy that cannot be ignored. Let’s take a closer look at why Google decided to partner up with Coinbase and consider the downstream effects of this deal.
What Deal Did Google and Coinbase Make?
At the Cloud Next conference in October 2022, Google announced that it would start working with Coinbase to accept cryptocurrency payments for cloud services, starting in early 2023. The financial terms of the deal were not disclosed.
Through an integration with Coinbase Commerce, customers of the Google Cloud platform will be able to make payments with cryptocurrencies like Bitcoin or Ether, two of the ten digital currencies supported by Coinbase.
Google also plans to investigate the possibility of using Coinbase Prime to manage cryptocurrency assets, which companies like Block and Tesla are already doing.
The origins of this deal go back to at least May of this year, when Google declared their intention to explore crypto and other digital currencies as a payment option. After months of negotiation, during which NFTs and other blockchain technologies became a greater topic of interest for Google’s cloud computing business, it would appear that everything has come together.
At first, the crypto payment option will only be offered to Google Cloud customers who are already using the Coinbase Commerce Web3 platform. Eventually, they plan to expand support to a wider range of customers.
Why Did Google Decide to Start Accepting Crypto?
Google’s cloud services are one of their most significant sources of income that doesn’t come from advertising, and they’ve been making moves recently to make it more Web3 compatible. Adding crypto support before their competitors helps cement their leadership in that market.
While there may not yet be a huge consumer demand for crypto payments, getting into the game early ensures that Google will have plenty of time to build and field-test the necessary payment infrastructure at their own pace.
Google is also getting some of Coinbase’s business at the expense of one of their biggest competitors. As part of the deal, Coinbase will be moving some of their cloud-based applications from Amazon Web Services over to Google Cloud.
How Will Coinbase Benefit from Their Deal with Google?
Aside from the intangible benefits of partnering with Google—and whatever might have gone into the non-disclosed terms of the deal—Coinbase will primarily benefit from the percentage-based fee they will receive from each payment. This is the standard arrangement for Coinbase Commerce transactions.
Not surprisingly, the announcement of the deal also provided an immediate lift to Coinbase’s stock price. Up until now, most of Coinbase’s revenue has come through retail transactions.
The Google deal positions them to become a stronger player in the world of B2B payments, which could migrate in greater numbers over to Web3 platforms in the years ahead.
For companies like Coinbase, the slow transformation of cryptocurrency from a speculative investment to an everyday digital payment method should work to their considerable advantage. These companies make money when customers are exchanging crypto, not when they’re holding on to it for dear life—as many crypto evangelists have been advising worried investors to do.
What Implications Could This Deal Have for E-Commerce Merchants?
For e-commerce merchants, a stable crypto payments ecosystem should be a good thing. Acquiring banks, payment processors, and third-party platforms all get to impose their rules and rates on merchants, but broader acceptance of digital currencies could put more power back in merchants’ hands.
For one thing, crypto doesn’t come with chargebacks. Once a customer makes a crypto payment, it’s final unless the merchants decides to grant them a refund. While this can lead to more time spent dealing directly with customer disputes, it also means that you don’t have to worry about fighting off friendly fraud, paying exorbitant chargeback fees, or stressing out about the consequences you might face for a rising chargeback ratio.
Crypto payment support is starting to ramp up in the e-commerce world, even if the average customer is largely unconcerned about this development.
Many companies are banking on the fact that the web in its current state is not going to last forever, and when cultural and generational shifts make Web3 technology the core infrastructure of our shared online spaces, the greater share of the spoils will go to those who embraced the blockchain sooner rather than later.
Retailers should keep a close eye on these developments, even if they can’t yet make the business case for accepting crypto payments. Consumers will have the final word on when crypto becomes a must-have payment option, and you’ll want to be ready when the time comes.
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