Inflation and Credit Card Processing Fees
As the U.S. faces sky high inflation rates, this manifests itself in the business economy in many ways, one of which is through the Producer Price Index (PPI). The PPI measures selling price change over time received by domestic producers for output. As of January, the PPI increase accelerated, rising 1.0 percent from December for final demand; this follows a 0.9 percent increase in November and a 0.4 percent increase in December. While the inflation ensues, credit card companies have been known to take a generous slice of each business transaction, ranging anywhere from 2.87 to 4.35 percent.
Are Cryto Payments the Solution?
Bitcoin and Ethereum have both attempted to provide methods that combat high credit card processing fees. Unfortunately, both are slow and costly and can handle only a minute number of transactions compared to credit card companies. So, crypto payments are a no-go for a largescale solution. Then how are businesses supposed to stay afloat when they face these deterring fees? That is where Solana Pay comes in. Keep reading to find out who Solana is and what they are doing to disrupt payment processing.
What is Solana and Solana Pay?
Solana Labs created Solana, which, according to their website, is a “decentralized blockchain built to enable scalable, user-friendly apps for the world.” It is the fastest growing crypto ecosystem and it rivals Ethereum. Last month, they launched Solana Pay, a way for merchants and customers to handle payment with stablecoins in a decentralized way. It is considered less of a crypto payment method and more like a set of payment rails. The ultimate vision? To incorporate all currencies on the chain with seamless swapping and to enable consumers to receive assets back from businesses.
Solana is a “digital version of a cash payment.” Consumers can send digital dollar currencies directly to businesses for less than a cent, boasting affordability as an advantage. Additionally, Solana Pay is incredibly versatile across currencies. For example, Solana Labs is working with Circle, which allows merchants to accept USDC and convert funds back to fiat. And the speed? Absolutely unmatched. Solana can handle 65 thousand transactions per second versus the much slower Ethereum. Solana Pay also offers user-friendliness, boasting the ability to pay via a QR code or browser plug-in.
Businesses might be ready to jump ship to Solana Pay, but there are a couple key considerations they should examine before doing so. Businesses should ponder the protection level of Solana Pay and investigate the potential for smart contracts to hold funds for large purchases in escrow. The Solana blockchain has also experienced some outages recently, so potential users may question the stability of the platform.
Where to from Here?
Solana pay offers an alternative to slow, costly cryto payment methods and circumnavigates sky high credit card processing fees. But as is the case with all new concepts, businesses will likely be wary of adopting the new technology right away because of the newness and wanting to see things shake out a bit more with existing users. The landscape could certainly look much different in a year from now, or possible even a few months. But for now, it is up to individual businesses and merchants to decide if Solana pay is the next move for them or not before we see whether there is a major shift.