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The partnership with Shopify is significant because the Canadian e-commerce platform is one of the most prominent players in the field. Shopify accounts for 10% of worldwide e-commerce sales and 28% in the United States, making it the company’s largest market, according to Statista.
While Solana Pay, launched in early 2022, uses the Solana blockchain, it will not initially use the SOL token. Instead, Solana Pay will utilize USDC, currently the stablecoin with the second-highest market cap. Josh Fried, Senior Manager at Solana Foundation, told TechCrunch the choice was made because a dollar-pegged stablecoin would likely be more acceptable to merchants.
Many merchants may be reluctant to move into crypto payments and a more regulated coin like USDC may also sit better with consumers, as crypto’s volatility can be off-putting. Fried said that SOL might be added at a later date.
Making High Network Fees a Thing of the Past
The most intriguing proposition of Solana Pay, apart from speed and ease of use, would be its very low fees. With major credit cards charging between 1.5% to 3.5% for each transaction, the average transaction cost on the Solana blockchain is a mere $0.00025.
The downside to Solana is that it has suffered outages in the past but has achieved 100% uptime in the second quarter of 2023.
Solana Pay makes it easy for customers to use crypto on the Shopify website. On check-out, users will need to select Solana Pay as a payment option and then connect their Solana wallet to approve the transaction. Additionally, Solana states no user data is stored apart from the users’ wallet address and the amount of USDC sent.
E-commerce has enjoyed steady growth and is said to account for close to 21% of retail purchases in 2023, with around $6.31 trillion in sales. Shopify’s 10%, or around $600 billion slice, is significant and could help crypto adoption beyond 2023.
While the venture itself may have a long-term positive effect on SOL price, the addition of SOL to the partnership of Solana Pay and Shopify may be the more significant catalyst for price movement. At the time of writing, CoinMarketCap shows SOL is up almost 7%, trading hands at $21.90, still far from its all-time high of $258 in 2021.