How to Know if Your Business Should Accept Bitcoin and Cryptocurrency Payments
Should Your Business Accept Cryptocurrencies?
Cryptocurrencies are seeing an increasing number of companies using them every day. In the midst of this revolution, entrepreneurs usually dubiously ask – “Is cryptocurrency good for my company?”
While an organization may have already fought with whether or not to add PayPal, Square or Apple Pay to your payment options, adding the ability to accept cryptocurrency is a bit different. Deciding to accept cryptocurrencies is more like the decision to accept foreign currencies than just choosing to add a new form of payment processor.
Benefits Of Accepting Cryptos
Lower Transaction Fees
The lack of a central intermediary dramatically reduces transaction fees. Small businesses accepting credit card payments often face fees of around 25 cents for each card swipe, plus 2 to 4 percent of the transaction total. These costs add up, which is why smaller stores often have credit card purchase minimums.
Crypto's decentralized setup also protects merchants from fraudulent chargebacks. The transactions, like cash, are final, because no third party can reverse charges.
Crypto's decentralized nature enables small businesses to expand and open their doors to international buyers for whom their products and services were once inaccessible. For example, a small electronics retailer reported selling $300,000 worth of merchandise to nearly 40 countries by accepting cryptocurrency.
Speed Of Transaction
One of the major downsides of managing payments is the waiting process. Each bank involved in the process has to give their approval to every transaction, often resulting in excessive waiting times. With cryptocurrency, this frustrating waiting period is all gone. Using this method of payment, you can receive money in real time or in a worst-case scenario – in a minute.
Catering to Consumer Preferences
Accepting cryptocurrency offers another advantage by giving customers an additional way to pay while providing an extra layer of protection for their information.
Protection Against Chargebacks and Fraud
For every company dealing with monetary exchange, security is atop the priority list of every entity. The primary advantage of cryptocurrencies as a payment method is their finality. Once a transaction is complete, nobody can cancel it nor override it. Immediately after you perform a transaction, the funds that were transferred get added to the blockchain almost instantly, via mining. What’s even more impressive about this payment system is its logic. Without any loans or debts, the entire composition of cryptocurrencies is based on a “have it or don’t have it” principle.
Disadvantages Of Using Cryptos
Unsecured Crypto Wallets
While everyone needs a merchant crypto wallet to receive funds, these containers have shown to possess several security risks. Having your finances stored in such an insecure place is not the foundation you want your business resting on. So far, there is no way to completely prevent cybercriminals from getting their hands on users' wallets. This is particularly dangerous because, unlike fiat currencies like the U.S. dollar and the Euro, cryptocurrencies are not backed or insured.
The highest risk of digital currencies is price volatility, which makes value extremely unpredictable. To illustrate, Bitcoin was first valued in pennies when introduced in 2009 but rose to $19,172 per coin in December 2017. Today, it is about $6,800. Although you will be receiving the amount of cryptocurrency equal to a dollar-based price, these currencies are volatile. Experts predict a bright future for Bitcoin and other currencies, but you can never be sure if something is “a bubble” or not.
Another issue with accepting cryptocurrency is that the regulatory landscape is subject to changes in the near future. Lawmakers are still crafting regulations to govern it. Once regulations are in place, they are likely to evolve further, meaning business owners will have to be adaptable. Every country has a right to sovereignty, which means that they can decide which laws to enforce on their territory. Thus, cryptocurrencies can be taxed or regulated differently in every country. Such a complex web of regulations is surely confusing.