Should your business accept cryptocurrency?

Many organizations had started accepting Bitcoin as a payment method sometimes back. However, most of the businesses are yet to take this cryptocurrency as a payment method. And, this could mean losing business to their competitors.

Most businesses use traditional or conventional payment methods. Accepting Bitcoin is a significant step in the process of developing successful business stories. However, making this cryptocurrency a payment method is a challenging move. That’s because the volatility of Bitcoin price can lead to significant losses.

But Bitcoin adoption is increasing at a fast rate. More and more people are also trading this cryptocurrency on platforms like Binance, Coinbase, Kraken, Huobi, etc. Such platforms enable even people with little knowledge of this cryptocurrency to start trading or investing in it. 

Essentially, Bitcoin adoption is growing, and eventually, it will become a shared payment method. Just like the early adapters, businesses that start accepting Bitcoin now are likely to reap better returns. Here are the top reasons why enterprises should consider to accept cryptocurrency as their payment method.

Cryptocurrencies such as Bitcoin are based on the blockchain, a distributed decentralized ledger. The transactions made are permanent. All the transaction records cannot be modified or deleted. Therefore the chances of fraud are greatly reduced to an extent for both customers and business. 

Unlike using credit cards, where customer personal data is transferred to the business after a purchase, cryptocurrencies are totally anonymous and no personal information is transferred. With the rising amount of personal data obtained easily, cyber-attacks on businesses are becoming more advanced and frequent each year. Hence, by removing the data within the purchasing process, the chance of fraud is reduced significantly.

Depending on the payment processors that you would like to choose for your business, they may offer additional security measures like KYC/AML or blockchain monitoring services.

As cryptocurrencies are not processed by any bank or centralized financial authority, all transactions have a much lower fee ranging from a few pennies to a maximum 1% per transaction. Depending on the payment gateway and compatible cryptocurrency you select, crypto payments can potentially provide you with some of the lowest transaction fees. In comparison to credit card and debit card, the transaction fees can be as high as 3-5%.

If businesses offer high value and volume products, they may be paying an immense amount of money to the conventional banks and payment gateways. Therefore, in terms of profitability, accepting Bitcoin and other cryptocurrencies potentially save business on some transaction fees. Besides that, it also allows consumers to continue using cashless pay methods and reduces the amount spent of transaction fees as well.

Most business people hate chargebacks. Businesses have to bear a lot of losses due to chargebacks. A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account statement or transactions report. It is sometimes used in a one-way scam where customers use the products and services for free by reporting fraudulent charges against the business to their credit card company. Although it is not impossible for companies to fight those charges, but it will take a lot of time and effort. In the end, businesses will decide to take up the loss.

With crypto payments, it can help in solving this matter. As we know that all the transactions that take place cannot be altered. They are recorded on an immutable public ledger. The transactions are final because no third party can reverse charges. Therefore, businesses can eliminate potential fraudulent chargebacks by accepting crypto payments.

There are 7.6 billion potential customers on the planet but for small businesses, there has been a number of prohibitive barriers to contend with. In many cases, the costs of accessing customers across borders are too high. Calculating exchange fees and currency fluctuation are off-putting factors for many small enterprises to participate in international business.  By offering cryptocurrency as a payment option will open the door to an increasing customer base and also enables access to overseas customers.  

Currencies such as Bitcoin and Ethereum, among others, offer lightning-fast transactions across borders that can easily be converted into the native currency at a minimal fee. This enables organizations regardless of small or large, to capitalize on previously unexplored markets.

Moreover, when business accepts Bitcoin, businesses and the customer will be using the same currency. For example, the customer is purchasing goods at $100 using Bitcoin, the business will get the funds at an exact amount. Both parties will convert it at their own currency. This also makes Bitcoin a suitable payment method for an international company with employees in different parts of the world. With cryptocurrency payment methods, businesses can complete an international transaction almost instantly.

Transacting via traditional banks takes hours or days for verification and approval. However, Bitcoin transactions are almost instant. With blockchain technology, businesses do not have to wait for a transaction to undergo approval process and are able to shorten the transaction time.

While there are many upsides to accepting Bitcoin, there are some considerations that need to be made as well. Consider that:

The price of cryptocurrencies such as Bitcoin are highly speculative due to factors that drive the value. Factors such as its perceived value and the actions of large shareholders result in high levels of volatility which can have a negative effect on businesses accepting cryptocurrency.

The biggest risk is the chance of a currency going through a “flash crash”. This is when the value drops to extreme lows in a matter of seconds. Although many merchant wallets convert coins automatically to mitigate the effect of a flask crash, due to the almost instant drop that can occur, it may not be fast enough. This will mean businesses will have to sit on their coins until the price returns to its original value, but there is always the risk it will not recover.

The regulations around cryptocurrencies have not been established in many countries and are often misunderstood by law-makers. As governments are working on crafting regulations to govern the digital currency, it may be some time before anything is set in stone due to the constantly evolving environment.

If an organization or a small business merchant loses the owner access key to their wallet, those keys are not recoverable. There is no central record of wallet addresses or cryptographic access keys. The only person who has it is the wallet owner, and that means it must be safeguarded. If anyone lost their wallet, any cryptocurrencies that are stored in the wallet is gone forever.

There is no binary answer. Although we can see that businesses across the globe are beginning to accept cryptocurrencies as their payment methods, people are talking about Bitcoin all over the world, the acceptance of cryptocurrency in businesses still needs much consideration.

The current benefits are appealing, especially to small businesses looking to expand internationally, however, acceptance should be treated with caution. Any business undertaking use of cryptocurrency should be prepared and informed for volatility within markets, aware of the risks associated and be equipped to adapt to the periodic changes in the regulation that will likely to come to fruition in the coming years.

You might not want to accept cryptocurrencies such as Bitcoin as one of your payment methods now, but you should start to study and understand about cryptocurrencies. If you do not understand and accept cryptocurrencies, this could be the reason you will lose customers in the future. Regardless of your business size, prepare to accept cryptocurrencies from today onwards.