Cryptocurrencies have emerged as the future of money, and it is just a matter of time before they replace mainstream currencies. After all, they are secure, transparent, accessible, diverse, and uphold the privacy of the transactors.
Crypto has become the currency of choice for many merchants and buyers, and you can use it to purchase goods and services, like any other legal tender. Many financial experts and institutions project the number of crypto users will grow four times in the next decade, reaching a staggering 200 million.
Despite the numerous advantages, cryptocurrencies have their fair share of risks and shortcomings as far as accepting it as a form of payment at your business. You must deal with price volatility, scalability concerns, and minor security issues.
This brings us to the big question – should your small business accept cryptocurrencies? Let’s find out.
If you are undecided whether or not to accept cryptocurrencies as a payment method at your small business, you are not alone. Many new entrepreneurs go through the same challenge as far as crypto is concerned. Here are a few factors that can help you decide:
Lower Transaction Fees
Most credit card companies and other payment platforms charge a minimum fee ranging from 2% to 4% of the transaction total. Cryptocurrency transactions do not involve third parties like banks. Since the transactions lack a central intermediary, you and your clients will likely pay lower fees, making crypto attractive to both merchants and clients.
Privacy of Customers
Another reason to accept cryptocurrencies is because of their private nature. Crypto does not use third-party intermediaries like banks or credit companies, meaning all transactions remain confidential. It is an anonymous form of trade that upholds the privacy of the merchant and the buyer. By accepting crypto as one of your payment methods, you’re sure of getting one or two comments from happy customers on your Google Reviews page.
Enhanced Merchant Protection
Credit card transactions and online payments are often prone to fraudulent chargebacks from malicious customers. Fortunately, this is not the case with cryptocurrency transactions. With crypto, all payments are final, and no third party can reverse the transaction, consequently increasing merchant protection.
Cryptocurrency is a recognized legal tender accepted globally. Embracing it as one of your accepted payment methods expands your market space and opens up your business to international trade. You can easily export goods and services and purchase supplies from any country worldwide without contending with outrageous foreign exchange rates and transaction fees.
Another advantage of accepting cryptocurrencies at your small business is that they are fast. With crypto transactions, you do not have to wait for funds to become available in your account. All payments are in real-time since no third parties or intermediaries hold up the transfers.
Attracts New Customers
As more people adopt digital currencies, it is not surprising to see more customers seeking businesses that accept cryptocurrencies. Clients prefer fast, secure, and seamless transfer methods and would appreciate lower transaction fees. With this in mind, you will likely attract and retain new customers if you offer crypto as one of your accepted payment methods.
Thanks to faster transactions, lower fees, and secure payments, customers will likely troop to your business and purchase your goods and services. That’s not all. Crypto opens up your business to international trade since the currency is widely accepted globally. The increased reach translates to more sales and revenue growth.
Cryptocurrencies have caps on supply, subsequently hedging against inflation. Unlike mainstream currencies, no one can manipulate crypto by minting more money or changing interest rates. For instance, the production of Bitcoin can never exceed 21 million, making it resistant to inflation.
Adopting cryptocurrencies early can give your business a competitive edge over your rivals. After all, the world is moving away from flat, paper money to digital currencies and embracing the change before your competitors can set your business a class above the rest.
Crypto might be the future of money, but this does not mean it is immune to various risks and shortcomings. Here are a few reasons why cryptocurrencies might not be the ideal payment option for your small business:
Even though cryptocurrencies do not have central intermediaries such as banks or credit card companies, the currency is not exempt from taxes. It has tax implications, and you must report it to the revenue authority as gross income based on its current market value. You must also keep track of the currency’s value on the day it was received and sold for tax filing purposes.
Cryptocurrency has a high learning curve, and it might take a long time before your transform your business to be crypto-ready. You also need to set up a digital wallet, which might be a massive obstacle for small business owners who are not conversant with the technology.
Another noticeable downside of accepting cryptocurrencies is that digital coins are volatile. Price volatility makes the value of crypto highly unpredictable. Even though crypto is inflation-resistant, it remains susceptible to market fluctuations as the currency is still in its infancy stage. Hiring a merchant service company can help insulate your business from this volatility by exchanging crypto for its cash value.
Another issue concerning cryptocurrencies is scalability. The cryptocurrency system can only handle transactions and has capacity limitations, meaning you cannot roll them out on a large scale. This increases the risk of financial losses.
Prone to Cyber Threats
Even though cryptocurrency transactions are secure, you are not out of the woods as far as security is concerned. Hackers can take advantage of technical glitches and errors to defraud unsuspecting end users, especially if you are not familiar with the technology.
As you can see, the upsides of accepting cryptocurrencies outweigh the few shortcomings. Crypto is fast, secure, and accepted globally. Besides, it has lower transaction fees with no chargebacks whatsoever.
Setting up your business to accept cryptocurrencies is similar to incorporating a credit card payment system. You only need to do your due diligence to protect your enterprise from the few risks and drawbacks associated with digital currencies.