Lots business is experimenting with the idea of accepting payments in cryptocurrency. Digital tokens seem to offer so many advantages. And considering how popular they’re with consumers, it looks like a no-brainer.
But as an example, as Tesla, has made clear, getting crypto to work as a payment scheme is more challenging than many brands realize when they’re first getting started. It takes lots of planning, preparation and technical know-how to do this.
However, not all companies back off on crypto payments. There are still plenty of outlets that offer the ability to buy Bitcoin and more, indicating that the way we pay for things, at least online, may change in the future.
If you own a business and are wondering whether or not to accept cryptocurrencies, this post is for you. We looked at the pros and cons of launching such a scheme and whether you should get entangled. Here’s what you need to know:
Here is a list of benefits your business can enjoy if you start accepting payments in cryptocurrency:
Much Easier To Get International Customers
The internet is global. But many businesses that sell online end up selling only to people using local currency. The reasons for this are complex. One of them is consumers don’t like to pay for goods in foreign currency. They know transaction fees are high and they’ll pay more than the ticket price. Another reason is that banks make it difficult for traders to accept funds from all over the world. Fintech solutions exist, but they have a tendency to be quite specialised and typically only work in certain countries.
But with Bitcoin, borders mean nothing. The currency is highly international and stands outside the traditional banking system. As long as you have a Bitcoin wallet with valid tokens in it, you are good to go.
There is also a component of trust for international customers. They care less about banks transferring and changing their money. Cryptocurrency just makes their life easier.
It can take days for international payments to be completed. And while there are now some fintech alternatives to traditional bank clearing, most international customers haven’t got access to them. (They tend to only be available in countries with highly developed financial sectors, such as the UK and the US).
But with Bitcoin, the slow payout times disappear. Paying for goods across borders generally only takes seconds or minutes, not hours or days. In fact, the payment speed depends on the network load at any given time. That is in contrast to traditional banking where legitimate payments are made after clearing.
Increased Crypto Support
As articles like How to Buy, Sell and Trade Dogecoin: Helpful Tips point out, the level of support available to businesses using crypto is higher than ever, even for companies that accept custom tokens. Exchanges are integrated with payment systems, enabling vendors to quickly convert payments into fiat, exchange them for other currencies, and manage fluctuating prices in real time. Such a system didn’t exist even three years ago.
Lastly, when companies go crypto, they avoid annoying chargeback issues. When customers send payments in Bitcoin, they barely collect it back. In fact, the system generally prevents this. And no merchant banking managers monitoring your account, threatening to close it if another disgruntled customer comes to you.
The undeniable fact that there are not any chargebacks also reduces the risk of fraud. Customers cannot buy an item, then claim they no longer want it, while keeping it. This makes the whole system radically more efficient, reducing the company’s risk of loss.
Of course, there are some serious downsides to accepting crypto as a payment method:
Very Volatile Prices
The price of just about every cryptocurrency fluctuates wildly, including those claimed to be “stablecoins”, as revealed by Luna’s collapse. The value of USD or GBP tokens can vary dramatically from one day to the next, making it difficult for retailers to offer a stable price. And while there are ways to get around this, it is hard to do. Companies need explicit crypto expertise to make it work.
Then there’s the infamous trust issue. Given the ups and downs in prices, many consumers are unwilling to use crypto, no matter how much buying power it gives them. They prefer to stick with plain cash: something they know and trust.
Consumers Need Knowledge About How Crypto Works
Then there’s the matter of education. Crypto is a really new type of exchange, and most consumers still do not understand how to use it.
For example, many do not understand how to buy crypto. They do not understand that they need to make an exchange, create an account, and then buy it with real fiat.
Lots too do not understand crypto wallets. Most believe that their wallet is their account on one of the major trading platforms. But that’s not true.
There is also a need for extra hardware, such as a physical “cold storage” wallet that keeps tokens secure when offline. QR codes are also sometimes required, adding complexity for the customer.
Then there’s the tax issue. When the government doesn’t tax cash (except through inflation), most treat crypto as capital. In other words, if the value goes up, you must pay taxes when you sell it, like stocks or bonds. If you receive crypto, you must also count it as fair value income, meaning you must pay taxes on the price you receive, not the price it’s finally worth.
So is accepting crypto a good idea? Well, it depends. If you have the infrastructure to make it work and lots of of your customers are from abroad, you can likely make it work. However, if you’re targeting the home market, then there is not much incentive to use it.