Business owners have to be able to accept payment in order to stay in business. That is a given. In a perfect world, businesses could accept all sorts of cash and electronic payments without having to put up with the hassles and fees associated with traditional banking. But this is not a perfect world. Enter cryptocurrency. Crypto payments are not ideal for every business, but they are for some.
Perhaps you own a business and have been considering accepting Bitcoin payments. First off, you are not alone. Bitcoin is the most widely accepted cryptocurrency among merchants. The fact that you are thinking about it puts you in the company of lots of other business owners. Furthermore, understand that the decision to accept cryptocurrency payments does not limit you to Bitcoin alone. There are other well-known cryptos that work equally well.
Below are six reasons we believe every business should at least look into crypto payments. You lose nothing by investigating the possibility. Should you decide cryptocurrency payments are not right for you, that's fine. But you just might discover that accepting crypto is one of the best ways to grow your business.
1. Lower transaction costs
Cash payments do not have any transaction costs associated with them. But how many people even carry cash anymore? Thus, business owners rely more on credit and debit cards these days. This is fine, except that credit and debit cards cost money. Transaction fees average anywhere between 3% and 5%.
Transaction fees are charged to cover payment processor costs. The company that provides your credit card machine and runs your transactions through its network has to pay its own bills and make some profit. You pay for it through transaction fees.
Cryptocurrency transaction fees tend to be lower most of the time. Where you could pay upwards of 5% on a credit card purchase, the average Bitcoin transaction fee at the time this post was written was less than one U.S. dollar. The thing to understand is that crypto transaction fees are not based on transaction size. They are based on speed.
Transaction fees are incurred to pay coin miners and payment processors for the work they do. But rather than charging a percentage, fees are assessed based on how quickly you want transactions processed. Miners compete for crypto rewards, so they prefer to process transactions from payers willing to pay higher fees. Those who want to pay lower fees have to be willing to wait their turn in line.
Practically speaking, the way fees are determined should not affect day-to-day business. Transactions are still processed quickly enough. Furthermore, transaction fees cost less (as a percentage) the higher the amount of the transaction.
2. Cross-border freedom
Fiat-based digital payments are generally hassle-free within national borders. Go outside those borders and payment becomes more complicated. Cross-border payments involve exchange rates, multiple payment networks, international settlements, and a variety of fees and charges. It all works to make for a very messy system.
One of the advantages of cryptocurrency is that it affords quite a bit of cross-border freedom. Let us illustrate by talking about exchange rates. If you run a Hong Kong business that sells online, you might have a customer in France wanting to buy your products. The customer has to pay in euros while the fiat in Hong Kong is the Hong Kong dollar (HKD).
Though the two fiat currencies are sovereign currencies, they do not have the same value on the open market. Thus, your payment processor has to convert the customer's EUR to HKD in order to pay you. Such conversions are not necessary when you are dealing with crypto.
BTC in France is identical to BTC in Hong Kong. In fact, BTC is identical around the world. Anyone could purchase from your Hong Kong business using BTC without any exchange or conversion necessary. This makes for seamless cross-border transactions that do not require messy bank involvement.
3. Expanded market reach
Speaking of cross-border transactions, accepting cryptocurrency payments represents an opportunity expand your market reach. For example, accepting Bitcoin suddenly opens a door to sell to people around the world. Imagine what that could do for your growth plans.
It has been said that business success begins by focusing on local opportunities first. That's true, and that's fine. But if you ever want your business to be global, you have to start thinking globally at some point. Cryptocurrency payments offer a good place to start.
You can accept Bitcoin, Litecoin, etc., right in your own hometown. You can accept it from customers who live in the same state or province. As your business grows, you gradually extend your reach until you are nationwide. Then you can shoot for an international reach. It starts locally, but with international ambitions always in the background. Crypto payments can be the fuel.
4. Chargebacks are not allowed
Immutability is a fundamental aspect of cryptocurrency. What is immutability? It is a rule that states entries in a blockchain ledger cannot be removed or modified once they have been entered. Immutability creates a permanent record that cannot be altered. Practically speaking, that means chargebacks are not allowed for cryptocurrency transactions.
As a business owner, you know full well just how much of a hassle chargebacks can be. You have an unhappy customer who refuses to pay a credit card bill for whatever reason. That customer disputes the charge, resulting in the credit card company initiating a chargeback against your account.
Chargebacks cost merchants a lot of money. While some might be legitimate due to damaged merchandise, incorrect order fulfillment, etc., other chargebacks are simply the result of customers changing their minds. They think nothing of the hassle their change of mind causes you. They have no idea that it costs you money as well.
The fact that chargebacks are not allowed with cryptocurrency might be all the motivation you need. No chargeback risk means you alone get to decide whether or not a customer's complaint has merit. If so, you can offer a refund by sending coin back to the customer. If not, you can stand your ground. There will be no credit card company forcing a chargeback on you.
5. Less dependence on banks
Dealing with banks is a normal part of doing business. But wouldn't it be nice to limit dependence on your bank? You can, by accepting cryptocurrency payments alongside cash and credit cards. Cryptocurrencies operate completely separate from banking institutions.
There are lots of implications here. For starters, any cryptocurrency you possess is stored either on an exchange or in your own electronic or paper wallet. It is not stored in a bank account. Therefore, your money is not held hostage to bank policies and procedures. Furthermore, your transactions are not subject to bank hours. Cryptocurrency networks never close.
Another thing to consider is that it is entirely possible for you to accept cryptocurrency payments directly. By this we mean that there is no need for a third-party payment processor. If you want to, you can have your crypto paying customers transfer their payments directly into your wallet. The only downside is that doing so exposes you to price volatility.
Cryptocurrency payment processors are a good way around that volatility. They work similar to credit card payment processors. Buyers actually send their coins to the payment processor rather than sending them to you. The processor verifies the transactions, converts the coins to fiat, then sends the fiat on to your account.
Though this model involves a third party, the third party is still not a bank. It is a private company that specializes in cryptocurrency payments. As such, it is in the company's best interests to make sure you are happy customer.
6. Cutting-edge branding
One last reason to consider accepting cryptocurrency payments has to do with branding. As a business owner, you want your company to be on the cutting edge. You want your brand to resonate with modern buyers whose needs are very different from their parents and grandparents. Cryptocurrency is gradually becoming a bigger part of your customers lives.
Accepting Bitcoin payments would put your business in the company of others who all belong to an exclusive club, so to speak. Seeing that Bitcoin logo on your door would tell customers that your business is a cutting-edge business looking toward the future. That impression would give your brand a whole new meaning.
Remember that branding is a marketing principle. It is designed to set your business apart from the competition in a memorable way. Accepting cryptocurrency payments certainly does that. Cryptocurrency payments would enhance your brand by modernizing it in the eyes of your younger customers. And since those younger customers will eventually make up the bulk of your customer base, it is a good idea to start adapting your brand to them.
Cryptocurrency payments are by no means the norm for businesses. But they are catching on. As more businesses come to realize the benefits of accepting cryptocurrency payments, they are finding themselves more receptive to Bitcoin, Litecoin, and the rest. Perhaps it's time for you to look into cryptocurrency payments as well.