Should Your Business Accept Cryptocurrency?
Subway, Expedia, and Microsoft — all of these major companies have recently decided to accept cryptocurrency. But what about the average small- or medium-sized business? Should it accept cryptocurrency?
Estimates show that there are more than 40 million cryptocurrency wallets out there. Cryptocurrency usage has soared in America — in places like San Francisco and New York — and in places like Canada (the first country to regulate the digital currency), the Netherlands, Slovenia, Israel, Switzerland, and countries with volatile currencies, like Zimbabwe and Venezuela.
Forty million seems like a pretty large number. Still, for comparison, there are almost 300 million active users of PayPal worldwide and about 1 billion Visa and 900 million MasterCard credit cards in circulation.
Small businesses make up the fabric of the global economy; it’s mostly thought that if these businesses start investing in infrastructure, allowing them to accept cryptocurrency, then mass adoption will soar. But there are plenty of advantages and disadvantages that companies should consider before they decide to take this currency of the future.
The Benefits of Cryptocurrency for Businesses
Every small business owner dreads the well-wishing customer who wants to pay for a small transaction with a credit card. Those 2-4% credit card transaction fees add up and can quickly affect small businesses’ bottom lines. Luckily, cryptocurrency allows companies to avoid those hefty fees by charging a low flat fee. Cryptocurrency transactions are also faster than traditional ones, taking less than 90 minutes to complete on average.
Cryptocurrency transactions also come with merchant protections since all transactions are final. There are no fraudulent chargebacks as is sometimes the case with debit cards - although crypto debit cards can change this. Businesses can also easily integrate their cryptocurrency wallets with their POS systems, which means that there is not a significant additional investment.
One of the best benefits of accepting cryptocurrency for international businesses is that crypto minimises exchange rates and associated fees. All goods are valued at a universal price that transcends country borders.
The Drawbacks of Cryptocurrency for Businesses
There are also some drawbacks that businesses should consider before accepting cryptocurrency. Business owners who do not properly store their cryptocurrency can feel the adverse effects of market volatility. Bitcoin and other cryptocurrencies have seen some large market swings that could prove tricky for business owners receiving payment for their goods and services.
Also, cryptocurrency is not backed or insured by governments (unlike traditional currency) and comes with some added tax regulations. Aside from that, cryptocurrency can be a hard concept for business owners to wrap their heads around. Businesses will want to consult with tax and regulatory officials to determine if accepting cryptocurrency is right for them.
Fundera created the infographic below summarising the pros and cons of businesses accepting cryptocurrency.
Curious about cryptocurrency wallets and how they work?
Learn how wallets work and how to set one up in our Beginners Guide to Cryptocurrency Wallets.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Images courtesy of Fundera unless stated otherwise.
Last updated: 04/12/2019