Should your company accept cryptocurrency payments?
Of course, the short answer is, “Absolutely!” Why would you want to limit the ways your customers can pay for your goods or services? I recently walked into a major retailer and tried to pay using my smartphone payment app. The NFC-based service works for me in about 70% of the establishments I visit, and my assumption was that this big of a chain would certainly accept it. Well, they didn’t – and because of that, I left empty-handed and they didn’t get my money.
While the logical case for accepting bitcoin payments is strong, there are other considerations. First, are there regulatory or jurisdictional barriers? Some countries have outlawed the use of these digital currencies, so check your local regulations first.
It’s much easier to accept bitcoin payments on an e-commerce marketplace. While there are some brick and mortar locations that accept it, you can quickly set up your e-commerce business to do so. What you’ll need is an exchange with a wallet that you can use to accept and store the money. You’ll be able to withdraw it from the wallet, or you can use it in the exchange to invest in up-and-coming digital currency.
Of course, there are pros and cons to accepting crypto payments, so let’s take a look at the risks and rewards.
It’s important to know the regulations for your specific location. For instance, almost any type of investment in the United States (stocks, real estate, etc.) carries some level of regulation in the interest of consumer protection. Cryptocurrencies aren’t very highly regulated at this time, but you can expect nation states to start doing so soon.
In the United States, the Treasury Department and the SEC consider crypto a security (tradeable asset) rather than legal tender. This is different from startups issuing Initial Coin Offerings (ICOs), which are tokens that represent a stake in a company.
There’s also a considerable stigma surrounding Bitcoin due to some high-profile controversies. This is to be expected given the decentralized nature of the digital currency, and the fact that it has no borders. Trading freely internationally means exposure to markets with less regulation, and potentially bad actors taking advantage of that fact.
The stigma of international cybercrime will make some customers feel uncomfortable and could cause them to question the validity of your business. There’s also serious volatility in the crypto investing market. If you don’t want to be exposed to that risk, use your exchange to quickly convert your crypto payments to fiat currency.
So there are some potential downsides, what about the good?
Should you decide to accept bitcoin payments, there are a number of benefits you can potentially enjoy.
At some point, cryptocurrencies will become more mainstream and end up with vendor processing rates like mainstream solutions. For now, cryptocurrency processors offer rates under 1% while traditional methods still cost around 3%. These reduced fees can save you a lot of money.
Cryptocurrencies are notoriously volatile. If a customer pays with one, it could be worth far more even 24 hours later. Of course, there’s a risk of losing that value too.
Since cryptocurrencies are decentralized, they are not regionally or politically based. That means anyone with a particular coin can purchase your product without any potential of issues regarding regional banks. That anonymity can be daunting as well.
Taking crypto payments also protects you from a common method of fraud where a person will chargeback a transaction after the item has shipped. With cryptocurrencies, once a transaction is complete, it cannot be charged back. Even if it could, there’s no central authority for the scammer to appeal to in the first place.
Examples of companies who accept cryptocurrency
There’s an ever-increasing list, including:
- Virgin Galactic
If you want to accept cryptocurrency, it’s important to choose which ones carefully. Watching the markets trends and understanding the technology behind the scenes are crucial. Look for coins that have been around for a while and have a more stable price, as well a good circulation and user base. And keep in mind the risks, especially the volatility. As a first step, it’s safest to start accepting bitcoin, since it’s the oldest and most trusted cryptocurrency. This provides stability while still showing your customers you’re pushing the boundaries.