Should you allow your customers to pay in crypto?

Cryptocurrencies have emerged from the digital era as a real, legitimate alternative to the traditional fiat currencies, which have long since dominated global economies. The likes of Ethereum and Bitcoin have risen in popularity and notoriety. When they first announced their arrival on the market, there was a lot of skepticism, but as we push into more than a decade since their creation, major cryptocurrencies have established themselves as legitimate tender. 

Having shifted this notion of them being a speculative asset, an increasing number of industries and businesses have started to accept crypto payments alongside traditional payment methods. Whilst this sort of implementation has been undertaken by larger companies such as Microsoft and AT&T, there remains a valid question for small to medium-sized business owners. Should you allow your customers to pay in crypto? 

The argument for and against crypto rages on, with stalwarts of the traditional system battling against innovative fintech entrepreneurs as the global economy continues to adjust to the emergence of cryptocurrencies. But what are the pros and cons it can bring to your business, should you allow customers to pay via crypto? 

The Rise of Crypto

Whilst cryptocurrencies started as a niche outlier in some distant digital future, it has made quick inroads into the global economy. Indeed, it is now present on Wall St and used as an investment method by many of the most wealthy in the world. Recent stats suggest that there are now close to half a billion crypto users worldwide, showing just how far this kind of payment method has come. 

Many people are beginning to favor crypto because of its transparency, instantaneous nature, and decentralized model. This makes it appealing to many who want to avoid issues that remain prominent in the traditional economic system. This consumer interest is not the only shift to crypto. Larger companies and certain sectors of industry have also started to widely adopt crypto into their business models. This is made easier by digital asset platforms such as Coinbase, but also caters to a growing demand of customers using blockchain-based assets. 

Big businesses such as Expedia, Shopify, and Twitch have adopted models to accept cryptocurrencies, whilst online casinos have seen a major rise in the number of crypto platforms available to gamblers. Indeed, online casinos are one of the pioneering industries when it comes to the implementation of crypto payments instead of traditional transactions. Crypto casino sites have started to grow in popularity for the very reason that they solely implement the use of crypto payments, which are decentralized, accessible by everyone worldwide, and are more transparent, safe, and quick for withdrawing funds. 

Before making any decisions about your business, it would be wise to weigh up the pros and cons of accepting crypto payments and what sort of outcome this may have. For many, this may be a scary prospect. It could be revolutionary to the way your business operates, but likewise, it may not suit the framework of your current business, and with small or medium-sized businesses, it may be too much of a dive into the unknown. 

Benefits of Crypto Payments 

• Lower Transaction Fees

For many small independent businesses, the charges that are implemented by credit card companies, Mastercard and Visa on the card machines they are using can be extortionate. For fast-paving environments such as coffee shops or restaurants, which are more likely to have a continuous stream of transactions on any given trading day, the lower fees charged by crypto payment processors could amount to quite a significant saving. Many of these crypto payments will only charge 1% fees, whereas credit card fees can range between 2 and 4%, which could add up over time. 

• Increased Security and Anonymity

One of the major reasons that people are drawn to cryptocurrencies is their enhanced security and privacy measures. Compared with credit cards, crypto payments are unlikely to fall victim to data breaches and cannot be stored by companies. This means that customers and companies alike can rest easy knowing that malicious attackers have much less chance of getting hold of people’s wealth. The blockchain technology, which underpins crypto, is near impossible to hack and remains incredibly transparent, which many users like. This also allows customers to remain more anonymous when making purchases, as crypto does not require you to store any personal data with your payment processes. 

• Quicker Transactions

Many people have become increasingly frustrated with the less-than-instant nature of online payment methods that come up as ‘pending’ on your bank account. This is due to traditional banking systems taking a couple of days to settle the transaction. Cryptocurrencies avoid this problem altogether with virtually instant transactions. This can improve flow and accelerate operations within a business setting, but also gives peace of mind for any customers of the business. 

Risk and Challenges with Crypto Payments

Whilst there are many positives on offer when using crypto payment methods, business owners would be wise to take heed of possible risks and challenges they may face with the implementation of crypto in their business plans. 

• Differing Regulations 

Whilst crypto remains legal in most places, the rules and regulations on the use of crypto vary across different jurisdictions. In addition to this, the landscape of cryptocurrencies is constantly evolving as the concept continues to grow. This means it would be best to consult a legal advisor to ensure you are complying with local regulations. This sort of thing can be scary for small business owners who don’t want to run into compliance and legal issues. Holding cryptocurrencies is likely to increase the chance of facing such issues due to the nature of the monetary system. 

• Volatility

The most off-putting thing about cryptocurrencies is their volatility. Whilst the two main cryptocurrencies, Bitcoin and Ethereum, have seen a more robust soundness in recent years, which has proved testament to their worth as a legitimate currency, there remain times when the crypto market is volatile and reactive to world events. Indeed, it is still likely that prices of a given cryptocurrency can swing by 10% in a single day, and these fast-changing trends can raise concerns for those invested. This is fine if you are looking to invest in crypto for longer periods at a time, but for businesses operating a daily service, this sort of volatility is hard to account for. There are ways around suffering from this sort of volatility, such as using crypto payment processors designed to convert crypto to fiat almost instantly. 

• Environmental Issues

Small and medium-sized businesses focus on garnering pockets of customers that remain loyal to them. This is often done by using products that are fairly traded or by building an eco-friendly brand. If you are looking to include crypto in your future business plans, it is worth accounting for the carbon footprint that some cryptocurrencies have been accused of having. Bitcoin, in particular, has been known to cause a detrimental impact on the global climate due to extensive energy being used for mining and large volumes of water usage when creating Bitcoin. Whilst some cryptocurrencies have been wise to this sort of press and changed their ways to remain environmentally cleaner, there is a consideration for business owners to have here to avoid alienating potential customers for this sort of reason. 

To Finish

Whilst accepting cryptocurrencies can offer a brand new advantage to your business plan with effective cost saving, enhanced security, and rapid transactions, there are some considerations smaller business owners will want to contend with before going full steam ahead. There is risk, there is volatility, and there are negative connotations associated with cryptocurrencies. Whilst crypto may be the future of the economy, adopting a hybrid model right now may be any business’s best bet.