Cryptocurrency is generating plenty of hype these days, with its dynamic price fluctuations and stable market hold simultaneously. However, after spending many years in the market, this kind of currency is now making its way into the mainstream.
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Accepting Cryptocurrencies as a form of payment might help you save money on transaction costs, but it also raises security issues.
This article is for small company owners and entrepreneurs who want to learn more about Cryptocurrencies as a consumer payment option.
What Are Cryptocurrencies?
Cryptocurrency is a digital means of trade that is decentralized and based on peer-to-peer blockchain technology. It means there is no central bank or government that supports or regulates Cryptocurrency. Since there are no third parties to look after the payments, buyers send money directly to vendors. Cryptocurrency removes the intermediary in a transaction. Rather than putting your money in the hands of an organisation to keep it secure, you keep it safe using an encryption key that only you have.
Cryptocurrencies seem increasingly enticing to customers searching for a secure method to do business as we hear more stories of data breaches and hackers becoming more skilled.
Why Should A Small Business Accept It?
Accepting credit card payments incurs costs for many company owners. The minimal cost for a credit card transaction ranges from 1.3%-3.5%. This characteristic alone has made cryptocurrencies appealing to business people, as the lack of a middleman decreases transaction fees substantially.
Fraudulent chargebacks on credit card purchases are another issue that firms may encounter. These may be a pain to disentangle and might take a long time. Because there is no third party to reverse the charges, Bitcoin transactions are final, just like cash.
Using Cryptocurrencies as a payment mechanism allows you to reach out to more people all over the world. Crypto allows users to avoid currency conversion and the expenses that come with it. Potential buyers can see how you price products in a global currency, making purchasing decisions easier.
For a traditional comparison, the Euro’s introduction across the European Union resulted in price harmonisation for many products since buyers could readily see what individuals in other nations were paying for the same commodities.
Giving your consumers as many payment options as possible is an excellent business. Bitcoin ATMs are growing increasingly widespread in different countries, which means that more potential clients are becoming accustomed to using them.
What Are The Risks?
The regulatory environment of Cryptocurrencies is likely to alter in the near future. Regulations to control it are now being drafted by legislators, forcing company owners to adjust.
Even though Bitcoin transactions reduce cyber dangers such as stolen credit card details, the money isn’t completely secure. There is currently no method to totally prohibit fraudsters from accessing users’ money.
Cryptocurrencies, unlike fiat currencies like the US dollar and the euro, are neither backed or guaranteed, making them extremely hazardous.
The most significant danger associated with digital money is price volatility, which makes its value exceedingly volatile. For example, Bitcoin was once priced in pennies in 2009 and has now risen to almost $65,000 per coin in February 2021.
You’ll need to create some sort of agreement to change Bitcoin back into your official currency. Since Cryptocurrencies are so volatile, you’ll want to do this as soon as possible and on a frequent basis.
Accepting bitcoin necessitates the creation of a digital wallet on a digital currency exchange, which may be technically difficult for small company owners who are inexperienced with the technology.
Cryptocurrency is a densely information-rich subject with a high learning curve, which could be time-consuming for a small business to research and make a decision. So, that’s another drawback of this transaction.
The Bottom Line
Cryptocurrency is a digital currency where you don’t need a third party to approve the currency for you to proceed with the transaction. Cryptocurrencies are neither backed nor controlled by any government, which is a good enough reason for small businesses to start accepting them. Even though there are risks to such a transaction, there are benefits too. So, weigh two sides carefully before you make a decision.