There’s no denying that crypto’s popularity and value have risen tremulously over the past decade. We’ve seen the Bitcoin price skyrocket to unimaginable values on exchange platforms like Binance, dragging all the other coins in the market with it. People’s knowledge and perception of crypto changed considerably as more traders and investors started using these assets. Things escalated so fast that even major corporations couldn’t look away. Today, world-famous companies like Microsoft, Burger King, KFC, Twitch, ExpressVPN, Norwegian Air and more support Bitcoin and crypto payments.
With digital currencies inching closer to mainstream adoption, many business owners are wondering whether they should join the movement and start accepting crypto payments themselves. After all, the fact that big players have already taken the leap and governments are looking to develop their own version of digital money known as central bank digital currencies (CBDCs), suggests that crypto represents the future of finance, and therefore the future of business.
But is it that simple for businesses to jump on the crypto payments bandwagon? While it’s clear that digital currencies are here to stay, they represent a very novel asset class that hasn’t reached maturity and there are many things we have yet to explore and discover about it. Aside from that, any change to a business should be approached as a calculated move, taking into account both the risks and the benefits.
So, as a business owner trying to figure out if introducing crypto payments is a good decision or not, here are the most important pros and cons you need to consider.
The pros
When it comes to pros, probably the biggest perk of accepting crypto payments is represented by the lower transaction fees. With conventional card payments, businesses pay high fees (that usually range between 1.3% and 3.5% of the total transaction) to banks and credit card companies, apart from the fees incurred by payment processors. While these percentages might not seem that big, they add up and impact the bottom line, especially for smaller businesses, which means that less money goes into the merchant’s pocket.
By comparison, digital currencies are decentralized, so carrying out crypto transactions doesn’t require paying third-party intermediaries like banks or other financial entities. As a result, the fees tend to be a lot lower, allowing businesses to make considerable savings.
If you want to keep your customers happy and enhance their shopping experience, offering multiple payment options is one way to achieve that. People have different needs and preferences, so they appreciate it when companies include a variety of payment solutions as it allows them to choose the one that suits them best and makes the purchase process run smoother.
Apart from the extra convenience, with more payment methods available, you can also attract a larger number of clients. This includes both die-hard crypto fans who will choose a crypto-friendly business over its competitors if given the chance, but also unbanked individuals from all parts of the world who don’t have access to conventional financial services. This gives you the opportunity to tap into new markets and expand your business, ultimately leading to increased sales and higher revenue.
Transaction safety is another notable advantage to take into account. Fraudulent chargebacks represent an issue that businesses have struggled to solve for a long time as they can cause significant financial losses. With crypto payments, you can forget about this problem given that crypto transactions are irreversible, so there’s zero chance of dealing with fraudulent chargebacks or other types of payment fraud.
The availability and universality of digital currencies can also serve as an incentive for greater crypto adoption by businesses. Unlike fiat money transactions that take a relatively long time to process due to banks and payment processing services, crypto transactions happen almost instantly, so you’ll receive the funds in your account within minutes. And the fact that crypto is universal and can be used for cross-border transactions adds another benefit to the pile. This is especially helpful for businesses that sell or purchase products/services abroad as they can avoid expensive foreign transaction fees or currency exchange rates.
The cons
There are surely plenty of reasons for businesses to embrace crypto payments in today’s economy, but one has to look at both sides of the coin. As innovative and practical as they may be, digital currency payments are not without their flaws.
Accepting Bitcoin and other cryptos as a form of payment can pose technical difficulties for business owners. Although crypto is not rocket science, those who are not familiar with this highly complex asset class and the intricate technology behind it will have a hard time integrating crypto payments into their business operations.
Then there’s the infamous crypto volatility that everyone knows about. Digital currencies are extremely volatile which means their price can rise or drop suddenly, making their value highly unpredictable. And that stands true for all cryptos, regardless of their size or the time they’ve been in the market. Since crypto prices can change without warning, it’s very difficult for merchants to manage returns, so they have to immediately exchange the crypto they receive into fiat to limit the risk of losses.
Last but not least, the lack of clarity and coherence regarding crypto regulations makes crypto adoption all the more confusing. The crypto industry is no longer the Wild West it was in its early days, but governments around the world are still struggling to develop viable regulatory frameworks for this asset class. While some countries have adopted Bitcoin as a legal tender, others have banned all crypto-related activities, so for the moment no one knows for sure where crypto fits in. This regulatory fragmentation and uncertainty make businesses wonder if it’s really worth adopting crypto when it’s not sure if their efforts will pay off.
Wrapping up
Accepting crypto payments is a growing trend in the business world, but it’s up to each company to decide if that’s a smart move or not. Ultimately, you have to weigh the pros and the cons and see which way the balance falls if you want to make a wise decision.