Crypto technology has entered the mainstream over the last few years, and people are quite familiar with the terms cryptocurrencies, NFTs, and metaverse. And even if the market is bearish at the moment, and the industry lost around $1.4 trillion, it won’t disappear but most likely bounce back and regain its popularity.
Digital currency use continues even in the crypto winter, and BTC price is slowly increasing again. So, companies are left with the question, should they integrate crypto payments into their processes?
Traders can choose from over 2000 different digital currencies, and while each has unique features, Bitcoin is the most widely accepted cryptocurrency for B2B and B2C transactions. Bitcoin is the oldest and most secure digital currency, and there’s no surprise organisations usually turn to it when they consider adopting crypto payments.
Suppose you’re running a business and considering adopting crypto payments; you’ll most likely research the sector to find out more about the oldest cryptocurrency and what it would mean for your company to add a new payment method.
What is cryptocurrency?
You hear people talking about cryptocurrency, Bitcoin, and Ethereum everywhere, but if you didn’t trade digital currency before, you might not fully grasp what they are and how they could benefit a business.
Cryptocurrency is an online exchange medium based on peer-to-peer blockchain technology that enables decentralised transactions. Therefore, regardless of the digital currency you want to use to facilitate transactions, no government or central bank will regulate them because there is no entity to back crypto. Your clients directly transfer the funds to your account without waiting for a third party to process the payment.
When you accept crypto payments, you cut the middleman in transactions because you don’t have to store the funds in an account dependent on a central bank to safeguard it, but you hold it in an account that relies on encryption. You have a key that provides you with access to the account. You have most likely heard numerous stories about hackers stealing money from bank accounts and data breaches and wonder what you can do to safeguard yourself from something similar. Cryptocurrencies like Bitcoin rely on sophisticated blockchain technology and are safer for users because they’re almost impossible to breach.
As a small business, you have multiple benefits if you accept cryptocurrency.
Why should you adopt Bitcoin as a payment method?
Compared to traditional payment methods, Bitcoin (and other cryptocurrencies) offer multiple benefits that small companies might want to consider.
You can expand your client base
As a small business, you’re most likely struggling to reach more clients, and providing diverse payment options could be an effective strategy to address a broader public. Crypto users are usually young and tech-savvy individuals who prefer using digital money because it’s more secure and enables them to purchase services and products without having to deal with a third party. As Bitcoin is the largest cryptocurrency by market cap, if you add it as a payment method, you could attract this demographic of buyers who prefer to use digital funds. Studies show that 40% of buyers selecting Bitcoin as a payment method are new customers.
You’ll find it easier to overcome geographical limitations
Suppose you want to grow your business and address a broader audience, you might face a common obstacle, the problems international regulations bring when you need to process transactions with fiat currency. But if you integrate Bitcoin payments, you’ll find it easier to reach clients worldwide because you’ll no longer have to face the regulations concerning traditional cash. Your business will also seem more attractive to clients because they won’t have to pay the fees associated with exchange rates.
Lower transaction fees
When no middleman is involved in the process, the transaction fees associated with purchasing goods from you are dramatically reduced. The companies that rely solely on credit card payments usually have fees of around 25 cents for each transaction plus 2% to 4% of the transaction’s total sum. As a small business, when you add up these costs, you lose a lot of money you could use to improve your services and expand your company. If you switch to crypto payments via Bitcoin, you can cut the costs to less than 1% of the value of each transaction.
Increased company exposure
Customers these days are known for how much they value convenience, and by integrating Bitcoin payments, you provide them with the option to purchase services and goods safely from the device they prefer. Bitcoin users enjoy benefits like anonymity, transaction security, and low transaction fees, and they always prefer to use digital money instead of fiat alternatives because they don’t want to worry about leaking vital data during online transactions.
Increased sales
We mentioned earlier that your business would find it easier to reach international clients if it accepted Bitcoin payments. And as expected, if the number of customers spikes, so would the sales. Crypto payments enable you to open your doors to international customers who couldn’t access your products before.
Are there any drawbacks of accepting Bitcoin payments?
Bitcoin payments also have their downsides, and it’s important to be aware of them before integrating them into your operations.
Technical barriers
You need to set up a digital wallet on a cryptocurrency exchange to be able to accept digital currency payments, which could prove challenging if you are unfamiliar with the technology. Specialists state that small businesses usually find it difficult to integrate such innovative technology into their processes because cryptocurrency is a data-dense field, and a business owner might lack the necessary time to learn about it.
Bitcoin volatility
Bitcoin payments’ highest risk is price volatility, which makes its value quite unpredictable. Back in 2009, when it was first introduced on the market, it was valued at only a couple of pennies to reach over $65,000 in 2021.
Regulatory uncertainty
Another issue to consider is the regulatory landscape concerning cryptocurrencies. At present, there is no global regulation in place, so you need to work around it.
Final words
As you can see, there are several benefits and some challenges surrounding the use of Bitcoin payments, so you must decide what the best decision for your business is.
Suman(Kul Prasad) Pandit is an accomplished business professional and entrepreneur with a proven track record in corporate and start-up sectors in the UK and USA. With a focus on sustainable business practices and business education, Suman is highly regarded for his innovative problem-solving and commitment to excellence. His expertise and dedication make him a valuable asset for businesses seeking growth and success.