Over the last year, many big-name companies have started accepting cryptocurrency as a valid form of payment. Birks Group, Park and Finch, even Best Sleep are the most recent retailers to jump on the crypto bandwagon, and even certain point-of-sale terminals are making it easier for Canadians to buy goods and services with crypto.
Of course, that begs the question — should your small business follow suit? While the decision ultimately depends on your customer base and your business model, I’d say — it might be best to start planning now for a time when crypto will be widely accepted. Here are just a few reasons you might want to open the door to crypto-paying customers.
1. Lower transaction fees
Let’s face it: as easy as credit cards are, they come with some hefty processing fees. Many Visa and Mastercards charge at least 1.5% per transaction, which can start to eat into your profits, especially for items below a certain price.
The good thing about cryptocurrency, however, is that no one owns it. It’s completely decentralized, which effectively takes out the middleman. Depending on how you accept crypto, you could eliminate processing fees altogether. At worst you might pay 1% or lower for crypto transactions, which is still significantly lower than credit cards.
2. Fraud protection
Crypto is a bit like cash. Once the transaction goes through, you don’t have to worry about chargebacks. Unlike credit cards, no third party will cancel payments due to “fraudulent charges.” That means, no more wasting time dealing with “reversed charges,” which can be a headache to resolve.
3. Broaden your customer base
By accepting cryptocurrency, you could attract not just younger customers, but international ones, too. Crypto is a universal currency that transcends exchange rates. This makes crypto more attractive than credit cards, which often come with foreign transaction fees or exchange rate fees.
What are the risks of accepting cryptocurrency?
Perhaps the biggest risk of cryptocurrency is its volatility. Right now, the value of crypto isn’t exactly stable. On the contrary, certain cryptos will fluctuate on a daily basis. That’s not a major problem for small businesses, unless, of course, you don’t convert your crypto to cash regularly. If you do, you’ll prevent yourself from losing money should the value of crypto go down before you make the exchange.
Secondly, crypto does come with security risks. As of right now, the best way to accept crypto from customers is to get a crypto wallet, then accept crypto over an exchange, like Coinbase. These wallets are fairly secure, but they can be vulnerable to cyberattacks. If a hacker managed to access your wallet, you could lose your crypto.
Finally, crypto isn’t the easiest thing to understand. While you don’t need to be an expert in cryptocurrency, you should know the basics before you start accepting it as a form of payment.