People’s rising interest in digital currencies has prompted a growing number of businesses to accept crypto payments for the products and services they offer. It is estimated that nearly 15,000 businesses worldwide have already embraced Bitcoin payments – among them, major companies like Starbucks, Microsoft, Home Depot, PayPal, Burger King, and KFC.
Those who have yet to include cryptos in their payment options will probably do so in the near future. According to Deloitte, approximately 75% of vendors have already expressed their intention to make crypto payments possible within the next two years.
That’s one more reason to believe that the crypto hype is nowhere near its peak. In fact, this might just be the beginning of a new era for digital currencies. Consumers are definitely on the winning end. Those who know how to buy crypto and are already familiar with the ins and outs of using digital assets are naturally going to benefit from these developments. For those who don’t have any stake in the crypto sphere, nothing will change, so there’s nothing to worry about.
But what does accepting crypto payments mean for companies? From a business perspective, the situation looks a bit different, and it’s definitely not the same for everyone. If this ends up being a failed experiment, the big-name brands are strong enough to pick themselves up and keep going. Not the same can be said about smaller companies that can’t withstand the negative consequences that come with making a wrong turn as well as the bigger players in the market.
Therefore, if you’re an entrepreneur asking yourself if you should join the trend and start accepting crypto payments to keep up with the times, there are various aspects you need to consider before taking the plunge.
The approach
It’s clear that cryptocurrencies have penetrated the business environment and continue to gain more ground by the day. The statistics point in this direction, and so does the market sentiment, which favors crypto adoption. But in order to determine the success of these endeavors, we have to look at the inner workings of using crypto as a payment option on par with fiat currencies.
One might assume that cryptos will be used to pay for goods in the same way that traditional currencies are, and that is true to some extent. However, their journey in the payment circuit will take a different route. This means that companies will indeed accept cryptocurrencies in exchange for their products and services, but most of them (nearly 50%) have no intention to keep these assets after the transactions have been finalized. Instead, they’re going to exchange the cryptos they’re received from their customers for fiat money by using a third-party payment processor.
This serves as a precautionary measure considering the high volatility and unpredictability of the cryptocurrency market. That way, merchants will be able to meet customers’ demands and keep up with the evolution of the financial system while also protecting themselves against the risks of owning crypto.
The challenges
Whether they decide to convert crypto into fiat or hold on to their digital assets, retailers still have a series of challenges to overcome in order to make crypto payments part of the sales journey. The main deterrent is represented by the difficulty of transforming their current infrastructure in order to accommodate crypto payments and the intricacies that this process entails.
On top of that, there’s also the issue of security to take into account, as payment platforms have to ensure the safety of the assets that are transferred, be it fiat or crypto, which adds another layer of complexity to the problem.
Finally, one cannot ignore the regulatory landscape (or lack thereof) regarding cryptos that is
going to affect all stakeholders, from consumers to businesses. There are currently no clear regulations or guidelines on making crypto transactions in a business setting or the taxes this might involve, and that’s obviously a major point of concern for most businesses.
The advantages
However, although accepting crypto payments implies a learning curve for both businesses and clients, it doesn’t mean it lacks advantages. If that were the case, no company would be willing to go through the trouble of making crypto payments available to their customers.
Probably the most notable and important benefit for businesses is the possibility of saving money. Businesses pay a hefty amount to payment processing companies to enable fiat transactions. However, cryptos are decentralized structures, which means there’s no intermediary between businesses and their clients; thus, processing fees can be dramatically reduced.
The lack of a central authority to authorize and slow down transactions also leads to faster processing times. Funds can be transferred in real-time, and that’s a big win in a day and age where speed and expediency are a requirement.
Cryptos are the closest thing we have to universal money at the moment. You may think that a company can sell its products/services in any part of the world due to the internet and tech advances, but there are multiple obstacles that pose obstacles to cross-border transactions in the form of regulations, exchange rates, or transaction fees.
Digital assets can provide a solution to this issue by making products and services easily accessible to everyone, regardless of their location, and therefore help businesses expand their customer base.
Security is another aspect that needs to be considered. Crypto transactions are known for being extremely safe due to the inherent security features of the blockchain technology on which they’re built. To put things simply, once a crypto payment has been recorded onto the blockchain, it’s impossible for anyone to alter it, significantly limiting the risk of fraud and chargebacks.
While cryptos still have a long way to go until they can become mainstream, this is the path they’re currently on. It’s best that companies prepare in advance for when digital currencies will reach that stage of their development, so they can reap the benefits and minimize risks as much as possible.
