Cryptocurrency seems like a taboo subject to people who are uneducated about it. Not that it’s particularly nefarious, but the crypto space seems full of terminology and technicalities that only folks with advanced computer science degrees can understand.
Bitcoin is probably the most famous cryptocurrency, and its dramatic price fluctuations are well-documented. Cryptocurrency is not something to be feared, or reserved only for tech-savvy startups and large companies with a wealth of resources: small businesses can benefit from it, too.
The benefits of accepting crypto payments
Cryptocurrencies are dependent on blockchain technology, which stores transactions in a linear procession of “blocks” secured with cryptography. Blockchain generates a transparent public ledger that records all transactions, therefore removing the need for third-party verifiers because both parties can hold one another accountable. Records are immutable, so the technology deters double spending or any other discrepancies. The system operates on a peer-to-peer network, meaning it is inherently decentralized; information is never stored in a single place (centralization is the traditional model, which means servers are especially subject to cyber attacks and natural disasters).
Most forms of digital payment require a processing fee. This added expense is usually between two and three percent for credit cards and online processors like PayPal and Stripe. Blockchain, however, does not necessitate transaction fees because there are no intermediaries involved. If accepting cryptocurrency, small businesses can save money from these fees while still holding a record of payment.
Chief Investment Officer with Full Node Capital, Ivan Brightly, says:
“If you’re a B2C merchant you should accept cryptocurrency. It’s easy to implement and the amount of free advertising alone as a forward-thinking company that accepts multiple payment types is worth putting up a widget on your website or POS system. Cryptocurrency transactions also have lower fees than credit cards, cannot be reversed, and are typically settled and converted to cash the same day by your merchant wallet account, reducing any market risk.”
Mr. Brightly mentions something important: small businesses afraid of cryptocurrencies price volatility can rest assured knowing that they can convert payments to cash the same day at whatever rate the value happens to be. They won’t gain money like famous Bitcoin millionaires, but they also won’t lose it, either.
Open to more customers
Just the mere fact that a small business accepts cryptocurrency can increase revenue. There is a growing number of Bitcoin and altcoin users (any cryptocurrency that is not Bitcoin), but still far too few outlets where they can actually spend their money. People with cryptocurrency are drawn to places that understand them.
According to Business News Daily:
“Crypto’s decentralized nature enables small businesses to expand and open their doors to international buyers for whom their products and services were once inaccessible. For example, a small electronics retailer reported selling $300,000 worth of merchandise to nearly 40 countries by accepting cryptocurrency.”
Cryptocurrency is an excellent way to embrace the e-commerce market. By opening their doors to a whole world of customers, small businesses can dramatically increase their profits. And, thanks to blockchain, they do not have to worry about a trail of paperwork and have a lesser chance of facing inaccuracies and unhappy customers.
Steemit.com chronicles several industries that are entering the crypto landscape: jewelry, online dating services, food (such as companies like Subway), hotels, clothing retail, TV providers (like Dish), software companies (like Microsoft), colleges, and more. A company named CheapAir.com was the first US-based online travel agency to accept Bitcoin as a method of payment, and it processed approximately $15 million in crypto payments (for hotels and flights) within the first six months of accepting digital tokens. Expedia.com followed suit and has seen similar growth.
Other payment methods
If small businesses are still hesitant to approach cryptocurrency, that’s okay. There are still other innovative ways of simply changing payment models can increase profits. Small businesses can consider accepting ACH payments or wire transfers, for instance, which take time but are secure. They can also consider accepting (and maybe even using) eChecks, like those from Deluxe, which are a form of digital check that removes the hassle of dealing with paper (all transactors need is an email address to send them).
Cryptocurrency is not something small businesses need to shy away from. The world is changing, so by keeping pace with emerging technologies, small businesses can interact with a broader variety of customers—and potentially generate more revenue, too.