When you are planning on starting a business, one of the most important things to decide is how you will be receiving payments from customers. While many businesses pick popular options such as credit cards and PayPal in addition to cash, some businesses are starting to embrace cryptocurrencies as a fair means of exchange for their goods and services. While there is controversy surrounding the use of cryptocurrencies to accept payments, there is still a case to be made for businesses to try it out. In this article, we are going to be exploring some of the most compelling reasons why businesses should, or at least try to, accept cryptocurrencies as a payment option.
Cryptocurrencies Save You Money
It is estimated that merchants in the United States have paid over $78 billion in transaction fees by accepting credit and debit cards as payment options. These cards usually incur a transaction fee of about 2-5%, with the bulk of these fees going to the banks that do the transactions and exchanges. The rest goes to transaction facilitators such as Visa and MasterCard. If you want to check your credit score before applying for a credit card read this helpful Credit Sesame review.
Cryptocurrencies are not tied to any bank or transaction facilitator because they are decentralised. This means businesses can save the 2-5% on each transaction and this can amount to large sums of money for businesses doing hundreds or even thousands of transactions a day. Do note that these percentages also apply to payment options like PayPal and Stripe and, when you switch to cryptocurrencies, you do not have to pay any of these transaction fees.
One of the most frustrating things for merchants and business owners is slow transactions. Depending on the payment options the business accepts, it might take up to a few days for the funds to be available in their bank accounts. Most cryptocurrency transactions are instantaneous and even when you have to wait, it only takes a few minutes for the funds to become available.
Most people do not realise that banks and other players in the financial sectors are a huge bottleneck when it comes to payments and financial transactions. There is so much verification and handshaking going on that these transactions can get extremely slow. With cryptocurrencies, these bottlenecks do not exist and this is why most transactions are completed within seconds and the rest within a few minutes.
Faster transactions can help streamline business operations and processes because they make funds available faster to businesses. This helps improve cash flow, which is very important in the fast-paced business world we live in now.
Avoiding Fraud and Chargebacks
Fraud and chargebacks are a huge problem for businesses because they rob them of legitimate revenue and cause a myriad of other problems. With credit cards and other payment options, it is easy to ask for a chargeback or even commit fraud by using stolen credit cards, for example.
Cryptocurrency payments work similarly to cash; all transactions are final, and it is impossible to get your cryptocurrency back through a chargeback. This is because all transactions are added to the blockchain once they happen and the business would have to pay back the cash to return it. There is no other way to do it because there is no institution advocating for either the buyer or the seller.
Similarly, all funds on the blockchain are verified and there is no way to spend more than you own. Because all parties approve the transaction, there are no disputes, which puts chargebacks out of the question.
Lastly, although it is possible to pay using someone else’s cryptocurrency, it is harder than most people think. There are verification processes in place, as well as encryption and passwords to minimise the chances of this happening. According to crypto stats, it is impossible to get your cryptocurrency back once you forget your account password.
Accept International Payments
Businesses that want to operate internationally have to deal with the challenges that come with accepting international payments. For example, most of these transactions will have to go through at least two banks and this means they often have to wait for over three business days to get the money. Additionally, businesses have to deal with local and international exchange rates which can eat into their profits and make it difficult to keep going.
Cryptocurrencies solve all of these problems. They eliminate the long wait times associated with banks processing the transactions and they get to avoid the risks associated with fiat exchange rates. Additionally, businesses do not have to deal with things like high transaction fees and international transfer fees. However, they have to keep in mind the tax implications of receiving payments in the form of cryptocurrencies.
Canadian businesses that accept cryptocurrencies are required to pay tax on all business income associated with cryptocurrencies. Crypto tax in Canada is quite complicated. Fortunately, WealthSimple has created an in-depth guide that can help businesses understand crypto tax in Canada much better. WealthSimple creates financial tools to help investors grow their money through a combination of knowledge, the right tools and prudent financial advice. They manage over $10 billion in client assets and have a team of financial advisories standing by to help you with your investments.
Ease of Use
A common misconception about cryptocurrencies is that they are hard to use, but they are not. All you need is to know the wallet addresses of the people you are sending the cryptocurrency to and have a platform through which you can do so.
Some people also complain that it is difficult to understand cryptocurrencies. It is important to understand how cryptocurrencies work if you are going to be investing in them by using them as a store of value. However, when you want to use them to exchange goods and services, you do not need to understand the underlying nuances just like you do not need to know the underlying nuances of fiat cash to use it.
The one thing you need to know though is how to secure your cryptocurrency wallet and digital assets, but this too has gotten easier over the years.
Preparing for the Future
It is true that a lot of people still prefer fiat currencies over cryptocurrencies for common transactions, However, as more people get educated and the adoption of cryptocurrencies increases, it will really help your business if you are ready to accept digital currencies.
As other businesses are scrambling to put the necessary systems in place to accept this type of payment, you will be ready to go and this will give you a massive competitive advantage. Also, as markets mature and get increasingly sophisticated, people will demand more payment options. By having the means to accept cryptocurrencies in place, you will be able to attract a larger customer base and increase the chances of them completing their purchases. Studies show that having a selection of payment options helps to convert more customers.
Another way cryptocurrencies prepare businesses for the future is by encouraging them to go paperless. Cryptocurrencies, digital wallets and electronic payment systems are becoming the norm. This trend will continue growing as more people adopt digital payments and other paperless payment options.
It might be overwhelming for small businesses to make the switch, but it makes a lot of sense for businesses to start preparing for it by adopting cryptocurrency payments. Resisting the switch to paperless payments is only delaying the inevitable and the businesses that do not follow these trends will ultimately be left behind.
You Do Not Have To deal with Third Parties
Apart from cash, all the most common payment options businesses have available to them involve a bank at some point. When you have a bank or other financial institution holding your business funds, they can dictate how you use the cash. For example, they may freeze your account for any reason, or they may limit your account so you are not able to receive money anymore.
As a business, this can be devastating, especially if the business needs a steady cash flow to keep things going. Cryptocurrencies are decentralised, which means only the seller and the buyer are involved. Although some governments may try to limit what you can and cannot do with cryptocurrency, businesses are saved from the whims of third-party financial institutions looking to exert some of their powers.
Building Your Brand Identity
Accepting cryptocurrencies is a great way to build an identity as a forward-thinking, innovative business that is also an early adopter of new technologies. Even in cases where you adopt cryptocurrencies to add to the buzzwords associated with your business and brands, that does more to help your brand image than to hurt it.
Cryptocurrencies are the future of payments according to experts and those who have already embraced them. For businesses that want to stay ahead while preparing for the future, accepting cryptocurrency payments is the way to go. Examining the benefits cryptocurrency payments afford businesses should help convince even the most sceptical people.