The emergence of BTC in 2009 struck a blow to the very heart of the traditional financial system and brought about an unprecedented paradigm shift in the marketing and business landscape.
Subsequently, the number of cryptocurrency users saw a staggering 190% growth between 2018 and 2020, and now in 2023, there are an estimated 420 million users globally with the numbers expected to escalate in the nearest future. That’s a lot right?
But as the hype surrounding cryptocurrency and blockchain technologies continues making the rounds, you may begin to wonder if accepting cryptocurrency payments will come in handy for your small business or not. Well, it all depends on your business needs, but by and large, cryptos are full of benefits.
So here in this piece, we’ll explore the nooks and crannies of digital currencies and how it impacts your small business.
- 1. Best Tools for Cryptocurrency Payments
- 2. Benefits of Using Cryptocurrency
- 3. Risks Associated With Using Cryptocurrency
- 4. How to accept cryptocurrency payments
- 5. The Viability Of Cryptocurrency For Small Businesses
Best Tools for Cryptocurrency Payments
When bitcoin first stormed the market, individuals and businesses were more inclined to buy BTC with PayPal but over the years, the number of digital currencies has risen by over 9000 and as a result, the crypto market is continually witnessing the introduction of newer payment platforms.
As a small business owner, Paypal is your best bet at trading effectively. Its payment processor operates with light speed allowing you to process payments more swiftly and effectively with your customers. Other prominent payment platforms include BitPay, Coinbase, B2BinPAY, CoinGate, and the list goes on and on.
Benefits of Using Cryptocurrency
1. Lower transaction fees
Transaction levies issued by traditional financial services can be maddening especially for small businesses. The cost accumulated from these transactions affects the revenue generated thereby negatively impacting the growth of your business.
On the contrary, cryptocurrencies operate on a decentralized ledger making your business transactions free of governmental or traditional banking influence.
To be more explicit, the use of credit cards comes with a transaction levy of around 25 cents for every card swipe with an additional 2% to 4% of the transaction total. Now take a moment to envisage what that adds up to when you perform hundreds to thousands of transactions daily.
Accepting cryptocurrency payments lowers these fees to less than 1% of the value of every transaction you make. Don’t you think it’s an awesome way to save your hard-earned money?
2. Speedy and instantaneous transactions
As an entrepreneur, you want to attract and retain more customers at the least opportunity that comes your way. As such, enhancing customer experience becomes your top priority.
Traditional financial services are characterized by inconsistencies in their payment processes and can take several working days before funds get updated in your bank account. That can leave you frustrated and create inconveniences for your customers.
Cryptocurrency transactions are mostly instantaneous and occur in real time. As you know, high transaction speed gives you an edge over competitors who are still affiliated with traditional banking systems and provides customers with instant gratification.
3. Wider range of business prospects
Cryptocurrency has been a game-changer since its inception and successfully changed the dynamics of international trading. Being a universal currency, small businesses can expand their customer base and attract foreign prospects who had no access to their goods and services.
Furthermore, cryptocurrencies use a decentralized ledger and extirpate the barriers of currency variations and exchange rates so you can worry less about heavy transaction levies on cross-border payments as in traditional banking systems.
For conventional comparison, international business prospects can see how your price tags compare with the prices you offer for the same commodities in other countries, simplifying their purchase decisions.
4. Transparency and increased security
Blockchain technologies use a public ledger that guarantees high-profile security for all your transactions. Its decentralized nature paves the way for transparency and detailed information of coin owners is encrypted to avoid any fraudulent activity or legitimacy.
For clarity, cryptocurrencies can be likened to cash in that you can’t make payments if you don’t have it. When making deals with cryptocurrencies, transactions are only apparent to the sender and the receiver and every transaction has to be approved by both parties so you can worry less about time-wasting chargebacks.
Risks Associated With Using Cryptocurrency
After perusing the interesting benefits that come with accepting cryptocurrency payments, you might wonder if there could be any potential threats to this relatively new form of technology. Well, here’s a list of what you need to consider before getting into the act.
1. Technical barricade
Not everyone is technologically savvy and cryptocurrency requires adept understanding to trade effectively. From setting up your digital wallet to integrating cryptocurrency options into your points of sale, not to mention linking transactions with accounting software, small business owners are pressed for time and may not have the luxury to get their acts together.
And again, if your target audience are those in the traditional set-up or skews older, this kind of payment process may not be worth enabling.
2. Market volatility
Perhaps, the single most significant threat to your small business. Cryptocurrencies are multifarious and their prices are extremely volatile making their market values unpredictable.
Possibly, you’ve heard about the apocryphal story of the Florida programmer, who bought two Papa John’s pizzas on May 2010 with 10,000 bitcoin. By December 2017, the value of that bitcoin had gone beyond $100 million. That’s quite a margin!
As an entrepreneur, the fluctuating market values of cryptocurrencies might make it dangerous to keep your funds in cryptocurrency, but interestingly, you can get your crypto funds exchanged into GBP once you receive payments.
3. Security issues
Despite blockchain technologies being popular for their high-profile security measures, there may still be a few missing pieces in between cryptocurrencies payment process. Albeit, cyber attacks like stolen credit card numbers can be eliminated, but by and large, there’s no 100% safe way to prevent cyber criminals from stealing your wallet.
The most worrisome aspect is that cryptocurrencies aren’t backed up or insured as in conventional currencies and the implication of that is there’s a slight chance of getting your funds back if it ever gets stolen.
However, there’s been some reassuring developments going on in some cryptocurrency firms to fully insure losses that come from company security breaches so you can be rest assured that your funds are intact.
But be in the know that these insurance doesn’t cover losses that stem from hacked wallets, so it’s totally up to you to secure your personal account.
4. Lack of regulatory oversight
As it stands, cryptocurrencies aren’t under the regulation of any govermental organizations but that is set to change in the near future as lawmakers are already coming up with new regulations to govern it and once that’s in place, businesses will be forced to adapt to the evolving crypto landscape.
Moreso, it’s just normal that regulations on crypto markets will change continually as more people continue to adopt cryptocurrency and new challenges surface.
So, as a small business owner looking to leverage on the viability of cryptocurrency payments, you must be willling to adapt to the ever-changing local and state business regulations especially data privacy regulations and laws governing online businesses.
How to accept cryptocurrency payments
Should you decide on adopting cryptocurrency payments as part of your payment processes, here’s a simple guide to get you started;
1. Create your merchant wallet account
Typically, it only takes a couple of minutes to create personalized wallets, which offers you access to customizable portals and cryptocurrency conversions to your trnsaction currency.
While some payment platforms are exclusive to Bitcoin, others accept multiple versions. By virtue of that, you must understand the kind of currency your merchant wallet accepts before getting your customers in the know of your preferred payment forms.
2. Integrate the cryptocurrency address into your sales point
Now that your merchant wallet account has been set up, it’s about time you incorporate the address into all your sales point so that customers can send cyrpto funds to your exchange account.
Also, you can integrate your QR code or address on each of your digital and physical invoices so that customers use their smartphones to send coins through your QR code and alternatively, go online input your public adrress.
3. Transfer funds to your business bank account
On a final note, if you want to withdraw your funds from your exchange account, you need to move it to a digital wallet, or alternatively make a quick exchange to GBP or Dollars and trasfer to your business account.
The Viability Of Cryptocurrency For Small Businesses
The hype surrounding the viability of cryptocurrencies is making the rounds and generating series of questions and debates.
By and large, the benefits of accepting cryptocurrencies outweighs its downsides and considering the effectiveness of merchant wallets and easy conversion of coins to cash, small businesses have a lot to gain from its adoption.
The business landscape is really not fair especially to small businesses so you need to leverage every bit of opportunity that comes your way. Let go of the doubts and embrace crytocurrency with open arms, it’s a sure bet to gaining new customers and accelerating the growth of your business.
Rilwan Kazeem is a freelance content writer, explorer, and reader. He has covered topics including digital marketing, HR, how-to guides, and product descriptions. Rilwan’s writing has been featured in Leaderonomics, Engagedly, and Newsbreak—where he unraveled “10 simple steps to launch an online business in 2023”, among others. He is the recipient of the 2015 Golden-Ink essay contest award at the Ladoke Akintola University of Technology.