Pros and Cons of accepting cryptocurrency for your business
With the rising appeal of multi-choice payments on both eCommerce and retail market, businesses need to rethink their approach in regards to providing customers with versatile purchase options. Whether you aim to integrate cryptocurrency payments into your business in the near future or already feature several prominent currencies as payment methods in your company, the appeal of implementing digital currencies is certainly there.
According to SoftwareFindr, 4.68% of millennials have invested in cryptocurrency acquisition of some kind, while 78.95% of cryptocurrency owners have acquired their coins through peer-to-peer purchases. However, just like with any form of technology or financial feature, cryptocurrency’s implementation will inevitably lead to different pros and cons for your business. With that in mind, let’s dive into the advantages and disadvantages of featuring cryptocurrency payment options for your business going forward.
- Pro #1: User-friendly versatility
- Con #1: Currency fluctuation
- Pro #2: Minimize chargeback fraud
- Con #2: Potential territorial regulations
- Pro #3: Low transaction fees
- Con #3: It takes time to set up
- Pro #4: Fast and secure transactions
- Con #4: Lack of widespread appeal
- Conclusion: The Best of Both Worlds
Pro #1: User-friendly versatility
Giving your customers and clients as many payment options as possible will ensure that they are comfortable with using your eCommerce store or website. According to Medium, there are around 24 million bitcoin users around the globe and around 31 million Ethereum users accordingly.
The more cryptocurrencies you feature as viable payment options, the better your user engagement and conversion rates will become as a direct result. This is especially true if you aim to attract an international audience with a variety of currencies and payment options available to them.
Con #1: Currency fluctuation
As with all types of payment options and currencies, cryptocurrencies also fluctuate in value over time. However, their fluctuations are somewhat sporadic due to the nature of cryptocurrency exchange and additional coin generation. In addition to professional crypto exchange software, you can refer to localization tools such as The Word Point for any international cryptocurrency exchange needs going forward. Blockchain technologies are used to track each individual coin regardless of its currency, point of origin or current owner.
Due to the limited amount of coins at any given moment, their value can vary significantly as time goes on. This can make payments which were fair in regards to the products or services you’ve provided unviable if a cryptocurrency spikes up or down in a significant way. This is a double-edged sword in terms of pros and cons for your business and should be taken under consideration.
Pro #2: Minimize chargeback fraud
Chargeback fraud is an important subject of conversation when it comes to currencies available for use on your business’ website. In short, this process involves illegitimate chargeback requests from users who ordered goods or services from your business, resulting in your loss of revenue and those goods as a result.
When it comes to cryptocurrency use as a viable payment option, this issue becomes insignificant thanks to the rigid crypto tracking system based around blockchain technology. It is very difficult if not impossible for someone to illegitimately request chargebacks once they’ve used crypto as their payment choice, ensuring that the transaction was legal and final.
Con #2: Potential territorial regulations
Transactional fees, taxes and other territory-based price regulations may prove bothersome when it comes to cryptocurrency implementation. Simply put, cryptocurrencies are entirely digital and, for many countries, miles away from proper regulation.
This is especially true if you decide to cash in on your gained cryptocurrency through a local bank, creating additional governmental and tax regulatory questions in regards to your business’ income. It can create problems for your business’ continued presence in certain underdeveloped markets which may be used to more traditional payment types such as with credit cards or PayPal.
Pro #3: Low transaction fees
Many payment services such as Payoneer and PayPal will place additional costs on your transfer requests and incoming payments as a result of using their services. However, cryptocurrency transaction fees are miniscule in comparison, leaving a lot more revenue in your hands at the end of the day.
Peer-to-peer trade effectively eliminates the intermediary bank or financial institution making the entire process more streamlined as a result. It all comes down to blockchain technologies and the way cryptocurrencies exchange hands, allowing for much cheaper transfers to take place regardless of the sum in question.
Con #3: It takes time to set up
Setting up your cryptocurrency payment options may require additional time and setup in comparison to other transaction channels. One of the options you can go for is to create your business’ own crypto wallet and receive payments directly through it. Similarly, eCommerce websites may require additional plugins in order for cryptocurrency exchange to take place in a safe and practical environment.
Another option available to you is to opt for a third-party exchange service which will act as an intermediary between you and the customers, however it will require additional transaction fees from your wallet as a result. While these factors are nothing to worry about in the long run, the initial setup time may be enough to turn some businesses away from cryptocurrency integration.
Pro #4: Fast and secure transactions
The speed at which you receive and process payments will directly affect the performance of your business as a whole. Cryptocurrency exchange is lightning-fast compared to traditional banking transactions which require hours or days to process depending on the type of exchange that took place.
In addition, cryptocurrency payments are more secure as a whole due to blockchain tracking of each individual coin and wallet, eliminating fraud possibilities. This will ensure that your funds are available as soon as possible in a safe and user-friendly manner unlike with banks and similar financial institutions which take time to process each request.
Con #4: Lack of widespread appeal
Lastly, depending on your business’ niche and product portfolio you aim to push to potential customers, your mileage with cryptocurrencies may vary. Crypto exchange is still considered niche among online users due to obvious reasons as the payment option is still in its developmental infancy.
Even users who have wallets and crypto coins in their name may opt for more traditional payment options due to their wider appeal and more developed integration with online services. Make sure that you are aware of the fact that cryptocurrency exchange may only comprise a fraction of your incoming payments before the implementation in order to manage your expectations accordingly.
The Best of Both Worlds (Conclusion)
Whether you are for or against cryptocurrency, its appeal is undeniable in the online circles. It’s important to gauge its viability against your own business’ products, services and target demographics before the integration into potential payment options, however.
If you predict positive reception from your audience in regards to cryptocurrency exchange for goods and services, its implementation should be a no brainer. Make sure to allow for as many payment options as possible in order to appease as many customers as you can in order to maximize your profit margins and continue your business’ organic growth going forward.