Should your company accept cryptocurrency?
According to Michael Foster, co-creator of localethereum — a decentralized Ethereum marketplace enabling peer-to-peer exchanges — “crypto enables cheap and borderless near-instantaneous transactions. This enables customers all over the world — even those without access to traditional banks, but with access to the Internet — to purchase your company’s services or products.” Dibu Paul, of Alchetron, the Free Social Encyclopedia for the World, notes that this is a big change. “Especially for large payment amounts, which have historically taken extra time to clear, crypto transactions are nearly instantaneous.” In addition, cryptocurrencies are not bound by a specific country’s exchange rate: rather, they are universally recognized, which makes them more attractive for many businesses. For international e-commerce companies in particular, these advantages can be significant.
Paul also notes another benefit of crypto: it makes it easy for many people to contribute to a single purchase because everything goes to a smart public ledger, which can be trusted. This makes crypto a good medium for crowdsourcing. Using cryptocurrency as payment is also a good choice for high-risk businesses, since traditional payment gateways might not support them.
Transactional benefits aside, Josh Reif of Reif Ventures, LLC, adds that “accepting cryptocurrency can help you attract a younger demographic of people who prefer the simplicity and anonymity of crypto transactions.” Carmen Mastropierro, the owner of three digital magazines and an e-commerce website which accepted cryptocurrency, concurs: “I believe accepting cryptocurrency as a payment is wise for many businesses. Just offering several payment options has always been linked to higher conversion rates. In addition, some customers feel safer paying with crypto as compared to PayPal or credit cards.”
Alexander Winston, Managing Director of PPC Limited, adds: “I think it’s important to always be open to new technology. If a customer wants to pay you in crypto, why should you turn them down? Originally, we only accepted payments in dollars through processors such as Stripe and PayPal. But with the vast increase in the number of cryptos available over the past few years, we’ve had quite a few customers request to pay in crypto.”
What are the risks involved in accepting cryptocurrency?
Foster says there are three primary risks of accepting crypto: (1) you don’t know how to keep your crypto safe; you or your business are risk averse. (2) Cryptos are highly volatile — just look at Bitcoin’s price chart this year; (3) the regulatory and tax schemes are confusing and depend on where your business is located.”
CPA and COO Matthew May, founder of Acuity, adds: “Other risks include transaction fees, liquidity concerns and counter-party risks associated with using crypto exchanges, which act as the processors for businesses that do not directly accept crypto. Exchanges let you convert crypto to “fiat” — e.g., government-backed cash — but leaving money in exchanges leaves the crypto coins vulnerable to theft. “The crypto counterparty risk mantra is, ‘Not your keys, not your coins,” May continues. “This is the educated person’s acknowledgement that when you send crypto to any of the exchanges, you add the extra risk of someone else having full custody and ownership of your assets.” To address this issue, those who have any significant money in crypto usually move it to a “hard wallet” offline, like a Ledger Nano.
How could your business accept cryptocurrency?
If the pros outweigh the cons for your business, and you want to add crypto to your payment offerings, how do you begin? Antonio Madeira of CryptoCompare explains how crypto transactions occur. In order to accept crypto as a form of tender for products or services, your business needs either a digital mobile “wallet” or a Point of Sale (PoS) machine. While the two processes are essentially the same, having designated equipment and accompanying software and support enables a more seamless experience for your customer and your business. A QR code for the amount of the transaction is generated on the business end, which is then scanned by the customer to pay and complete the transaction. Different PoS machines have various benefits, but most charge a fee for this service.
Madeira continues, “In order to accept crypto via your business website, sign up with a service such as Bitpay or Coinbase, which has plug-ins that you simply install automatically into your system. These gateways integrate with major e-commerce platforms. Customers will be able to check out using crypto, which is then deposited to your digital wallet or deposited as a local currency.”
“Accepting crypto can be a great advantage to a business. For our new business, adding them was as simple as adding and configuring a WordPress plugin,” explains Jacob Murphy of GPS Tracking Made Easy.
Whether choosing to accept crypto or not for your business, it is clearly prudent to know the facts. Ask other entrepreneurs about their experiences, evaluate your risk aversion level, and proceed with care.