Plenty of major companies like Subway, AT&T, Expedia, Dish Network, and Microsoft have recently decided to accept cryptocurrency. These are large corporations that have the resources to experiment with relatively new technology.
But should the average business, or small business, accept cryptocurrency?
A high population of the world has heard of or are familiar with Bitcoin. But that doesn’t mean they’re ready to use it. Only a few percentages own it. An even smaller number use cryptocurrency.
There are more than 40 million cryptocurrency wallets out there. Cryptocurrency usage has soared in places such as San Francisco, New York, and Tampa — and in places like Canada (the first country to regulate the digital currency), the Netherlands, Slovenia, Israel, Switzerland, and countries with volatile currencies, like Zimbabwe and Venezuela.
To give you a perspective, there are almost 300 million active users of PayPal worldwide and about 1 billion Visa and 900 million MasterCard credit cards in circulation. Cryptocurrency has to catch up when compared to these other digital ways to pay.
It is widely thought that if small businesses make the necessary investments in cryptocurrency infrastructure, then cryptocurrency usage will rise enormously. But there are plenty of pros and cons for businesses to consider before they take that leap.
For small and medium-sized businesses that are watching their bottom lines pretty closely, Bitcoin offers a nice reprieve from the world of hefty credit card fees. Cryptocurrency transactions charge a low flat fee, not a 2-4% transaction fee, as is the case with credit cards. This could be very useful when customers try to pay for small transactions with a form of payment other than cash.
In many cases, cryptocurrency transactions are also faster than traditional transactions. On average, Bitcoin transactions take less than 90 minutes to complete. They also prevent fraudulent chargebacks, easily integrate with businesses’ POS systems, and allow businesses that do international business to avoid the hassle of worrying about exchange rates. All goods are valued at a universal rate that transcends country borders.
Accepting cryptocurrency also comes with some drawbacks. For one thing, business owners who do not properly store their cryptocurrency can be subject to the market volatility that goes hand-in-hand with cryptocurrency. Bitcoin has seen some pretty drastic market swings that could prove tricky for business owners.
Cryptocurrency is not backed or insured by governments (unlike traditional currency) and comes with relatively complex tax protocols for small businesses. Businesses will want to understand the ins and outs of cryptocurrency before they start accepting it.
Thanks to Fundera for the infographic highlighting the pros and cons of businesses accepting cryptocurrency.