Online merchants are always researching for innovative yet profitable ways to elevate the shopping experience of their audience. One popular trend we’ve witnessed being adopted by businesses is adding cryptocurrency to their list of payment options. While it’s nothing close to a mainstream form of payment, it has certainly garnered a lot of attention from people from all over.
Out of the repository of crypto coins sprouting in the marketing, the most buzz-worthy digital coin is Bitcoin. The promise of increased transactional security, discretion, and low fee charges are just some of the benefits associated with the cryptocurrency. But is that enough to keep businesses interested?
We’ll be discussing the benefits and risks involved with using bitcoin as a payment procedure for small businesses.
Pros of Bitcoin
1. Prevention of Fraud and Chargeback
Many companies accept transactions through different online payment schemes, which require sensitive data from consumers about their credit or debit card. Such kind of information being shared on the internet is high risk because hackers can steal such data and give them unauthorized access to their bank accounts.
In contrast to such transactions, bitcoin transactions are similar to cash sales. The buyer gets to decide the amount to transfer to the seller. Moreover, the structure of the bitcoins is encrypted in such a way, making it immune to hacking risks. So the retailer doesn’t have to worry that the trade is fraudulent.
Another important feature is that it safeguards the bitcoins even after the transaction has been made. Purchases made through debit or credit cards can be refunded for valid reasons due to unauthorized access or due to faults in the provision of service or product. This is not the case with bitcoin. Once they are spent, they cannot be returned unless there is a legitimate reason for it.
2. Provides User Discretion
One major appeal of bitcoin is that it offers complete user discretion. This means that your transactions can’t be traced back to you as your identity is kept a secret. Each purchase is appointed a unique address making it unlikely to trace it to the person spending their coins.
3. Attracts New Customers
Today’s consumers are generously accepting of new technologies and techniques. Businesses that offer additional payment systems to their list of payment methods are guaranteed to attract tech-savvy prospects and cryptocurrency lovers. SME’s can generate sales by integrating BitPay into their e-commerce platforms and tapping into a whole new customer base. What makes it such a deal-breaker is that it enables cross-border payments so merchants can reach international markets, which isn’t a possibility with credit cards.
There’s been a notable surge in online shopping since COVID-19, and many consumers were seen using digital payment methods rather than a credit card. Merchants that supported cryptocurrency payments were able to provide better payment options, which led to increased customer satisfaction and customer loyalty.
4. Increased Sales
As cryptocurrency is completely decentralized and requires no intermediary involvement, small-scale enterprises can easily penetrate international markets and make their products available globally. The elimination of those boundaries makes businesses extremely desirable and tempts customers to purchase their products. For instance, carpet care retailers can sell carpet cleaning products and services to international buyers by allowing cryptocurrency transactions. This takes away the inconvenience associated with the cost of exchange rates and other charges linked with international transactions.
What Risks Are Involved?
While the upsides might have you intrigued, there are some obvious drawbacks associated with the entity that you should know before investing in digital currencies.
1. Regulatory Uncertainty
The regulatory landscape of cryptocurrency is shifty, as lawmakers are trying to implement laws to limit the ways the public uses bitcoin. As we know, bitcoin is entirely decentralized, but governments are vigorously attempting to govern and regulate how it’s being used. This can be a major hurdle for small e-commerce businesses that rely on bitcoin as a payment mode. Some countries charge taxes on transactions, while others have completely banned the use of bitcoin and/or cryptocurrencies.
Once these regulations are set, they’re likely to become harsher, and businesses would have to adapt accordingly, which can influence their operations and sales. Entrepreneurs must be prepared to pivot their operational strategy to these kinks in the law, which may or may not change in the foreseeable future.
2. Price Volatility
While bitcoin payments show immense potential for profitability, there is a primary downside to it as well. The most apparent is said to be its price volatility. This roadblock has kept Bitcoin from becoming a universal payment method, but it’s extremely unpredictable nature can’t be ignored. What was once amounted to pennies in 2009 later shot up to approximately $20k in 2017? And today, one Bitcoin is priced at about $15k.
The volatility makes it a risk for merchants and traders, especially since they’re uncertain when the price might drop next. However, enlisting the help of a merchant service like Coinbase can assist SME’s to combat the volatile nature of crypto coins. The merchant company immediately exchanges the digital currency for its real-time cash value, so businesses don’t suffer a loss when prices are fluctuating.
3. Technical Barriers
In order to accept bitcoin payments, one needs a reliable bitcoin wallet to store their assets digitally. For someone with little to no technical expertise, this can be a harrowing experience and can even result in blunders that could later cost you big. The cryptocurrency realm is extensively dense and requires a higher learning curve, which most entrepreneurs and customers may not possess.
If a merchant misplaces the access key to their wallet, there is no way to recover the address, and the bitcoin stored will be lost forever. Bitcoin wallets must be safeguarded, and the access key can’t be shared with anyone else.
It’s vital for small enterprise owners to do their research and find out the general consensus regarding bitcoin before venturing into any uncharted territory. Consider the points presented in both aspects and educate yourself on how to overcome the technical barriers that accompany bitcoin payments. If you have the leeway to adapt your strategies to the fluctuating characteristics of bitcoin, then strap in for an interesting business journey.
Shaheryar provides ghostwriting and copywriting services. His educational background in the technical field and business studies helps him in tackling topics ranging from career and business productivity to web development and digital marketing. He occasionally writes articles for Carpet Cleaning Guildford