Should You Adopt a Crypto Payment Solution for Your Business?

The market of cryptocurrencies is estimated to reach $45.3 billion this year. The use of cryptocurrency in global finance is rising, leading to businesses experimenting with its use in payments. Major brands, such as Shopify, allow merchants to accept cryptocurrencies. This decision has facilitated trade and ease. However, you may wonder if your business should follow suit. Read on to find your answer!

Pros of Adopting Crypto Payments

Here are three ways crypto payments will benefit your business:

1.   Appealing To a New Customer Base

Younger, tech-savvy customers might prefer using digital assets over traditional currencies. Adopting crypto payments is an excellent way to tap into this demographic. They will likely support businesses that align with their values. You can expand your customer base by offering them security, innovation, and decentralization.

Accepting cryptocurrencies will also appeal to international buyers. Currency exchange can be costly and time-consuming. Buyers will turn to crypto payments to bypass these issues. A business accepting these payments will attract them, expanding its global reach.

2.   Faster Settlements

Traditional bank transfers and credit card processors can take hours, or even days, to process transactions. This will not only be cumbersome to your customers, discouraging repeat purchases but also damage your cash flow. It can be especially harmful to SMEs (small and medium enterprises) as they need a constant stream of cash to continue operations. In contrast, crypto payments take minutes, or even seconds, regardless of geography. Having a steady cash flow can help you manage daily operations and pay suppliers on time. As a result, your business will stay liquid.

3.   Enhanced Security

Blockchain records transactions and provides a secure, tamper-resistant system. The biggest advantage of this is that payments are irreversible. This means your customers cannot alter or reverse their payments, significantly reducing fraud risk. Your online business can consequently rid itself of the persistent issue of chargeback fraud.

Public blockchains are also transparent, meaning that all transactions are verifiable. Businesses and customers can confirm payment status independently. This visibility can act as a trust signal, allowing you to retain customers.

Cons of Crypto Payments

Let’s look at some cons of crypto payments.

1. Volatility: Based on Kraken cryptocurrency price, the value today may be much higher than its value tomorrow. In fact, the currency might fluctuate in value within hours. So, you must convert these payments into fiat immediately. You must evaluate whether you can deal with this level of financial volatility.
2. Regulatory uncertainty: The Financial Conduct Authority (FCA) UK is increasing oversight of crypto activities. There are new regulations in place that might impact how you store or transact cryptocurrencies. Failing to follow these laws can result in heavy fines and penalties.
3. Tax implications: Crypto is a currency, not a property. You will trigger tax implications every time you use it in a transaction. Even a simple sale could require multiple entries for accounting and tax purposes, adding complexity to your systems.
4. Technical integration: Adopting crypto payments is not easy. You will have to secure the correct gateway, ensure wallet compatibility, and secure private keys. This can be overwhelming and create friction. Similarly, your customers may be unfamiliar with these systems, making them wary.

The Final Decision

The verdict on whether you should adopt crypto payments or not lies within your business resources. Can you afford to implement the following changes to your business:

• Instant conversion tools to convert cryptocurrencies into fiat immediately, reducing volatility.
• Due diligence and legal guidance to stay ahead of and respond to regulatory changes.
• Maintaining meticulous records of all crypto transactions for accounting purposes.
• Offering educational resources and support to guide customers through the process.

Adopting crypto payments will succeed only if you can gradually take these measures to improve the existing system.

Endnote

Cryptocurrencies are now an integral part of the digital economy. Only agility and forward-thinking can help you gain a competitive edge in this complex landscape. However, integrating crypto can be complicated and costly. Read the points above to expand your understanding of this. Remember, take the time to evaluate your readiness before making a choice!