The rise of cryptocurrency has been nothing short of astounding. In the past 12 months, the price of Bitcoin has increased tenfold, and other forms of cryptocurrency have risen along with Bitcoin. This has made cryptocurrency, despite its volatility, an increasingly popular form of investment—and an increasingly popular form of payment.
Many businesses now find themselves wondering if they should start accepting cryptocurrency as a form of payment. While there are many benefits to accepting cryptocurrency, the benefits do come with a certain amount of risk. Having a well-rounded understanding of the pros and cons of allowing your customers to pay with cryptocurrency will enable you to make an informed decision moving forward.
What Are the Benefits of Cryptocurrency for Businesses?
One of the biggest benefits of accepting cryptocurrency is that it allows you to bypass traditional banks or other middlemen. This means that you can avoid high transaction fees, especially when it comes to fees related to credit card transactions.
Accepting cryptocurrency can also potentially increase your customer base, especially if you deal with international customers. Cryptocurrency, unlike traditional fiat money, is a borderless currency. This allows businesses that accept cryptocurrency to avoid dealing with exchange rates. As long as your customer has Internet access, they can do business with you from anywhere in the world.
Another coveted benefit for businesses is that cryptocurrency allows for near-instant transactions. Transactions that may usually take several days to clear, with large amounts of money at stake, can go through almost immediately with cryptocurrency. This way of making transactions quick and effortless is a key part of ensuring repeat business.
Of course, these are only some of the benefits. There are some non-tangible benefits as well: you’ll likely be attracting a younger customer base, and your business may be seen as more forward-thinking. Having said that, there are a couple of issues to tackle when it comes to accepting cryptocurrency.
Your Customers May Not Use Cryptocurrency
Depending on your industry or the size of your business, you may find that the number of your customers who actually use cryptocurrency isn’t all that large. Although many can see the potential of cryptocurrency as an investment, its volatility means that some are only just beginning to experiment with using it as a form of payment for goods and services.
On the other hand, accepting cryptocurrency may allow you to capture a unique segment of the market: those who are underbanked. Not only will this allow you to broaden your customer base, but you can do so without turning away your existing customers.
You Will Need to Educate Your Staff on Cryptocurrency
Cryptocurrency can be a hard concept to grasp in and of itself, and the technology around it even more nebulous. If you choose to accept cryptocurrency, you will likely have to spend time and resources on training your staff on the ins-and-outs of cryptocurrency. Most importantly, you will need to have their buy-in and support.
Your staff on the frontline will need to come to grips with the technology that comes with accepting cryptocurrency. This will mean becoming familiar with different types of digital wallets. These digital wallets come in hard and soft wallet varieties, and your frontline staff may need to know how to handle both types. You will also need to integrate the option to pay with cryptocurrency into your point of sales system, and make sure your staff is trained on how to complete cryptocurrency transactions.
Once you’ve decided to allow cryptocurrency payments, remember that your frontline staff will be the ones directly promoting your business’s acceptance of cryptocurrency to your customers. You’ll want to make sure that your staff is fully behind accepting cryptocurrency and will actively encourage your customers to pay with it.
On the back end, your IT and finance staff will need to be trained on the implications of cryptocurrency as well. For your IT staff, they will need to understand the ins and outs of blockchain technology. As for your finance staff, they will need to understand the different tax laws surrounding cryptocurrency.
Your Cryptocurrency Policy Needs to be Flexible
Since cryptocurrency is largely unregulated, it remains highly volatile. While many large companies are looking for ways to stabilize the price of cryptocurrency this is still a work in progress. On top of that, some forms of cryptocurrency are more volatile than others. Until the price of cryptocurrency stabilizes, you will need to decide which types of cryptocurrencies you accept and be ready to regularly review which ones you choose to accept.
Lawmakers are also beginning to draft regulations surrounding cryptocurrency. This means that your business will need to remain flexible enough to accommodate new laws and regulations surrounding cryptocurrency. Again, a regular review of your cryptocurrency policy will be needed to ensure your business is keeping up with the latest laws and regulations.
You Will Need to Understand the Security Challenges of Cryptocurrency
While blockchain technology makes it difficult to make fraudulent transactions with cryptocurrency, there are still some challenges when it comes to turning cryptocurrency into traditional fiat money. Generally, cryptocurrency is turned into fiat money through crypto exchanges, but giving your cryptocurrency to a third party can leave your money vulnerable to theft.
Having said that, there are several ways to work around this security challenge. You can move large sums of cryptocurrency into an offline hard wallet to protect it from threats. Furthermore, some companies are making strides in eliminating this security vulnerability by allowing both sellers and buyers to directly choose which currency they will use. For example, a buyer may choose to purchase your product using Bitcoin, while you can choose to accept the payment in U.S. dollars.
You Will Need to Stay Flexible
While cryptocurrency is beginning to gain more of a foothold, much of it is still in a state of flux. While businesses who choose to accept cryptocurrency will take on a certain amount of risk, much of it can be mitigated by constantly updating your knowledge regarding cryptocurrency and keeping you and your team flexible. Keep this in mind, and your business can take advantage of the growing popularity of cryptocurrency.
Ian Kane is the Co-Founder at Unbanked, a global fin-tech platform built on blockchain. Kane has worked in technology & digital media for over 10 years with a heavy focus on business development, sales, and strategy. His diverse professional background enables him to bring unique insight and experience to every challenge he takes on.