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Everything Small Businesses Should Know About Cryptocurrency

Cryptocurrency has become a medium of exchange that is actively traded 24/7. Crypto is a digital or virtual currency that enables online payments without the interference of third-party processors. Cryptocurrency has a decentralised structure which allows it to exist without regulation or backing by any government or central authorities. This has become attractive to consumers as they no longer want to depend on an organisation to safeguard their money, and with crypto, the middleman in a transaction is removed.

With its prevalence in mainstream conversation, crypto has become widely accepted as a form of payment. Small businesses have started accepting cryptocurrency for multiple reasons, such as lower transaction fees, increased sales, merchant protection, and convenience for customers. While there are numerous benefits, it does however come with some risks.

The Benefits of Accepting Cryptocurrency

There are several perks for a business accepting cryptocurrency, which is why crypto has experienced such a large-scale adoption.

  1. Lower Transaction Fees 

Without a central intermediary, there are no credit card processing fees for small business owners. These costs can add up when you are charged a fee for each swipe of a card plus a percentage of the transaction total. How many times have you entered a small store to find that they have credit card purchase minimums on their POS system? Using crypto as a payment method can significantly reduce these small costs, which every small business is sensitive to.  

  1. Merchant Protection

Similar to cash transactions, as crypto is decentralised, there is no third-party intervention to reverse charges. The merchant is protected from all types of payment fraud and fraudulent chargebacks. Cryptocurrency exchanges are final. 

  1. Increase Sales 

Crypto can improve the bottom line of your business by opening you up to a whole new market. An increase in sales occurs when small businesses open their doors and expand to international buyers who previously could not access their products or services. As a bonus, not only does it boost your bottom line, but it also positively impacts your reputation.

  1. Customer Convenience 

Digital wallets are becoming increasingly popular, and there is no sign of it going backwards. By offering cryptocurrency as a payment option to your customers, you are adding another method of payment that is widely preferred. Your customer’s personal information gains an extra layer of protection which sequently increases their trust and confidence in your business. Where a customer may have turned away, having crypto as an option got them to stay. 

The Risks of Cryptocurrency

So what is the downfall of this medium of exchange?

  1. Technical Barriers 

If you are unfamiliar with digital currency exchange, setting up cryptocurrency acceptance will be a learning curve. To accept crypto payments from customers, you will have to set up a digital wallet on a digital currency exchange. While a small business owner will need to learn the technology, this is something that you should familiarise yourself with as digital currencies are becoming more prevalent.

  1. Can Be Volatile

Cryptocurrencies’ volatile nature lies in the fact that their value can rise and drop without forewarning. A way to protect yourself against this volatility is to have an “arrangement for translating your cryptocurrency back into your currency of record”, as advised by Ariel Wolanow, managing director of consulting firm Finserv Experts. Merchant services companies can be engaged to help small businesses immediately exchange digital currency for cash value. This way, crypto payments translate to the value of the current currency within the same instant, removing any gamble.

  1. Security Issues

While credit card numbers cannot be stolen, digital wallets can be targeted by cybercriminals if protective measures are not put in place. The risk is that crypto is not backed or insured the way other currencies are. This is why companies are actively working on ways to protect themselves from cryptocurrency security issues. Some are exploring insurance policies to back crypto, while others are implementing double verification methods to protect wallet security.

  1. Regulatory Uncertainty

As crypto has made its way into mainstream society, lawmakers are looking at drafting new regulations. With upcoming changes, there will be an evolution in the cryptocurrency ecosystem, so business owners must be ready to adapt to the changes. The government is particularly looking at how businesses will report gains and pay taxes on crypto transactions.

With the trajectory of the technology, customers are opting for cryptocurrency as their preferred payment option. Small business owners should keep in mind that with these potential risks, they may experience some obstacles, which is why it’s important to learn about the technology and set it up correctly for your business. One thing is for sure, cryptocurrency is here to stay.