Should I Accept Cryptocurrency on my eCommerce Store to increase Revenue?
Business owners may be unsure how exactly cryptocurrencies will affect their revenue and operations. There are reasons that it can affect the businesses in both positive and negative ways. However, the exact cause in which cryptocurrency will impact the business revenue widely depends on whether we are accepting it or not.
In the current scenario, international giants like Microsoft, Amazon and other reputed brands are started accepting payment through Bitcoin. These large-scale companies have encouraged small and medium business owners to follow the suit. Before accepting Bitcoin to your business, it is vital to understand how it can impact on your business by considering both positive and negative possibilities.
Positive Aspects of Cryptocurrency
Cryptocurrencies like Bitcoin have provided quicker and less expensive ways to accept customer payment when compared to conventional payment options like credit cards, wire transfers, and others. The transactions made through cryptocurrencies are diverting the balance of power away from the consumers and more towards the retailers.
● Each transition is final
Cryptocurrencies like Bitcoin follows Blockchain technology which blocks the transaction ensuring its authenticity. Each and every transaction which is made through cryptocurrency in final and one cannot alter it. Also, there is no way for the consumers to dispute a charge and to negotiate the sale. The retailers can able to better control their return policies and can get a complete relief from chargebacks other miscellaneous expense. This also secure fraud happened through fake credit cards.
● No Processing Fees
Every form of digital payment has a processing fee. It is because there is an intermediary that regulates the payment and takes a cut. Let’s take an example for better understanding. When you accept credit cards, you typically charge up to 3% by your credit card processing company. This is also the case with other digital platforms like PayPal and Stripe.
On the other note, cryptocurrencies do not have any processing fees as there is no intermediary. They are decentralized ledgers and they act as the peer to peer digital currency. As it is decentralized, you don’t have to pay anyone to facilitate the transactions. Thus, it helps your business by saving unnecessary costs and transaction fees. You can also offer products to your customers by lower prices.
Besides, you can also earn by exchanging bitcoins to your local currency. When converting cryptocurrency to the local currency, the exchanges will typically have a buy and sell policy. The exchange will buy your cryptocurrency from you at the selling price and then sell it to another user at the buy price. The difference between the buy price and sell price is what you can earn by exchanging the as the additional advantage of having bitcoins as the payment from consumers.
However, there are third-party services who are offering their cryptocurrency payment integration to the websites. You can pay around $30 for taking their services and accepting bitcoins as your payment gateway. Although they are already known for their transaction speed, this fess is a luxury rather than a necessity.
● More Options for consumers
By accepting cryptocurrency you are providing more payment options to your customers which improve the overall experience of your customers. In a recent survey, it is disclosed that the online consumers use as many as 5 options to initiate the payment. If you are accepting cryptocurrencies, then you are more likely to attract the worldwide customer base.
● High-speed transaction
The cryptocurrency transactions occur in real-time. It is clear the Bitcoin miners complete the authorization of the transaction in nearly 10 minutes maximum. It means that it can facilitate the transaction from one person’s wallet to another in just a few minutes. There is even cryptocurrency like Ethereum and Litecoin which are verifying the transaction in just 20 seconds. This means that the currency is deposited into your account in just 20 seconds or less.
This is much faster transaction than that of the credit card which takes 2 to 3 days to clear. Besides, retailers’ wallet converts cryptocurrency into their local currencies automatically and sends the equivalent cash directly into the bank accounts.
Negative Aspects of cryptocurrency
While it provides countless benefits, it also has potential cons. Unluckily, there are many ways that cryptocurrency can affect the businesses in a negative way. Their drawbacks surround the volatility and lack of regulation as the new form of currency.
● Unregulated Currency
Being a decentralized currency, it has no authority. The biggest advantage is also the biggest drawback in some ways. There are high risks that surround cryptocurrencies given that the coins are currently highly unregulated. Government and central banks are still unsure exactly what type of legislation they should pass for implementing the tax on cryptocurrency. Right now, the governments are also not sure to treat the cryptocurrency as cash or as property.
● Not legitimate in many countries
It is vital to consider that cryptocurrency is not legal in many countries. One of the biggest miners of Bitcoin, China has banned the currency due to the security reasons. Although the tax environment may change over the course of time, both domestic and international forms of tax can experience a change due to cryptocurrency. So, you should also keep check out the changing regulations of legality and taxations if you want to accept cryptocurrency.
● High Price Volatility
This is the major negative aspect which can impact the revenue of the business. It not only affects the volatility of individual cryptocurrencies but also includes the overall industries. The increasing popularity of Ethereum went through a flash crash on the GDAX exchange where it dropped from $319 to just $0.10 per coin in just a second.
The price volatility is something that offers a negative experience to the revenue of the business. Luckily, most of the merchant’s wallet converts coins to cash automatically in an attempt to avoid potential crashes. If a flash crash can happen in a matter of the second, your business might be forced to wait until the coins value recovers before converting to cash or else you might suffer massive losses.
Besides, only stores need to update their prices daily based on the currency value of cryptocurrency. However, you can add merchant wallets like CoinBase, BitPay to update the prices automatically, but you also have to pay the charges of $30 per month for accepting cryptocurrency payments for your transactions.
Should you accept Cryptocurrency?
There is a common thumb rule to consider while deciding to accept or not to accept the cryptocurrency is that you should accept if you are running a B2C business and consider it less while running a B2B business. This is because while consumers are using cryptocurrencies more and more, many businesses are less willing to pay their B2B partners in cryptocurrencies. Also, it is good to accept all kinds of payments including cryptocurrency, because most of the merchant wallet accounts accept all forms of coins and automatically convert their sales into local currency at just a minimum fee of $30, risking just a small amount of money for this facility.