Crypto Payments Unleashed: Embracing Opportunities and Navigating Challenges for Forward-Thinking Merchants

Necessity breeds innovation: It is crucial in difficult times to come up with innovative and creative solutions, and as the world was affected by the pandemic, merchants were able to show resilience and ultimately succeed in their important task of providing people with their needs and wants.

We can all agree that these were trying times and made some of us into HODLers, but as the WHO recently determined that Covid-19 “no longer constitutes a public health emergency of international concern” we can all breathe a little easier and seek more ways to boost businesses and encourage sales!

As crypto adoption continues to grow and crypto payments continue to be accepted as payment methods, many wonder: Would it be a good idea to accept cryptocurrency payments as part of my business’s payment methods? During my time at Pundi X Labs, I have witnessed the tremendous potential of cryptocurrencies to revolutionize the way we conduct transactions. So let’s delve into the benefits and challenges of accepting crypto payments:

Become a pioneer!

In this digital age, businesses must remain competitive and differentiate themselves from their competitors. As the world adopts crypto, accepting crypto payments can position merchants at the forefront of this financial revolution and make them stand out from the rest easily.

Client base expansion

By accepting crypto payments, merchants can tap into new markets. The merchant can appeal to “tech-savvy” clients like crypto enthusiasts as well as international travelers, who are on the lookout for uses for their cryptocurrency.

Lower transaction fees

Credit card transaction fees of up to 5% versus crypto transaction fees which are generally significantly lower. This creates a big advantage for the merchant by reducing costs, increasing their profit margin, and helping their customers save money.

Faster transactions

How long does it take you to receive credit card payments and bank transfers? We know it usually takes days. With crypto transactions, the money can arrive in your wallet in minutes.

Enhanced trust for both customer and business

The use of traditional payment methods like credit cards involves sensitive customer information making businesses vulnerable to data breaches and fraud. Using crypto as a payment method significantly reduces this risk as it uses cryptographic techniques ensuring safe and immutable transactions.

Additionally, if the merchant handles FIAT and considers itself at the risk of theft, crypto payments reduce the need to keep FIAT on site and by using good practices and a good service provider no one other than the person in charge will be able to make transfers and withdrawals. As every transaction is recorded on the blockchain it is possible to trace movement of funds giving the merchant peace of mind.

Easy integration

In many markets, accepting crypto payments has become relatively easy as many service providers offer user-friendly tools that make it simple for merchants to integrate. Merchants are advised to do a thorough research of the crypto payment solutions already available in the market to make a well-considered decision about which of them fits their business the best.

With all these benefits to accepting crypto payments, one needs to also consider the challenges.

Regulatory uncertainty

Despite cryptocurrency being around for over a decade, its regulation has been slow to develop and varies from jurisdiction to jurisdiction. The evolving nature of the regulatory landscape surrounding crypto makes compliance a tough job and requires you to be aware of specific regulatory changes in your jurisdiction. Thorough research, monitoring, and a clear understanding of the legal status of cryptocurrency, crypto payments as well as AML, and KYC requirements in your jurisdiction is compulsory to remain compliant.

When assessing whether a merchant should provide crypto payment solutions to their customers, merchants need to ask themselves some questions: Are cryptocurrencies and crypto payments legal in my jurisdiction? Do I need a license or registration to provide these services? If yes, which authority grants these licenses or manages registration? What’s the cost for a license or registration? Does my preferred crypto payment solution provider need to be licensed or registered in my country? If yes, are they?

It goes without saying that it’s advisable for merchants to always seek professional advice to ensure that their actions comply with applicable laws, regulations, and best practices related to accepting crypto payments.

Price volatility

Price volatility is a natural characteristic of cryptocurrencies. Therefore, merchants and anyone using crypto needs to implement strategies to manage this challenge. Nowadays, there are solutions like Pundi X’s XPOS that enables the merchant to accept crypto payments while protecting the merchant from price volatility by immediately converting their crypto into stablecoins to mitigate against potential losses.

Know-how

Being well informed about cryptocurrencies can be challenging for both the merchant and the customer. The merchant may discover that while accepting crypto payments is easy, it’s significantly more but to properly take care of your digital assets, education is key. Ignorance of processes and best practices may lead to human error which may cause the loss of the digital assets.

Merchants when trying to promote crypto payments may also encounter hesitation from customers unfamiliar with crypto. So having educational resources in hand, providing clear instructions, and promoting incentives to do crypto payments can help increase customer adoption and confidence in doing crypto payments.

Financial and Tributary considerations

When accepting crypto payments, merchants should also consider the financial implications it may bring to their business. It is advisable for merchants to also seek financial and tax professional advice to be aware if there are any regulations concerning crypto transactions and payments. Some topics to keep in mind and inquire with your financial and tax professional are the tracking of crypto transactions, crypto currency conversions, taxation, and their reporting. Regarding the reporting of crypto payments, think in the lines of: Do I have the obligation to report crypto payments? Who do I report to? When and how often should I report these transactions? Who should report them? Are crypto payments taxed? etc.. Merchants should aim to first clear all their doubts so they can make educated decisions.

In the rapidly evolving landscape of commerce, by accepting crypto payments merchants can now unlock a vast number of opportunities such as expanding their customer base, reducing costs, and demonstrating their commitment to innovation. Nevertheless, education and consultation with legal and financial experts are strongly encouraged to take care of the business and remain compliant.

Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive to ensure the accuracy and reliability of the information presented, we make no representation or warranty, express or implied, regarding the completeness, accuracy, or suitability of the information for any particular purpose.

Accepting crypto payments involves legal and financial considerations that may vary depending on your jurisdiction and specific business circumstances. It is essential to consult with qualified legal, financial, and tax professionals before making any decisions or taking any actions related to accepting crypto payments.

As regulations regarding cryptocurrencies and crypto payments vary across jurisdictions, merchants should be aware of the legal and regulatory obligations, compliance requirements, and reporting obligations in their respective jurisdictions.

The decision to accept crypto payments should be made after careful consideration of your business’s specific circumstances, risk tolerance, and legal and financial obligations. It is recommended to seek professional advice tailored to your specific situation before making any decisions regarding accepting crypto payments.

In no event shall we be liable for any loss or damage arising directly or indirectly from the use of or reliance on the information provided in this article. We disclaim any liability for errors, omissions, or inaccuracies in the content. Any reliance you place on the information presented in this article is strictly at your own risk.

Please note that the legal and financial landscape surrounding cryptocurrencies and crypto payments is subject to change. It is important to stay informed about legal and regulatory developments and regularly review your compliance obligations.

Always conduct thorough research and seek professional advice to ensure that your actions align with applicable laws, regulations, and best practices related to accepting crypto payments.