Cryptocurrency
The better option for high-risk businesses
Having options is one of the many beautiful benefits we are fortunate to have in the modern world. They intentionally allow us to satisfy our particular wants regardless of how different and complex our continual needs may be.
Options allow us to feel in control and typically motivate competition. They can encourage a business to lower its prices or improve the quality of its services and products.
Aiming to attend to all needs within both our personal and professional lives, remarkable advances in technology generously continue providing us with many more attractive options.
The thing is, when presented with all these alternative options, it can be challenging to determine what the ideal choice may be. If selecting the wrong choice when it comes to our personal needs, more often than not, we can overcome it quickly, move on, and consider another option. But when it comes to a business making the wrong decision, it can be extremely costly and can even result in a complete shutdown of operations.
Often, many decision-makers are apprehensive about making any significant change to their business because it poses a risk, the risk that the endeavor might fail. They like to remain the same because it is safe, and in that safety, there is a certainty. But there are many reasons to embrace change. So, forget old statements like “If it isn’t broken, don’t fix it!”… If we all thought like that, there would be no innovation or progress.
Key competitors will always be eagerly trying to gain as many customers as possible to proportionately increase their market share. So, it is only natural to carefully consider what innovative products, services, or processes can be implemented to stay ahead of fierce competition and increase revenue.
So, Where am I Going with all this?
Well, due to the hype around cryptocurrencies and Initial Coin Offerings (ICOs) in 2017, we saw the rise in Blockchain Technology, also known as Distributed Ledger Technology or (DLT).
Blockchain became nothing more than a buzzword and was voted the most overrated word of 2018 in a survey carried out by Media Post’s Research Intelligencer and rightly so. Every man and his dog were trying to launch an initial coin offering throughout 2017 and early 2018. Each was claiming they have the next best industry-disrupting idea utilizing blockchain technology.
Many projects launched massive marketing campaigns, raised millions of dollars, and had nothing to show. Others went off the radar altogether, which resulted in a considerable amount of distrust around anything blockchain and crypto-related.
Now many people prefer to use the term distributed ledger technology over blockchain, using them interchangeably. But although they share the same concept and purpose, they are not the same thing. As all blockchains are distributed ledgers, but not all distributed ledgers are blockchain.
A blockchain is a form of distributed ledger technology. The structure of a blockchain makes it distinct as the data on blockchains are grouped, organized in blocks which are then linked to one another and secured using cryptography.
The rise of blockchain technology has, of course, brought us many more options. We now have the opportunity to operate without governing bodies taking control of, or slowing down specific processes. The technology is set to change many key industries and provide considerable benefits to businesses that serve our needs.
Currently, some of the most attractive options in this area are those presented by the financial technology (fintech) industry. Because blockchain accommodates the use of cryptocurrency, which adequately provides a notable number of potential benefits, it is set to change the way transactions are made and received.
Now merchants can adopt payment systems that enable customers to pay for goods and services in cryptocurrency. Businesses are implementing this option as it solves many issues that have plagued them for a very long time.
It will still be sometime before this becomes the absolute norm. But slowly and surely, we can see it happening. You can see a list of leading companies and stores that accept the king of cryptocurrencies Bitcoin, by clicking HERE
For businesses that are in the high-risk category, receiving payment from their customers in cryptocurrency is the better option.
If identified as a high-risk merchant, you won’t qualify for traditional processing agreements. The third-party payment processor or acquiring bank (acquirer) which accepts and processes credit and debit card transactions on behalf of merchants, will accept liability for the increased risk associated with your business, which, of course, comes at a cost. The higher the risk, the higher the costs.
Accepting Cryptocurrency will Solve the Following Problems:
- Chargebacks
- The need for a rolling reserve
- High fees
- Settlement times
The risk associated with your business is typically calculated on how likely it is that your business will experience fraud and chargebacks. Chargebacks are a severe problem for merchants, not just those that are considered high-risk. It is a problem that is costing tens of billions of dollars every single year.
A rolling reserve is a strategy which allows the third party that processes your payments to hold a percentage of gross sales for a pre-defined time. The procedure is to save themselves and the merchant from financial loss due to chargebacks. But the strategy can have a severe and adverse effect on cash flow and make it difficult to compete with those in your industry.
A high-risk business will require a high-risk merchant account which will come with higher account fees and higher fees to process each transaction. These costs can easily amount to double the prices you would have for an account that is not high-risk.
Having to deal with a third party to process transactions can sometimes lead to longer settlement times. Many payment processors are often using an offshore merchant account, which can also be another reason for higher fees.
With cryptocurrency solving all these issues and enabling a merchant to receive their funds instantly, I am sure you can see why they are a better option.
Either way, major companies around the world are starting to accept cryptocurrencies as they are the future. Even the social media giant Facebook is aiming to launch its cryptocurrency (Libra) next year. Whether they succeed or fail, the list of those accepting cryptocurrency will undoubtedly continue to grow.
Are you a Business Owner and Identified as a High-risk Merchant?
If you are, perhaps it is time for you to take a serious look into how you can start accepting cryptocurrency from your customers.
