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A recent Visa survey has revealed that almost a quarter of small businesses plan to adopt cryptocurrency in 2022, seeing it as fundamental to future growth, with more than a third saying customers had asked if they could pay in digital currency.
So, what’s it all about? And how does it work?
Here, we’ve taken a closer look at everything SMEs need to know – and consider – when it comes to accepting digital currency, including the pros and cons, key opportunities and challenges.
A cryptocurrency is a form of digital money that can be used to make online purchases, just as you’d do with a debit or credit card, or using a money wallet, such as PayPal.
Cryptocurrency can also be exchanged into physical money, just like withdrawing funds from an ATM, and, as with conventional currency or investing your money into stocks and shares, the value of cryptocurrency can fluctuate up and down.
No, just as there are different currencies in different parts of the world, there are also different types of cryptocurrencies (albeit some have gained more notoriety than others).
The most commonly known cryptocurrencies at the time of writing include Bitcoin, Dogecoin and Ethereum. Bitcoin was actually the first cryptocurrency to launch back in 2009. Since then, many new cryptocurrencies have made their way to the market and it’s an area that’s fast evolving.
In terms of security, cryptocurrency is considered to be extremely safe. Your holdings are held in something called a blockchain, a type of technology that allows information to be recorded and stored, but not edited or destroyed.
Blockchains are decentralised records, held across several networks and locations. For many, this makes them a much safer option than traditional third-party payment systems.
Cryptocurrency is also encrypted by something called a private key, also referred to as a password. This is a unique set of alphabetical characters and numerals you need to access your cryptocurrency. It’s important you retain this key and keep it safe. You’ll need it to access your funds, but you only get a limited number of chances to input it correctly.
There have been several high profile cases in the news about people misplacing or forgetting their crypto keys, only to lose access to cryptocurrency worth millions. In that respect, your money is safe only if you remember your password!
Global brands, including Tesla, Microsoft, Starbucks, and PayPal are already accepting cryptocurrency as a form of payment for their products. And if Visa’s survey is anything to go by, an appetite and confidence among small businesses is growing too.
With that in mind, here are just some of the compelling reasons given in favour of small businesses accepting cryptocurrency as payment:
Unlike the fees applied to credit card payments, many crypto currencies offer very low transaction costs, which is great news for small businesses and presents a way to retain profits. (Just be aware that this is not the case for all currencies, so always do your homework and never assume).
No exchange rates
As cryptocurrency is held on a decentralised system it isn’t tied to any local currency. This makes it an extremely attractive currency to accept if your business trades in multiple countries, accepts purchases from international customers, or is looking to expand globally. With no exchange rates to consider, you never have to worry about converting payments from one local currency to another.
Transactions made using cryptocurrency process much faster than other types of digital payment method. This means that instead of waiting for the funds to clear, cryptocurrency payments can be in your account almost instantly, even if the customer is based abroad.
Unlike credit cards, when making a payment by cryptocurrency there’s no way of reversing the transaction. This protects small businesses from instances of chargeback fraud, common with online purchases made using cards. Accepting payment by cryptocurrency gives you the reassurance that a customer won’t be able to request a reverse of their payment after receiving their goods.
The value can increase
As we touched on earlier, the value of cryptocurrency will fluctuate and, for some, this has resulted in huge financial gains – for example, where a few thousand dollars’ worth of Bitcoin have morphed into millions. Of course, the flip side of a non-fixed currency means that the value can decrease too, so it isn’t without its risks. That being said, many people have been attracted to cryptocurrency because the levels of growth in recent years have far outweighed interest rates being offered by mainstream banks and building societies.
You can attract new customers
Some international buyers may be unable to purchase from you simply because they’re unable to pay using conventional payment methods your business accepts. Adding cryptocurrency to your choice of payment options allows you to reach a wider demographic of shoppers, helping you to grow while building a loyal customer base.
Accepting payment in cryptocurrency is actually very easy. All you need is a cryptocurrency payment provider that can integrate their technology into your e-commerce platform.
Once the ability to accept crypto payment is embedded into your website, your customers will be able to shop online in the usual way and choose the option to pay by cryptocurrency at the checkout.
Not all providers accept all forms of cryptocurrency however, and some only process transactions from selected countries, so it’s worth doing your homework before committing, in order to determine which provider is the right fit for your business.
Some of the most popular cryptocurrency payment providers include Coinbase, NOWpayments, coingate, and bitpay but the list is extensive. When making up your mind, be sure to take into account any fees or charges you’ll incur for using the platform, as this will eat into your profits.
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