According to Gemini, a cryptocurrency exchange, close to 21 million Americans (roughly 14%) actually own cryptocurrency. Also, new findings from The Ascent’s research revealed that more than 50 million Americans, who have never owned cryptocurrency before, are planning to do so this year.
Although a fairly wide knowledge gap exists for most Americans when it comes to cryptocurrency, it is clear that the interest in this innovative digital currency continues to grow.
Businesses of all sizes have already adopted cryptocurrency as a form of payment. Major companies such as Microsoft, PayPal, and Starbucks have already embraced the acceptance of cryptocurrencies. Amazon and Walmart are also following suit.
What about small businesses? Could they benefit from accepting cryptocurrency payments?
Should Small Businesses Accept Cryptocurrency Payments?
Accepting cryptocurrency as payment has its benefits. The biggest benefit is that it offers its customers security. Security has been a sore spot for merchants for some time now. Based on the findings of Identity Theft Resource, for the year 2017, data breaches reached their highest peak for businesses that stored sensitive customer information.
The advantage of using cryptocurrency is that the customer’s data is not stored in a “centralized hub”. All banking information is kept in the customer’s wallet and not held within the company’s server, where most breaches are likely to occur.
Another major benefit of using cryptocurrency is that all sales are final. Therefore, chargebacks will never be an issue. Here alone, you are looking at saving your bottom line from relentless chargeback fees, not to mention the ever-present threat of having your merchant account shut down due to overextending your chargeback ratio.
Here are more benefits to accepting cryptocurrency for your business:
- It benefits customers: There is no doubt that expanding your payment method offerings greatly expands your customer base. By accepting cryptocurrency as payment in your business, not only are you demonstrating a more forward-looking approach but you will draw the ever-growing customer base of crypto-enthusiasts.
- Safeguards merchants: The fact that cryptocurrency has a decentralized structure means that merchants are protected from chargebacks. Crypto payments are treated like cash payments. They are final as there is no third party that is available to reverse these charges.
- More sales: As cryptocurrency adoption continues to grow worldwide, there lies another opportunity for a business to expand its customer base. More countries are allowing the use of cryptocurrency as payment and therefore they would have access to pay for your goods, regardless of where they are located in the world. This means more revenue opportunities for your business.
- Transaction fees are lower: If you are a small business and accept credit card payments, then you know how much credit card fees can eat at your bottom line. Some credit card companies charge as much as 25 cents for every card swipe. In addition, they also charge 2% to 4% for every transaction. However, if you accept crypto as payments, these costs can come to about less than 1% for every transaction. If you take card payments, this can definitely make a difference.
Why Are Cryptocurrencies High-Risk?
Before you start approaching providers, you must know that cryptocurrencies are considered high-risk. Here are just some of the reasons:
- Regulations uncertain: Although the number of crypto users is growing each year, so is their surveillance by governments worldwide. Many are concerned about financial stability, financial crimes, and “monetary policy regulations.”
- Fluctuations in price: One of the biggest barriers to adoption by skeptics is the extreme fluctuation in price as compared to other “government-issued currencies.” This can pose a substantial amount of risks for companies that are in possession of these digital currencies.
- Not all crypto is the same: Although it has been discovered that the first digital currency could be traced back to the ’90s, as of this year, there are currently more than 10,000 cryptocurrencies in circulation. It is nearly impossible to comb through this substantial amount of digital currency to determine which are legit and which are to be ignored.
How To Open A Bitcoin Merchant Account
So now you’re convinced that accepting cryptocurrency as payment is not a flash in the pan, a passing trend, and something to completely ignore. So how do you get started and take cryptocurrency payments? Especially Bitcoin? You will need to open a Bitcoin Merchant Account.
When you find a trustworthy provider to partner up with, applying for a bitcoin merchant account could be similar to applying to any high-risk merchant account. Just know that, depending on the provider you choose, you will need to provide important documentation before you submit your application.
Here are just a few possible documentation requirements:
- Business bank statements (time frame up to the provider)
- Corporate documentation
- Passport of ID (copy)
- Letter from bank displaying the IBAN or Swift number, and showing business name
- Personal and business credit history
- A secure website
Once all documentation and the online application have been submitted, you will need to wait from one to a few days while underwriters review your application. Once approved, a representative from the company will walk you through the registration process. If the application and merchant solution includes a payment gateway, you will receive assistance with setting it up.
Choose Only The Best Bitcoin Merchant Account
When it comes to choosing the best provider for a bitcoin merchant account, it is up to the merchant to research extensively and ask plenty of questions.
There will be a variety of capabilities, resources, tools, and fees/rates to examine. A provider that has extensive knowledge in the cryptocurrency space is essential. With the ever-changing regulations, it is critical that the provider is up to speed in the crypto space.
Also, as this is a highly-controversial and high-risk space, make sure that your provider offers chargeback solutions and other anti-fraud tools to help your business and customers stay secure.