It is safe to say that cryptocurrencies are no longer a fad. It has only exploded in popularity in just the last decade. As more users are using crypto to make their payments, businesses would do well to adopt cryptocurrency as another payment method. Not only will you draw forward-thinking customers, tapping into a new niche, but your customer base will continue to expand.
The Reasons Why Customers Prefer To Pay With Crypto
A study conducted by the University of Chicago found that 13% of Americans trade cryptocurrency. There are those holders of crypto who take advantage of the market’s volatility to boost their wealth by trading.
Then there is a growing community of crypto users who want to take part in decentralized finance (Defi) as well as non-fungible tokens (NFTs). They are firm believers in investing in a new infrastructure where traditional banks and credit card networks are completely removed from payment transactions.
So there are cryptocurrency users that prefer to pay for their goods and services by using crypto like actual currency. Businesses stand to gain substantially if they can tap into this growing, forward-thinking niche.
Why Get A Cryptocurrency Merchant Account?
Since its introduction to the market, cryptocurrency has been met with absolute derision from the financial services industry. The main reasons include its volatility and the foggy regulations that the government has been trying to implement.
As a result, there are many things about cryptocurrency that are not straightforward, discouraging many traditional financial institutions from accepting and processing these digital currencies as payment.
The aforementioned reasons are what make crypto fall under the high-risk category. As a result, merchants that wish to process crypto payments would need to seek the services of a high-risk merchant that specializes in crypto processing.
By opening a crypto merchant account from a trustworthy and knowledgeable provider, you will be offered a secure vehicle through which you can process crypto payments quickly and securely.
Downsides To Accepting Cryptocurrency
It would be unfair to businesses if we only gave attention to all the advantages of accepting crypto without also presenting the downsides.
And downsides crypto has.
Although accepting crypto has an enormous amount of potential to help your business tap into new streams of revenue, it is still considered a “Wild West” type of market.
Before you begin accepting crypto payments, here are a few issues to keep in mind.
1. It’s Volatile
The volatility of cryptocurrency is what draws savvy investors to take advantage of the potential for great gains in a short amount of time. However, when it comes to accepting cryptocurrency as currency, this volatility becomes a problem.
When it comes to cashing out, there’s a potential for making massive gains as well as suffering incredible losses.
If you do decide to accept crypto as payment, you will need to have a system where your prices can be updated in “real-time”. Furthermore, you will need to build yourself a tolerance for risk or use a gateway that will protect you from it.
2. Vague Tax Laws
It seems like Congress wants to step in and provide “guidance” when it comes to crypto taxes, but for now, it’s a bit of a nuisance. Currently, most tax preparers have no clue as to how to even handle crypto.
When it comes to mining and staking, it is yet to be determined how the IRS will handle this. Right now, the IRS treats mining as a “taxable event”, where you are responsible for paying a percentage of the crypto’s fair market value at the time it was created.
This works best for Bitcoin mining, not so much for staking. Staking is when coins can be created hundreds of times in a year, sometimes more.
3. Hard To Access Records
Although there is a “built-in-record” for every transaction, this vital information is not as easily accessed as, say, your monthly credit card sales. Yet, it is essential to keep track of all of your crypto payment processing for both investment and tax reasons.
4. It’s Final
The positive and negative about cryptocurrency transactions is that they are final and cannot be reversed. That means you won’t have a system for chargebacks or disputes. Although that can be good news for the merchant, it means that you would need to handle all requests for refunds yourself.
Take time to figure out what kind of policies you will implement to manage all requests for refunds.
5. Volatile Network Fees
If having to deal with crypto’s value isn’t enough, you now must contend with the cost of making a transaction on the network. Network fees tend to spike when there is an increase in activity. Bitcoin and Ethereum are known to have high transaction fees.
When it comes to high transaction fees, many crypto users may be discouraged from paying with crypto.
Typically, the payer is responsible for paying all the transaction fees at the time of the transaction and in the currency that it is being transacted.
6. Security Concerns
Security is a continuous concern when it comes to blockchains. Every network has its security system. However, when it comes to smaller networks, they are more prone to what is called, “51% attacks.” This is when one person or a group of people control over 51% of a network’s mining.
Networks are also vulnerable to shutdowns as a result of bugs or overload. Also, you need to make sure that either you or a trusted party has the security keys for all of your crypto.
Cryptocurrency Is The Future Of Payments
Society has revealed its growing demand for both “digital assets” as well as “instant payments.” The official financial sector has failed to meet these customer demands and this important gap is being filled by the “disruptors” of the financial payment industry.