In 2020, business owners are faced with many choices when starting out that simply didn’t exist a decade or two ago.
The digital age means that companies have never before had as many tools to communicate directly with their customers in such a worthwhile manner. One of the growing areas of businesses experimentation is with the way they allow consumers to pay.
Online businesses are beginning to take full advantage of the different kinds of payment methods that exist in a digital space afford. The question is, as we move forwards into an age of digital money, should you consider cryptocurrency payment methods for your online business?
What is Cryptocurrency?
Cryptocurrency has been around since Bitcoin was launched in 2009 to take advantage of the gap in the market for a decentralized currency that offered a safer and more secure way of handling finances that required no intermediary. Indeed, cryptocurrency has gained a huge amount of popularity since.
The best-known crypto coin today remains the initial offering of Bitcoin, and the value of Bitcoin is still often used to determine the trajectory of the cryptocurrency industry as a whole. In fact, monitoring Bitcoin’s value can help you gain a deeper understanding of the buoyancy of the industry. But with many other alternatives – Ethereum, Litecoin, Ripple – the field of cryptocurrency is growing, and the underlying ledger mechanisms tied to BTC and altcoins are also being deployed for a range of uses in the world of finance and payments.
For instance, Ripple has paired with Santander to deliver cross-border payment solutions, as the service is faster and safer than traditional methods. Moreover, many retailers accept Bitcoin as legal tender, including Microsoft and Expedia, while Ethereum’s inherent smart contract ability based on its ledger is being seriously considered by companies who want to ensure personal information and data are secure.
The Benefits of Cryptocurrency
Why would your business want to offer cryptocurrency? Offering cryptocurrency as a payment method could provide benefits for both the consumer and the business owner. The nature of the decentralized ledger and the privacy and security provided means that certain issues that may mar businesses, especially smaller ones, are eliminated through using cryptocurrencies.
Crypto payments could save business owners money in transactions, as the lack of an intermediary drastically reduces banking fees compared to, say, credit cards that can sometimes charge 5%. Moreover, cryptocurrency payments offer more finality than other kinds of payments, which can be disputed and withheld later.
Customers must have adequate funds to make the payment, which isn’t always required for debit or credit cards. Indeed, Visa is working on building up its Bitcoin credentials, with Zap raising £3.5 million for Bitcoin transactions.
For consumers, card payments online are susceptible to fraudsters and data being stolen.
But as cryptocurrency is anonymous, there is no personal data to steal. Moreover, cryptocurrency’s lack of ties to a national bank means it can facilitate easier payments for people who might be using different currencies. This helps standardize things, and ensures that businesses don’t have to juggle different kinds of currency payments from around the world and consumers don’t have to do complex mental maths to calculate exchange rates if using a business not based in their country.
The Hurdles in Crypto’s Way
There are two main hurdles that are preventing cryptocurrency from being on par with traditional finances. The first is a buzzword many assign to cryptocurrency that may cloud judgment for those who haven’t yet become acquainted with cryptos: volatility. Cryptocurrency detractors cite its unreliability and volatility compared to fiat money, but recent years have proven how standard currency (e.g. GBP, USD, EUR) can be subject to fluctuations too. Traditional currencies have experienced big fluctuations, which gives some vindication for crypto.
Legitimacy in the eyes of the mainstream is also a hurdle that crypto needs to be overcome. Many feel as though cryptocurrency requires a lot of technical or technological knowledge to get involved with it, which is untrue. But there could be a way to overcome this problem on the horizon, and it comes from Facebook.
Facebook’s Libra coin is expected to help propel cryptocurrency to the mainstream, with more people finding their way to the currency. Currently on shaky ground, Zuckerberg’s new project could end up changing the face of digital finance. Businesses could stand out if they already have the facility to accept cryptocurrency in place. The more people trading cryptocurrency, the greater the industry will be, so anything to further legitimize it will help.
Accepting cryptocurrency as a payment method could be beneficial for your business. You might not actually get many people opting to use the service, but it nevertheless sends a message about the kind of business you run. Offering digital payment methods shows a commitment to the future of technology and to ensuring consumers have choice. The gesture alone will be enough to show that you are determined to adopt and implement as many measures as possible to accommodate your consumer.