Cryptocurrency can be intimidating, and the thought of accepting it as a payment method is virtually implausible for small businesses. The industry is plagued with tales of rug pulls and unmanageable volatility, while payments are said to be complex and wildly prone to human error.
While there are elements of truth to all of these, the industry has matured a lot over recent years. Software like crypto wallets has improved, reducing the risk of mistakes and making payments more intuitive. Payment gateways can deal with cryptocurrency payments on behalf of small businesses and some exchanges are regulated by securities bodies.
This leaves small businesses in a strong position to accept crypto and take advantage of the benefits this innovative payment technology has to offer.
1. Profit From Price Increases
Cryptocurrency is volatile, and that does carry risk. But, it also offers potential for savvy businesses. Businesses can build a strategic reserve while investing in new currencies.
In his review latest Uniswap additions – what’s hot, crypto content writer Kosta Kostadinov identifies some of the most exciting new coins launching on decentralized exchanges: coins that have the potential to post significant gains.
2. Accept Global Payments
Accepting fiat payments from overseas typically means that either the seller has to accept payments and then convert them to their local currency or expect individual buyers to convert payments money before sending payments.
Cryptocurrency is a global currency and while it does need converting before it can be spent locally, businesses can retain the currency and use it to make purchases of their own. Or retain it as a hedge against inflation.
3. Protect Against Inflationary Rises
Local currencies are prone to inflation while fluctuations can be caused by economic policies, political decisions, and other factors out of the business’s control. Alternative investments, which include cryptocurrency, can act as a hedge against inflation and can protect businesses against typical price fluctuations.
This does mean exposure to volatile cryptocurrency prices, but through careful management and diversification of the crypto portfolio, businesses can enjoy economic protection by holding a portion of their assets in Bitcoin and other digital currencies.
4. Reduce Payment Processing Fees
Credit card and bank fees can be amongst a business’s biggest outgoings. While 3% of transactions might not sound like a lot, this is only the baseline figure when considering credit card payments. The addition of management fees, chargeback fees, and other administrative fees means this fee can increase.
And, even at 3%, that can amount to businesses losing thousands of dollars every month. Cryptocurrency payments cost a fraction of that fee and are actually usually paid by the sender. There are no chargeback fees, and payment fraud is less common thanks to the security of crypto.
5. Enjoy Improved Security
That security is built into cryptocurrency in the form of advanced cryptographic techniques. Payments are almost impossible to steal and while payments do display wallet addresses, they do not include personal details, and privacy coins can be used to further enhance the anonymity of payments and the security of both the sender and recipient.
Even fraudulent claims, including payment fraud and chargeback fraud, are difficult because records are immutable and cannot be reversed.
6. Benefit From Improved Payment Settlement Times
Transactions are immutable because there are no centralized groups or parties managing payments. Traditional payments rely on banks and other financial institutions to manage the payments. They ensure payment details are correct and then route the payment through to the recipient’s account.
Cryptocurrency, instead, relies on automated smart contracts. As soon as requisite terms are met, payments are processed, and rather than a processing time of up to five working days, as is seen with some traditional payment methods, crypto transactions are complete in a matter of minutes. Or even seconds.
7. Benefit From Innovation
The smart contracts used in crypto payments not only speed the process up, but they automate tasks and can be used to detect payments and other requirements. As the industry has evolved and the market has matured, businesses and decentralized app providers are finding increasingly innovative ways to use the technology.
Crypto itself is considered innovative, and when you consider the possibilities of tokenizing your supply chain, offering governance tokens to clients, and jumping on DeFi lending platforms, there are a lot of ways a small business can benefit.
8. Raise Capital Through Innovative Crypto Products
Fan tokens have become very popular with sports teams, leagues, and individual players. Supporters can buy tokens launched by these groups. They are typically given access to benefits or governance.
Benefits can include meet-and-greet opportunities. Governance might include the opportunity to vote on team kits or other important decisions. It isn’t just the sports industry that can use cryptocurrency in this way, either. Small businesses can establish their own tokens, tokenize physical products, create non-fungible collectible tokens, or even establish and sell their own cryptocurrency.
9. Attract A Broader Customer Base
The crypto industry is quite a tight-knit community. While acceptance of Bitcoin and other coins is increasing, it is still considered unusual for businesses to accept crypto. Organizations that do accept crypto can become well-known among individual users and other crypto-forward businesses, opening up a whole new potential market.
Furthermore, the borderless payment method means that you can accept customers from around the world, including the unbanked and underbanked citizens who do not have access to even basic banking facilities.
Conclusion
Cryptocurrency is still new and innovative, but it has matured in recent years. It is easier than ever to accept and hold crypto payments, with new wallets and payment gateways launching regularly. Businesses that are worried about the high levels of volatility in the market can accept and hold tethered stablecoins, which are tied to the value of the dollar or other physical assets.
And, by accepting payments in cryptocurrency, small businesses can brand themselves as innovative while introducing innovation into their daily business efforts.
