If you’re a business owner, you already know how important the user experience is when making a sale. You want to make it as easy as possible for a customer to checkout, with a range of online payment options. Bitcoin payments are becoming increasingly popular, but are they worth implementing into your checkout system? Here’s what to know about cryptocurrency and small business payments.
How do Bitcoin payments work?
Bitcoin payments function the same way as many other types of cryptocurrency. They use a technology called the blockchain to keep transactions secure. Customers can purchase bitcoins (or other cryptocurrencies) using the currency of their choice, keeping the coins in a designated electronic wallet. When the customer checks out, they can use what’s in the digital wallet to pay for their products.
As the seller, you can use a bitcoin payments service to convert these into the currency of your choice. The money is then transferred to your usual business bank account.
The benefits of cryptocurrency
More and more businesses are using cryptocurrency, including big names like Microsoft and Expedia. PayPal has even added Bitcoin to its usual payment options. There are several benefits of cryptocurrency for small businesses:
1. Lower transaction fees
There are fewer fees associated with cryptocurrency in comparison to small business payments that use credit cards.
2. Increased security
Because of its decentralised nature, cryptocurrency protects merchants against fraud. There aren’t any third parties that can cancel your online payments. The blockchain stops customers without appropriate funds to make a payment, reducing the likelihood of time-wasting chargebacks.
3. Nearly instant processing
There’s no need to wait for funds to clear with Bitcoin payments or other types of cryptocurrency. While bank transfers can take several working days, a crypto payment is received and processed in real-time.
4. International marketplace
One of the biggest benefits to using cryptocurrency is that it throws open the doors to new markets. You can easily take payments from buyers living in any country, with a universal currency that can be converted into GBP at your end. This can boost business revenue and encourage growth.
The risks of cryptocurrency
At the same time, there are a few risks to consider with this relatively new form of technology. Before you add cryptocurrency to your list of accepted small business payments, consider the following.
1. Requires customers to adapt to new technologies
For tech-averse customers, Bitcoin payments may not be ideal because it requires some understanding of something that’s still new. Customers will need to set up their own digital wallet to buy and use cryptocurrency. If your business caters to a traditional audience or skews older, it may not be worth enabling this type of payment just yet.
2. Market volatility
Perhaps the biggest risk is market volatility. There’s a wide range of cryptocurrency companies out there, with some currencies doing better than others. The unpredictability of the market might make it risky to hold company cash in cryptocurrency, but fortunately you can make a quick exchange to GBP upon receiving payments.
The future of cryptocurrency for small businesses
While novelty and volatility are part of what make cryptocurrency so exciting to traders, this element of risk can be off-putting to small businesses. You can reduce risk by researching cryptocurrency companies carefully before determining which you will accept. It’s also important to realise that regulation is rapidly changing, so there may be more merchant protections put into place over time.
Ultimately, the future of cryptocurrency looks promising both for small businesses and consumers alike. Adoption is rapidly increasing, and as more big companies like Microsoft start to accept crypto as payment it’s likely that smaller businesses will follow suit. Furthermore, there are an increasing number of platforms that help manage cryptocurrency payments on your behalf to take all risk out of the equation. The ability to expand your brand’s reach into international markets alone makes it well worth exploring.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.