With the proliferation of web-based mobile technology, consumers have come to expect a variety of digital payment options. From online payment platforms, such as PayPal and Venmo, to mobile wallet services like Apple Pay and Google Wallet, today’s business owners have a number of different payment systems to choose from.
But perhaps the most innovative digital payment method is cryptocurrency. Starting with Bitcoin in 2009, there are currently more than 1,300 different forms of cryptocurrency in circulation, with a total market value of nearly $600 billion.
While some view cryptocurrency primarily as an investment vehicle, consumers are increasingly using it to purchase products and services. Indeed, a 2018 study by the Imperial College of London found that crypto is set to become a mainstream payment method within the next decade.
If you’re looking to capitalize on this growing trend, here are 4 key benefits you stand to gain by adopting cryptocurrency as a payment option.
1. Reduced processing fees
When you accept credit card payments, the processing companies tack on an additional 3% to 5% processing fee to each transaction. The same is also true for other payment methods such as PayPal and Stripe. In fact, in 2017 alone, American businesses paid some $90 billion in credit card processing fees.
However, because cryptocurrency payments pass directly from customer to merchant without the need for intermediaries, such fees are dramatically reduced, if not eliminated altogether. In fact, when fees are added to crypto payments, they generally run between 0.5% to 1% per transaction.
By offering cryptocurrency as a payment option, you can save significant money on each sale and pass that savings along to your customers with lower prices.
2. No disputed payments
Another hassle of credit cards are chargebacks. Chargebacks occur when an individual purchases your products or services and then disputes those charges with their credit card company, often claiming the transaction was fraudulent. Though it’s not impossible to fight chargebacks, doing so can take a lot of time and effort.
But just like paying with cash, crypto transactions are final and cannot be disputed by a customer, totally eliminating the risk of chargebacks, fraudulent or otherwise. Moreover, the blockchain technology cryptocurrency employs verifies that funds are available before the transaction is complete, making it practically impossible for customers to make a purchase without the funds in their account to cover it.
3. Enhanced security
Whether made at the point of sale, over the phone, or online, both credit- and debit-card payments are a tempting target for frauds and identity thieves. And since they lack the security resources larger companies employ, small businesses are among the most frequent victims of such crimes.
The risk for identity theft and fraud can even lead some customers to shy away from making purchases, especially those made using online storefronts. For instance, a recent study found that 17% of consumers decided not to make on online purchase due to security concerns, and another 18% failed to make a purchase because the company asked for too much personal data.
Yet when making cryptocurrency payments, customers aren’t required to share any personal data—payments are completely anonymous—so there isn’t any identifying information for hackers to steal. Indeed, the anonymous nature of cryptocurrency is one of its biggest draws for people who place a high value on privacy. In fact, some choose cryptocurrency as their preferred payment method for the simple fact there’s no way to identify the purchaser.
4. Expand your customer base
Adding crypto as a payment option could attract a whole new set of customers, particularly those who are die-hard fans of the technology. Indeed, there are a growing number of people who specifically seek out companies that accept digital currencies, and you can break into this burgeoning customer base.
By adopting this new payment method sooner rather than later, you can also gain a leg up on competitors who don’t accept crypto, forcing them to play catch-up with you down the road. And with more and more brands, organizations, and financial firms accepting digital currency every day, it’s only a matter of time before crypto payments become the rule, rather than the exception.
Given how far and fast digital currency has advanced, tech-savvy entrepreneurs should give this new payment technology serious consideration. If you’re ready to make cryptocurrency a part of your business, start by consulting with your Family Business Lawyers®. We can help you navigate the various legal, financial, and tax issues related to cryptocurrency transactions, so you can achieve these benefits without any unnecessary risk.
This article is a service of the Family Business Lawyers® at Griffin | A Professional Law Corp. We offer a wide array of business legal services and can help you make the wisest business choices throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.