Should You Accept Bitcoin as Payment Option on Your eCommerce Website?
The impact of Bitcoin on the world has larger echoes every day. It has got to the point that you’ll hear people talking about it wherever you go. Even your mom has probably considered investing into Bitcoin. The currency started out with a value of $0.6 back in 2009 and it grew to more than $16,000 in 2017. This tendency shows no signs of slowing down and has provided strong investment opportunities for everyone. Many have reported to have an 800% return on their investment, which is quite insane. But Bitcoin offers a lot more than just a good investment opportunity. It provides great opportunities for mainstream businesses as well.
Bitcoin is simply a better way to do transactions. You can forget about using it as an investment vehicle for now and focus more on the potential benefits it could bring to your business transactions. If you’re a business like Mercedes and receive daily transactions of $50,000, than you should stick with the practices you already have in place. But if you’re a small business, like a coffee shop or a convenience store that collects an average ticket of 5-10 dollars, than Bitcoin will prove to be an outstanding opportunity for you. Which is why in this article, we’re going to look at the benefits and potential risks involved with accepting Bitcoin and other crypto currencies for your eCommerce website.
The Benefits of Accepting Bitcoin and Other Cryptocurrencies
Faster Transaction Processing
Waiting for funds to make their way from your online account to your bank account is a time consuming process. It’s pretty frustrating and negatively affects your cash flow, which is where cryptocurrencies can help. The cash doesn’t have to go through any online payment processor or bank, it just moves from one account to another. There aren’t multiple banks holding up the process and delaying your cash from reaching you.
If you accept Bitcoin as a payment method, your cash flow will speed up and you’ll be able to reach your money once the customer bought something from your site.
Much Lower Transaction Costs
Since PayPal, Western Union or a bank isn’t there to play the role of the middle man, you’ll just get the money with a much lower transaction cost. While most middle men make you pay about 3% – 4% of the sent amount, you’ll pay an average 1% with cryptocurrencies. This is one of the reasons small merchants use Bitcoin to process their payments.
Small businesses have to pay higher credit card fees than Walmart or other larger companies. These companies can negotiate credit card fees, thanks to their massive size, but small companies can’t. With Bitcoin, small businesses can take their money back from credit card companies. A payment processor like Coinbase will charge a penny for a $1 transaction. Feel the difference?
Payment processors use the customers’ personal data in every transaction, which gives space for identity theft. Most hackers are constantly searching for ways to get their hands on such valuable information to make fake credit cards and conduct other frauds. This is theoretically impossible with Bitcoin, because Bitcoin transactions don’t leave data behind. It’s impossible to make fraudulent purchases with it, because every Bitcoin transaction has its own identification number which leaves a money trail. This makes double spending and frauds nearly impossible.
Though it is important to mention that Bitcoin exchanges like Coinbase do collect personal data from their users, they have nothing to do with federal and state regulations.
Easy International Transactions
Have you ever thought about how you could accept payments from Nigeria? With Bitcoin, it’s as easy as having someone handing the cash to you. If your business exports goods and services, or has to purchase them from other countries, cryptocurrencies make the payments as easy as it gets. They help you work your way around expensive foreign transaction fees, exchange rates and the other. Because every cryptocurrency is a global currency, they aren’t restricted by borders and restrictions. As long as both parties accept the cryptocurrency, let it be Bitcoin or Ethereum, everyone can get paid.
It’s Good For Your Publicity
Bitcoin is considered progressive and the club of die-hard cryptocurrency fans is only getting larger. If they buy your products with cryptocurrencies, they support said currency. This can be a major boost for your business. A general rule of the thumb is that the more currencies and payment methods you adopt, the more customers you’re going to attract. One of the main reasons for shopping cart abandonment is the lack of the payment option the customer prefers to use. Simply put, you’ll be taking more money off the table by accepting the all so popular Bitcoin as a payment method.
Every Bitcoin transaction is final. There are no chargebacks and no refunds, like there are in credit card purchases. Chargebacks occur if the buyer disputes the purchase made with their card. If they received defective goods or didn’t receive them at all, they can reclaim their money. Maybe he or she fell a victim to credit card fraud or identity theft and didn’t even know about the purchase in the first place.
After a chargeback, the credit card company withdraws the money from your account and places it back in to the customer’s but it also gets charged with an additional $10-$15 chargeback fee. But merchants are completely isolated from this possibility with Bitcoin transactions. All of the power is in their hands, which might be problematic for some customers. If a store uses Bitcoin transactions only, there is nothing protecting the customer.
Moving Along With Change
Bitcoin was the top currency in 2016 and continues to gain popularity every day. Its growth will only continue as people become more and more familiar with this cryptocurrency. There are also a lot of other cryptocurrencies on the rise, so it looks like there’s no stopping this wave of change. Instead of fighting against them, become one of the early adapters and reap the benefits. The fact that you accept cryptocurrencies will differentiate you from your competitors.
The Risks Involved With Using Bitcoin and Other Cryptocurrencies
Bitcoin is Not Fitted for Mainstream Yet
People are already using Bitcoin ATMs to buy and sell Bitcoin, but it will still take some time for Bitcoin to be completely accepted as a trusted payment method. Just look at PayPal for example. It took numerous years for it to become a trustworthy payment method and even then it partnered with eBay to move towards the mainstream. So there’s still a dire need for larger, forward thinking companies to lead the people towards the acceptance of Bitcoin as a common currency and payment method. The recent media attacks and Bitcoin exchange companies being hacked, sure didn’t help.
BitInstant’s CEO Charlie Shrem was one of those who recognized the opportunities in a decentralized currency and not in a good way. He was arrested for money laundering, which definitely didn’t help Bitcoin’s popularity.
Bitcoin can’t be corrupted though. Keep in mind that it’s the exchange service companies that became corrupt or end up getting hacked, not Bitcoin’s system. There are some security issues involved with Bitcoin, just as there are with any other online platform that exists.
Most people still see Bitcoin as an investment opportunity and would prefer holding it to make money, instead of spending it on goods. They would rather purchase them with regular currencies. Also, when they do try to spend it, they are often faced with high exchange fees. It might also take a long time to complete the transaction through some exchange services, which turns some people off.
Since there isn’t too much support for Bitcoin yet, few things actually motivate Merchants to invest in the infrastructure that is needed to accept Bitcoin.
It Isn’t Considered Stable Yet
Cryptocurrencies aren’t equally regulated yet. Some countries are trying to restrict cryptocurrency use, which would end up making its use problematic.
Planning is More Challenging with Cryptocurrencies
Because cryptocurrencies are 100% digital and decentralized, it makes much harder to make a financial statements with them. Figuring out your prices with a constantly fluctuating currency and determining your taxes can get quite difficult if a lot of your money moves in Bitcoin.
Not Many Applications Support It
While you can install a payment processor for your site with a few clicks, few applications allow you to do that with cryptocurrencies. There aren’t as many applications that can process virtual currencies, but there’s an ocean of apps that can process debit card transactions.
Even though there are some limitations that come with using Bitcoin, accepting payments for your business is very easy. You’ll still need to tie a debit card or credit card to a digital wallet that lets you buy and sell Bitcoin or accept it as a form of payment. You use Coinbase’s services for example. After that, you only have to place a Bitcoin payment button on your purchase page and you’re all set. It won’t take you more than 30 minutes to do. As an early adopter of this currency, you’ll get a lot more exposure, which will serve as a payoff for the risks you take with doing so.