Should My Online Business Accept Cryptocurrency?
Cryptocurrency has increased in popularity. This article considers whether your business could benefit from adopting this type of payment.
There is no right or wrong answer here. This article will set out the benefits and risks businesses could face in accepting cryptocurrency as a type of payment.
What is cyptocurrency?
Many people have heard about cryptocurrency. However, understanding what cryptocurrency is can help business owners decide whether or not to accept it as a form of payment.
Cryptocurrency is a form of ‘decentralised’ currency, or ‘peer-to-peer’ money. This simply means that this currency is not regulated by banks or governments. Therefore the users of cryptocurrency are able to buy coins directly from coin sellers, without the need for a third party (a bank) to approve the transfer of the money.
To find out more about what cryptocurrency is and how it works, click here.
Benefits of accepting cryptocurrency as a form of payment:
Borderless money and instant payments:
The fact that cryptocurrency runs on a decentralised market means that it is borderless. Therefore, cryptocurrency payments can be sent and received instantly by international users. This means that your business will be able to accept payments from around the globe. This will open up your customer base to international customers you might not have been able to access. Furthermore, because this currency is borderless there is no need to calculate any exchange fees and currency changes from international customers. Thus, you could potentially access millions more customers with no fee restrictions. Also, there is no need to wait for any banks to process any money transfers. Therefore, transactions are virtually instant.
Minimal transaction fees:
As there is no financial institution or bank that needs to approve the transfer of payment, the transaction fees are very low. This means that the regular transaction fees that apply when accepting payments credit cards, debt cards or other services like PayPal will be significantly less for cryptocurrency payments. However, even though there are minimal transaction fees, there may be fees that apply depending on whether your business uses a digital wallet or personal wallet.
Risks of accepting cryptocurrency as a form of payment:
The set up can be difficult:
Setting up your businesses form of cryptocurrency payment can be difficult at times. In order for your business to accept this type of payment, you need to set up a digital wallet or personal wallet. A digital or personal wallet stores all cryptocurrency payments. It can be difficult to choose which digital wallet best suits your business needs if you’re unfamiliar with this technology. This is because different wallets have different fees. A consultant can help you assess which type of digital wallet will best suit you.
Cryptocurrency can be volatile:
It is no secret that cryptocurrencies have a ‘volatile’ nature. This means that the value of the currency can be very unpredictable at times. It may increase or decrease dramatically. However, this is why setting up a digital wallet is so important. Once your business has a digital wallet and a customer pays for your product or service, the exchange of money happens instantly. Therefore, payments are protected from any and all changes in the market.
At the moment, cryptocurrency is still new in terms of regulation by Australian law. In other words, there is no legislation that currently deals directly with cryptocurrencies. Therefore, any business that accepts cryptocurrency as method of payment should be prepared to be flexible to any legal changes that may happen over the next few years.
Cryptocurrency has gained a lot of popularity over the past few years, with many businesses now accepting it as a form of payment. This digital currency offers fast and borderless transfers, with little transaction fees. Accepting cryptocurrency is a great way to expand your customer base and keep up with innovative changes in technology. However, setting up this method of payment might require a little help. Overall, you must choose the payment method that best suits your business.
Mai is a Legal Tech Intern at Lawpath, working as part of the Content Team. She is in her final year of a Bachelor of Laws degree at the University of Wollongong. She is interested in Business and Employment Law.