Does your small business have to accept cryptocurrency?

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Over the past year, many reputable companies have started to accept cryptocurrency as a valid payment method. Birks Group, Park and Finch, and even Best Sleep are the latest retailers to jump on the crypto bandwagon, and even some point-of-sale terminals make it easier for Canadians to purchase goods and services with crypto.

Of course, this begs the question: Should your small business follow suit? While the decision ultimately depends on your customer base and your business model, I would say it might be best to start planning now for a time when crypto is widely accepted. Here are some reasons why you might want to open the door for customers who pay by crypto.

1. Reduced transaction fees

Let’s face it: As simple as credit cards are, they come with high processing fees. Many Visa and MasterCard charge at least 1.5% per trade which can start to eat into your profits, especially for items below a certain price.

The good thing about cryptocurrency, however, is that no one owns it. It’s completely decentralized, which effectively eliminates the middleman. Depending on how you accept crypto, you can completely eliminate processing fees. At worst, you could pay 1% or less for crypto transactions, which is still significantly lower than credit cards.

2. Protection against fraud

Crypto is a lot like money. Once the transaction is complete, you don’t have to worry about chargebacks. Unlike credit cards, no third party will cancel payments because of “fraudulent charges”. This means you no longer have to waste time dealing with “reverse loads” which can be a headache to solve.

3. Expand your customer base

By accepting cryptocurrency, you might attract not only younger customers, but international customers as well. Crypto is a universal currency that transcends exchange rates. This makes crypto more attractive than credit cards, which often come with foreign transaction fees or currency exchange fees.

What are the risks of accepting cryptocurrency?

Perhaps the biggest risk in cryptocurrency is its volatility. At the moment, the value of the crypto is not exactly stable. On the contrary, some cryptos will fluctuate on a daily basis. This is not a major problem for small businesses, unless, of course, you don’t regularly convert your crypto to cash. If you do this, you will avoid losing money if the value of the crypto drops before you trade.

Second, crypto comes with security risks. At the moment, the best way to accept crypto from customers is to get a crypto wallet and then accept the crypto on an exchange, like Coinbase. These wallets are quite secure, but they can be vulnerable to cyber attacks. If a hacker managed to gain access to your wallet, you could lose your crypto.

Finally, crypto is not the easiest thing to understand. While you don’t need to be an expert in cryptocurrency, you should know the basics before you start accepting it as a payment method.

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