Considering Crypto as a Payment Option? Know These Pros and Cons First

Have you ever considered if cryptocurrency is a viable payment option in a business setting? Now that digital asset markets have grown and there are now regulated stablecoins, the situation is more professional than before, but there are still risks associated with this payment option. Let’s go over the pros and cons of adding digital assets like cryptocurrencies to your checkout and payment flow.

Why Switch In the First Place?

Near-Instant Global Payments

Your average international wire will take 3-to-5 business days and usually have to work around bank holidays. These days, businesses using stablecoins like USDC and USDT can pay in a matter of minutes, regardless of day or holiday. With this increase in cash flow, you can reduce any lag in funds while they’re in transit and plan your finances more effectively.

Much Lower Fees

What are your honest feelings about payment processing fees? Credit cards and PayPal still charge between 2.5 and 4 percent, but modern Layer 2 networks and high-speed blockchain allow for transaction fees of less than a cent. If you’re doing over $1 million in annual volume, that can create serious savings and lead to you bringing in much more profit that isn’t going toward fees.

No More Chargeback

Retailers often have to deal with friendly fraud, where the customer disputes a charge after they’ve received their product. Blockchain transactions are immutable, however, so once a payment is confirmed, it cannot be reversed back to the sender. This means the business holds the power in the refund and dispute policy resolution.

Access to the “Techie” Demographic

Accepting crypto as a form of payment makes your brand appear innovative to the more tech-savvy folks out there. It’s also a great option for those who are unbanked and underbanked in emerging markets, particularly if the mobile-first crypto wallet is the accepted standard. That said, it will be foreign to the average user.

Challenges of Accepting Crypto for Payment

Regulations and Compliance

Tax authorities are requiring strict reporting regarding costs of digital assets, and any time you receive crypto or convert it to cash, that’s taxable. You’ll likely need a specialized crypto accounting software to ensure these events are tracked in a compliant way.

Price Unpredictability

Stablecoins solve this issue to a degree, but accepting blue chip assets like Bitcoin is still risky. If you accept $1,000 in BTC and the price drops before you pay your suppliers, there goes your margin. Businesses accepting crypto use a payment processor that can instantly convert crypto to USD at the point of sale.

Security Requirements

If you choose to manage your own funds, then you have to consider yourself your own bank. If you lose your private keys and your wallet is cracked, then the funds are gone for good. Most enterprises will choose institutional-grade custody services or multi-signature wallets to eliminate this risk.

Customer Perception and ESG

Some clients might think of crypto as an environmental factor or something only used for illicit activity. Modern networks are largely low energy, so you’ll need to be ready to answer questions about your ESG alignment—that stands for Environmental, Social, and Governance—and your methods for verifying the source of those funds. 

Is your business ready for cryptocurrency? You want to have a rock-solid “yes” as your response to this question. You can take the first steps by working with WatchPoint Solutions to ensure your network is secure and ready from an operational perspective. Learn more today by calling us at (848) 202-8860.