Accepting Bitcoin As Payment
Being a small business owner is tough. Trying to be an innovative business owner, and to do it in a way that encourages growth is a full-time job by itself. Whether you own a brick and mortar storefront, or a solely online business, you’re always looking for the the best ways to advance the business, at the lowest cost. To really get ahead in the market, some kind of innovation is usually required. Today, many small businesses, along with multinational corporations, have turned to accepting bitcoin as a form of technological innovation. In fact, there are now well over 100,000 businesses and merchants that are accepting bitcoin as a form of payment.
Similar to any other type of innovation, accepting bitcoin can bring a multitude of rewards, but it does come with its own downsides as well. If you have considered using bitcoin as an additional form of payment, it’s definitely worth looking at the positives and negatives.
1. Bitcoin is truly fee-free for merchants.
Transaction fees to merchants can range from 0.5% to 5.0% of the total transaction. That’s a hefty price to pay when you’re running a small business, and consumers use plastic almost exclusively these days. It’s an even tougher pill to swallow if you do all of your sales online. Bitcoin fees are often 0 (yes that’s a goose egg, you pay nothing), or a whopping 1%. That’s not a bad deal for the little guys.
2. Payment is usually fast.
Bitcoin outpaces just about every other form of payment when it comes to receiving your money. There are no banks or governments checking every bitcoin transaction (blockchain technology takes care of that), so you can get paid faster. You can literally be paid in minutes. This is important for small businesses, and especially new businesses and startups that have limited cash flow. Think of it like this: Charge a customer, go outside and check the mail, return to your computer, and bam! You’ve got money!
3. Bitcoin knows no borders.
It’s true, bitcoin is an international currency. Bitcoin has no ties to any bank or government, and now that over 100,000 other businesses are accepting bitcoin as payment, you’ve got a lot more options when it comes to making international purchases. Exchange rates and international transaction fees from banks can be a huge headache, and at the end of the day, could detrimentally affect your overall cost of doing business.
4. Think of bitcoin as digital cash.
There is no bitcoin that you can physically hold in your hand and stick in your wallet. It’s digital cash which makes transactions much more final than with credit cards. Bitcoin is as convenient to use as a credit card. However, the fact that it is simple to use, and that it gives a greater finality to sales is a win-win for the consumer and the business owner. You’ll never hear the dreaded term “chargeback” from a bitcoin transaction.
5. It could be a good investment.
Dealing in bitcoin could be a good way to get that extra boost of capital that you’ve been hoping for to grow your business. Bitcoin works sort of like the stock market, in that its value fluctuates. Of course, it can go down, but it can also grow tremendously in value. If you have the ability to sit on your bitcoins for a time, you could cash in big in the long run.
6. Attract new customers.
More and more consumers are being turned on to bitcoin, so it’s no surprise that they might be looking for ways to spend it. Accepting Bitcoin as a form of payment might bring in customers that you don’t typically see. It’s a new segment that you can try to tap, and because accepting bitcoin costs virtually nothing, it can’t hurt to give it a go!
Every prize has its price, so we must look to the downsides of Bitcoin as well.
1. It’s not really regulated.
Remember the no banks, no governments thing? Well, that can be a good thing, but it can also be scary for some people. With bitcoin, who is looking out for your financial well-being? Can you really be sure that you are protected from fraud? These are important questions to ask since we are still in the wild west of digital currency.
2. It’s volatile.
Since bitcoin is not properly regulated, it is also quite volatile. Its value can skyrocket or plummet in seconds. But just like with any type of investment, don’t put all of your eggs in one basket.
3. Planning is challenging.
It’s hard to create financial models based on bitcoin. How do you even begin to do your taxes? Keep accurate books? It can be done, but it takes experts well-versed in bitcoin to be able to do it. Make sure your accountant is on board.
Before you start accepting bitcoin or any new payment method, do your homework. Talk to your most trusted advisors: your accountant, attorney, financial planner, etc. Get second opinions. Accepting new payment methods cannot be taken lightly, but if done responsibly, could help you live out the entrepreneurial goals you’ve always dreamed about.