nDash.com is a content creation platform that provides brands and agencies with access to the world's top freelance writers.

Should Your Business Accept Bitcoin?

Should Your Business Accept Bitcoin?

Created in 2009, Bitcoin shook the financial world when it became the first decentralized cryptocurrency and turned early investors into overnight millionaires. Although there are now many forms of cryptocurrency, Bitcoin is the one that is most commonly recognized. It’s the one that routinely makes the news when it either rises or falls in value.

Although Bitcoin was at first primarily the domain of the technologically savvy, this is no longer the case. It is now mainstream, and many retailers accept it as a form of payment alongside cash, credit, and debit. Just a few organizations that accept Bitcoin include:

Many thousands of small and medium-sized businesses also recognize the legitimacy of Bitcoin as currency and now accept it as payment for the goods and services they offer.

Should your business accept Bitcoin, too?

The nature of business constantly changes. New technologies come along that make older technologies obsolete. Those that fail to adapt run the risk of being left behind as competitors embrace change and attract new customers to their product and service offerings.

It may be hard to believe, but it wasn’t that long ago that most companies didn’t accept credit or debit cards. When was the last time you shopped at a store that only accepted cash or checks? While it’s impossible to predict future financial business trends, we may be in the midst of a major change regarding payments right now.

If you are considering accepting Bitcoin in addition to other payment methods to stay current and competitive, there are some important benefits and negatives to consider. It’s important to carefully weigh both before making a decision.


The Benefits of Accepting Bitcoin

Whether accepting Bitcoin makes sense for your business depends on a variety of factors. The nature of your business, size, and market, should all be considered. 

A small business that mainly serves a rural area, for example, may realize little or no benefit from accepting Bitcoin. An eCommerce business that sells products to customers all around the world, however, may increase its customer base by accepting the popular cryptocurrency. 


Access New Markets

For businesses that sell internationally, accepting Bitcoin may allow you to extend your operations into new markets that traditional payment processors don't serve. There are some countries, for example, that PayPal and Stripe do not operate in.

Bitcoin allows those that were previously locked out of international transactions to join the global business environment. As a retailer, it means you may be able to sell your products to many new people, thus increasing profits.


Attract New Customers

Many young shoppers prefer to buy from companies they perceive as being tech-savvy, environmentally conscious, or something else. Advertising that you accept Bitcoin could be a powerful marketing tool that attracts new customers – even if they end up making their purchases with other payment methods.

Accepting Bitcoin is about much more than the addition of another payment option. It’s about creating the perception that your business is a technology leader that is positioned to make the buying experience as convenient as possible. It has as much to do with marketing as it does with payments – and that may result in increased business.

Lower Processing Fees

It costs money to process credit card payments and payments made through digital payment processors like PayPal and Stripe. For every transaction you process with these methods, you are looking at charges from 2 to 4%. That could take a significant bite out of your profit if your margins are low or you sell low-cost items.

Bitcoin transactions, in comparison, are much cheaper. It depends on which payment provider you use. BitPay only charges a 1% processing fee, which is very competitive. Coinbase states on its website that it does not charge a fee to accept Bitcoin payments.


Eliminate Chargebacks

Chargebacks are never any fun to deal with, and they usually result from one of three things – merchant error, criminal fraud, or friendly fraud. Friendly fraud is when a customer initiates a chargeback without first asking the merchant for a refund. Many people do this because they consider it to be a faster and easier option. 

Chargebacks aren’t just an aggravation. If you receive enough of them, they can negatively affect your merchant account. This could result in higher processing fees or the loss of your merchant account.

Bitcoin transactions are one and done deals. They can’t be reversed by the customer. Bitcoin transactions eliminate the possibility of chargeback fraud and customers using chargebacks as an easy way to obtain refunds. 


Get Paid Fast

The faster transactions are completed, the faster you can have money in the bank. Processing delays can result in liquidity problems, especially if you deal with expensive products. The inventory bill still needs to be paid on time, even if you haven't received payment from the sale of the merchandise.

Compared to credit card payments – which may take up to a full business day to complete – Bitcoin payments are lightning-fast. They typically take between 10 to 20 minutes to complete.


The Negatives of Accepting Bitcoin

Although the benefits of accepting Bitcoin payments are hard to ignore, there are also some challenges to consider. The negatives may be enough to dissuade some.


Price Volatility

The constant – and sometimes dramatic – volatility of the value of Bitcoin is a major concern to many. The continuous change in its value has been the main impediment to its mass adoption as a form of currency. Investors may drive the price up significantly one day only to sell and take their profits the next, causing the value to plummet.

Many businesses wonder how they could possibly keep up with Bitcoin’s wild volatility with the pricing of their products. If an item is priced at $50, for example, and the value of Bitcoin suddenly plunges, wouldn’t the business risk losing money on the transaction?

Not necessarily. 

Some Bitcoin exchanges allow you to convert Bitcoin payments to the currency of your choice at the time of the transaction. This ensures that your business receives the full value of the sale (minus fees) regardless of the current Bitcoin value. It’s vitally important to ensure that the Bitcoin exchange your business chooses does this before you implement their system so that you don’t experience any unpleasant surprises. 

Another potential negative to consider is how price volatility affects consumer behavior. When the price of Bitcoin is rising, consumers may be less likely to spend the currency because it is becoming more valuable. And when prices dramatically decrease in value, consumers may wait to make purchases again until Bitcoin regains its buying power. 


Tax Issues

In Bitcoin’s infancy, it mostly flew under the radar of the IRS. Things are now different, and the IRS has since issued guidelines on the tax treatment of Bitcoin and other cryptocurrencies. Because Bitcoin investing is now taxed, businesses must be vigilant in maintaining financial records in case there is any question about how the currency is used.

An additional factor to consider is the constantly-changing nature of the tax code, which is currently over 6,000 pages long – twice the length of the epic novel “War and Peace.” Because Bitcoin is still relatively new and many businesses still don’t accept it, most CPAs are not familiar with how to handle it. Your CPA may need time to study the tax code before preparing your taxes to make sure everything is handled correctly – and you can be sure that you will be charged for this extra time on your tax preparation bill. 


The Future Is Uncertain

Although Bitcoin has been around for over a decade, it is still mostly unregulated. Its future at this point is impossible to predict. 

Will Bitcoin be regulated? And if so, to what degree? Will different countries create a complex hodgepodge of regulations that don't play well with each other, or will a coherent international standard on cryptocurrency be developed that is easy to follow?

Complicating the situation is the fact that some nations, like China, have banned all forms of cryptocurrency. And in other parts of the world Bitcoin is not well understood. This is an important consideration for companies with international business interests. 

Money has been used in the exchange of goods and services for millennia, but if there is great uncertainty about a currency’s future utility as a form of payment, then it will fall out of favor. For a currency to work, it must be trusted by those who use it.


Should Your Business Accept Bitcoin?

Whether your business decides to accept Bitcoin or you take a "wait and see" approach will depend on your mission, goals, and priorities. Although there are obvious benefits to accepting Bitcoin for some businesses, the negatives may not make sense for others. 

If you do make a business decision to accept Bitcoin, be sure you do your homework before you accept any Bitcoin payments. Take the time to study several different Bitcoin exchanges to make sure you are familiar with their fees, user agreements, and how their systems operate.

Accepting Bitcoin has to make sense for your business. There must be a clear and significant benefit to doing it. Accepting Bitcoin could help you stand out in a crowded market and attract new business, or it could be nothing more than a big headache and a waste of time. 

Ultimately, there is no one-size-fits-all answer to the question of whether your business should accept Bitcoin. Because each business is unique, the decision must be based on a careful consideration of both the pros and cons and other relevant information pertaining to your business. 

Cyrus Vanover

Writer Name

Cyrus Vanover

Publication Date

Published on Mar 9, 2021

Summary

<p>Although Bitcoin was at first primarily the domain of the technologically savvy, this is no longer the case. It is now mainstream, and many retailers accept it as a form of payment alongside cash, credit, and debit. Should your business accept Bitcoin, too? There are both pros and cons to consider, and any decision should be based on the nature of your business, its size, your market, and other factors.</p>

Content ID

5fee0e5c46ee6b00155984ea

Content Price

400