Today’s world is made up of digital everything — even money doesn’t escape the trend. You’ve likely heard the term cryptocurrency but may feel uncertain about the viability of these forms of currency. Maybe you wonder if your site should consider accepting cryptocurrency for payment.
You may need to make a few minor changes to your site, such as installing a WordPress plugin for accepting cryptocurrency or adding a note that you now take Bitcoins. Such changes are minor and worth the effort.
When it comes to accepting cryptocurrency on your eCommerce website, there are positives and negatives. Consider these pros and cons before leaping into to digital cash.
Negative: No Central Authority
Digital cash, such as Bitcoin, is based on peer to peer sharing and has no central authority. This can also end up as a drawback because you have no recourse if things go wrong.
One ruling party could come in and abuse the system, although the creator of Bitcoin has put some stop gaps in place to prevent this, such as the SHA 256 Hash algorithm that makes people show proof they’ve done the work to earn the currency. Still, as cryptocurrency becomes more and more accepted, there is less risk than ever before.
Negative: Black Market Money
Some still associate cryptocurrency with black market money in many circles. It was a backdoor way for drug dealers and traffickers to exchange money without any sort of regulation. Because of this negative association, some people are reluctant to use cryptocurrency and may even wonder why your eCommerce site accepts it.
At the same time, however, the currency is more accepted. The U.S. government even recognizes it as a currency. Sites such as Overstock.com began accepting it as payment, too.
Positive: Third Party Sites Help the Process
Because of the rise in popularity of cryptocurrency, sites such as Coinbase.com have sprung up to help online merchants process cryptocurrency transactions. You can even create a wallet and sell your digital currency on the site, which means you can turn digital cash into real cash if that is a concern of yours.
For small businesses with cash flow concerns, the ability to sell cryptocurrency might mean the difference between success and failure. About 82 percent of failed small businesses blame the failure on cash flow issues. The ability to exchange digital cash for other forms of currency is attractive to business owners.
Positive: Expand Your Customer Base
The use of cryptocurrency rose to a market cap of 800 percent in 2017 with more investors accepting Bitcoin and Altcoins as tender for investments. As cryptocurrency becomes more mainstream, expect to see more people using this form of payment and more eCommerce sites accepting this form of payment.
Adding cryptocurrency as a payment option on your website opens up marketing to a new database of consumers. Those who use Bitcoin and other digital currencies tend to look for places to shop where they can spend those electronic dollars. Offering this option allows you to market to this demographic and pull in new business specifically. You also can make your brand more attractive to consumers, edging out the competition.
Positive: No or Low Transaction Fees
The fees involved in trading Bitcoins and other cryptocurrencies are cheaper than the fees to use a credit card. Instead of charging a one to three percent transaction fee based on the purchase price, Bitcoin’s flat, per-transaction rate was about 22 cents, according to Forbes. Instead of paying a percentage of the purchase price, the business pays only a small, flat rate.
The high fees of credit card companies and issues with chargebacks have long plagued business owners. Bitcoin removes many of those concerns and puts the power back in the hands of the merchant while still protecting the consumer to some degree.
Positive: Irreversible Transactions
Speaking of chargebacks, returns can be a bit tricky with cryptocurrency. Transactions can’t be reversed as they can with credit cards. This is also a negative for consumers, who have no recourse if a shady company chooses to take their money and not deliver what they promised.
At the same time, the fact that the transaction can’t be reversed could be seen as a positive by those delivering services. Difficult clients, for example, can’t simply reverse their payments to you because they didn’t fully outline the scope of what they wanted and you were unable to please them. You can always send a credit back to the consumer in the form of digital cash, of course.
Cryptocurrency is much more secure than credit cards. It is very difficult to fake cryptocurrency, but credit card fraud is on the rise.
Should Your Site Accept Cryptocurrency?
As with most things, staying at the forefront of a trend is a positive. You can reach out now to consumers who wish to pay with electronic cash and establish yourself in the market as a company that is open to innovation. Although there are a couple of negatives to accepting cryptocurrency, the benefits far outweigh them.
Watch where cryptocurrency goes. The marketplace is still wide open as numerous people have not used digital cash yet. However, in a marketplace that grows increasingly global and amid fears of credit card fraud, expect to see cryptocurrency used more frequently by both businesses and consumers.
About The Author
Eleanor Hecks in the Editor-in-Chief of Designerly Magazine, an online publication dedicated to providing in-depth content from the design and marketing industries. When she's not designing or writing code, you can find her re-reading the Harry Potter series, burning calories at a local Zumba class, or hanging out with her dog, Bear.