Cryptocurrency has been touted to be the game changer in digital payments. There is currently a very bright spotlight on cryptocurrencies, including Bitcoin(BTC), Ethereum(ETH), and other similar digital currencies. However, they have gained popularity as an option for speculative trading much more than some of the other advantages it promised.
However, some organizations have been keen to look at some of the other benefits of crypto and its role in peer-to-peer transactions and as a point-of-sale payment option. Flying V Group has recently started accepting cryptocurrency payments, which has opened up many new avenues for us. If the sheer number of crypto startups is any indication, we are witnessing the rise of the future of fintech.
While much focus on cryptocurrency will remain due to its immense popularity as an investment, we believe that crypto payment options like bitcoin payments will help organizations open new doors. This blog will explore the advantages and issues with accepting crypto payments and how you can make it work for you.
Why Should You Accept Crypto Payments?
Cryptocurrencies generally have not had an easy run in the limelight for the past few years. While it was quite a popular topic among a few enthusiasts in the early years, the last couple of years has propelled it into mainstream conversations. The bitcoin manifesto had listed many of cryptocurrency’s promises as a decentralized currency as opposed to the fiat currency we are used to today. But due to the volatility in value and the regulatory challenges, many investors and businesses still viewed it with skepticism.
Whether you want to accept crypto payments or not depends on your business and how your client base is structured. For us at Flying V Group, we work with a lot of new-age organizations that are revolutionizing the way their industries work. It made perfect sense for us to expand the options for payments that we offer our clients to include cryptocurrency. This will help them to make payments at their convenience, and it can happen without the need for a centralized exchange and with large amounts of transaction fees and processing fees incurred every time the payment is made. On average, a crypto wallet will incur a transaction fee of less than 1% of the total transaction, while bank account, credit card, or PayPal transactions would be charged at a higher rate.
Accepting crypto payments is also a good way to attract a new mix of organizations onboard, especially from the technology and web3 space. There are a host of crypto and NFT startups as well as other fintech businesses working with web3 and blockchain technologies. Giving them an option to pay via crypto is really a no-brainer in our opinion.
As we move along in time and the apparent volatility around crypto subsides, we will see a much more stable environment surrounding cryptocurrency. Currently, experts believe that the valuations may be a bit exaggerated simply due to the demand and the fact that there is quite a bit of curiosity around all cryptocurrencies. As regulations catch up and valuations settle to the real levels, more organizations will accept crypto as payment options. Given its decentralized nature, it offers many advantages, especially in peer-to-peer transactions. More payment processors and payment gateways will also accept bitcoin payments and other types of cryptocurrency. Accepting cryptocurrency payments now would give your organization a competitive advantage in your industry. More businesses would be interested in working with you, especially in areas where constant change is the norm.
Why Should You be Cautious About Crypto Payments?
While crypto payments have distinct advantages, there are some disadvantages. Given that price volatility is the norm these days, a drop in bitcoin’s value would put your business at risk. Since most transactions are based on exchange rates to USD, if there is a fall in value, you will end up with less cash in hand than what was invoiced, even if payments have been made in full.
Further, there is also the issue of trading to consider. It’s great to hold Bitcoins, Litecoins, or Ethereum and hope that the values will rise and you make some extra cash when you trade it. However, to get this money into your cash flow, you will have to trade it when you receive payments. Selling bitcoins necessitates the search for a buyer, which can take some time and effort to do. While cryptocurrency exchanges like Coinbase or Robinhood can help, it is not always straightforward.
Regulatory issues are also to be considered. Cryptocurrencies are currently heavily regulated, owing to their decentralized nature. Governments are wary of cryptocurrencies because it is difficult to track the flow of money and its possible involvement in illegal activities. This is the current backdrop we are all working with. So before you accept cryptocurrency payments, you should check the regulations that are in place by the local and federal governments, as well as any future regulations that could affect this.
What do You Need to Accept Cryptocurrencies?
Now, this is the more technical part. To accept cryptocurrency payments, you need a wallet and a way to integrate it into your website and your overall system from a process perspective.
A Crypto Wallet and a Gateway
A cryptocurrency wallet is what allows you to hold and transact your cryptocurrencies. Whether an individual or an organization, you need a wallet for all cryptocurrency transactions. Most platforms like Coinbase or Bitpay offer you a crypto wallet once you open an account with them. Choose your partnerships wisely; this is a very important step.
Service providers vary in terms of the features they provide and the transaction fees they levy for every transaction. It frequently depends on the amount being transacted as well as the volume of transactions. Choose a service provider based on your estimates and the amount of transaction charges you are willing to pay.
Security is also a concern. Most bitcoin wallets secure your account with a private key, and blockchain offers you another layer of protection when it comes to keeping it safe. However, hackers may try to steal your crypto holdings from your wallets.
The payout frequency is also something to consider. Some wallets payout on a daily basis, while others may take a few days to process payments. You should also consider where your customers are located and see if the payment gateway is available in that location.
Once the bitcoin or other crypto payments have come into your wallet, you can then exchange them to your chosen currency based on the current exchange rates. Most wallets allow you to change from one crypto to another and also withdraw the funds to your bank account in US Dollars.
Payment Options on Your Website or as a Part of the Process
The other side of the process is to provide customers with a crypto payment option. If you are an eCommerce business, you can simply include the payment buttons associated with your wallet. If you are on e-commerce platforms like Woocommerce or Shopify, you can use plugins to add these options to your checkout page. Some crypto wallets and platforms also offer APIs that can easily be integrated into your website.
It is quite straightforward if you are using an invoicing and bank transfer process or if you have an in-person store. You can ask the client to scan a QR Code and pay via this, or there are even POS applications that accept cryptocurrency payments. You can also send the client a wallet link which the customer can use to pay directly to your wallet.
Cryptocurrency as a payment option may not be for everyone. However, if it is something you can do and you are not, you may be missing out on valuable customers. All businesses are here to make their clients’ lives easier, and accepting crypto payments can do just that.
Like all payment methods, it is important to communicate the terms of the transaction, such as how refunds work, the transaction fees involved, and how much time it takes for a transaction to be processed. Of course, drawbacks are involved, and these should be considered when you offer crypto as a payment method. But the long-term benefits are likely to be far higher than the issues in the short term.
Do you want to learn more about Crypto payments and how we handle them at Flying V group? Get in touch today!