Accepting Cryptocurrency as Payment on Your eCommerce Store
Since its breakthrough in 2009, Bitcoin and other cryptocurrencies have slowly made their way into mainstream financial systems. Unlike before, crypto coins are now actively traded and are an accepted form of payment worldwide. Nonetheless, the decision to accept cryptocurrencies as payment on your online store isn’t easy to make. You should consider several factors before integrating cryptocurrency payment gateways into your eCommerce store. Below are the benefits and drawbacks to help you decide.
Benefits of Accepting Cryptocurrency
You should consider adding cryptocurrency payments for the following reasons:
Low transaction fees
Unlike banks and credit card providers that charge high transaction fees of 1.3 to 3.5%, cryptocurrency transactions are usually free of charge. For the few platforms that do charge transaction fees, these are as low as 1%. Whether you are a small or established business, this slight change in percentage can significantly impact your online store’s bottom line.
If you can convert most of your traditional credit card sales into cryptocurrency sales, you’ll save enough to run offers and discounts that drive further sales. While you can save a lot at the point of purchase, you should do due diligence to avoid high fees that can wipe out your savings when converting cryptocurrencies to fiat currency.
Expand your customer base
More than 420 million people globally hold cryptocurrencies. They are often looking for places to spend it. Thus, eCommerce stores that offer crypto as payment methods can tap into this expanding number of crypto users. Businesses can gain these new customers who prefer making payments using digital currencies.
Cryptocurrency users are tech-savvy and often wealthier than the average consumer. As such, accepting cryptocurrency payments helps eCommerce stores attract affluent customers with a higher average order value.
Online businesses often have to deal with fraudulent chargebacks from malicious customers. They are a major cause of revenue loss, and businesses spend a lot of time and resources resolving these disputes. Adopting cryptocurrency payments eliminates this problem, as chargebacks on cryptocurrency transactions aren’t possible.
Drawbacks of Accepting Cryptocurrency
Though beneficial, the risks of accepting cryptocurrencies include:
Cryptocurrencies have the highest risk of price volatility. As such, the value of your payments and business revenue isn’t predictable. For instance, Bitcoin’s value rose to $64,000 in February 2021 before plummeting to $28,500 in May 2023. Therefore, you should make arrangements to transfer your coins into fiat currency regularly to avoid losing money.
The cryptocurrency regulatory landscape will change as lawmakers continually develop new regulations. Introducing these regulations means business owners should be ready to adapt to the changes. Governments globally are cracking down on cryptocurrencies as they lack state oversight. Furthermore, governments are targeting the environmental impact due to the high computing power required to mine Bitcoin. As such, despite its popularity, there’s uncertainty on the future of these coins.
How to Accept Cryptocurrency Payments
You can onboard cryptocurrency payments into your eCommerce store in two ways. The first is through your personal wallet. With this option, you set up a virtual wallet that receives cryptocurrency payments. You can download the virtual wallet to your phone or PC. Note that you will have to convert the payments you receive into your preferred fiat currency.
The second option is to accept payments through third-party payment processors. Third-party payment processors like Coinbase handle the payment process like credit card processors and remit the payments in your preferred fiat currency, which saves you from volatility risks.
The Bottom Line
With more people investing in cryptocurrencies, digital wallets will likely become a preferred payment option for most online shoppers. But before including cryptocurrency as a payment option, you should understand the technology. Take the time to open a digital wallet and inform your customers. You should also understand and find ways of mitigating the risks of this new financial technology.