Many small business owners accept cryptocurrency for transactions in addition to fiat cash, credit cards, or EFT. Digital currencies are traded online in the international market. They are peer-to-peer transactions, moving cash from one person or entity to another. Here are some things to keep in mind if you are considering adding cryptocurrency to your financial matrix.
- Blockchain Technology
Blockchain is the core of digital currency. You must set up an account with a cryptocurrency exchange, such as the OKX trading platform. All blockchain transactions are generated from the exchange. While there are many technical levels of how it works, you only need to understand how it makes cryptocurrency different from fiat money.
- Approves and authenticates each transaction.
- Verifies ownership of assets, preventing fraudulent transactions.
- Confirms availability of funds.
- Limits the amount of customer financial data you receive.
- Eliminates dependency on traditional financial institutions.
- Instant Capital
Digital currency gives you immediate access to your funds, giving a boost to your company’s cash flow. You have the option at the time of sale to receive the payment as fiat currency or you can keep it as cryptocurrency. The digital currency market is traded online 24/7. Immediately after you receive payment, you can turn around and purchase with those funds.
It can take up to three days, sometimes longer, for money from credit card transactions to post to your bank account. Check and EFT payments require similar processing times and are dependent on traditional banking hours. Cash is the only other payment you receive that you can use immediately, but customers prefer more secure payment methods.
- Processing Fees
If you directly accept crypto payments from your point-of-sale system, you do not pay processing fees. Most cryptocurrency processing companies charge a nominal 1% transaction fee. This equates to significant savings considering credit card companies charge around 3% of each transaction plus a flat processing fee. PayPal has even dipped into the crypto arena by allowing customers to use digital currency to pay for a transaction. As the merchant, however, you are still responsible for transaction fees.
- Fraud Protection
Cryptocurrency was developed to protect the financial assets of their account holders. Blockchain technology verifies that the person presenting the digital transaction is the actual account holder. While hackers can access an individual’s wallet, a third party cannot require you to restore fraudulent transactions.
If you accept direct cryptocurrency payments, you will need to increase your network security to protect the company’s accounts. Some small business owners use a payment processor in place of significant upgrades to their network.
- Professional Services
You may need to hire a CPA or attorney that specializes in cryptocurrency to stay on top of regulatory changes. Due to the anonymity of digital currency, governments are developing regulations and policies that protect users, while still maintaining the integrity of the blockchain system. Professionals can help you focus on your business, rather than the evolving regulatory structure of the industry.
The number of small businesses accepting cryptocurrency payments is increasing every day. It can be a great strategy that differentiates you from your competition. As you navigate this digital transaction, you may quickly find that it becomes your preferred payment method.