With the growing opportunities on E-commerce, a lot of payment methods has risen. One of which is the use of Bitcoin and other cryptocurrencies. But what is Bitcoin and why merchants should accept it as a mode of Payment? What does it entail using Bitcoin?
For those who haven’t heard or just heard about Bitcoin but are unsure what it is, Bitcoin is a virtual currency or a cryptocurrency which can be exchanged between users directly, peer-to-peer or etc. It has recently taken its spot on some E-commerce platforms as a new mode of payment for goods and services
Advantages of accepting cryptocurrency
Lower transaction fees: From Merchants Perspective, compared to other modes of payments, cryptocurrencies have lower transaction fees. Credit cards, debit cards, VCs, Paypal, and other payment channels offer 2 percent to as much as to 25 percent transaction fees aside from per swipe fees while cryptocurrencies charged around 1 to 2 percent. Consumers are not charged any transaction fees. These make it more beneficial to both parties.
Security: Bitcoins works more like cash on hand, whoever has it, owns it, thus, making transactions more secure and safe. There is not much information disclosed when making payments so no information is being compromised. Most cryptocurrencies have multi-factor authentication, private key enablement and allow data backup so information is being protected.
Protection: Merchants are being protected as Cryptocurrencies decentralized setup protects them from fraudulent chargebacks from clients. All transactions are final and there is no third party platform that can reverse the charges.
Profitability (Increase in Sales): Accepting bItcoins and other cryptocurrencies make small businesses grow as it opens door to expand its market to other countries which were once inaccessible due to the inadequacy of payment options that would allow the international transaction.
Disadvantages of accepting cryptocurrency
Market volatility: The Bitcoin market is very volatile. Its value may drop and rise in a few minutes or hours. Its value is very unpredictable. It is not uncommon for its value to drop even half its original and this may be very disadvantageous to merchants. However, this can be eliminated by converting its value to local currency. Some use a Merchant Service Company to store their Bitcoins and other cryptocurrencies and take advantage of it when its value increases.
Technicality: Bitcoins and other cryptocurrencies setup are technically hard for those who are new to it. It may take a while for those who are not tech savvy to operate the platform.
Governing regulations: There are countries were using Bitcoin and other cryptocurrencies are not governed in their laws. Since cryptocurrency is new, Lawmakers are very much uncertain on how it works and are still trying to get a grip on how the technology works before making regulations on taxes, especially on money laundering issues.
Due to the profitability of trading Bitcoins and other cryptocurrencies, many merchants would opt to adopt Bitcoin as a mode of payment despite its volatility.
Unlike Fiat Currencies whose value rarely change, Bitcoins value change almost every now and then. This gives the Merchants as well as the Consumers an opportunity to sell their Bitcoins when the value is high and store it when the value seems so low and wait until it rises again and trade.
The use of cryptocurrencies as payment to goods and services have rapidly grown and continuously growing as new cryptocurrencies are continuously upscaling its features and delivering new ones.