Bitcoin is a digital currency that is growing in popularity every day, offering unique advantages to businesses in a wide range of industries around the world. But does it make sense for your business to accept bitcoin? Let’s explore why it may.
Businesses That Adopt Bitcoin Benefit in at Least Four Unique Ways
1. Bitcoin payments happen instantly, so the funds are in your account (known as your “wallet”) and available for your use as soon as you receive the payment. There is no waiting or settlement period, so it stands to improve your business’s cash flow and bookkeeping.
The moment you receive your customer’s bitcoin, the digital transfer of value is immediate and final, without the risk of chargebacks sitting on your books.
For businesses that handle a great deal of physical cash, it makes sense to accept bitcoin. With your data cryptographically secure, there is nothing an employee or a thief would gain by stealing your computer or accessing other data.
2. Bitcoin payments carry no risk of the identity theft or payment fraud that are common to online businesses, so both you and your customers benefit. With bitcoin, your customers can shop your store or purchase your services without having to enter any sensitive financial information that thieves can use to access your customers’ bank accounts. That also could mean reductions in the PCI DSS costs that ensure you are in compliance with security measures for accepting credit cards in your business.
3. Bitcoin can help expand your international audience. It is no secret that the Internet plays an integral role in almost every company’s efforts to expand its customer base. While the United States has the dollar and Europe the euro, bitcoin is quickly becoming recognized as the currency of the Internet. Because Bitcoin is borderless by design, you can accept payment from someone in China just as easily as from someone sitting in the same room.
If your company already relies on international business, consider how
instant, borderless transactions can enhance your customers’ experience.
Accepting your customers’ bitcoin does not require exchanging to a local
currency, and it does not come with the hassle of processing foreign credit
cards. Your customers’ shopping experiences are quick and seamless no matter
where they are in the world. They’ll remember you for that.
4. Bitcoin dramatically reduces your transaction costs. When bitcoin is transferred in a payment or trade, it goes directly from sender to receiver—without the need for a middleman. That means greatly reduced transaction fees. Credit card companies charge you up to 3 percent or more per transaction to ensure that the payment changes hands. With as many credit card sales as there are in an increasingly “cashless” economy, that adds up to a severe hit on the bottom line.
The number of businesses accepting bitcoin worldwide grows every day as more
consumers realize its benefits. Given that accepting bitcoin at your business
can enable instant payments, eliminate the risk of fraud, open you to an
international market and reduce the costs associated with simply accepting
your customers’ money, the question is no longer why or how, but when will you
begin accepting bitcoin? Many of your competitors are choosing today. Will
Getting Started With Payment Processing
Integrating bitcoin payments into your business is a fairly simple process. If you have a small business or online store, you can start accepting bitcoin in just a couple of hours. Billion-dollar enterprises take a little longer, but even TigerDirect, the huge tech retailer, was able to integrate bitcoin payments in as little as four days. Once you decide how you want to accept bitcoin, the matter of integrating it is both simple and free.
There are two ways to accept bitcoin for payment: directly or indirectly. If you choose the direct route, customers can send bitcoin to your wallet by scanning a QR code. You can set up a “business wallet” using a free wallet service, and you can store it on your computer, tablet or smartphone. If you then intend to hold bitcoin as an asset and watch its value rise over time, it would be your responsibility to convert the bitcoin to cash to cover your expenses, which can be done on an exchange. Accounting for any capital gains and assuming the risk of the price volatility would also be up to you.
Some businesses find it more convenient to accept bitcoin indirectly, through a bitcoin payment processor. These processors can offer services to make bitcoin use more effective, from bitcoin-to-currency settlement to sales and accounting integration. Each bitcoin payment processor has different service models, so be sure to shop carefully for what you need.
Most payment processors allow you to set your prices in your local currency. There’s no need to peg your prices to bitcoin’s exchange rate. The payment processors offer point-of-sale systems that can easily calculate the bitcoin price at the point of checkout. More important, they can settle incoming bitcoin funds in your local currency to maintain value stability. This way, the rise or fall in the price of bitcoin doesn’t affect the price of your product or service.
A partnership with a payment processor can essentially eliminate any risk with bitcoin. These processors will ensure you receive the USD value (or your local currency) of your invoice and are not exposed to the price fluctuations of bitcoin. In fact, due to the lower cost of accepting bitcoin payments and the free publicity it can bring as a byproduct, your business has more to gain than to lose.
Most payment processors allow you to receive a daily settlement in your local currency, and many can enable you to receive a mix of bitcoin and your local currency, depending on your preference. If you elect to receive a portion or all of your bitcoin transactions in bitcoin, it would be up to you and your accountant to report any capital gains. If you receive 100 percent of your transactions in your local currency, no additional reporting would be necessary. Be sure to discuss this with your accountant before making any changes to your settlement preferences.