Bitcoin, Ethereum, Litecoin, Monero, Procoin, there are so many new forms of currency popping up it’s hard to keep track of, let alone wrap your head around. But with Bitcoin topping $4,000 for one coin (as of this article 8/15/17) and other cryptocurrencies on the rise, the question facing eCommerce store owners is, is it time your eCommerce store starts accepting cryptocurrency as a form of payment?
What is Cryptocurrency
Cryptocurrency can be a little confusing, so let’s start by explaining what it is. Bitcoin is currently the most popular cryptocurrency, so we’ll use it as our basis of explanation.
Now, no one is actually carrying around any sort of coin in their pocket, the currency is entirely digital. The coin is separated from governments and central banks and is instead organized through a network known as a blockchain. These blockchains are essentially online ledgers that keep a secure record of each coin transaction. So anytime someone buys or sells Bitcoin, it gets logged in the ledger. Several hundred of these transactions make up a block. Confused yet? Let’s see if we can clear things up!
Since these blockchains are decentralized across every computer that has a Bitcoin wallet, no one entity controls the blocks. This gives Bitcoin the advantage of being a quicker, cheaper, and more reliable form of payment than money tied to countries and banks.
Traditional banks charge fees to process monetary transactions. This increase the cost of everything you buy. They can even freeze your account, blocking access to your money. With Bitcoin, you can trade between person to person, person to business, or business to business without going through a bank. This means lower fees, no restrictions on your account, no arbitrary limits and no account freezes.
Current eCommerce Payment Methods
One of the biggest challenges facing any eCommerce business is cash flow. Most stores offer clients, suppliers, and customers the option of paying via credit card, ACH or check. While these are all very convenient for them, eCommerce stores are incurring costs and taking risks with each:
- Credit card transactions are the most common way of exchanging money between businesses and customers. However, credit card companies have merchant fees for eCommerce stores ranging between 2.3% and 3.5% and hold payments for two to three days before they are transferred into your account. This affects both your cash flow and bottom line.
- The costs for ACH transactions are typically a flat fee per transaction making them lower than credit cards since you’re transferring from bank to bank electronically. The trade off though, is that you have to wait longer, between three and five days before you have your money. Also, both credit card and ACH transactions are subject to disputes from customers. Forcing you to pay back what could be a scam.
- While there is no cost to process a check, yet, there is still a large wait time involved. You have to wait for the client to send you the check, deposit the check, then wait for the bank to clear payment, which can take awhile, especially if it’s for a large amount of money. While depositing has gotten easier with new banking apps that let you take photos of checks, you still are looking at a week or two before everything’s said and done.
On top of all that, the responsibility of protecting clients’ payment information, including credit card and bank account numbers, falls on the shoulders of your company. This can pose a serious risk to your business.
Why Accept Cryptocurrency?
With companies like Fidelity Investments, JPMorgan, Intel, and Microsoft beginning to invest heavily in these currencies, and large vendors such as Amazon, Target, Newegg, Dell, and many more beginning to accept it as payment, the risks of accepting cryptocurrency has shrunk to almost nothing. While the potential benefits of improved cash flow, customer satisfaction, and the bonus of an ever increasing value makes for a boost in business.
Here are some benefits your eCommerce store can expect by accepting cryptocurrency:
- Crypto payments are “push” transactions. This means they’re initiated by the purchaser, making chargebacks impossible.
- Payments are also processed immediately #PaydayEveryday!
- Because transaction are “push”, your store doesn’t need to hold or safeguard sensitive customer payment information, reducing the risk of having information stolen.
- No processing fees. You can accept payments and exchange crypto into USD easily through third-party processors. Coinbase, one of the most popular processors, charges 1% or less to convert crypto to dollars.
- By offering to accept crypto as a form of payment, you increase customer satisfaction and could reconnect with past customers.
- You become an industry leader and build brand awareness.
- You will most likely gain new customers who are cryptocurrency enthusiasts that will help promote your business within the crypto community.
How to Get Started
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Hopefully, by now, I’ve managed to convince you to begin taking crypto seriously and are curious how to begin accepting payments on your website.
Surprisingly, getting started is increasingly easy and fast to do. Both Shopify and BigCommerce now allow merchants the options to accept Bitcoin as a form of payment. Shopify has an easy to install integration through BitPay, a third-party payment processor that allows stores to accept, store, spend, or convert Bitcoins into dollars. While BigCommerce allows stores a little more freedom of choice letting you choose what type of third-party processor you want to incorporate like Coinbase. Coinbase also gives other eCommerce stores not running on either of those platforms different option to integrate into your site.
If you do want to forego the fees of using a payment processor or provider, it is possible to simply integrate payments into your own custom system. But honestly, that’s a bit too technical for me, but still a viable option.
What question do you have about cryptocurrency? Would you like us to do a video on the topic? Let us know in the comments below. Feel free to contact us at (360) 747-7401 or message us at Red Rokk.