Cryptocurrency is a digital or virtual currency that uses cryptography for security. A digital currency is difficult to counterfeit because of this security feature.
A defining feature of crypto, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Merchants accepting cryptocurrency as a form of payment are in a unique position and should be aware of the following considerations.
Crucial Considerations for Crypto-accepting Merchants
1. The payment method is relatively new
Cryptocurrency is still new, so it’s crucial to track the market so that you can understand how it affects your business. As the market grows and evolves, there will be more tools to track pricing and market trends.
2. Transactions cannot be reversed
Crypto payments are irreversible. If you don’t receive the exact value of the ticket, there isn’t much you can do about it. To prevent fraud, we recommend using an API service like Coinbase or Bitpay that automatically converts the cryptocurrency into fiat after checkout. This way, if there is a problem with the transaction, you have an easier time claiming your funds from these services.
3. Taxes may apply
Taxes may apply to the transactions, so it’s important to consult a tax professional if you plan on using cryptocurrency for purchases. Many states consider this form of payment property rather than currency – consult a tax advisor for guidance on your specific situation.
4. Cryptocurrency payments are still considered risky
Cryptocurrency payments are still considered risky by some shoppers; however, many people prefer it because they believe it prevents them from receiving additional marketing materials or emails from merchants. In addition to being convenient, cryptocurrency payments also give customers control over their private information.
Crypto payments are considered risky for business transactions due to their irreversible nature and fluctuating value. Because of this, many merchants choose not to accept such payments, which could ultimately hurt the adoption of crypto payments at the retail level.
Final Thoughts on Accepting Crypto
For merchants, crypto payments have their pros and cons. It’s important to understand the potential benefits, which include less payment processing fees, improved customer experience and more., but also the risks, such as potential fraud and the inability to recoup funds if a sale goes bad.
Content crafter Alex Wilmont has been active in the payments industry for over 15 years. He lives simply, gives generously and loves his 2 dogs. His mission is to enhance and innovate the fintech industry through Pinwheel Pay for years to come.