Business owners who are crypto enthusiasts or who simply have an innovative mindset may be considering allowing their customers to pay for their goods or services in Bitcoin or other cryptocurrencies. While in some ways this could simplify transactions (particularly international ones), crypto transactions are still very new to most consumers, and they come with unique benefits and risks.
Before jumping into crypto transactions with your business, it’s essential to think through all the ramifications first so your decision nets the results you’re hoping for. Below, 11 members of Cointelegraph Innovation Circle share advice for businesses considering accepting crypto for payments.
The benefit for customers and backend implications
Think first of the user and how or why this move would benefit them. If you can see a compelling benefit for your customers, then consider the backend implications for your business. These include which currencies you should accept, whether you can hold crypto as a business, the tax implications, how long to hold before flipping to fiat and your CFO’s stance on the question. – Weiwu Zhang, Smart Token Labs
Which coins/tokens you’ll accept
It’s not about the price of coins or the volatility of the underlying asset; you can mitigate that risk with immediate settlement to stable or fiat. The real question is which coins/tokens to take for payment. Keep in mind that transaction fees can soar, and if your average price point is less or close to the cost of a transaction, you’re going to waste money implementing something that very few customers will use. – John Wingate, BankSocial
How you’ll handle refunds
Keep in mind that crypto transactions are not reversible; they are permanent. As such, transactions can only be refunded by the parties that are receiving the funds. Therefore, businesses that accept cryptocurrencies have to prepare for the possibility of customers requesting refunds and have a process in place to manage them. Also, the price volatility of cryptocurrencies may become a double-edged sword. – Billy Huang, Luna Market
What your customers understand about crypto
Consider your customers. Many people either aren’t too familiar with crypto or are confused by all the competing narratives and marketing swirling around the space in general. Doing right by them and focusing on the user experience is important. Bitcoin is the largest and most established cryptocurrency of them all and is widely understood to be a form of money, so it’s a great place to start. – André Neves, ZEBEDEE
Offering a variety of options
There’s a growing and thriving base of users that businesses can tap into by offering crypto as a payment option. However, doing so requires being mindful of offering enough options to cover the needs of users, including accepting different types of cryptos (proof-of-work or proof-of-stake), since the energy footprint of payment options is also at the forefront of consumers’ minds. Further, environmental, social and governance compliance requirements are a real variable. – Mark Soares, Blokhaus Inc.
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Starting with stablecoins
If you’re a business leader considering using cryptocurrency for payments and services, look into stablecoins first. Since stablecoins are tied to an asset like the U.S. dollar, you don’t have the volatility associated with Bitcoin or other digital currencies. Stablecoins make more sense for people to spend and are easier for you to manage on your balance sheet. – Molly Glennon, Ditto
Protecting against the market’s volatility
The crypto market is volatile, and this implies that the value of a digital currency is highly unpredictable. To overcome this, businesses need to have a system that can help them insulate themselves against this volatility by quickly exchanging cryptocurrency for its cash value. Additionally, businesses with a higher risk appetite can consider cryptocurrency as an investment. – Vinita Rathi, Systango
Your own familiarity with crypto
First, download a crypto wallet onto your phone and start using it for transactions so that you fully understand how the public keys and different chains work. Then, consider accepting stablecoins as a form of payment for your company, as it will enable you to accept crypto as payment without experiencing the volatility of Bitcoin and Ethereum. – Tim Haldorsson, Lunar Strategy
How you pay your current expenses
Coming from experience, if you are relying on fiat cash flow to pay business expenses and you are dependent on paying for goods and services with fiat, always liquidate costs to fiat out of payments and keep pure profits in crypto. That way, you hedge yourself against sudden market downturns and extreme volatilities, and you will make sure your business can keep running regardless of market circumstances. – Tomer Warschauer Nuni, Kryptomon
Current (and changing) regulations
Don’t forget about regulations if you want to set things up for long-term crypto use. Be wary about short-term and long-term holdings as well as regulatory and compliance laws in your country. Whatever efforts you make in the present to be compliant you’ll save in the future in consultations with lawyers and accountants. The space is becoming more complex, and being financially responsible is an added layer to that complexity. – Dennis Wohlfarth, ACCOINTING.com
Maintaining fiat options
Don’t supplant crypto payments for fiat payments; offer both. Odds are, if you’re just beginning to enable crypto payments, your user base is much more familiar with fiat and may be a bit hesitant if crypto suddenly becomes the only option. Offering a range of fiat and crypto payments gives them the flexibility and ability to slowly bridge to crypto. – Dan Novaes, EARNFT NETWORK
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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