Unless yours is a cash-only business, you've almost certainly heard of Bitcoins. Every day, it seems like more and more companies are jumping onto this digital currency craze.
However, does accepting Bitcoins make sense for your business?
Maybe — maybe not.
Below are nine of the top considerations you should explore before taking the plunge. We’ll start with the most important advantages of accepting Bitcoins:
1. Setup Couldn't Be Easier
You don't need a merchant account or any special equipment (i.e. terminals). In order to get started, all you need is a Bitcoin wallet that exists on your hard drive, mobile device or in the cloud.
2. Minimal Transaction Fees
With Bitcoins, all payments are from user to user, and transactions carry fees ranging from 0 percent to 1 percent on average. By contrast, most merchant accounts charge fees that can go up to 4 percent. Plus, you also have to consider money spent on PCI compliance and extra payment security.
3. Unparalleled Fraud Protection
This could change in the future, but right now, it is very difficult to "game" the Bitcoin community. There exists a real time and public ledger of all transactions, making it next to impossible for fraudulent activity to occur. Moreover, very little personally identifiable information is attached to the Bitcoin process, so data breaches are extremely rare.
4. Zero Chargebacks
All sales are final in the Bitcoin world. There is no way to dispute charges or force vendors to refund Bitcoins. This alone makes the concept irresistible for many merchants.
5. It's Its Own Currency
Bitcoin is a standalone currency that exists independently of all other exchanges. This allows you to break into new markets where currency conversions or banking rules have prevented you from doing business in the past.
6. Free Publicity
Most Bitcoin wallets and exchanges publish a list of vendors that accept this payment option. By joining the larger Bitcoin community, you receive instant and free publicity.
Now, let’s turn to some of the disadvantages of this payment option:
7. Bubble Concerns
Bitcoin prices fluctuate wildly. In the past few years alone, exchange rates have gone from $10 to $1,000 to $240. Some merchants fear that they’re buying into a bubble when they embrace Bitcoins.
However, you can mitigate these risks by converting your Bitcoin holdings as soon as you make a transaction. That way, you’ll always end each day with a zero-Bitcoin balance.
8. Accounting Complications
How do you track and report income? Are your accounting standards based on:
- The market value of Bitcoins in your possession?
- The value of Bitcoins when you first acquired them?
- The value of whatever items were sold or bought?
Just to be safe, you should talk to your tax advisor before making any decisions.
9. Having a Clear "Return Policy" Is Essential
All charges may be final, but shoppers prefer doing business with reputable merchants — so you'll need to update your return policy with Bitcoins in mind.
The most practical approach involves pegging all refunds to the dollar amount of the purchase. Bitcoins may rise or fall in value over time. A $100 purchase should equal a $100 refund — regardless of the currency used.
Should You Accept Bitcoins in Your Business?
Before deciding if accepting Bitcoins is right for your business, evaluate the pros and cons. Compared to credit card payment options, Bitcoins are easier to set up, and they’re cheaper to use. Equally important, accepting Bitcoins will allow you to tap into a growing community of users who prefer shopping exclusively with this cryptocurrency.
However, are you prepared to deal with fluctuating prices and accounting complications? Do you have a refund policy in place that will accommodate this new method of payment? At the end of the day, if you believe Bitcoin can improve your business, it’s worth the time to do the research before implementing this developing payment technology.