In November 2013, a then 23-year-old named Adam Welsh walked into a Subway restaurant in Pennsylvania and bought a chicken bacon ranch sandwich; not particularly unusual. What was strange, however, was the way he chose to pay for his $12 sandwich. He didn’t use cash or credit card—he used Bitcoin (BTC).
He paid 0.04035 BTC, worth $12.35 at the time, and posted the whole exchange online. Back then, that restaurant was one of only two stores in the chain to accept cryptocurrency—the other was in Moscow. Today more Subways have followed, and businesses big and small have begun accepting cryptocurrencies as payment for a whole host of goods and services, including Expedia, Microsoft, Overstock and Virgin Galactic, among others.
The total value of the cryptocurrency market rose to over $177 billion in the third quarter of 2017. Cryptocurrencies are no longer just an adventurous and futuristic investment opportunity; they are rapidly becoming an alternative payment method for everyday goods and services.
The convenience of receiving payments within seconds, with minimal transaction fees means a lot to a business. More online stores are opening up to accepting cryptocurrencies as a form of payment from their customers. But while cryptocurrencies like BTC have hit the headlines a lot recently thanks to its price volatility, there are a number of compelling reasons why small businesses should explore offering it alongside more conventional payments.
The cost of doing business
One big area that cryptocurrencies can help merchants with is security. According to Identity Theft Resource, data breaches in 2017 for companies holding private data for customers hit their highest levels since records began.
Allowing customers to pay with cryptocurrencies means their data isn’t stored in a centralised hub, which is where data breaches most commonly occur. Their banking information is stored on their wallet, and not on a potentially vulnerable company server.
Cryptocurrencies can also be useful to help businesses with their cash flow. If a customer pays for a product using a credit card, their banking provider ensures if they require a refund, you the retailer has to pay them back.
While fine in principle, in practice there’s often a delay between you refunding the customer and the credit card provider returning the payment to you, creating a potential headache for retailers having to cover a lot of refunds—like after the Christmas holidays.
With cryptocurrencies, all sales are final. There are no chargebacks to worry about which means your sales are more secure than they are with traditional merchants and help manage cash flow more efficiently.
For businesses working across borders, merchants have to pay hefty fees to process international currency payments. Cryptocurrencies cut out those fees. Because cryptocurrencies are virtual, they don’t have a country of origin or national bank backing it. That means businesses don’t have to wait for payments to clear a foreign bank or pay the taxes/costs associated with accepting that payment in the first place.
Cryptocurrencies have yet to rival VISA or MasterCard speed. Currently, the BTC network is capable of processing a maximum of 7 transactions per second. In comparison, the global VISA network can process an average of 2,000 transactions per second, even reaching as high as 56,000 transactions per second during peak holiday shopping periods such as Christmas and Black Friday sales in the United States.
This predicament paved the way for the rise of cryptocurrencies like Bitcoin Cash (BCH), which seeks to become the preferred peer to peer electronic cash system. Bitcoin Cash (BCH), which launched in August 2017, has been able to process 23-92 transactions per second—or between 2 million and 8 million transactions per day. That’s still not enough to match up to VISA, but several groups are already testing upgrades that could result in the Bitcoin Cash (BCH) network handling up to 7 million transactions per second in the near future and able to compete directly with mainstream payment processors.
The growth of Bitcoin Cash (BCH) comes at a time when BTC’s retailer acceptance is on a decline. In 2017, merchants like gaming distributor Steam have stopped accepting BTC payments because its processing fees went from 20 cents to as high as $20 in December. Currently, the average BTC transaction fee is down to $2.44, although still a costly difference when compared with Bitcoin Cash’s $0.09 fee per transaction.
Its ability to maintain low transaction fees on top of all the benefits that cryptocurrencies provide is among the many reasons why many payment solution providers for merchants have decided to accept Bitcoin Cash payments.
Other avenues
If you’re considering your first steps into cryptocurrency, gatherings such as the CoinGeek.com bComm Conference are a great place to start.
Taking place in Hong Kong in May, it will host some of the world’s foremost Bitcoin leaders including Roger Ver, CEO of Bitcoin.com; Michael Wood, Expedia’s director of global payments; and Ryan X. Charles, CEO of Yours, a social platform that gets people paid for creating and discovering good content with Bitcoin Cash micropayments.
You can find out more about the conference, by clicking here.