Cryptocurrency has been one of the hottest topics of 2021. With the price of Bitcoin and other cryptocurrencies skyrocketing, many entrepreneurs are looking into how they can accept cryptocurrency on their e-commerce site to reap the benefits.
However, there are pros and cons to this issue that need to be considered. In this article, we will talk about what it is like to accept cryptocurrency as an alternate payment method. As well as some of the pitfalls you may face if you decide to go down this route.
What actually is bitcoin & cryptocurrency?
Bitcoin was invented in 2009 to act as an alternative to ‘fiat’ currencies (A currency backed by a government institution e.g. USD or AUD) and is currently the most popular form of cryptocurrency. There are many other cryptocurrencies that have many other uses. However, for the purpose of this article, we will just focus on their application as strictly a currency/store of value.
In a recent study by Finder, A quarter (25%) of Australians already own or plan to own a cryptocurrency in 2021. So this isn’t just something that your local web designer uses 😃. Full disclosure: I don’t actually own any cryptocurrency. I give my opinion on it all at the end of the article!
What demographic of people own & use Cryptocurrencies?
The average avatar of a cryptocurrency owner is a 38-year-old male with an annual income of around $111,000. That is according to a study by Gemini. This doesn’t mean that women are to be ignored in this space. That same study found that 53% of people that ‘were interested in investing in digital assets but wanted to learn more first’ were women.
It’s safe to say that Bitcoin and other cryptos are mainly used by a majority millennial demographic. It can be a question of whether or not your target audience falls into that category. Do the benefits outweigh the cons for your business?
The Pros of accepting cryptocurrencies on your online store
I’ve put on my rose-tinted glasses for the below points that showcase the few benefits that accepting cryptocurrency on your site can have for your business.
If you already have an e-commerce store on the Shopify platform or similar, you probably are well aware that you pay a fee for each transaction. These fees range anywhere from 1.75% to sometimes as high as 3%. Accepting Bitcoin and other cryptocurrencies can help lower these fees to as low as 0.01%
Coinbase Commerce charges no fees themselves. Leaving only a network fee (which is a minimal fee paid to process the transactions on the blockchain).
Chargebacks can cost your business a lot of money. Accepting cryptocurrency eliminates this risk. As there is no way to charge back a purchase. This also means that you are not running the risk of having your account shut down due to too many disputes!
Credit Cards and Paypal transactions can sometimes take anywhere from 2 to 7 business days to actually receive your money in your bank account. Bitcoin transactions are confirmed in just a few minutes.
This also means that those funds are instantly in your possession and are ready to be used for other business expenses. Or even, the product you plan to send the customer – if you’re dropshipping.
Easy payment conversion from any fiat currency
With Shopify Payments only accepting 9 different currencies, accepting crypto can make it easier for your global customers to purchase and pay for your product, without having to jump through hoops.
This can open your website up to regions you previously thought were out of reach.
It can increase your Online Store’s revenue.
By increasing accessibility to your site by catering to potential customers that may only purchase solely in crypto. Your online store may see a significant increase in revenue.
With the rise of crypto in 2021, you will find more and more users using crypto to pay online.
The Cons of accepting cryptocurrencies on your e-commerce website
No customer service
Unlike with Payment Processors like Shopify Payments, Stripe or eWay, there is no customer service by phone or email to help you if a crypto transaction goes wrong.
You are the only one in charge of solving any issues or disputes that may arise from your customers’ payment. You may be able to chat to your exchange, but they won’t be able to help you with your customers’ individual transactions.
Risk of fraud
It is very difficult to find the identity of someone behind a cryptocurrency transaction. This can lead to scams and fraud; making it harder for you or the police to find a culprit.
Another payment option to manage/showcase
Most e-commerce stores have at least the option to pay by Credit Card and usually Paypal in addition to a Buy now pay later systems like Afterpay or ZipPay. This can take up precious real estate on your site, as well as create a less seamless checkout for your customers.
You may create a headache for your accountant
The sale of cryptocurrency can sometimes create a Capital Gains event and require to be taxed as so. Whilst this is not a huge issue for many small crypto traders, it can be an administrative nightmare if you are handling multiple crypto transactions daily.
I’m sure you’ve been waiting for this one. The price of Bitcoin and other cryptocurrencies has been known to fluctuate wildly and if you’re not careful, your business will be exposed to the occasional dip in prices. It is not a rarity to see 10%+ daily fluctuations in the price of some coins. This means that if you do not convert your crypto back into your main fiat currency (e.g. AUD, USD, GBP) straight away, it is possible to lose a significant amount of money.
How can I accept Bitcoin and other cryptocurrencies as a payment method on my site?
So you’ve weighed up the pros and cons above and have decided to go ahead with integrating a crypto gateway into your e-commerce site.
Below – I will explain how to implement a crypto gateway into your Shopify store in under 30 minutes. If you are running a Shopify store – they have a handy help guide which you can find here.
Picking a crypto payment gateway
BitPay and Coinbase Commerce are the two most popular crypto payment gateways. They both have an easy integration with both WooCommerce and Shopify as well. Coinbase is free to accept Crypto as a payment while BitPay charges a 1% fee on each transaction.
Both platforms have their benefits and drawbacks. While BitPay has a longer track record in the merchant facility space, it’s also more expensive for the end-user. The platforms both have extensive documentation on how to set up and integrate into your e-commerce website.
Do we recommend accepting crypto on your online store?
I have been following the cryptocurrency movement since 2014 when I first purchased half a Bitcoin for $200 or so. I would love to tell you that I still had that 0.5 of a Bitcoin, but I sold it only a few days later. It would now be worth over $35,000 Australian Dollars.
Since then I have witnessed the price of Bitcoin and other coins like LiteCoin, Ethereum, and Ripple skyrocket in price. While all coins are not created to be solely currencies. I can’t help but notice that they have become more a store of value rather than a currency with any practical application. (At least to warrant their extraordinary market caps.)
Why are Australians purchasing cryptocurrency?
So while you may hear a lot of people talking about crypto, and think it could be something to capitalise on. The vast majority of crypto holders do not use it to purchase goods and services like they would with the US Dollar. Instead, crypto holders are focused on increasing the value of their holdings. Hoping to one day make a profit by trading crypto for other assets.
For this reason, I don’t think an e-commerce store that offers cryptocurrency as a form of payment has a considerable advantage over one that only accepts USD or another fiat currency. If you want to discuss further, please get in touch today!