If you were a small business owner years ago, the only methods of payments you were likely accepting from customers were cash, checks, and credit cards. However, today's business world includes cryptocurrency such as Bitcoin and many others, and crypto is quickly becoming popular with many consumers. In fact, statistics show that as of 2022, 30% of small businesses in the U.S. accept crypto as payment. Should your business be one of them? Here's what you need to know when speaking with your CPA and making your decision.
Your Sales May Increase
If you decide to accept crypto as payment, it is quite possible you could see an increase in sales. Since crypto is very popular internationally, adding crypto as a payment option to your online customers could open your business to international buyers. In fact, many businesses report seeing a spike in online sales of their products or services once they choose to accept crypto as payment.
Better Merchant Protection
As a merchant, you are always concerned about fraud, especially when it comes to fraudulent chargebacks. If you allow crypto to be used as payment, these can't occur with this particular currency. Since crypto relies on a decentralized setup, this means crypto transactions are essentially like your customer is paying cash for products or services. This results in the transaction being final, since there will be no third-party that can reverse charges.
Technical Difficulties
Now for a potential problem you may encounter regarding crypto payments. When speaking to your CPA about this, you'll find out quickly that choosing to accept crypto payments means you may have many technical difficulties ahead. To accept this form of payment, you will need to create a digital wallet on a digital currency exchange, which is as difficult as it sounds. As a small business owner, this means you will need to make a substantial investment to upgrade your current computerized payment technology. If considering this, definitely speak to your CPA to discuss how such an investment would impact your bottom line.
Remember the Crypto Volatility
As a relatively new form of currency, crypto is extremely prone to volatility in terms of its value. One day its value skyrockets, while the next day it plummets. Should you want to accept crypto as payment at your business, you will need to pay close attention to this volatility. To begin with, you will need to discuss with your CPA how you can convert crypto payments into your currency of record. Using a merchant service company like Coinbase or BitPay can protect your small business from crypto volatility, since these companies will exchange the digital currency to its current value in real-time. If there is one thing your CPA will advise you not to do, it is to let crypto payments linger indefinitely. Since its value is constantly changing, doing so could find you getting far less revenue than you anticipated.
Lower Transaction Fees
If your business has been accepting credit card payments for any length of time, you as a business owner know all too well about the high cost your business incurs from credit card transaction fees. When a typical small business accepts a credit card payment, it usually incurs a fee of 25 cents per card swipe, plus up to four percent of the transaction's total. When you are sitting down with your CPA to analyze your finances, it's easy to see how these fees add up in a hurry. If there is one big advantage to accepting crypto, it's that the transaction fees associated with it are much lower. Generally, you can expect transaction fees associated with crypto payments to be no more than one percent of the transaction's value.
Almost No Regulations
While initially this may sound great to you as a business owner, the fact that cryptocurrency is virtually unregulated at this time can pose risks to your business. While lawmakers are currently trying to craft crypto regulations, this will take time for the laws to be passed and then actually accepted and understood by business owners like yourself. At the moment, crypto is a currency that is very prone to new and unexpected problems and difficulties. Until it becomes clear as to how your business would report gains and pay taxes on cryptocurrency payments, you'll need to stay in close touch with your CPA, especially if you are wanting to add crypto as a payment option.
Crypto and Security
If your business has ever fallen victim to cybercriminals, you know that is something you don't wish to experience again in the future. While crypto transactions mean you don't have to worry about credit card numbers being stolen, don't assume these transactions are completely safe from cybercriminals. Unfortunately, there is currently no full-proof way to ensure online hackers cannot gain access to digital wallets. Also, you need to remember that unlike the U.S. dollar and other well-known currencies such as the Euro, cryptocurrency is for the most part not insured. Thus, it is possible that should a hacker gain access to your company's crypto payments, you could experience a total financial loss. When discussing this with your CPA, you'll need to weigh the potential gains and risks of accepting this form of payment.
Added Convenience for Customers
Should you decide to accept crypto payments, this will add another level of convenience for your customers when buying products or services. As an added bonus, accepting crypto will also demonstrate to customers that your business is choosing to stay modern and use the latest technology, which may appeal to many younger consumers. Finally, accepting crypto payments may give you an advantage over competitors, which is something you are of course always seeking.
Since there are many advantages and disadvantages to consider when trying to decide if your business should accept crypto payments, it's best to have numerous in-depth conversations with your CPA. By doing so, you'll stay abreast of the latest crypto developments and make the best decision for you and your business.