Bitcoin, the flagship cryptocurrency and the blockchain that made it possible to transact out of the control of banks and governments, is often applauded for the technological breakthrough it brought about and for its potential to protect money from devaluation and to appreciate investment portfolios. Modern investors are well aware of what investing in pairs like the default ETH/BTC implies, and how lower-risk cryptos should be approached cautiously and through long-term lenses. But few step back to look at Bitcoin from the angle of a business, an enterprise that’s serving modern buyers, who are increasingly educated about decentralized finance and digital currency. They’re surrounded by everything digital and a decreased trust in traditional financial systems and institutions. And more and more are becoming familiar with market indicators like the ever-changing Bitcoin price prediction, which is also frequently used to gauge overall investor sentiment in the crypto market.
To be prepared for the client of tomorrow means to understand what types of payments are gaining traction among audiences, and which can be feasible in today’s marketplace, practical without disrupting current workflows. Depending on local regulations, crypto payments can be integrated with current workflows. How? What for?
Why a small business would consider accepting Bitcoin
There are quite a few reasons why more smaller-size businesses have been cautiously opening up to Bitcoin. And we don’t talk about big companies, which are understandably looking to access international masses and reach the millions of crypto users globally. But about those operating within confined parameters, like street cafes or growing enterprises.
Reduced fees
Perhaps one of the clearest reasons for a small business to accept Bitcoin is cost. Transaction fees are usually much lower than traditional methods – often just 0.2% to 1%, compared with credit cards or wire transfers, which can easily cost twice that or more. That translates into added profit on each sale.
There’s also an exception, when a business might incur additional fees. That’s if a third-party payment processor manages the flow of money and deals with accounting or other business-related activities on behalf of the business that starts taking crypto – the employer. However, even with that service fee, the overall cost is generally lower compared to what intermediaries charge to enable payments in the traditional way. Other than that, payments are easily accepted on Bitcoin’s second layers, like Liquid or Lightning.
Dishonest chargeback elimination
The bulk of seasoned online merchants are at some point facing customers calling their bank to request a chargeback on a consumed service or product. The reasons differ – it can be the common case of “subscribe-and-forget”, where a customer forgot they’d made a subscription and believes their money is being stolen. Or one trying to take advantage of consumer protection rules, and get their money back even if they had used a business’s service or product. More often than not, though, customers fail to realize the difference between chargebacks and refunds, which leads to many chargebacks being filed erroneously. Instead of reaching out to the merchant first, many call their banks, turning the event into what can be called an accidental fraud.
Crypto makes deceitful chargebacks history. BTC transactions occur on the blockchain and are irreversible, which protects businesses against instances of abuse of customer laws, eliminating related losses.
Effortless implementation
There are multiple tools that help businesses integrate crypto payments in a matter of minutes – including plugins. It takes no diploma or tech background to set it up once key considerations are handled. However, every business comes with its own peculiarities and needs, so there’s no one-size-fits-all solution when it comes to handling crypto payments. A smaller business might get by with a simple mobile Bitcoin wallet, but as the enterprise’s size increases, it may need more robust, professional setups.
Lower risk of fraud
Taking crypto as payment comes with an added security layer that deals with some vulnerabilities common in traditional payments. Because transactions take place on the chain, they’re permanent and can’t be altered, manipulated, reversed, or deleted. The instances of human error while processing are also reduced as payments no longer need intermediaries to settle. Data breach risks are also reduced since the Bitcoin model reduces the existence of sensitive data altogether.
Faster transactions
Transactions are faster with crypto, settling almost instantly, offering small businesses access to funds immediately and enhancing operational efficiency. Delays are a common challenge with traditional processors, which can retain funds for days.
There are two usable transaction layers
There are two transaction layers: layer 1 and layer 2. The first one is Bitcoin’s core layer, an accounting system that makes transactions irreversible and transparent, protecting them with hash computing and nodes. This one is more appropriate for larger transactions that don’t need instant settlement, like real estate purchases.
The second one is designed for immediate settlement and has no effect on the first layer. It’s a second-layer protocol that helps individuals transact while leveraging Bitcoin’s security. Importantly, transactions take place off-chain. Money gets locked on the main chain when the channel opens and the blockchain only updates the transaction when the channel is closed.
Selecting an appropriate wallet
There are hardware wallets and multisig wallets, depending on each business’s needs. The first one works for layer-1 transactions only, taking the form of a small device, and connectable to the internet via Bluetooth or USB, which makes them safer compared to the second alternative. Multisig options, on the other hand, are a special model of Bitcoin wallets where more private keys are involved to greenlight transactions. The keys can be assigned to more parties, from CEOs to employees. So if you choose a 2-of-3 model, for example, it’s enough for two keyholders to agree to transfer Bitcoin for the transaction to proceed.
Endnote
There are evidently challenges and thought-consuming decisions to make when looking to integrate such a novel technology. Bitcoin is still maturing. But if we look at how rapidly progress has been made in online payments, it’s safe to say that digital currency payments will make it there too. It’s important to treat it like an extra payment solution for customers, not a replacement. Bitcoin’s price is also famously volatile, making it crucial to consider more strategies for operations like money conversions.
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