June 30, 2020 |James Messi
Some companies will benefit more than others. The local green grocer is unlikely to benefit heavily from offering crypto payment services but online businesses and shops in big city centers can benefit heavily. This article hopes to understand exactly how a business can increase its sales (mostly online) by accepting cryptocurrency payments.
Why Internet Businesses should accept crypto?
For online businesses, you may be excluding a share of potential customers by not offering crypto payment options. Customers from certain locations with various currencies can find it difficult to pay in their native currency or it might be that their native currency has capital controls and so no foreign exchange services are necessary. These frictions are likely to put people off
A lot of countries have significantly higher levels of adoption than others. Turkey for example is known as an area that is extremely crypto-friendly. In a recent poll, it was found that X has used cryptocurrency. By offering crypto payment services you may be giving your business a significant selling point that you previously weren’t aware of. At this early stage of adoption, not many of your competitors are likely to be offering crypto payment services and so you might get some business out of that alone.
Benefits of accepting payments in crypto
When a customer from abroad wants to buy something online from a website that requires the payment in a different currency, either the customer has to have some of that currency themselves or they must incur bank transaction fees. Commercial bank transaction fees are notoriously bad and can be as high as 5% or more. This might be enough to make you uncompetitive in the market, especially if your product is a single large payment.
Why put up with these unnecessary extra costs when there’s a clear alternative that’s universally available. Bitcoin is available anywhere in the world where there’s an internet connection, normally at a good rate. Even countries with internal turmoil have access to crypto markets. Venezuela has a strong crypto market, as does Sudan and China. With these countries, in particular, you wouldn’t be able to buy an online service like software using Bolivars or Yuan. That’s why Bitcoin can help plug that gap in your business.
What cryptocurrencies can be used for online sales?
The most popular cryptocurrencies that could be used for online sales are:
– Bitcoin Cash
Many crypto fans will have read this article so far and probably said things like ‘Other coins have lower fees than Bitcoin’ and that’s true. That’s why It would be a disservice if other options in terms of making payments, weren’t included. Other coins have benefits in terms of speed and cost. Here is a brief assessment of some of the options available and specialized for purchases.
The block size limit of Bitcoin Cash (BCH) is 32MB. Compared to Bitcoin which only has a 1MB limit, it’s clear that BCH has a larger capacity to accept payments, especially small ones. Its maximum transactions per second is 224 which is well above Bitcoin’s. On the other hand, transaction fees are not cheaper. So it can be seen that BCH is quicker but not necessarily cheaper to use for a business. If you were a street vendor selling food for Bitcoin (which is becoming more and more common), you might choose speed over cost as you need to verify that the transaction has gone through. It’s worth noting that the lightning network covers some of the block capacity issues around Bitcoin.
XRP is the token created by Ripple intended for use on instant, certain and low-cost international payments. In recent years its gained attention for its favourability amongst institutions for use in payments. Although it seems like a good alternative in terms of cost and speed, a lot of people who might decide to use crypto for purchases aren’t fans of XRP. Some argue that it goes against one of the founding principles of Bitcoin, i.e. decentralization. XRP is an entirely centralized project where you rely on the faith you place in Ripple. With other cryptocurrencies, you put your faith in the consensus of the network.
Litecoin was founded in 2011. Much like Bitcoin, it’s decentralized and distributed. Its main selling point is that it has a faster block generation rate and a faster transaction confirmation time. Meaning that it is very quick. Once again, depending on your business, it might meet your preferences to add Litecoin as one of your favored coins.
There are a number of other options like stablecoins that are pegged to the value of the fiat currencies and can be redeemed for them.
Depending on your demographic and the censorship laws in their jurisdiction, you might benefit from offering Monero to these clients. It’s a privacy-focused token that can stop the prying eyes of the government interfering in your private transactions.
How to introduce crypto payments on website?
You don’t simply need to have one payment offer. The best approach is choosing a payment platform or service that allows a number of coins to be used so that you can appeal to the maximum number of customers. If your payment solutions cover; Bitcoin, Bitcoin Cash, Litecoin, a few stablecoins, and Monero, then you’re going to be able to accommodate 99% of all customers that wish to use cryptocurrency