crypto strategy

Should merchants accept crypto in 2023? The pros and cons

Tracy Kobeda BrownVice President of Programs and Technology for the MRCshares with our readers the pros and cons of accepting crypto payments for merchants

Between inflation, supply chain issues, the ongoing recovery from COVID-19, and lingering geopolitical concerns, the payments landscape has changed dramatically over the past year. Cryptocurrency continues to be an increasingly prominent feature of this landscape. As merchants race to adapt to the new normal over the coming year, the question of whether to integrate digital currency as a form of payment becomes increasingly important.

The decision is not easy. Enthusiasm for new technologies is a key element of innovation, but it must be tempered with strategic and practical implementation to succeed. Determining whether crypto is a good fit for a merchant’s payment stack requires a thorough analysis of the pros and cons of accepting cryptocurrency.

The benefits of accepting cryptocurrency


Many of the reasons consumers are drawn to cryptocurrency as a means of payment are also advantages for traders. After an initial learning curve for consumers, cryptocurrency offers virtually instant transactions that are cheaper than many traditional payment methods due to lower third-party fees. Crypto also simplifies cross-border transactions and alleviates the inconvenience of currency conversion.

A powerful potential benefit of crypto acceptance for merchants is finality of purchase. In most transactions, there are no refunds and no costly chargebacks. All sales are final. While this can free up resources, a potential downside is the added burden on customer services when a consumer regrets a purchase.

But perhaps the most compelling reason merchants should consider accepting cryptocurrency: their customers want to pay with it. Providing the payment method consumers want will allow them to spend more. It also enables those without access to traditional banking services to engage in the economy and will likely continue to play a central role in emerging markets.

These are some of the reasons 73% of small businesses say new forms of digital payments are fundamental to their growth, and why big merchants have been exploring this space with caution for a long time.

The risks of accepting cryptocurrency


As compelling as customer preference is, there are also barriers that need to be considered.

The most obvious concern is continued volatility. The wild fluctuations of even the most stable cryptocurrencies complicate the pricing of items and make cryptocurrency a challenge for subscription merchants, where predictable revenue streams are an essential part of a successful business model. Eventually, these price swings may be less dramatic and more in line with traditional exchange rates, but it’s impossible to predict when or if this will happen.

Another unpredictable element of cryptocurrency is the changing regulatory landscape. We are still in the early days of crypto, and the global patchwork of regulatory infrastructures makes compliance a challenge. This can pose challenges for global traders who have to adapt to a wide variety of very different regulations. There are payment-related regulations that global merchants need to consider, compliance requirements are nothing new, but the relatively untested legal and regulatory landscape of cryptocurrency makes foretelling what is to come and how. adapting to it is a major challenge.

There is also the risk of additional fraud. Properly executed, cryptocurrency transactions are very secure; but adding new payment types still provides exposure to additional attack vectors. This is an inherent risk of adopting any new payment method, but it is important to consider that fraud mitigation strategies will need to be updated and tailored to the unique profile of crypto fraud -currency, and this process may require new staff training, new technologies, and at the very least, new KPIs and tracking methodologies.

There are other challenges as well, including how best to store cryptocurrency, privacy issues given the transparency of the public ledger, how to count it as revenue, and when to convert it into currency. traditional. However, these are merchant-specific considerations and likely secondary to the immediate challenges faced by organizations accepting crypto for the first time.

Should we accept crypto?


From 2022, global crypto ownership rates average 4.2% of the population, with over 320 million crypto users worldwide. That’s too big a number to just ignore, although accepting crypto just because others are is obviously not a viable strategy, especially if it’s against your business model or not suitable for your customers.

Maybe it’s best to start with a simple question: do your customers want to pay with crypto? If so, does your business model support it? Will it be profitable for your business based on customer demand? Do you have the resources to implement the logistical, legal, regulatory, and anti-fraud infrastructure needed to do it right? Do you have the resources to stay up to date as crypto continues to evolve?

If the answer is yes, remember that as adoption increases, third-party companies can also help you with this complex process, regardless of the size of your organization. There are many logistical considerations when adopting crypto into a payment stack, but it’s much easier to achieve than it was a few years ago. Merchants don’t have to do it all in-house, and they don’t have to do it alone.

Even if the answer is no and you’re not ready to take that step yet, it’s still wise to explore digital currencies and blockchain technologies because they’re not going anywhere. These concepts continue to be valuable for a wide variety of business concerns, not just payment acceptance, and having the institutional knowledge to use them successfully can provide a significant advantage in years to come.

This editorial originally appeared in our Crypto Payments and Web 3.0 Report for Banks, Merchants and PSPs. The first edition of our report aims to provide a go-to payment resource on crypto terms and concepts for those who wish to understand the basics of crypto payments and their long-term impact. Additionally, it shares practical examples of cryptocurrency-enabled e-commerce and banking services and presents the latest developments in the regulatory landscape. Also, it reveals which are the most innovative companies in this space, which are building the crypto rails.

About Tracy Kobeda Brown

Tracy Kobeda Brown is the vice president of programs and technology for the MRC. She was product manager for Fragomen, Lockerz and CEO of Evil Genius Designs. Tracy created the American Eagle Outfitters website, ae.com, and served as CISO. She received her master’s degree from Carnegie Mellon and her bachelor’s degree in economics from the Wharton School.

About the Merchant Risk Council

The MRC is a global community connecting e-commerce and payment fraud prevention professionals through educational programs, online community groups, conferences and networking events. As a non-profit organization, the MRC is headquartered in Seattle, Washington, but has members from around the world.

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