Cryptocurrency is becoming more and more popular, and many small businesses are wondering if they should start accepting it as payment. There are a number of benefits to accepting cryptocurrency, including lower transaction fees and increased security (more on this later).
And as more individuals learn how to invest in cryptocurrency in Australia, the question of whether or not small businesses in Australia should accept crypto as payment. In this blog post, we will discuss the pros and cons of accepting cryptocurrency as payment and help you decide if it is the right choice for your business.
With cryptocurrency becoming increasingly popular and more people are investing in it, there are now more opportunities for small businesses to accept cryptocurrency as payment.
There are a number of benefits to accepting cryptocurrency, including lower transaction fees, increased security and convenience for customers. Let’s take a closer look at each of these benefits:
i. Lower Transaction Fees –
One of the biggest advantages of accepting cryptocurrency is that transaction fees are usually lower than traditional payment methods, such as credit cards or bank transfers.
For example, Bitcoin transactions typically have a fee of around 0.00025 BTC (or $0.40 at current prices). In comparison, credit card companies typically charge between two and three percent per transaction. This means that businesses can save a significant amount of money by accepting cryptocurrency as payment.
ii. Increased Security –
Another big advantage of cryptocurrency is that it is much more secure than traditional payment methods. When you accept cryptocurrency, the transaction is recorded on the blockchain—a decentralised public ledger. This makes it virtually impossible for someone to fraudulently charge your business for something they did not purchase.
In contrast, traditional payment methods are much less secure. For example, credit card companies can reverse charges if there is fraud or dispute, which can leave businesses out of pocket.
iii. Convenience for Customers –
Cryptocurrency is also convenient for customers. They can make payments using their smartphone or computer without having to carry cash or a credit card. This is especially useful for businesses that operate online.
Things to Consider Before You Decide to Accept Cryptocurrency as Payment
There are a few things to consider before accepting cryptocurrency as payment, such as volatility and taxation. We will discuss these considerations in more detail below.
i. Volatility –
Cryptocurrency is known for being volatile, which means the value can go up or down sharply in a short period of time. This can be a problem for businesses if they accept cryptocurrency as payment and the value of the currency goes down before they have a chance to convert it into another currency.
For example, let’s say you own a coffee shop and someone pays for their coffee with Bitcoin. You then convert the Bitcoin into Australian dollars so you can pay your suppliers. However, over the next few days, the value of Bitcoin falls by 20%. This means that you would have lost money on the transaction even though you did the conversion immediately.
To avoid this problem, businesses should consider using a cryptocurrency exchange that allows them to convert their cryptocurrency into fiat currency (e.g. Australian dollars) immediately after a sale is made. This way, they can lock in the value of the sale and avoid any losses due to volatility.
ii. Taxation –
Cryptocurrency is treated as an asset for tax purposes in Australia, which means that businesses will need to pay capital gains tax on any profits they make from selling it.
However, there is a silver lining—businesses can deduct any losses they make on cryptocurrency transactions from their taxable income. So if the value of Bitcoin falls and you sell at a loss, you will not have to pay tax on that loss.
Overall, there are a number of benefits to accepting cryptocurrency as payment. However, businesses should be aware of the risks before making the decision to do so. If you’re thinking about accepting cryptocurrency, we recommend speaking to an accountant or financial advisor to get expert advice.
What do you think? Is accepting cryptocurrency as payment something you would consider for your business? Let us know in the comments below!
