Right out of the gate, we'll state the obvious: Digital currencies won't work if there's nowhere for their investors to spend them. Upon a currency's initial launch, that can be a big issue; there's only so much trading you can do between members. You need real merchants and vendors on board to make the enterprise work.
Cryptocurrency is a young industry, and a lot of business owners have adopted a wait-and-see attitude about accepting alternative currencies for payments. Now that it's proven to be more than just a passing fad, however, more merchants are jumping aboard; as proof, this website alone lists over 1,300 businesses who accept Bitcoin transactions. That's just one type of digital currency among many, and more retailers are signing on all the time. With that information in mind, we'd like to explore this topic in more detail.
First, what incentives are there for vendors to accept cryptocurrency? It's only natural for them to ask, “What's in it for me?” Below is a list of benefits that digital currency issuers are counting on to make their product more attractive to business owners:
Lower Transaction Processing Costs. Any business owner can tell you the costs incurred when their company accepts bank wires and credit cards as payment; most of them include a monthly fee, along with charges to the vendor for each individual transaction. The majority of cryptocurrencies don't include a monthly fee for vendors to accept them, and—when compared to credit card purchases—the per-transaction cost is almost always much lower. This and other advantages are detailed in this article from Service Cycle.
Transaction Security. All electronic methods of payment offer layers of security—usually in the form of encryption or coding—with all transactions made. However, cryptocurrency advocates say their security is much more effective and multi-layered than that used by banks and credit cards. Alternative currency transactions usually require more than one access code or password in order to be completed, and the mining process assures the validity of every single transaction. To be fair, just like credit card transactions, digital currency ones are “hackable,” too—but, they assure us, much less so.
All Sales are Final. “Charge-backs” are a pain in the backside to all involved; these happen when someone decides, for whatever reason, to reverse a financial transaction. These can create headaches for consumers and financial institutions alike, and can damage reputations and credit scores over the long run. On the whole, once a digital currency transaction is approved, it's 100% final and irreversible—no charge-backs.
More Information Storage. Digital currency allows for much more financial information to be stored and organized than, say, a traditional wallet. In FT's recent article about eBay looking at accepting digital currencies, John Donahoe, the company's chief executive, said, “There is a limit to how many cards you will carry, or remembering what points you have or don’t have...but in a digital wallet, you can put 50 different loyalty cards.” This ease of use appeals to both merchants and customers alike.
So, say you're a merchant, and you're sold; you want to sign up to accept cryptocurrency as a mode of payment. Where do you go? Digital currency issuers are more than happy to help you with that. The following are links to merchant account setups for the top two major cryptocurrencies:
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