Or why every other online payment method suck
Whenever someone tells you to start using new technology, the first question that comes to your mind is why? You might think: “I’m already happy with current solution, so why to change anything?”
Therefore, let’s look at the current online payment gateway situation and see why merchants should start accepting Bitcoin or other cryptocurrency payments.
What type of online payment options there are?
- Online wallets: PayPal, Neteller or Skill.
- Card payments: Visa and Mastercard.
- Bank transfer: direct or via a payment gateway.
And, how are they? Well honestly they all suck, for various reasons.
1. You don’t control your money
When you use banks, credit card companies or online wallet providers, they control your money and can legally do things with them that are not in your best interest. One of these things is freezing your account or just withholding your funds.
Sure, this doesn’t happen often, but when it happens the damage is massive. When you have millions stuck on your account for months, it can literally bankrupt the whole company. And this happens every day to some unfortunate businesses.
The reason for such a tragedy can often be very minor. Maybe someone sued your company, or there was some suspicion in money laundry and the financial institution or the government just overreacted. There’s always a risk something like that happening even if you didn’t do anything wrong.
In order for things in point 1 not to happen, when dealing with financial institutions you have to comply with their bureaucracy, and it’s terrible. There are entire teams whose only job is to monitor that clients to go through painful KYC and AML procedures, because if they don’t, even if one $1 of “criminal” or “illegal” money slips by, that’s just another excuse for a financial institution to lock your payment account.
Imagine how much money merchants spend per year for complying with all the regulations set by the government?
3. High transaction fees
Credit card companies take on average 3% fee. Same goes for all online wallets that use card payment. With non-card payment online wallets may take “only” 1–2%. While in some countries bank transfer may be cheap, in the USA it costs $25 per transfer on average.
That’s quite a lot. Imagine if your business makes $10M in revenue per year, 3% from that is $300k per year. That’s just huge!
4. Payment limits
Most cards have a payment limit per day or per month. Usually, it’s a few thousand per day and tens of thousands per month. Even if you have more money on the account it’s still impossible to surpass those limits if the bank has set them.
This means that if you are selling expensive goods, it may be quite hard for some customers to purchase them even if they want to.
Whenever someone says charge-back, merchants go into a panic. Charge-back basically allows the consumer to dispute the payment, even if everything went by the book. And even if they fail in getting back the money, it’s still extra work the merchant and you also and up paying the charge-back fee anyway, even if you won. And I’m sure you know that people often do a charge-back even if they got what they paid for. There’s even a name for that — “friendly fraud”.
6. Country Restriction
It’s pretty common that payment providers restrict specific countries. Usually, it’s the USA, China, Russia, or some 3rd world countries. That’s practically half of the world. How are you supposed to grow your business if you have to say “No” to every other client that comes to buy something from you? Or you need to set up multiple payment gateways for different geographical regions?
When you look at these problems, you will see that there’s actually quite a good reason for switching to Bitcoin, because with Bitcoin those problems do not exist.
- CHEAP: the average price of transactions is just 10–20 cents. Even if you send 1 million.
- FAST: Transactions get registered in blockchain usually within half an hour, or if you integrate your system with specific wallet provider or use Lightning Network then it will take few seconds.
- SECURE: No one but you has access to your funds. The money goes directly to your wallet, and no one can touch it.
- EASY: There’s no bureaucracy, you can start accepting Bitcoin payments right away and set up everything in 1 hour.
- And most importantly: It’s DECENTRALIZED. Everyone from any part of the world can send money to anyone they want. No one can come in between and stop them. That’s the definition of freedom.
So, by accepting Bitcoin, you are not just using a superior way of sending and receiving money, you are taking back your financial freedom. Therefore, there’s really no place to argue if you should do that or not.
Though there is one more reason, many of you have not thought about.
When you accept payment in Bitcoin and hold to those Bitcoins after getting them you most likely will earn a profit, due to an increase of price.
I know you have heard about all sorts of Bitcoin bubbles and price going up and down, but that’s just short term. If you look long term, you can see that despite all ups and downs, the price of Bitcoin has been systematically growing. So, if you put your money in Bitcoin today, in a year you will most likely have profit. It may not be 1000% increase anymore, like in the good old days, but it can still easily double or triple.