Should your store accept cryptocurrencies?

This is a question I get asked frequently now, and my answer is never the same. I try to take a holistic approach with our clients to give them the best possible recommendation for them and their business. My company works with close to 800 different e-commerce stores all around the globe, and for this question, there is not a one size fits all answer. Some shops I recommend that they try accepting crypto; others, I think it would be a waste of time and effort. Where does your shop lie in my thought process? Let’s see.

Cryptocurrency Pros

There are a few pros to taking cryptocurrencies, not a ton, but they are still worth noting as a store owner.

1. Immunity to charge-backs. This is one of the most attractive reasons to accept cryptocurrency; charge backs just cannot happen with its design.

2. Reduced fraud is another reason that goes hand-in-hand with the charge-backs. Since there is no reversing a crypto charge, is it ever really a fraudulent charge?

3. The possibility that the payments for your products can appreciate overnight and be worth more than the initial transaction.

4. Somewhat anonymity. This works to some degree, depending on what you are selling. If it is digital, anonymity is higher, but a lot of that goes out the window when a product is shipped.

Cryptocurrency Cons

While some of the pros for accepting cryptocurrencies do sound nice, like everything in life there are some cons associated with taking cryptocurrencies as well.

1. You can lose money on transactions. This is the big one for a lot of people. If you take an order on a Friday and by Monday, the cryptocurrency has dropped 20% in value, you have lost 20% of that order if you have not cashed out.

2. Increase accounting costs. Another factor that comes into play is your accountant has another account they need to look after and figure into your books.

3. The learning curve and having more on your plate is another consideration. There is a learning curve involved with accepting and understanding crypto. Do you have the time to manage that and keep an eye on the crypto market?

4. Refund issues. There is controversy about handling refunds with crypto since the value can change fast. If someone pays the equivalent of $50 but wants a refund at a later date and the value of their payment is $60, what do you do?

Now that we have outlined the essential pros and cons, we can get into the actual question, should your store take crypto? Keep in mind, when I talk about accepting cryptocurrencies, I am speaking in addition to your usual payment methods. In no way am I suggesting becoming a crypto-only store. Across all of the stores we manage, I have never seen crypto account for more than 3% of all payments to a store.

Demographic

One of the biggest concerns is your customer demographics. Would your primary demographic care or even ever use crypto? If you target an older demographic accepting crypto is primarily a waste and only beneficial in a few narrow sets of circumstances. Off-the-grid verticals generally have an older demographic as their customers, but they are also a vertical where the older demographic is onboard with using crypto for some of their transactions. Older users generally have a more challenging time with e-commerce, resulting in more customer service interactions and calls based on our experience. The only times we can see them bleed over to being amenable to using crypto are paranoia-based products.

Products

Another consideration for accepting crypto payments is, do your products lend themselves to a demographic that uses crypto? This is much like the age demographic but mainly centers around customers’ financial position. Sure, you might have a younger demographic that purchases on your site, but does that demographic overlap with crypto users? As a broad statement, most crypto holders are at a financial place where they are investing. Does this financial state align with any part of your primary demographic?

Cash-Flow

Your business’s free cash flow is a significant consideration in accepting cryptocurrencies. Is your business operating on a shoestring, where you have to use money from every purchase to fulfill the order? If that is the case, I would warn against accepting crypto. The unstable nature and longer cashout times can hinder your business operations. Expect 1-3 days longer to cash out payments than if you were using a typical gateway like Stripe. The instability presents itself when a $500 transaction is only worth $400 at the time of cashing out. If neither of these concern you, then it is a moot point.

As a whole, if your business can support crypto without having cash-flow worries and your demographic overlaps with the crypto user demographic, I say go for it. If you stay on top of the payments, you can cash out before any significant currency swings. Or, if you have the free capital, you can site on the currency and see how it performs. It could be a new investment conduit for you and your business in the long run. The verticals I have seen best perform with crypto are:

• Nootropics
• Gray Area Supplements
• Electronics
• Prepping / Doomsday Supplies
• Solar and Offgrid Products
• Police / Military Equipment and Surplus
• Digital Products

The verticals we have seen the poorest and no adoption are:

• Housewares
• Non-bulk foods
• Durable Medical Products
• Clothing
• Bookings
• Construction Supplies

There you have it; from the above thought process, you can determine whether accepting cryptocurrencies is the right move for your business. There are some more no-frills ways to accept cryptocurrencies, but I tend to shy away from them because of the learning curve required for shop owners. As for a recommendation on which service to use, I generally do not have one. With payments and gateways, I like to stick to the top-tier choices. Paypal and Coinbase are good choices for accepting it; they have the broadest support across most e-commerce platforms. They also make it easier for shop owners with their reporting.