Retailers and merchants can easily set up Bitcoin payments and increase their margins.
Have you ever been to a gas station or retailer and noticed the hand written note describing the minimum amount required for a debit or credit card purchase? Have you ever wondered why so many stores go to this archaic practice? It may be shocking to discover this is not the retailers attempt to exploit its customers, the store is simply trying to mitigate the transaction costs enforced by credit card companies.
The typical consumer doesn’t realize the high transaction fees merchants are forced to pay for using credit cards (and paypal). Credit card companies enforce many different types of fees including: interchange fees, processing fees, monthly fees, and many more. Calculating the cost of these fees varies between location, the transaction type, and if its in person or online. So the average cost of each card is hard to pinpoint but it is safe to assume merchants pay between 2.5%-5% in fees for each transaction. Which is a hefty a fee, especially when operating on tight profit margins.
Merchants may not be required to provide debit and payment methods, but in today’s digital cash society it would be very foolish not to accept these forms of payments. This puts merchants in a bind, by not offering credit cards as a payment method they risk losing a large amount of customers, but by accepting these payment options they are forced to cut deep into their profits.
Merchants are stuck without another option.
For many years, this has been a real issue facing retailers. Although, retailers have an several options of companies they can go through, shedding the high fees is unavoidable, at least until now.
The adoption Bitcoin and select other cryptocurrencies is providing merchants with a new option of payments and an easy way to avoid excessive fees imposed by credit card companies.
The biggest knock to crypto payment options is the difficulty new users have acquiring crypto, but this is a natural phase of new payment technologies. When the checking card was first introduced in the 1970’s few people and retailers used it. In fact, debit cards did not become popular until the late 80’s and early 90’s.
Similar case with PayPal. PayPal rolled out in 1998 and took over a decade before it became commonly accepted by online retailers. Bitcoin and other payment cryptos will become widely accepted, its just a matter of time. In fact, I believe it is as difficult or even more difficult to open a PayPal or a bank account than it is to purchase crytpo.
Why Merchants Should Accept Cryptos As A Payment.
By accepting cryptos as a payment option merchants would instantly eliminate the high transaction fee imposed by credit card companies. Currently, the majority of Bitcoin and crypto transactions only cost a few cents. CZ from Binance posted a tweet regarding their latest transfer of $600 million in Bitcoin only cost $6.
This is a signifigant move that few people are talking about. Typically major transactions of this magnitude require tremendous amounts of paperwork, labor, and millions of dollar in transactions fees. With Bitcoin, companies save enormous amounts of money.
Merchants can easily take advantage of this system. By accepting crypto as payments, merchants can instantly increase their margins by 3%-5% and with the increasing transaction speed of blockchain upgrades and new tokens, transactions can be processed nearly instantly. Merchants can rest assured customers are not going to double spend their crypto.
Besides saving money on transaction fees, merchants can save large sums per month by using the free accounting system built into most blockchains. Adding the TX Hash to the receipt would allow customers a permanent copy of their transaction, that they or the merchant could look up and verify from any computer. Blockchains like Bitcoin and Ethereum allow data storage with the TX and could easily store the customer’s purchase on the ledger. This would allow merchants the ability to refrain from using expensive accounting tools, as they could easily pull up the same information from the blockchain.
Why Customers Want To Pay With Crypto
Customers do crazy things to save money. They wake up extremely early the day after Thanksgiving, fight mobs of other customers, and push through traffic just to save money. They also print off coupons, download apps, etc. Why? Because consumers want to spend less on the things the want to buy and paying with Bitcoin and cryptos will allow merchants to save money therefore reducing the need to increase prices.
More importantly, consumers can protect themselves by using a payment method that doesn’t expose themselves to scammers who can steal their banking information by hijacking card swipers and card chips.
Customers could also benefit from the decentralized ledger in a similar manner to merchants. By using crypto as a payment solution, customers could us the TX Hash as the Transaction number and easily look up the transaction from any computer or smart phone. Customer should also prefer this method as it allows customers to not divulge any of their private information that is associated with using a credit card.
How merchants can easily encourage customers to pay with crypto.
By using Bitcoin and crypto payments, merchants will save 3%-5% by eliminating high credit card transaction fees. They can use this knowledge and offer customers an incentive to pay with crypto by offering an extra 2% off their transaction. Customers would be encouraged to pay with crypto as it will save them money and merchants will still save 1%-3% in credit card fees.
Customers do not mind using alternative methods if it allows them to save money. Similar to how people sign up for store credit cards to save 10%, or wait outside a store in freezing weather to catch a deal, consumers will not mind using crypto if it allows them to save money. As crypto becomes more popular (which is happening each day) more people will be available to use this as a payment option. As it becomes more integrated, more merchants will use it and thus the spreading of this payment option is magnified.