With cryptocurrency gaining prominence, have you considered accepting Bitcoin and its ilk?
6 min read
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Consumers expect businesses to provide ease of use, efficiency and seamless payment processes. That’s especially pressing considering that globally, around two-thirds of the population of 52 key countries are expected to own a smartphone in 2018, as documented by Zenith Media.
Unfortunately, as NFIB research shows, many smaller companies still forgo adopting digital solutions. One of my main companies helps small and large businesses with software, and we constantly encounter issues of old and unreliable systems and even an absence of the right software, including ecommerce options. Although this may seem like a no-brainer topic, the research proves that there are still slow adopters and laggards to digital solutions.
While there are a host of variables to consider when putting up an ecommerce channel, among the critical decisions to make is choosing a payment system. As shown in this Baymard article, checkout concerns are among the top reasons why online shoppers abandon their purchases. Customers demand a frictionless experience.
It’s high time for small business to ramp up their use of digital solutions. Here are five factors you should consider when choosing how to integrate ecommerce into your business.
1. Customer’s preference
There’s a dizzying array of payment methods and solutions that are currently available. However, supporting every method available can be costly and impractical. A good way to approach this is for you to support the methods most preferred by your key customers.
This can be based on geography. For instance, Americans typically use cards as funding sources even with digital wallets such as PayPal and Apple Pay. Certain regions in Europe such as the Nordics prefer to use bank accounts. The Chinese use mobile payment solutions such as WeChat and Alipay. Other parts of Asia still prefer cash-on-delivery.
Preference can also be based on your particular audience and niche. Working-age customers should have a certain level of financial capacity and would have access to bank accounts and credit cards.
Payment services can help you support virtually all these methods but keep in mind that service tiers that accommodate multiple payment methods come with a cost. If you run a smaller operation, consider prioritizing support for the most preferred method by your market.
2. Emerging tech
Consider emerging niches as well. There’s a growing demographic of the crypto-wealthy who made their money investing in Bitcoin and Ether. Because of the lack of means to exchange cryptocurrencies to local currencies, these people try to spend them instead. This creates an opportunity for you to tap into this market. Services such as Paybear can help you support payments in Bitcoin and other altcoins.
However, supporting cryptocurrency payments does have its challenges, after all, cryptocurrency values can fluctuate wildly. For example, Bitcoin can take double-digit swings within a single trading day.
Projects like T.OS are developing blockchain-based emoney that can even be pegged to local currencies. Such “stablecoins” hold their value even if the rest of the crypto market fluctuates, making them suitable for use in commerce. Such options could allow you to work with crypto payments while minimizing the risk of volatility.
Developments in logistics and payments have allowed cross-border commerce to grow. So, if you’re looking to expand your market across borders or overseas, accommodate the preferred methods in those places.
3. Security of transactions
Security is always a concern for anything that involves money and customer data. Payment services providers should be the ones who work towards compliance with security standards. Check if the provider you’re partnering with follows industry standards such as the PCI Standards if you’re accepting card-funded payments.
Fraud and chargebacks are also concerns. Criminals often use stolen credit cards for online purchases. If you happen to process orders from such fraudsters, you may be left shouldering the cost of goods and even shipping since card companies typically rule in favor of the cardholders in cases of disputes.
Fraud prevention and chargeback protection may be available with your payments provider but they often charge extra for these services. One of the advantages of accepting crypto payments is that transactions can be irreversible and final, which eliminates exposure to chargeback fraud.
4. Ease of use
Due to the advances in user experience design, customers now demand speedy and convenient interfaces to use. It would do you well to check if your targeted payments solution will enhance your checkout experience. The fewest clicks or page loads customers have to make, the better.
Take note of the ease of use at your end as well. See if the experience will be idiot-proof for your or your staff to handle. Go through the checkout process yourself to confirm. Ask questions about reporting, such as will you gain functionalities such as dashboards and reporting, inventory management, invoicing and bookkeeping integration? Does the new software have plug-ins and integrations for your shopping cart platform (e.g. Magento or Shopify)?
You don’t want your payment solution to introduce unwanted complications to the way you do business.
5. Fees and costs
Among the reasons many small businesses want to stick to cash are the costs associated with supporting other payment methods. Card companies can charge somewhere between 1 to 3 percent for every transaction. Digital payments services that support card payments often pad these rates even more.
Crypto payments can charge lower rates. Since they use blockchain, they don’t have to route payments through intermediaries such as banks and clearing houses. However, it’s a different story if you have to convert crypto coins to traditional currencies. Crypto exchanges charge additional fees and commissions for such transactions.
Most payment services offer tiered charging depending on the volume of transactions you make. Shop around so that you can find the best option depending on your locality. Crunch the numbers to see which one will give you the best value.
As a business owner, you are in the best position to know your business, industry and customers. The success of your ecommerce efforts depends on various factors, but your choice of payments system will play a major part. So evaluate your situation, check out possible providers and do the math to see how these would affect your bottom line.