Should My Retail Business Accept Crypto Payments? Things To Consider – Fin Tech

Retailers everywhere are asking themselves the same question,
“Hold on. Another retail company is accepting cryptocurrency
as a payment method? Is it time that my company starts preparing to
do the same?”

It feels as though every day we see another merchant joining the
list of companies that accept various forms of digital currencies
for their products and services. In the past few months alone, many
brands have announced crypto payment adoption plans, including
Chipotle, Regal Cinemas, and multiple luxury fashion brands.
¹

By offering a cryptocurrency or digital currency payment
mechanism to your customers, a CFO can solve a number of problems
for their treasury department. First, cryptocurrency payments are
instant (or near-instant). Credit card providers can have longer
processing times, while crypto would enable immediate receipt of
cash proceeds. If converting crypto to fiat immediately, this can
allow for more accurate cash budgeting, particularly in times of
crisis.

Fees are another key driver for onboarding a cryptocurrency
payment platform. Credit card companies charge transaction fees to
accept payments on behalf of customers. Some credit card providers
have already increased fees in 2022. ² By accepting
cryptocurrency payments, these third-party fees can be greatly
reduced. Exchange fees in the form of ‘gas fees’ may come
into play if building an internal cryptocurrency platform, however,
they can be mitigated based on conversion strategies.

So how do I start my crypto-as-a-payment journey? CFOs must be
prepared if they want to successfully execute a new payment
onboarding program. This endeavor has three main considerations
when setting up the project with Treasury and IT.

What do I need to do to receive payment via
cryptocurrency?

Treasury and IT departments can work to hire and design internal
capabilities to accept cryptocurrency payments. However, a more
cost-efficient method would be to utilize one of the many
third-party cryptocurrency processors that can onboard crypto
payments to your merchant site. Coinbase Commerce, Bitpay, and
Flexa are three examples of companies that can quickly integrate
with websites and POS systems to onboard crypto payment
capabilities. Third-party processors do come with a transaction
fee, however, this fee typically is around 1% versus credit card
fees that can range from 1.5-3.5%.

How often do I convert crypto to fiat, and what will it
cost?

Conversion from crypto to fiat frequency will ultimately be
determined by a company’s risk tolerance to crypto exposure.
With the uncertainty looming around cryptocurrency prices, and even
stablecoins ability to remain stable, we will likely see instant
conversions become more popular until regulation settles in.
Third-party processors handle the conversion for the merchant,
which can be done at the time of sale or at set intervals. Many
third-party processors convert at no cost, making transacting
globally even more accessible for merchants.

How do I account for cryptocurrency?

Accounting for cryptocurrency will open new doors for
regulations. Are they securities? Are they currencies? Accounting
teams must stay informed of current accounting regulations to
ensure proper accounting treatment for their cryptocurrency
positions. In addition, the CFO must determine guiding principles
on the overall cryptocurrency strategy, whether that is holding a
cryptocurrency position or instant conversion. Long-term holds will
have accounting impacts based off price fluctuations.

Most importantly, seek counsel and feedback from Finance and
Legal before starting any cryptocurrency project as rules and
regulations are changing every day and alignment to your
company’s risk profile and appetite is paramount.

Footnotes

1 https://www.coindesk.com/business/2022/06/02/chipotle-now-accepting-cryptocurrency-payments-at-us-locations/

2 https://www.cnn.com/2022/05/18/economy/credit-card-swipe-fees-inflation/index.html

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.