Bitcoin (and other cryptocurrency) has grown swiftly in popularity, and doesn’t seem to be backing down any time soon. By December 2018, almost 32 million bitcoin wallets had been set up globally. It’s growing especially fast in developing markets (which are often under-served by other payment gateways or financial services). Want to get in on persuading some of those millions of people to buy from your business? Read on to find out how…
Cryptocurrencies are digital currencies that operate independently of a central bank. Unlike Paypal or other third party payment services, cryptocurrencies like bitcoin are not required to be tied to a debit card, credit card, or bank account.
That means that users can pay online without any risk of identity theft. As you can imagine, this makes cryptocurrencies attractive for a lot of customers. In turn, more and more businesses are offering crypto payments as a result. However, there are some challenges to overcome before taking that step:
One of the biggest disadvantages to accepting bitcoin payments is that a state license may be needed to accept bitcoin payments. For example, New York is proposing legislation for such a license and other states may follow suit. This type of law is a reaction to shady businesses, like online drug dealers, using bitcoin to hide illegal activities.
If you’re in a state where a license is required to accept bitcoin payments, that’s an obvious barrier to entry. Subscription businesses in that position should carefully weigh potential subscriptions against the cost of setup and license. In contrast, the fees for getting set up with Paypal or other payment gateways are minimal. This comes down to your industry and target market — as usual, the answer is to talk to customers often and see what payment methods they’re requesting.
Bitcoin and other cryptocurrencies are designed for single use only. This allows users full control over their funds, since bitcoins are only transferred to a merchant when a user initiates the transaction.
In other words, for a customer to use bitcoins for subscription payments (or any other recurring payment), they’ll need to use another service on top of it.
For example, Coinbase is a virtual wallet service that allows users to initiate recurring payments. Users who intend to use bitcoin for payments would need to use it or something similar. On the one hand, this can make it more tedious to use cryptocurrencies for subscription payments. On the other hand, that extra step is on the customer’s side, not the business’s side. It’s also worth noting that billers who offer Coinbase or a similar service may be seen as more attractive to customers.
Unlike credit card payments, bitcoin payments are always for a set amount. Some subscription services raise their prices every year. With normal payment methods, existing customers are charged the new payment amount as soon as it goes into effect.
For bitcoin and other cryptocurrency users, it doesn’t work this way. Since all virtual payments must be authorized by the user, any change in payment requires the user to sign up again with their Coinbase or other virtual wallet account. Because of this, raising subscription prices can be more difficult when dealing with customers who use cryptocurrencies.
It’s likely that bitcoin and other cryptocurrencies will only become more common in the future. Accepting cryptocurrency payments can show that you’re on the cutting edge and sway customers your way, especially those concerned about identity theft or other security risks. Just be aware that there are unique challenges with this currency, and adjust your billing methods accordingly.
Finding a subscription billing tool that offers the features you want (including accepting bitcoin or other payment types) can feel intimidating, but it doesn’t have to be. Download our Six Must Haves guide to get a list of the must-haves (and why they matter), plus a bonus three-page feature checklist. Get it for free below: