What are the benefits of accepting crypto payments?

Written by Jeff Cangialosi

Reviewed by Brady Werkheiser

Published on February 24, 20233 min read

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Crytocurrency and stablecoins are an increasingly popular payment option for businesses and consumers. Before choosing a crypto payments provider, explore four primary benefits and three potential downsides of using digital currencies to accept payments.

What are the benefits of accepting crypto payments?

The primary benefits of crypto payments are lower transaction fees, instant settlement times, a reduction in fraudulent chargebacks, and access to an affluent and growing consumer base.

1. Lower Transaction Fees

If your business is accepting credit or debit card payments today, you are likely paying approximately 3% in transaction fees. This means that for every $1,000 your customers spend, you are paying a credit card processor $30.

While some countries have regulations lowering card transaction fees, this is still a significant expense for businesses, especially those with international customers who may incur additional foreign exchange fees.

Depending on the blockchain network used to process transactions, crypto payments can dramatically decrease transaction costs for domestic and international consumers.

While gas fees can be high on Layer 1 blockchains like Ethereum, processing a payment on a Layer 2 network like Optimism or Arbitrum is inexpensive and often cost just a few cents, regardless of how large the purchase is.

2. Instant Settlement

Utilizing crypto rails for payments enables almost instant settlement. With third parties removed from the process, funds are typically available in minutes or seconds.

Unlike traditional payment methods like credit cards, there is no 24 to 48 hour waiting period before funds become available in your bank account. For businesses focused on managing cash flow closely, this near-instant settlement time can be a critical advantage.

3. Reduced Fraudulent Chargebacks

Dealing with fraudulent chargebacks is a time-consuming process and adds risk that the funds from a legitimate customer purchase can be pulled back. With crypto payments, the immutability of blockchain transactions removes this risk.

While it is still important to establish a process for handling refunds and errant payments, businesses gain greater control of this process rather than being subjected to chargebacks.

4. Access to an Affluent and Growing Consumer Base

According to Triple-A, a crypto payments provider, there are now over 420 million crypto users worldwide. According to JP Morgan, crypto user demographics and those looking to spend crypto skew young and affluent. Offering crypto as a payment method is a way to appeal to this emerging cohort and meet customer demands.

In addition to the growth of individual users, there has been an explosion in the number of decentralized autonomous organizations (DAOs). These new entities typically hold digital assets in their treasury and need to spend these assets to support their business operations, making them good prospects for paying with crypto. 

What are the downsides of accepting crypto payments?

The main downsides of crypto payments are difficult user experiences, the back-office hassle for finance and accounting teams, and managing refunds.

1. Difficult User Experience

The biggest downside historically has been the user experience (UX). Asking clients to create a crypto wallet, acquire crypto, and then figure out how to send that crypto to the correct place is challenging.

When customers are accustomed to Amazon’s one-click check-out, it can be hard to convince them to go through extra steps to pay in crypto.

Fortunately, the UX problem is being addressed by a number of solutions that are making it simpler and more intuitive for users to pay with crypto.

To start, we are seeing a number of innovations around wallet infrastructure, such as smart contract wallets, making it more secure and ideally simpler to manage and sign transactions.

Beyond wallet architecture, we are beginning to see native crypto checkout experiences. There are new solutions being offered by a range of players from large institutions like Stripe and Coinbase Commerce to more crypto-native projects like Loop Crypto, Unlock-Protocol, and Superfluid.

2. Back-office Hassle

The problem of tracking and reconciling crypto payments with the rest of a business’s finances has been a challenge keeping many businesses from accepting crypto.

If a business is accepting crypto and fiat, tracking payments in both currency types can pose logistical problems for legacy web2 accounting and finance products.

Crypto accounting solutions like Tres.Finance, Bitwave, Tactic, Coinbooks, and others are making it easier to track wallet activity and report crypto revenue in a streamlined manner.

Some of the payment solutions noted above also provide dunning flow automation, meaning that they will generate invoices, receipts, and send payment reminders to customers when a bill is due.

3. Refunds

While crypto offers the benefit of reducing fraudulent chargebacks, it does require that businesses create a refund policy and process. If a refund needs to be processed, a business will need to establish procedures for handling this. Typically, this will simply entail sending a one-time transaction directly to the customer’s wallet once proof for the refund is provided.

Start Accepting Crypto Payments

Businesses and individuals looking to spend crypto online, in-store, and on mobile should consider the pros and cons of using cryptocurrency for payments.