Startups are, without a doubt, the backbone of the economy, driving innovation and societal growth. However, there’s nothing easy about being a small business owner. Entrepreneurs have plenty of responsibilities, and one of the most important is searching for customers – and keeping them. And although this shouldn’t be a concern, they often worry about getting paid on time, and that’s for a good reason, as more than 50% of small businesses in America struggle with cash flow due to payment delays.
However, startups can’t keep the lights on unless payment is seamless. Traditional finance makes it challenging to accomplish this goal because the methods are outdated, leading to lengthy payment processing or payments getting lost. This shows a significant need to implement digital payments, which play an important role in the growth of a business. Debit and credit cards are popular financial instruments used in physical and online stores, but payments in crypto like Bitcoin or Ethereum have also been accepted by many companies as well.
Why are startups increasingly embracing crypto payments?
In recent years, consumers and investors have become more and more interested in digital assets, with businesses hopping on the crypto bandwagon and reaping numerous benefits. Let’s take a look at the most common factors that have contributed to the increased adoption of crypto payments in startups.
Growing popularity of cryptocurrency
Cryptocurrencies have kept making headlines, with Bitcoin paving the way for the development of plenty of other digital assets with unique features and use cases. Many find digital currencies a great way to achieve financial freedom, and despite their volatility, users are embracing them. Given that consumers holding crypto prefer businesses that accept this payment type, it is easy to understand why startups have integrated digital assets into their processes. There is high demand for crypto payment options, and staying competitive in the market requires businesses to meet consumers’ needs.
Development of crypto payment services and platforms
Several cryptocurrency payment services and platforms have been developed, enabling startups to accept digital assets. They provide tools that facilitate the crypto payment process, including crypto wallets and payment gateways. Moreover, some platforms even enable the conversion of digital assets into fiat money, helping mitigate price volatility risks.
Appealing fundraising opportunities
Raising funds can be challenging for small businesses, but cryptocurrencies provide new opportunities through ICOs and IEOs. Startups can sell tokens to investors as a way to raise capital, which is an appealing method that enables global participation.
Financial inclusion and cross-border transactions
Embracing crypto payments allows companies to participate in cross-border transactions, helping them expand their customer base and make more sales as a result. Unlike traditional systems, digital currencies ensure that international transfers are quick and cheaper, eliminating the need for a middleman. Moreover, crypto payments provide financial inclusion to those with limited banking services access. Everyone can transact with digital assets as long as they have a phone and an Internet connection.
Accepting crypto payments helps startups stand out as innovative
In the business world, innovation is paramount, allowing companies to adapt to change and fostering growth. Since so many customers now prefer to buy online, it only makes sense to enable digital payments. Cryptocurrencies have become a significant part of the financial world, and many of their advocates see them as a way to end corruption, changing society by encouraging people to trust technology instead of relying on the government. And given that the Internet is expected to evolve further, businesses should stay on top of these advancements unless they don’t want to fall behind.
Providing crypto as an alternative method to purchase items can undoubtedly position a company as forward-thinking, attracting tech-savvy customers and fostering trust among crypto enthusiasts. Some studies show that over 40% of customers paying with digital assets are new customers, which can help businesses access new capital and thrive in a competitive market. A startup that accepts crypto can build a solid reputation right from the beginning, increasing its growth potential in the long run by ensuring clients buy from them. Retaining customers is challenging for companies, but accepting crypto payments provides a significant advantage, ensuring your venture is chosen instead of those that only offer traditional payment methods.
The endless benefits of accepting crypto payments
Accepting cryptocurrencies as payment provides multiple benefits for startups, such as:
- Increased efficiency. With crypto, payments are much more efficient because the processing time is significantly reduced.
- Lower costs. Digital assets decrease the high fees associated with traditional payment methods, which can be a considerable advantage for small businesses with limited resources.
- Greater convenience. Crypto payments are convenient for customers and businesses, making it a win-win situation where everyone is satisfied. For instance, digital assets allow customers to pay by using their smartphones, while for businesses, accepting crypto payments means eliminating the need to handle cash.
- Increased security. With crypto, transactions are safer because they are based on encryption, which aims to protect against fraud and other cybersecurity risks.
Are there any challenges to accepting crypto payments?
Despite their numerous advantages, cryptocurrencies aren’t risk-free. For this reason, startups can encounter several challenges when accepting payments in digital assets, including volatility, compliance and technical issues. Everyone familiar with cryptocurrencies knows that digital currencies have a volatile nature, meaning their prices experience significant fluctuations within a short time. Therefore, it is crucial for startups to carefully assess the risks of price volatility on their profitability and develop efficient strategies like implementing hedging mechanisms.
The regulatory landscape of cryptocurrencies is another aspect that needs to be considered as a potential challenge in embracing crypto payments. In some regions, there are strict frameworks regarding the use of crypto, and businesses must comply with them to avoid reputational damage or legal issues. If necessary, it is recommended for startups to seek legal support to ensure they stay compliant with regulations and operate within legal boundaries. Startups may also face technical challenges when implementing crypto payments, making it imperative to hire experts who can help or invest in a crypto payment service from a third-party provider.
The bottom line
Data shows that the startups’ failure rate is 9 in 10, and one of the reasons why this happens is financial problems. However, accepting crypto payments allows small businesses to capitalize on the growing digital economy and make the most of market opportunities. By taking the time to understand the technology, assessing benefits and challenges, and choosing a trusted payment processor, startups can set themselves on the path toward innovation and success.