When accepting cryptocurrency makes sense in restaurants, and when it doesn't
As a restaurant owner, you've probably never encountered a patron who insisted on paying their bill in bitcoin. But cryptocurrency's popularity is on the rise. Some 46,000 merchants currently accept bitcoin, and in June 2017, the user base for bitcoin grew by at least one million, according to Coinbase. That said, it may or may not make sense for your restaurant to accept bitcoin, depending on your goals and knowledge.
What is it?
Cryptocurrency is an all-digital currency that relies on peer-to-peer technology for tracking and trading. Bitcoin was the first cryptocurrency. There is no centralized system, bank or government that backs it. Nonetheless, it has gained in popularity since its debut, and a single bitcoin can be valued at thousands of dollars. The currency is mainly used for online commerce and long-term investment; however, it is possible to use bitcoin for physical transactions.
How does it work?
Getting into bitcoin isn't as complicated as it sounds. To accept bitcoin, you'll need to sign up for a merchant bitcoin wallet account. You can do so on such websites as BitcoinPay, BitPay or CoinGate. Many of these merchant wallets integrate with most major point-of-sale (POS), shopping carts and commerce systems such as Magento, Shopify or SoftTouch.
Payments through these applications are usually made through a QR code that the payer scans to send bitcoin (or bits) to your account. Depending on the POS or bookkeeping software you use, it can automatically convert the bitcoin payment into U.S. dollars for easy accounting and tax keeping.
Once you set up the ability to accept bitcoin payments, you'll want to let your current clientele and potential customers know that you're ready to accept bitcoin. This can be done with physical signage that you post in your restaurant or on your website. There are websites that track businesses that accept bitcoin, including Coinmap.org and SpendBitcoins, so it's advisable to get your restaurant on those maps.
Should you accept bitcoin?
There are a few benefits to accepting bitcoin at your restaurant or cafe. It's a given benefit to accept bitcoin if you're a supporter of the cryptocurrency and want to see its usage grow. It could also attract like-minded clientele. Also, it gives your customers more choices of payment. Even if they don't own or haven't ever heard of bitcoin, they may appreciate the many payment options.
Businesses getting into bitcoin may not see any significant financial benefits but may do it for a spin, according to Ian Khan, a technology futurist and podcast host. "For marketing-savvy businesses, it is definitely a differentiator to be able to accept bitcoins, and if you are trying to attract an audience that uses bitcoin, you may be perceived as a techno-savvy restaurant or establishment," he said.
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It makes more sense to accept bitcoin if your establishment is geographically located in a place that's tech savvy and is likely to have equally tech-savvy customers where bitcoin acceptance will be appreciated.
Most experts concur that in its current state, bitcoin is still not widely used enough to be considered mainstream and a competitor to cash and credit, but that possibility may still be on the horizon.
"There are only a small number of businesses around the world that currently offer bitcoin as a viable payment option, with most of those being in Asia. In its current form, bitcoin just isn't ready to go mainstream as an accepted form of payment, but that time is getting closer," said Investing.com senior analyst Jesse Cohen. "It won't be long before governments around the world start to regulate bitcoin, which could lead to taxation and less anonymity. Only then would conditions be ripe for it to become an acceptable form of payment used on Main Street."
The other problem with bitcoin is that it is volatile and constantly changing values. In September 2016, a bitcoin was worth about $600; one year later it skyrocketed to nearly $5,000, according to bitcoin value tracker CoinDesk, hence why more people are choosing to invest in bitcoin for the long term and not likely to spend it on coffee.
That same upward momentum could also swing the other way, rendering bitcoins to a fraction of what they were worth a day ago – meaning a payment you received for lunch could be worth less once it's processed, depending on the market. Plus, you'll likely need to pay a fee to a payment processor just to accept and convert people's payments, but it's possible those fees may be less than what you pay the credit card companies. For instance, Coinbase offers conversions for free on your first $1 million in transactions, and after that it's 1 percent per conversion.
There's the question of security as well. Of course, your bitcoins are safe from physical bank robbers since they live online, but they and your digital wallet aren't completely safe from cyberattacks. Then again, nothing ever is.
Bitcoin has come a long way since being introduced in 2008, and plenty of companies and enthusiasts have made it easier to include the cryptocurrency in everyday transactions. However, it still has a way to go before it's convenient and stable enough to be commonplace on Main Street. It doesn't take much effort to accept bitcoin and doesn't hurt to announce that you do, but it may be a while before you get that customer who pays for his steak with his cryptocurrency.
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