Let’s cut to the chase – payment processing fees are quietly killing your bottom line and most merchants are blissfully unaware of how much money is leaving their wallets every month.
The harsh truth is that when it comes to traditional payment methods there are a bunch of hidden fees that creep up before you know it. But there’s another option at the table now…
Crypto payment solutions for business have arrived and they’re disrupting the financial services industry. Lower fees, faster transactions and access to a global customer base are just some of the benefits these solutions provide.
The real kicker is that:
Understanding the difference between the two payment systems could save you thousands of dollars every single year. So let’s break it all down.
Inside This Guide
- Traditional Payment Solutions Explained
- How Crypto Payments Work For Business
- The Real Cost Comparison
- Which Solution Fits Your Business?
- Bringing It All Together
Traditional Payment Solutions Explained
Traditional payment processing refers to credit cards, debit cards and bank transfers. It’s the tried and true way of processing business payments for decades.
But what does this method really entail?
Credit card processing involves a complicated web of middlemen who handle customer purchases. When a consumer swipes or taps their card, their transaction moves through card networks like Visa and Mastercard, the issuing bank, and the payment processor. Each one takes a percentage of the sale.
The merchant is ultimately responsible for these fees.
The result is that credit card processing fees fall anywhere between 1.5% to 3.5% per transaction.
It doesn’t sound like much initially, but the further you drill down the more you see the damage.
For a business that processes $500,000 in card sales each year, that could mean anywhere from $7,500 to $17,500 of fees to the processor. That’s profit you could be reinvesting in your inventory, equipment, or wages.
It’s even worse if your business is in a high-risk industry such as firearms, CBD or adult entertainment. Credit card processing can be ten times higher than traditional merchants.
Fortunately, finding a merchant account for firearm businesses is made easier through providers like 2Accept that also support crypto payment solutions for businesses.
There are some positive points in terms of benefits that traditional methods of payments have brought in for a business over the years. Here are some of them:
- Customer familiarity – everyone knows how to use a credit card
- Buyer protection – chargebacks prevent customers from fraud
- Widespread acceptance – cards work almost anywhere
- Established infrastructure – it has been in place for decades
But what most businesses need is to go back to their root to understand exactly how these business revenues are hampered by these types of fees and try to fix this.
The question is can the crypto payment solutions for business bridge that void of lost profits?
How Crypto Payments Work For Business
Crypto payments are built with business needs in mind from the start.
Instead of using banks, credit card companies and card networks to handle each transaction, cryptocurrency payments are direct transactions between the payer and the payee. This is called peer-to-peer payment processing.
The transaction is verified on a blockchain which is a secure ledger that records all payments in a transparent manner. There are no middlemen.
Neat, right?
And for business, what does this all mean?
- Lower transaction fees – on average 0.5% per transaction. Compare that to 2-3% from traditional credit card processing and the savings are glaring.
- Faster settlement times – credit cards can take 2-3 business days to clear while crypto payments clear in minutes.
- Global reach – you can now reach international customers without any currency conversion fees or cross-border payments.
- No chargebacks – once a crypto transaction is confirmed on a blockchain it cannot be reversed. Chargeback fraud is entirely removed.
Crypto for Business payments adoption grew 55% year over year in 2023. The curve is only going to grow as merchants begin to understand the advantages.
On the other hand, crypto payments also come with a set of their own problems that look something like this:
- Price volatility – cryptocurrency prices can be very erratic.
- Learning curve – staff and customers will have to learn how it works.
- Adoption – unfortunately, not everyone is a crypto owner as of yet.
- Regulations – not all areas of the world have clear cryptocurrency regulations.
The solution to that issue is that many payment processors are offering instant conversion to fiat currencies, eliminating volatility risk and allowing one to still enjoy those massive savings.
The Real Cost Comparison
Let’s face it – all of this fluffing is good and well but what’s needed is numbers that we can use to stack up against one another to make heads or tails of the actual cost of payment processing.
Traditional Credit Card Processing:
- Average fee: 1.5% to 3.5% per transaction
- Monthly fees: $10 to $50+ depending on provider
- Chargeback fees: $15 to $100 per dispute
- Settlement time: 2-3 business days
Crypto Payment Processing:
- Average fee: 0.5% to 1% per transaction
- Monthly fees: Often none
- Chargeback fees: None (transactions are final)
- Settlement time: Minutes to hours
The math really is doing the talking itself here. Let’s take the example of a restaurant.
Suppose it processes $50,000 worth of credit cards each month at 2.5% of that. That comes to $1,250 in fees. Now, switching to crypto at 0.5%, that number goes down to $250. Multiply that by 12 and you have $12,000 saved in a year.
Not to mention, that’s not accounting for the chargeback costs that can drive a small business owner crazy.
There are now over 560 million crypto owners worldwide and the user base is only growing as more consumers actively seek businesses that accept cryptocurrency.
Which Solution Fits Your Business?
The answer isn’t a simple one-size-fits-all but depends on a bunch of factors.
Things to consider if traditional payments are the way to go:
- If most of your customers are loyal to cards
- Your business is a low-risk industry
- You have staff with low technical expertise
- Immediate widespread adoption is more important than margins
Things to consider if crypto payments are the way to go:
- If you’re in a high-risk industry
- High transaction volume is processed by your business
- Your customers are international
- Optimising your margins is the key priority
The best way for many businesses? Accept both.
Multiple payment options allow you to capture as large a customer base as possible. Traditional methods appease the standard consumers while crypto attracts tech-savvy customers who actively seek alternative payment options.
Many modern payment processors now offer both traditional payment solutions and crypto payment processing for business through a single integration. This makes the dual acceptance easier than ever before.
Bringing It All Together
Traditional and crypto payment solutions have pros and cons that make each one a good fit depending on a business’ individual needs.
Traditional methods are tried and true, but can eat into margins over time with hidden fees and high chargeback risks.
Crypto payment solutions for business really have the upper hand when it comes to cutting out the fat and optimising for those key business metrics.
It’s safe to say the payment processing landscape is changing in ways business owners will never see coming.
Businesses that move to adapt now will find themselves miles ahead of their competitors still buried deep into the payment processing fees quicksand.
The real truth of the matter is that;
- Businesses must understand the true cost of their current payment processing fees
- Business owners need to understand customer needs/preferences for shopping and how they behave
- Hybrid solutions should be considered where a business can offer multiple payment options
- Partner with reliable solutions providers that can really understand what a business really needs from its payment solutions.
If there is one thing every business can take away from this comprehensive comparison between traditional and crypto payment solutions for business it’s this: payment processing does not have to suck away all of your profits.
The right mix of solutions can drastically reduce those costs and keep customers both happy and coming back for more.
The choice between different payment methods is really no choice at all. The savvy business owner will accept both.