Even though cryptocurrency isn’t as popular as newly developed payment options like digital wallets and mobile wallets, small and emerging business owners are noticing that its use has recently increased.
The most well-known cryptocurrency that is making its way into the mainstream is called Bitcoin. If you run a restaurant or planning to, you may want to consider using Bitcoin as a form of receiving payment to draw in more business and boost your earnings. But you might also be concerned about how Bitcoin interacts with restaurant accounting systems and its erratic price.
We’ll look at Bitcoin’s features and workings as well as the advantages and disadvantages of taking it as a means of payment for your restaurant and business.
Definition: What is Bitcoin
Since its birth in 2009, Bitcoin has been the leading contemporary cryptocurrency. It is a fully digital currency that tracks and trades using peer-to-peer blockchain technology. Bitcoin is not backed by any government, bank, or controlled system.
Despite being created primarily as a payment method, the majority of users now utilize Bitcoin and its cryptocurrency cousins for investing purposes. Nevertheless, the most popular cryptocurrency that merchants accept as payment is still Bitcoin.
Over 15,000 businesses worldwide accept Bitcoin as a means of payment, according to Zippia. Research carried out by Pew in 2021 found that 16% of Americans (and 31% of Americans between the ages of 18 and 29) have invested in Bitcoin and other cryptocurrencies.
How does Bitcoin work?
Firstly, you must Find Best Crypto Exchanges and create a Bitcoin merchant wallet account using an online platform such as Kraken, Ledger, or Coinbase Pro to accept Bitcoin at your restaurant.
Numerous of these cryptocurrency wallets are compatible with top-notch point-of-sale systems, shopping carts, and e-commerce platforms. It’s simpler for retailers to accept Bitcoin payments because several of the top credit card processors take cryptocurrency payments.
How transaction with Bitcoin works in three steps:
- The restaurant displays a QR code to the customer who is paying with Bitcoin.
- After the customer scans the QR code, the virtual address to which the money should be sent is read by their cryptocurrency wallet. Usually, this address is a destination code that is used once.
- To validate the transaction, the client inputs their private key, which functions similarly to a password.
For simpler accounting and tax filing, you might be able to convert the Bitcoin payment into U.S. dollars using the POS or accounting software at your restaurant.
Why should your restaurant accept cryptocurrency? Although there are many strong arguments in favour of accepting cryptocurrencies at your restaurant, you should carefully consider the drawbacks before deciding.
Here are five upsides of accepting Bitcoin in your restaurant:
- Transaction fees can be 1% or less
The lowest transaction costs are the biggest advantage of using Bitcoin for your restaurant or business. Merchant service providers charge up to 4% of each transaction; if your diner is from outside, the fee may be more. With Cryptocurrency, however, prices can be as little as 1%, but beware of transaction costs known as gas fees, especially when using Ethereum.
- Instant cash flow.
With cryptocurrency for your restaurant, days of waiting to receive cash from your merchant services provider are over. When a customer pays with a credit card, you could have to wait days to get their money from your merchant services provider. You can get it in one hour using Bitcoin.
- Say Goodbye to PCI compliance
Now is the time to wave goodbye to every PCI compliance. Bitcoin transactions are not subject to PCI compliance. This benefit is meaningless, though, if you continue to accept credit and debit card payments in addition to Bitcoin payments.
- An open doorway to attract Bitcoin believers.
A lot of people who own Bitcoin are excited about cryptocurrencies and think they can help the financial system. These people might come looking for you to support your restaurant if you take Bitcoin. Being able to accept Bitcoins makes your business and/or restaurant stand out for marketing-savvy companies, and if you target customers that use Bitcoin as part of your marketing target strategy, you might come off as a tech-savvy eatery or venue.
- Zero chargebacks.
You can prevent chargebacks if you accept Bitcoin. Customers who want a transaction reversed cannot get in touch using Bitcoin, unlike regular credit and debit cards. Customers can only be reimbursed by you if you decide to do so.
That’s all there is about why you should accept bitcoin for your business. However, there’s no rose without a thorn. With that in mind, it’s also worth having a look at:
Five downsides of accepting Bitcoin in your restaurant:
- Price volatility.
Exchange rate fluctuations in cryptocurrencies are typically far more severe than those involving regular currencies. In contrast, the price of Bitcoin varies due to several factors which include supply and demand, investor and user take, governmental restrictions, and hype from media. The combination of these elements results in price volatility.
A quick glimpse into Bitcoin’s price volatility and how it might affect your restaurant:
Assume that on October 1, 2021, your restaurant serves food to a group of Nigerians commemorating their nation’s independence day. They shell out a total of $1,000. That money would lose some value due to inflation if you took it in US dollars. On June 18, 2022, the value of Bitcoin was $18,948.80, a 67.3% decrease from its $58,051.64 value on that day. So you accept the volatility of Bitcoin by accepting it.
- Wallet security/scam.
Selecting a fraudulent cryptocurrency exchange or having your reputable supplier fail could result in the loss of all of your cryptocurrency. Comparing cryptocurrency to traditional financial products, it remains the Wild West of finance.
- Future regulation.
Future laws might be implemented if Bitcoin’s use and popularity continue to rise. Regulations will probably increase the cost and difficulty of processing cryptocurrency.
- Accounting with Bitcoin may be more challenging.
The majority of cloud-based accounting programs aren’t configured to support Bitcoin transactions. This will complicate bookkeeping, particularly if you frequently exchange dollars for bitcoins and vice versa.
- The individual decision to accept Bitcoin
Depending on your consumer base, digital savvy, company objectives, and willingness to experiment with new tech trends, you may decide to accept Bitcoin or not. Since its launch, Bitcoin has advanced significantly. It is now simpler to include cryptocurrencies in regular transactions thanks to the efforts of numerous businesses and enthusiasts.
Consider the benefits and drawbacks of accepting Bitcoin as payment for your restaurant before making a decision.