Businesses Reveal Reasons for Adopting Bitcoin Payments

Since its inception, Bitcoin has grown from almost nothing to a cryptocurrency with a market cap of $831.02B USD, with some nations even adopting it as a legal tender. Over the years, its adoption has steadily increased thanks to the growing number of businesses and individuals using Bitcoin for their day-to-day transactions.

According to a report by Blockware, Bitcoin could hit a 10% adoption rate by the end of this decade, and by 2050, it will reach 80% of the population. One in every four businesses plans to implement the Bitcoin payment method by 2025 — a number that is bound to increase as the education gap decreases.

As of today, approximately 15,000 businesses actively offer Bitcoin as a standard payment method. Let’s explore the reasons behind Bitcoin’s rapid adoption among businesses and consumers.

• Lower transaction fees

Stop giving away ~2-4% as fees while remaining liable for fraud and chargeback! #Bitcoin gives you an alternative that doesn’t require a third party!

— Student of Bitcoin (@studentofbtc) May 15, 2023

Lower transaction fees are among the most frequently cited reasons for adopting Bitcoin. The average credit card processing fees, which are deducted from the merchant’s revenue, range between 1.5 percent to 3.5 percent. Due to varied currency exchange rates, this can go even higher for international payments. Moreover, additional service charges and fees can eat up a significant chunk of the payment.

On the contrary, when you transact via Bitcoin, you only pay a network fee, which is usually a small fraction of the payment. In 2021, a transaction worth $2 billion was processed for a fee of only 0.00001713 BTC. That’s just $0.78.

The network fees can be further reduced by using modern-day solutions like the Lightning Network — a second layer on top of Bitcoin that facilitates instant transactions at lower fees.

If you had to receive the same amount of money via traditional payment methods, be it a bank or a credit card, you would lose approximately $70 million to transaction fees and processing charges.

• Security and fraud prevention

#1 reason merchants should immediately accept #bitcoin is to start clearing xmas whale orders they’d normally reject because of chargeback risk.

No, I’m not going to manually recreate my $30,000 cart of 200 items so you can see if the card goes through the second time. I’m out. pic.twitter.com/DehcrmgAay

— Jesse Powell (@jespow) October 20, 2022

Chargeback frauds are a major challenge for online merchants. The chargeback process was initially introduced more than 50 years ago to protect consumers from fraud and unfair consumer practices. Online shoppers have since found loopholes that allow them to abuse the system. Experts predict that global chargeback costs may reach $117.47 billion or more by 2023.

Chargeback frauds not only cause financial losses but also affect a merchant’s reputation. If too many chargebacks are filed against a particular merchant, the payment processor may suspend their account or restrict them from accepting certain types of transactions.

Bitcoin can make chargeback frauds obsolete. Any transaction you make via Blockchain is irreversible. This prevents the possibility of fraudulent chargebacks and allows merchants to collect payments from anywhere in the world. Bitcoin gives merchants the freedom to really own their funds.

• Hedge against inflation

The US dollar has lost 96% of its purchasing power since 1913. In 2020 alone, the Federal Reserve printed approximately $3.3 trillion, which, according to City AM, equates to one-fifth of all US dollars in circulation in the same year. Banks and the government can print money whenever they want, eventually decreasing your capital’s value. That’s not all. They can even freeze your funds at any time or impose restrictions on their usage.

Bitcoin fixes this. It’s coded such that only 21 million Bitcoins will ever exist in the ecosystem. This is to prevent inflation. Since its inception, Bitcoin has grown by 12,977% at an average growth rate of 70.89%, and it will get even more scarce with time if its demand remains constant. Moreover, no one can control or freeze your funds due to Bitcoin’s decentralized nature.

For businesses, Bitcoin is like a boon, a currency that never inflates and provides them unrestricted access to their funds from any corner of the planet.

Tahini’s — one of North America’s fastest-growing Quick Service restaurant chains with over 30 locations across Canada — has been accepting Bitcoins since 2020. They are widely popular as the world’s first restaurant chain to invest 100% of its cash reserves into cryptocurrency. Their founders, brothers Aly and Omar Hamam use Bitcoin as a hedge against inflation.

During the pandemic, when the inflation was soaring, Tahini’s used their Bitcoin reserves to expand their operations nationwide.

“The main problem that we have right now is that dollars are devaluating. Central banks will say inflation is only 5%. But that really depends on what you want to buy. Poultry is up 45%, beef is up 25%, imported goods and spices are up 65%, oils are up 110% since March 2020, when the pandemic was accelerating. So it made sense to put our money into [bitcoin], and that will outstrip any inflation rates we see for the coming decade.”

–  Aly, Tahini’s Chief Marketing Officer (Source: Insider)

Here’s a company that has grown 460% on their initial investment in Bitcoin. Tahini’s is not an isolated example of businesses converting their cash reserves to Bitcoin. Microstrategy, one of the largest independent publicly traded business intelligence companies, has also converted all its cash reserves into Bitcoin. As of today, they hold 189,150 bitcoins bought for about $5.9 billion.

• Instant international payments with a 99.99% acceptance rate

Managing international payments is a huge challenge for companies operating across borders. According to the World Bank, the average cost of transferring $200 internationally is 6.8%. Moreover, the discrepancies in the legislation and tax laws across countries make international transfers strenuous and time-consuming.

Last but not least, if any of the intermediaries are unable to verify the payment, it will invariably be rejected. As of writing this, the payment decline rate for fiat payment gateways is 15%. On the contrary, the chances of payment failures are almost non-existent for blockchain transactions.

Ever since its inception, Bitcoin has made global transactions simpler, faster, and significantly cheaper than any other payment method. The currency’s decentralized nature makes it immune to transaction declines. The network has remained operational 24×7, thanks to the ever-growing community of miners and developers keeping Bitcoin secure and reliable currency for global trade.

For businesses trading globally, Bitcoin is the most efficient payment method, facilitating blazing-fast transactions to any part of the world.

• Bitcoin allows businesses to scale globally

Even today, over 1.7 billion people remain unbanked worldwide. According to a report by FDIC, approximately 5.9 million unbanked citizens are in the US alone. That’s primarily because banks and financial institutions cannot reach people living in remote locations. Moreover, to qualify for a bank account, an individual needs a certain credit score, which is often high enough for the 659 million people living below the poverty line.

Unlike banks and giant financial institutions, Bitcoin can be accessed by anyone around the world — all you need is internet connectivity. This allows businesses to reach a wider market and serve customers from around the world.

Hostinger, a leading hosting service provider, has been accepting Bitcoin and other cryptocurrencies since December 2017.

“There are millions of young web developers and people with great ideas around the world, but they do not have a bank account due to their age or other restrictions. The last thing we want is for a talent with a great idea for the Internet to give up on it just because they do not have the chance to pay for the tools that will make it happen.”

 

– Giedrius Zakaitis, Head of Product, Hostinger

Enabling Bitcoin payments has helped Hostinger reach a broader audience and boost its revenues. They are not alone. Let’s look at hundreds and thousands of brands and businesses that already accept Bitcoins in exchange for their goods and services.