Bitcoin in Business: Why don’t most Businesses Accept Digital Currency?
Bitcoin is in a unique place right now, it has the ability to help businesses increase their revenue and decreases transaction fees paid for point-of-sale transactions. Many businesses have started to accept Bitcoin payments for goods and services, but many still don’t — despite the number of Bitcoin payment processing companies that allow businesses to convert Bitcoin to fiat currency instantly to avoid market fluctuations. So why do most businesses in the world still continue to operate without Bitcoin?
There are many factors that determine if a firm will accept Bitcoin. The largest component of the decision is whether or not the firm believes that accepting Bitcoin will increase overall revenue and generate profits that are greater than or equal to the cost of implementing Bitcoin payments into their platform. Many POS systems are capable of integrating Bitcoin with ease and with little to no cost for the business, but what good is that if the company doesn’t expect any sales in Bitcoin? Let’s take into consideration a company that manufactures a product to sell to retail stores. This company, named Company X, would have little interest in accepting Bitcoin payments unless there was interest from one of the retail stores that frequently purchased merchandise from Company X. Company X would also have no incentive to purchase Bitcoin to pay for materials if its material supplier didn’t accept Bitcoin payments. Companies like X which, don’t sell directly to consumers, would never have a reason to use Bitcoin unless one of its major customers or suppliers expressed interest in using it. Lack of interest or understanding can also play a role in this decision.
Let’s take another business into account, coffee shop Y. Coffee shop Y is an independently owned coffee shop that sells various drinks and bagged coffee beans and grinds to customers. If Y has a POS system that can integrate Bitcoin with little to no cost, then it is likely that the coffee shop will accept Bitcoin payments, as it should expect to increase overall revenue. Small brick and mortar stores like Y are more likely to integrate Bitcoin as the cost and risk are virtually zero.
Larger firms (especially corporations) are less likely to integrate Bitcoin, as the cost and risk is much greater and stockholders have a say in the matter, something that might hinder the company from choosing to accept Bitcoin. Because large companies almost always have their own proprietary systems, the cost of implementing Bitcoin is much greater. Unless the firm’s market research analysts predict significant increases in revenue over a long period of time, the opportunity cost will exceed the benefits, and the funds needed to integrate Bitcoin payments would be better spent elsewhere or in another investment. This is the reason why larger corporations don’t accept Bitcoin on a whole.
Accepting Bitcoin does increase overall revenue and results in less fees for transactions, but many companies do not expect that the profits from accepting Bitcoin will exceed the costs of implementing it in the first place and, therefore, choose to spend the money somewhere else. Until consumer demand shifts significantly, brick and mortar and small online stores will continue to drive Bitcoin acceptance on the whole.
What do you think about Bitcoin acceptance? Let us know in the comments below!
Images via Pixabay.