Small Business Fintech Survey 2022

Small businesses want to be paid in crypto, too

There are still roadblocks to wide adoption, but merchants are warming to accepting bitcoin and other digital tokens.

Person hands bitcoin to cashier

Small businesses are increasingly interested in accepting crypto payments.

Photo illustration: Clay Banks/Unsplash; Protocol

Crypto is still not an everyday payment method for most consumers, but many small businesses say they’re interested in jumping into crypto — if they’re not already using it.

A surprising number of small businesses, 28%, said they already accept cryptocurrency payments, and 27% plan to accept it in the next year, according to a Protocol survey of more than 700 small-business owners, conducted by Morning Consult.

In addition, 51% of small-business owners expect crypto to have either a “very positive” or “somewhat positive” impact on their business in 2022. Only 14% said it would be “somewhat negative” or “very negative”.

The technology for merchants to accept crypto payments for ecommerce is already available from companies like Coinbase and PayPal. Smaller companies like BitPay have been offering it for years. But there are numerous challenges to mainstream adoption, such as the volatility of crypto and lack of user-friendly wallets and cost-effective on-ramps from fiat to crypto.

Accepting crypto over the counter has been more challenging given the high cost and settlement time of such transactions. A wave of businesses tried accepting bitcoin earlier last decade, only to find little appetite from shoppers. But the technology has improved, and consumer interest in crypto has skyrocketed.

For merchants, crypto is attractive because it’s generally “non-recourse,” meaning there are no chargebacks, which lowers costs, said Sundeep Peechu, general partner at Felicis Ventures. And crypto has lower fees than credit cards, which can be meaningful for small businesses that operate on thin margins. “Once you do a transfer, it’s kind of gone,” he said. “That’s very valuable for the merchant.”

But even if consumers are paying in crypto, they will still demand refunds and claim fraud, so those problems won’t necessarily go away. And merchants want other features such as clean integration with accounting and reporting tools, said Jose Fernandez da Ponte, SVP and GM of Blockchain, Crypto and Digital Currencies at PayPal.

Several vendors offer the ability to accept crypto payments, and will automatically convert the crypto to fiat so merchants don’t even have to hold crypto if they don’t want to. This could make it relatively easy for some merchants to flip on crypto payments without an obligation to change their business practices or worry about volatile crypto prices.

Still, even if merchants like the idea of accepting crypto payments, widespread consumer demand is not there yet — though some in the crypto industry expect it to ramp up quickly in 2022 as new products from large companies roll out.

“Some fraction of enthusiasts want to get paid in it and want to transact in crypto,” said Peechu. “But we’re not at the point where my mom and dad or a regular person are transacting in crypto.”

The interest in crypto may tilt more toward online businesses, which are typically more tech-savvy than brick-and-mortar small businesses. They’re already steeped in the technology of ecommerce and other online marketing tools, and their consumers may slant toward early adopters too.

Ultimately, if consumers want to use a payment method, merchants will offer it, said Leonard Speiser, a co-founder of point-of-sale outfit Clover; he cited American Express' high fees relative to other credit cards. “If customers are coming in and saying, ‘I really want to pay in this way,’ merchants will accept it,” Speiser said.

But getting off traditional payments rails is hard to do in the U.S., which may mean that small businesses’ apparent enthusiasm for crypto payments won’t necessarily generate a lot of volume.

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