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| 3 minutes read

Should My Retail Business Accept Crypto Payments? Things to Consider

Retailers everywhere are asking themselves the same question, "Hold on. Another retail company is accepting cryptocurrency as a payment method? Is it time that my company starts preparing to do the same?" 

It feels as though every day we see another merchant joining the list of companies that accept various forms of digital currencies for their products and services. In the past few months alone, many brands have announced crypto payment adoption plans, including Chipotle, Regal Cinemas, and multiple luxury fashion brands. [1]

By offering a cryptocurrency or digital currency payment mechanism to your customers, a CFO can solve a number of problems for their treasury department. First, cryptocurrency payments are instant (or near-instant). Credit card providers can have longer processing times, while crypto would enable immediate receipt of cash proceeds. If converting crypto to fiat immediately, this can allow for more accurate cash budgeting, particularly in times of crisis.

Fees are another key driver for onboarding a cryptocurrency payment platform. Credit card companies charge transaction fees to accept payments on behalf of customers. Some credit card providers have already increased fees in 2022. [2] By accepting cryptocurrency payments, these third-party fees can be greatly reduced. Exchange fees in the form of ‘gas fees’ may come into play if building an internal cryptocurrency platform, however, they can be mitigated based on conversion strategies.

So how do I start my crypto-as-a-payment journey? CFOs must be prepared if they want to successfully execute a new payment onboarding program. This endeavor has three main considerations when setting up the project with Treasury and IT.

What do I need to do to receive payment via cryptocurrency?

Treasury and IT departments can work to hire and design internal capabilities to accept cryptocurrency payments. However, a more cost-efficient method would be to utilize one of the many third-party cryptocurrency processors that can onboard crypto payments to your merchant site. Coinbase Commerce, Bitpay, and Flexa are three examples of companies that can quickly integrate with websites and POS systems to onboard crypto payment capabilities. Third-party processors do come with a transaction fee, however, this fee typically is around 1% versus credit card fees that can range from 1.5-3.5%.

How often do I convert crypto to fiat, and what will it cost?

Conversion from crypto to fiat frequency will ultimately be determined by a company’s risk tolerance to crypto exposure. With the uncertainty looming around cryptocurrency prices, and even stablecoins ability to remain stable, we will likely see instant conversions become more popular until regulation settles in. Third-party processors handle the conversion for the merchant, which can be done at the time of sale or at set intervals. Many third-party processors convert at no cost, making transacting globally even more accessible for merchants.

How do I account for cryptocurrency?

Accounting for cryptocurrency will open new doors for regulations. Are they securities? Are they currencies? Accounting teams must stay informed of current accounting regulations to ensure proper accounting treatment for their cryptocurrency positions. In addition, the CFO must determine guiding principles on the overall cryptocurrency strategy, whether that is holding a cryptocurrency position or instant conversion. Long-term holds will have accounting impacts based off price fluctuations.

Most importantly, seek counsel and feedback from Finance and Legal before starting any cryptocurrency project as rules and regulations are changing every day and alignment to your company’s risk profile and appetite is paramount.

[1] https://www.coindesk.com/business/2022/06/02/chipotle-now-accepting-cryptocurrency-payments-at-us-locations/

[2] https://www.cnn.com/2022/05/18/economy/credit-card-swipe-fees-inflation/index.html

© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.

Fast-casual chain Chipotle Mexican Grill (CMG) has begun accepting cryptocurrency payments through Flexa, a digital payments platform.

Tags

cryptocurrency & blockchain, office of the cfo, retail, memo, finance

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