5 Reasons Why Merchants Are Not Accepting Cryptocurrency

Bitcoins rise to almost $20,000 per coin and were noticed by the world over. Many pundits and analysts thought that the popular blockchain-based Cryptocurrency would cause a high level of disruption within the payment world.

Many people touted it as a viable payment alternative that would become commonplace in the future. As can be seen, Cryptocurrency technology has not become commonplace even though many large corporations did adopt Bitcoin as a payment option for some time.

Below we will look at some reasons why merchants are not accepting Cryptocurrency.

Large Volatile Swings In Price: Anyone who has followed the Cryptocurrency markets to any degree knows that most coins and tokens are extremely volatile. Major price swings of 10% or more within a few weeks or less are not at all uncommon.

Because of this, merchants have been hesitant to accept Crypto. As one may imagine, many vendors project to make roughly 15% profit on the sale of a product. If the price of Bitcoin or some other coin drops significantly it could entirely wipe out any profits the vendor may have seen.

Many Cryptocurrency enthusiasts claim that stable coins, coins designed to minimize the price volatility inherent in the cryptocurrency market, can solve this problem. Even still, merchants have not been convinced that these stable coins are long term solutions.

Transaction Rate: The most common Cryptocurrency, Bitcoin, has a relatively high transaction time. Blockchain is a decentralized technology, meaning any transaction has to be verified by multiple, independent computers. Unlike traditional money systems, there is no central authority presiding over the network. This is a key principle of blockchain and cryptocurrency technology.

For Bitcoin, 6 different computers have to verify the transaction before it is recorded on the ledger. This verification process can take anywhere from 12 to 30 minutes. This transaction time makes it unfit for point of sale purchases such a coffee from the local cafe or a pass on public transit.

Other coins such as Stellar Lumens, Nano, and Dash all have transaction rates of under 20 seconds. Unfortunately, these coins are not as well known and there is no reason to expect they will see mass adoption at any point in the near future.

No Transaction Reversal: The blockchain can be thought of as an electronic, open-source, ledger. Because of the decentralized nature of Blockchain, transactions on the ledger cannot be reversed. This causes a set of obvious problems for a merchant should they be required to reverse a transaction. Current payment systems offer a much higher degree of support when it comes to transaction reversals or customer refunds.

If a vendor was to accept Cryptocurrency as a form of payment they would have to create a new transaction every time they wanted to refund a customer or reverse a transaction. For most merchants, this is simply not a practical mode of operation.

Lack Of Support From Major Banks: Traditional payment options are significantly better supported by major banking institutions. When a customer performs a transaction the money is deposited directly into the company’s bank account. This is not the case with Cryptocurrency.

If a purchase is made via Cryptocurrency, the coin will be saved on the company’s crypto-wallet or be deposited into their Cryptocurrency brokerage account. The merchant would then be required to sell the coin for fiat currency and have it wired to their bank account should they desire to hold it there.

This makes accounting issues significantly more complicated. While the IRS has updated their laws recently, there is still much confusion over what exactly a business must declare, and how, when it comes to cryptocurrency.

Low Adoption Rates: Cryptocurrency solves many issues that debt-based fiat currency presents. While this may be true, Bitcoin and other coins have simply not benefited from large scale adoption amongst the general public. If Bitcoin was not able to achieve wide-scale adoption when it was reaching $20,000 per coin it is doubtful that it will anytime soon.

Conclusion: Bitcoin and other Blockchain-based Cryptocurrencies is an extremely powerful technology that may one day become a commonplace payment option. Unfortunately for Cryptocurrency enthusiasts, there are still a plethora of issues plaguing the technology that have kept merchants away from implementation.

Beatrix is a professional copywriter at Term Paper Writing Service and UKWritings.com. She has written on a wide variety of topics and is always willing to offer advice to new writers.