More than ever, understanding the benefits of credit card payments is essential for businesses. EMV continues to grow, cryptocurrency is staking its claim as an accepted payment method, and it’s all happening fast.
From fraud protection to transaction fees, it can be challenging to know what form of payment is best for your business. One thing is for certain in the digital era, consumers prefer to use debit and credit cards to cash.
In fact, a consumer payment study found that 75 percent of U.S. customers choose cards to cash. This makes accepting cards paramount for businesses.
However, will new technology push the traditional credit card into extinction? Let’s take a closer look at credit cards, EMV chip card technology, and cryptocurrency to see how they stack up for businesses.
The rise of cryptocurrency as a form of payment can’t be ignored by businesses.
Lower transaction fees are one crypto business benefit.
“A credit card company charges a percentage, usually around 1-3% of the transaction amount,” Jia Wertz of Forbes explained. “This makes Bitcoin fees almost inherently less expensive than credit card fees.”
This is because cryptocurrency transactions are supported byblockchain technology, a peer-to-peer decentralized network. Meaning no financial institution middlemen.
However, fees associated with digital wallets via cryptocurrency exchanges can stack up. Depending on what exchange you use for your merchant wallet, you may need to transfer your digital currency to another exchange to get fiat currency.
At the end of the business day, transaction fees from credit card transaction could be lower, and more efficient. It depends on how you have your crypto payment set up. Security risks can also be a concern for businesses as well.
The blockchain itself provides heightened security features. For instance, each block (transaction) that is created on the blockchain is verified, secured, and enforced with innovative encryption.
Unfortunately, hacks of exchanges are quite common. In fact, storing your cryptocurrency on a hardware wallet can still be risky. For example, Coincheck, a prominent exchange was hacked earlier this year. About $550 million of NEM coins were stolen. This is just one of the many major cryptocurrency hacks.
Exchange hacks can put your business at risk if you’re not constantly exchanging your crypto into fiat currency.
EMV chip card technology has become a must for businesses. After 2015, businesses needed to accept EMV payments of become liable for fraud and chargeback costs. This has caused a boom in EMV cards with nearly 450 million EMV chip cards issued by Visa alone.
The idea behind EMV chip card technology is to reduce fraud. “Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again,” Sienna Kossman of Creditcards.com explained.
However, differences between traditional credit cards and EMV chip cards aren’t so big. Yes, fraud protection may be lower, but most EMV cards still have magnetic swipe strips to accommodate for businesses that have not switched over, or for consumers using cards while abroad.
When deciding on payment options for customers, businesses need to put themselves in the shoes of the consumer. What is the preferred payment method for your target audience?
As far as cryptocurrency is concerned, many people have yet to really use it as a regular form of payment. This is due to the volatility of the crypto market, and the need for mainstream adoption.
There are also no consumer benefits, such as reward points, building or increasing credit score, loan approval, and fraud protection. This makes it absolutely essential to accept credit card payments, “EMV-ready” or not.
Should you accept credit card payments via EMV chip card technology? Yes. Due to the fraud liabilities businesses face if they do not, it is a safer bet. Business owners can mitigate loss from chargebacks with EMV technology as well.
It can be challenging for businesses to hone in on the right payment method. With all the trending cryptocurrency news out there, it is certainly tempting to accept digital currency.
EMV also continues to grow, but businesses can still process EMV chip cards like traditional credit cards since most still have magnetic strips.
In the end, the choice comes down to three main elements. Business efficiency, the payment method customers prefer, and keeping your business protected from fraud.
This is a sponsored press release and does not necessarily reflect the opinions or views held by any employees of The Merkle. This is not investment, trading, or gambling advice. Always conduct your own independent research.
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