Cryptocurrency or digital currency- a word that gained immense buzz globally and has invited enough pessimism from sceptics about the possibility of fraud, is now being considered by global small businesses as a mode of accepting payment. In 2022, small businesses across nine countries namely Brazil, Canada, Germany, Hong Kong, Ireland, Russia, Singapore, United Arab Emirates, and the United States will be exploring cryptocurrency for payment. According to a study by card company Visa on taking a sample size of 2250 small businesses, it found that 24 percent i.e. 540 small businesses have plans to embrace payments through bitcoins.
The acceptance of cryptocurrency as a payment mode by global businesses can be attributed to no involvement of banks giving less complications that will also aid businesses to scale internationally. The benefit of accepting payment in cryptocurrencies might increase the sale of a business as it will attract crypto investors who prefer such payments. The small business can ace the first-mover advantage with cryptocurrency payment to attract more customers and have hassle-free transactions.
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According to a study by card company Visa on taking a sample size of 2250 small businesses, it found that 24 percent i.e. 540 small businesses have plans to embrace payments through bitcoins.
Getting paid in cryptocurrency
There is an increasing trend to accept payments in crypto for work. Several young engineers and freelancers are working with global companies where their salaries are paid in cryptocurrency. This eliminates the need for a company to pay transaction costs for bank transfers but it has a flipside. Accepting salaries in digital currency can attract legal implications as it violates Foreign Exchange Management Act (FEMA) as these constitute cross-border payments in a currency not recognised by the Reserve Bank of India.
The market for accepting crypto payment has potential since India is a developing economy, where much emphasis is laid on digitisation, making young Indians early adopters of digital currencies. According to a study by Chainalysis, India has close to 15 million crypto investors and is the world’s second-largest country for crypto adoption.
Cryptocurrency transactions in Indian businesses anytime soon?
Indian businesses embracing payments in cryptocurrency seems to be a distant possibility as the government plans to regulate resulting in a ban on private digital currencies.
In addition to the above, the challenge to accepting crypto payment lies in its price volatility which makes its value unpredictable. For instance, when Bitcoin was introduced in 2009 its value was in pennies, and in 2017 its value ballooned up to $19,172 per coin.
Indian businesses are already vulnerable to cyberattacks since its pivot to remote working and digitisation. Although crypto transactions can evade threats such as stolen credit card numbers, they cannot be said as safe and can get hold of users’ wallets. This is dangerous for use in transactions unless it is a fiat currency. A fiat currency is a government-issued currency that is not backed by a commodity such as gold. Such currencies are existing in American and European economies, whereas India is yet working to introduce a basic central bank digital currency ( CBDC).
Lastly, even if the Indian government launches its digital currency, the adoption of it by the businesses would depend on technical capabilities, awareness about new age-deep technologies including blockchain and crypto other than artificial intelligence, machine learning, and the internet of things.
