The crypto revolution is happening, the momentum is building and how exactly it's going to change the financial system isn't entirely clear yet. We know that most revolutions take place from the people and through a grassroots effort. Well, the people are here, they are ready to remove the shackles of the banking industry, but they just need everyone to start accepting their new digital money.
We've seen over the years that the consumer often drives change for businesses, whether that's with the products they sell or the way they treat their employees. Cryptocurrency is one of those frontiers where small business could be the change leader, not the consumer. In the United States, stores and companies get screwed by a credit card processing fee. This processing fee was a big issue that a lot of people were trying to solve eight years ago when I worked on some explainer videos on this subject at Daily Planet ltd. The solution was to get those rates down or make using a credit card free. Overall, I think the fee dropped a little, but most businesses still pay 1-3% on every transaction.
This fee is something as a customer you don't think about, a $5 beer costs $5 but that $5 beer for the bar only brings in $4.90 for them since so many people use cards now for every purchase. In turn, a bar will often mark up the beer to cover the credit card fees and any other sort of costs. So what should be a $5.00 beer now costs you $6.00 or more just to cover everything at the bar.
At LooseKeys I accept credit cards for our animation work, but most people pay by check or wire transfer. So I don't have to deal with these credit card fees that often and because of that I'm not marking up my cost. I can say though that for large projects where the price is significant, that 3% fee adds up fast. If I ran into more people using cards, I might start increasing our rates to compensate.
I'm not going to say I know all about the back end that happens with credit processing and how it all works but I can tell you most small businesses and bars I visit in Chicago use a Square terminal because it's easy and they made the processing fee 2.75%.
So what does this have to do with crypto? At the moment potential customers have cryptocurrency but nowhere to use them. So few places accept any cryptocurrency, even Bitcoin. A small business (maybe with the help of Square) could start taking Bitcoin, Litecoin, Nano, Stellar or whatever else someone is looking to use. Then the consumer pays the transaction fee, and the business gets the full amount with nothing going to the credit card company. Sure the consumer pays a little more, but that business can offer a discount for paying with cryptocurrency because it costs them less. Or if we look at something like Nano, there is no transaction cost, so no one pays. Win! Win!
There might be a lot of work on the back end for a business to deal with and for the government, but I honestly think that's coming. And coming sooner then we all think. Square Inc. or someone ready to disrupt squares business might be working on that as you read this. LitePay 😀
I know small businesses are looking for ways to stand out, there are approximately 543,000 new businesses that get started each month. In the past, it was a drawing force if your store took Visa, MasterCard, AMEX or even Diners Club (Does anyone still own a Diners Club Card?).
Now it's shocking when a business won't take credit cards but also makes sense based on the fees. If it was a statement to standout 40 years ago that you took credit cards, then a business should be thinking the same way about cryptocurrency.
That would be some excellent marketing power if you were a bar, coffee shop or restaurant in a city to say, Bitcoin Accepted Here.