The rise in the popularity of crypto assets and trading worldwide has grabbed the attention of several consumers and businesses. This can help make the company a competitive one, thus attracting more customers and lowering the payment processing fee. The everyday traders who have faced some losses in traditional payment procedures usually find crypto payments appealing.
In recent years, businesses based in the UK have been mainly accepting Bitcoin as a valid means of payment. This guide article extensively explains to the readers, especially those residing in the United Kingdom, the pros and cons of accepting crypto payments. Moreover, they can also learn the difference between traditional and Bitcoin payment methods.
What is Bitcoin?
In 2009, an individual or a group of individuals using the pseudonym Satoshi Nakamoto founded the cryptocurrency named Bitcoin. It is a decentralized currency that any single individual or organization does not operate.
A public distributed ledger called a blockchain is used to record the Bitcoin transactions taking place and are verified via the network nodes. This adds to the transparency and security of the blockchain network without any involvement of a central authority.
Reasons for Adopting Bitcoin as a Payment Method
A large number of consumers all around the world are shifting towards adopting cryptocurrencies as a payment method. In the United Kingdom, in addition to large businesses, even small-scale merchants are also making their way toward crypto payments. Here are some reasons why Bitcoin and other cryptocurrencies should be adopted to carry out trade.
- More Payment Options
Regarding payment options, the needs of clients vary with the situation. People use different kinds of payment methods according to their feasibility. Some prefer using credit cards, some pay through debit cards, and others want to pay through PayPal. Therefore, a company may lose potential clients using different methods of payment in case they offer only one payment option.
- More Customers
The popularity and hype of cryptocurrencies are increasing worldwide, grabbing the attention of many people. This is due to the convenience and feasibility of carrying out transactions that people find crypto easier to deal with. Customers prefer to trade with businesses that are readily accepting payments in Bitcoin or other cryptocurrencies.
Therefore, keeping crypto payments in your trade profile helps attract more customers and hence increases the revenue earned.
- Higher Liquidity
Unlike traditional banking, when transactions are carried out through crypto wallets, the user does not have to wait for the clearance period and can immediately withdraw their funds from the wallet. Therefore, businesses can easily manage their finances and do not have to wait for long periods to access their funds.
Moreover, it also saves customers from chargebacks and high transaction charges that banks and credit card companies impose.
- Fast Transactions
It usually takes days or even weeks while transfer funds using the traditional methods of payments. One can instantly transfer funds using cryptocurrencies. If one is using a digital platform for trading, after the completion of the transaction, goods are delivered immediately, ensuring that customers get them as soon as possible.
Traders are shifting towards crypto payments because them being more secure than traditional payment methods. While carrying out transactions through decentralized services, the users do not have to submit their credentials; therefore, it provides a convenient way of trading to people who do not want to reveal their details.
The Payment Industry In the United Kingdom
Before analyzing the importance of accepting payments in cryptocurrencies in the United Kingdom, one must understand the present situation of the trade market. Considering the payment methods and options, the markets in the United Kingdom are one of the most developed and upgraded ones all across the world.
The country is shifting towards cashless payments and providing mobile payment opportunities extensively. Moreover, consumer behavior has changed entirely after the advancements in eCommerce. Customers who only used to pay in cash or to use cards are now looking for advanced and online payment options.
There are several options available for them, such as mobile payments, contactless cards, mobile wallets, etc., to choose from. This has also resulted in the increased demands and expectations of customers from businesses and companies. They are attracted to companies that provide them with more accessible and feasible payment options.
Therefore, it is the need of the hour to integrate blockchain technology or crypto payments into the existing financial system. Thus, merchants and businesses in the United Kingdom strive to provide better opportunities and payment options to their clients to compete in the financial industry better than others.
Is Bitcoin Legal In the United Kingdom?
Trading and investment in Bitcoin are not governed by any regulations, but the residents of the United Kingdom can carry out their transactions using Bitcoin. However, the United Kingdom does not treat cryptocurrencies as other currencies except El Salvador, which has classified Bitcoin as tender by law.
Instead, the cryptocurrencies are declared as digital assets by the HM Revenue & Customs (HMRC) that may be held accountable to income tax or capital gain tax according to the situation. Bitcoin can be traced by using crypto exchanges such as brokers such as eToro or central exchanges based in the United Kingdom or through global Binance or Coinbase.
However, specific requirements are ascribed by the Financial Conduct Authority (FCA) to be fulfilled by any business before registering a crypto exchange in the United Kingdom. These conditions include the establishment of a legal entity, getting a registered office address, opening a bank account, and registering for taxation procedures.
The next step is filling out a crypto exchange license. It is done by submitting the registration form available on the official site of FCA and paying the registration fee. Therefore, businesses in the United Kingdom can accept payments in Bitcoin; however, they may be paid directly or indirectly via gift cards. In addition, being paid in fiat currency or crypto also depends on the choice of the customer base.
How to Start Accepting Crypto Payments?
There are two primary requirements that one has to fulfill to start accepting payments in crypto. These are owning a digital wallet and a payment gateway.
- Owning a Digital Wallet
The place where the customers’ crypto assets are stored is known as a digital wallet. Moreover, it can also be used to transfer funds to other people’s wallets and to make purchases. It depends on the user’s need whether he uses a software wallet that may be installed in his desktop device or mobile phone or a hardware wallet such as a USB device etc.
- Owning a Payment Gateway
The payment gateway is also a Point of Sale (POS) machine. It helps in the acceptance of payments from customers within no time. However, for each transaction carried out, a specific fee is charged by the payment gateway. Still, this fee is minimal and very low compared to the charges taken by credit card processors for accepting payments.
Which Companies Accept Bitcoin In the United Kingdom?
Several companies in the United Kingdom accept payments in Bitcoin. These companies may include CheapAir, Shopify, Microsoft, Etsy, Lush, etc. However, Amazon does not allow its users to pay directly in Bitcoin, but they can make purchases from the brand’s official website using gift cards. Amazon UK website offers its services to customers through CoinGate or BitPay.
Lush is a company that deals with cosmetic products in the United Kingdom. To increase the payment methods available worldwide, the company has started accepting payments in Bitcoin. It accepts payments in crypto in the UK through BitPay. Some basic steps to be followed by the users to make purchases from the company are mentioned below.
- After completing the purchase, the user has to choose the option of BitPay during the checkout step.
- Next, the user must get the wallet application for BitPay if he does not have it or directly connect to the wallet he prefers.
- Then from the list of cryptocurrency options available, choose Bitcoin.
- After that, the user can add the details manually or directly scan the QR code to complete the transaction procedure.
- The order can then be tracked in the purchase section of the wallet.
In addition, if any customer plans to use crypto to buy an Xbox gift card, here are specific steps he needs to follow.
- First of all, the user has to get the BitPay application or the BitPay extension.
- Then the gift card that he wants to purchase is to be selected.
- After that, the user has to decide the amount of money he wants to integrate with the gift card.
- Then he can use Bitcoin to pay for the gift card.
- The user can get his gift card on Windows, Xbox, or the Microsoft store as soon as the payment is completed.
However, the Etsy company does not accept Bitcoin payments on its platform. However, it allows traders to use Bitcoin as a payment method at the checkout option for carrying out their trades. Moreover, Shopify, in the e-commerce space in the United Kingdom, allows merchants to accept payments in Bitcoin.
In addition, by following similar steps as discussed above, several other companies have also started accepting payments in Bitcoins or some other cryptocurrencies using the service providers offered by Bitcoin. These companies include Starbucks, eBay, CheapAir, etc.
What Can Be Bought With Bitcoin in the United Kingdom?
The residents of the United Kingdom can buy almost all kinds of stuff, including coffee, fast food, automobiles, gadgets, or travel tickets, by making payments through Bitcoin. Crypto enthusiasts can make payments in Bitcoin by using Bitcoin debit cards similar to the usual prepaid cards.
If the customers pay in Bitcoin via a digital platform or in person, the merchants still get their share in their local currency, for example, in the United Kingdom, and they are paid in the Great British Pound. Therefore, it can be said that the function of Bitcoin debit cards is the same as that of traditional credit cards.
Any shopping website that accepts Apple Pay or Google Pay gets a card known as a CoinJar card. It is a crypto Mastercard based in the United Kingdom. Moreover, the places that do not accept payments without contact can also use their CoinJar cards to make the payments.
In addition, there are several other ways to spend Bitcoin in the United Kingdom. One can use them to buy additional altcoins or Bitcoin to start an investment project, buy new mining equipment or even donate it to charity. The Financial Conduct Authority (FCA) has declared that the users making payments in Bitcoin in the United Kingdom cannot access the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service.
This means the customers would not get any compensation or solution if they make a wrong move during trade or purchase. The Financial Ombudsman Service is responsible for solving disputes among users and organizations. It is a convenient and accessible service that provides financial assistance to customers.
In addition, the Financial Services Compensation Scheme (FSCS) assists customers using authorized financial services. It is responsible for providing investors with a compensation scheme and legal deposit insurance in the United Kingdom. Therefore, if a company cannot pay a claim against it, then FSCS will have to pay compensation for it.
Pros of Accepting Bitcoin Payments
Several advantages are offered to customers residing in the United Kingdom for making payments in Bitcoin. Some of them are mentioned below.
- Lower Transaction Charges
Bitcoin payments help customers flee from the additional debit card and credit card charges being a decentralized means of payment, as there is no involvement of an intermediate body for verifying transactions. Moreover, if the payments are made in Bitcoin, the traders do not have to pay the additional currency exchange charges while dealing overseas.
In addition, businesses with low margins and high-volume products can significantly benefit from the offer as the charges saved from transaction fees keep adding.
- Increased Customer Base
Accepting Bitcoin payments can help businesses make an entirely new customer base as the world is looking forward to shifting towards crypto payments. Companies and individuals find it more convenient to carry out transactions using crypto assets. This also facilitates the businesses to earn more capital and expand their overall reach.
- Price Appreciation Potential
It is also one of the significant benefits of using Bitcoin trading. Everyone dealing with crypto is aware of the price fluctuations integrated with it. Therefore, if one stores the Bitcoin instead of converting it into fiat, he can gain profit when the price of the currency goes up.
- High Transaction Speed
Faster transactions are another benefit of allowing Bitcoin payments. It helps the traders to receive their real-time payments, which in turn, helps in earning more revenue.
Cons of Accepting Bitcoin Payments
Although Bitcoin payments are facilitating merchants in many ways, there are specific problems that arise with using Bitcoin as a payment method. A few of them are elaborated on below.
Allowing traders to make their payments in Bitcoin imposes several tax implications on businesses. They must pay income tax on any revenue generated through Bitcoin payments. The starting rate of income tax is 19% generally, which varies with the country. For the residents of Scotland, it is 21%; in Northern Ireland, England, and Wales, it ranges between 0% to 45% depending on the tax band.
Dealing with crypto assets, one cannot ignore the volatile nature of the market. The anticipated shifts in the market may result in sharp and abrupt price movements. In case the value of Bitcoin falls significantly, it may lead to a significant loss for businesses and companies.
- Legal Uncertainty
Including the United Kingdom, still many countries have not declared the proper legal status of Bitcoin and other cryptocurrencies. Although the higher authorities have announced in the United Kingdom that they will allow traders and businesses to make crypto payments, the system lacks the proper regulations and guidance regarding handling crypto transactions.
- Limited Acceptance
Although it is a convenient way of transactions, Bitcoin payments are still not accepted, mainly by the residents of the United Kingdom. Therefore, businesses may think before taking Bitcoin payments as most customers may not be willing to pay in Bitcoin.
- Risk of Scams
Moreover, the threat of scams is always there with using crypto wallets, as the scammers can get hold of the user’s wallets by redirecting them to fake websites or sending them phishing emails. Therefore, businesses and companies shift towards Bitcoin payments; they should consider the vulnerability of risks and scams in the crypto space.
Accepting payments in Bitcoins is helping businesses and merchants in several ways by reducing the transaction costs and time required for it. However, being in the initial stages requires time and patience to settle and establish properly.
As Bitcoin is a decentralized currency, there is no room for error, as nobody except yourself will be responsible. Therefore, traders are advised to look upon all aspects of crypto trading before adopting it in their daily life trades.