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What SMBs Need to Know About Accepting Crypto

Back in October — in what seems like a lifetime ago in the cryptocurrency world — PYMNTS and BitPay’s “Shopping With Cryptocurrency” study found that “tech-driven” consumers, who make up about 15% of all consumers and 22% of past or present cryptocurrency holders are most likely to transact with it.

But now, as FTX drags itself into bankruptcy court, other crypto exchanges shudder, and bitcoin hovers at $16,000, traders must ask an existential question: do I accept crypto, or not?

It might make sense that since bitcoin and its brethren are volatile, consumers might hold off on using their holdings to buy goods and services. The purchasing power of those digital coins varies from day to day, hour to hour. It also makes sense that merchants would be concerned that they might not see their money as consumers do deal (FTX’s ripple effects include management concerns and frozen funds).

But BitPay CEO Stephen Pair and Nick Dossa, chief dealer at Vegas Auto Gallery, which processes crypto transactions through BitPay’s platform, told PYMNTS that the FTX fiasco hasn’t really changed things much at all. Viewed through the broader lens of history, the FTX shakeout is nothing new.

“We’ve been through a number of events like this in the last decade,” Pair noted.

Bitcoin payment service provider BitPay decided long ago to reduce dependence on outside companies.

“We keep our own crypto, and we don’t rely on third parties for it,” Pair said.

When exchange is used, Pair said his firm moves crypto to the exchanges, sells it and withdraws the proceeds immediately.

Mixed consumer sentiment – for now

Yes, there is some uncertainty among consumers in the market, Dossa said, and people may be waiting a bit to see how things shake out. But for Vegas Auto Gallery, which sells luxury and exotic vehicles and has offered bitcoin as a payment option since 2015, “the people who have a lot of crypto are still moving forward” and transacting.

Pair echoed that observation, noting that different people came to crypto at different times — and there are still several people who invested years ago at healthy profits — or they may have converted their bitcoin into stablecoins (BitPay also supports USDC) and used it coins to make purchases.

In the holiday season, there can be some division among consumers who hold crypto.

“You’ll see some people who are of the ‘spend it or lose it’ mentality,” Pair said.

But there are other consumers who want to spend when bitcoin’s price is high, and when it’s low, well, it’s a good time to save and build wealth.

Upside down for Traders

Despite the current headwinds, Pair and Dossa said, traders should be drawn to the fact that crypto-holders are younger, tech-savvy and tend to be relatively more affluent than other demographics. Pair noted that even in these somewhat constrained times, the average spend across BitPay’s merchant customers is tracking twice what a typical customer spends with a credit card.

There is another advantage that accrues to the traders.

“If they find a place where they can spend crypto, they’re going to tell their friends,” Dossa said.

Looking ahead over the next few months and over the longer term, the chaos sown by FTX will have the salutary effect of flushing out bad actors from the system, providing a wake-up call for investors and regulators. The great deleveraging may have begun, Pair predicted, and “we will find a footing and a floor in the markets. And then we will start building again.”

As he told PYMNTS, amid the rebuild, “many merchants should consider accepting crypto. They will be pleasantly surprised by the type of buyers they attract.”

For all PYMNTS crypto coverage, subscribe to the daily Crypto Newsletter.

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