How does crypto benefit hospitality?

Cryptocurrency is slowly gaining popularity as a payment method throughout the world. Although companies were originally hesitant to adapt to the futuristic trend, crypto has proven is definitely here to stay.

Here's a scenario: If a hotel had accepted a Bitcoin booking in October 2015, valued around $230, today it would be worth $30,000 USD! But how does it benefit the hospitality industry?

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As discussed in a previous article, the blockchain technology associated with crypto hosts many benefits for the hospitality industry. Let’s break it down and talk about what accepting crypto as a payment option really means for your business. As with any frontier, there may be strong incentives but there are also lingering dangers.

PROS of cryptocurrency

More Available Payment Options

With cryptocurrency becoming more widely accessible, companies must stay current to keep up with the demand. By adding another payment option, businesses will accommodate more customers, increasing sales opportunities. As the hospitality business focuses on tourism you must be able to accommodate all clients!

Simple International Transactions

Opposed to regular fiat currencies, crypto is a universal currency that can change hands easily. This makes it easier for international clients to pay and avoid extra conversion fees.

Processing Time

If a customer pays with a credit card, authorization may be issued immediately for a transaction. For larger purchases it may take between 2-5 days for the bank to process and receive the funds. The network hosting crypto is enforced by a disparate network of computers rather than a centralized system. As crypto currency is verified with the use of blockchain technology, low value transactions could be confirmed in 10 minutes! While larger transactions take longer, you could still expect it to be completed in approximately 90 minutes.

Processing Fees

Most payment services charge merchants to process payments. Although crypto currencies still have processing fees associated with their transactions, they are extremely competitive. Companies like Square & Stripe offer processing rates of 2.9% per transaction, while major companies charge from 1.3% to 3.5%. In contrast, crypto payment processors only charge around 1%, saving your business huge amounts of money in the long term.

No Risk of Chargebacks

A chargeback occurs when a cardholder questions a transaction and requests their bank to reverse the payment. These payment disputes may be granted in favor of the card holder. Hence the funds may have to be returned to the client or they're never actually be received. As crypto transactions are irreversible, a customer is unable to cancel the transaction or dispute the payment. A refund may still be requested by a consumer, but it will be considered a new transaction. Refunds will only be authorized by the party that received the payment.

CONS of cryptocurrency

Tax Time

The IRS classifies cryptocurrency as property and cryptocurrency transactions are taxable by law. You are required to pay a capital gains tax when disposing of your crypto in any way. If you accept cryptocurrency, you must report it as gross income based on its fair market value when received. This means the value of a transaction is based on its actual dollar value at the time of the transaction. A company must keep track of the value for each cryptocurrency when received, and the day it was sold. This can get complicated while managing many daily transactions within an ever changing market.

Volatile Market

On average, the value of cryptocurrencies fluctuates rapidly and the market is extremely volatile. It changes without any notice unlike the more stable counterpart of a government-issued currency. This volatility hosts risks for companies holding and using cryptocurrency, as the value received may be worth more or less. With this unpredictable valuation, companies are greatly susceptible to the exchange rate at the time of sale. Just as cryptocurrencies rise at an incredible pace, they could just as easily lose that value.

Setup & Maintenance

The acceptance of cryptocurrency requires an additional tech stack in order to run your day to day business. To introduce this payment method, a business needs to acquire a suite of tools to build an easily maintained infrastructure. This includes front-end tools, back-end tools and connectivity applications.

A business must weigh the benefits while considering the risks.

Crypto payments allow businesses to stay ahead of the competition by offering fast and easy international transactions. Although, they do come with the risk of a volatile market. By accepting this new payment method, a business is able to create more sales opportunities and boost overall conversion rates. Although crypto has been deemed the future of finance, it is still extremely controversial. It boosts unknown regulatory laws that are still to be put in place. Cryptocurrency is an ever-evolving rollercoaster ride that may someday erase government regulated money all together. As a business owner, you must make the decision for your organization to jump on board while risking the value of your earnings. The hospitality industry must be flexible to embrace new concepts so they are able to stay ahead of the curve and adapt to all opportunities.

Cryptocurrency - The Money of the Future

Author: Derek LaChance

Cryptocurrency is a tradable digital asset, basically meaning it is digital money! It has no physical form and only exists in the network. Anybody may have access to crypto as long as they have an internet connection and a smart device. Crypto is financial freedom!

Instead of being physical money, crypto is stored online and exists as entries in a database. It gets its name from the cryptography it uses to authenticate transactions while providing security and safety.

Bitcoin’s creator, known as Satoshi Nakamoto, introduced the currency as “a new electronic cash system with no trusted third party.”

Similar to regular money in your account but unlike physical currency; crypto doesn’t rely on third parties to verify the value of transactions. Instead of storing your transactions in a bank, crypto transactions are recorded in a decentralized public ledger. This digital ledger is known as the blockchain which enables the existence of reliable cryptocurrencies.

The way it works:

Your bank shows a value assumed to be in your account and you request to complete a transfer. This occurs only if the bank approves the process.

What happens if the bank says no?
What happens if an error occurs with the bank's data storage?
What happens if one day the amount you hold in your bank account has somehow changed?

The blockchain - a bit of the nitty gritty!

Cryptocurrency is usually built with block chain technology, a distributed public ledger that records all transactions that take place. Although wallet addresses are anonymous, transactions are public, traceable, and permanently recorded. Meaning all members of the network have complete clarity!

Now I mentioned the blockchain is distributed and public. Imagine the transactions as individual data entries, or “blocks” of data. As each transaction occurs the data block records necessary information, such as; from who, to who, how much, and when. By a consensus on the network, these blocks form a chain of data as possessions are changed between owners.

Consensus on the network = the majority of nodes agree that the transaction is valid

The blocks confirm the exact chronological sequence of the movement of data in a permanent and secure chain of events. Each additional block in the chain strengthens the verification of the previous blocks, in turn, the entire blockchain. The data history, distributed throughout the entire network, always confirms who owns what at any time. This enables the owner of that currency to send it without the need for a bank to authorize the transaction.

When you own cryptocurrency you can move your money from one entity to another, without a third party verification. This makes buying items and transferring funds much faster and cheaper than regular banking. Improving transparency while almost eliminating transaction fees.

You say cryptocurrency is money, so what can I actually buy?

Yes, cryptocurrency is essentially worth real money and little by little cryptocurrency will become universal! One day you may be able to buy everything from a cup of coffee to your dream home. It is slowly revolutionizing the world of commerce. For now only a few cryptocurrencies, like Bitcoin, are being commercially accepted but that may change with the times. The new introduction of crypto visa and debit cards, enables to buy from a retailer that doesn’t accept crypto directly.

That being said, there are many institutions currently accepting crypto with more expected to follow suit in the near future. It is already possible to buy a variety of products from luxury watches to cars through certain websites and dealerships.

Who knows, maybe one day you may be able to use cryptocurrency to pay for your university education. Imagine paying for an international MBA program with digital money instantly, without extra fees from the bank! That could be the future of education.

Cryptocurrency is changing slowly changing the way of banking across the world. In the future companies including hotels will add crypto to their currencies.

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