Cryptocurrency is a lucrative payments option for slashing transaction fees and building a longer-term business savings fund, a Melbourne business owner has claimed.
Robert Tadros, founder of Melbourne digital media agency Impress!ve, which has 19 staff and a revenue of $3.5 million in its first two years, began accepting crypto payments for his services around seven months ago.
The business accepts four of the main digital currencies: Bitcoin, Ethereum, Litecoin and Ripple.
“A client who is in the online retail space reached out and said: ‘Rob, I buy a lot of my furniture from Overstocked.com, they accept bitcoin as payment; have you considered offering your service for crypto?’,” Mr Tadros told My Business.
“Here I am, I’ve been trading cryptocurrency since 2016 myself on a personal level, and I said: ‘Mate, I haven’t thought about it, let me have a think and come back to you’.
“I sat down with my accountant, bookkeepers etc, had to jump through hoops to get them to agree to it, but we finally did, opened up a digital wallet and then we could start accepting digital currency.”
Mr Tadros said the main reasons for implementing cryptocurrencies as a payment method was to be seen as a forward-thinking business and also to better engage with its largely tech-savvy customer base.
“We’re a technology company – we offer a service which is SEO, which is very much on the tech side of things. So naturally the persona we attract and the customer we attract is very much in that space… so for us it was a very natural move,” he said.
However, Mr Tadros cautioned that accepting cryptocurrencies as business payments is not a brash decision, but rather a “very calculated move” involving the development of a detailed risk mitigation strategy.
“We are very selective with the clients we accept crypto from, and we do have a threshold. So it’s not for everybody, and it’s at the lower end of the threshold for now. We’re calling this almost a bit of a trial period to see which companies are approaching us,” he said.
That trial is restricted to particular services, and only those below a maximum threshold set at around $1,000 per month.
“We’ve done the calculations and we’ve played out certain scenarios if we were to accept it. We’ve looked at the trends of those particular coins … over the last 12 months, and we’ve figured out a bit of a trending habit of the volatility of those particular coins themselves. So we know, if we signed on a client today, for example, for $1,000, what would that look like in two months, three months, four months,” said Mr Tadros.
“It is like a yo-yo, that’s the reality of it. It is up and down. Ever since I’ve been trading, I’ve still made plenty of money personally, but I could have made a lot more.”
Mr Tadros said rather than using these digital payments as working capital in the business, the strategy has been designed more as a long-term investment option for the business.
“This is a longer play for us, it’s not about the short-term. We’re not using the crypto payments we’re receiving back into the business, it’s a side portfolio if you like for future investment,” he said.
According to Mr Tadros, there is significant appetite for cryptocurrencies among SMEs thanks to their substantially lower transaction fees.
“The transaction fees are very, very minimal in comparison to some of the other platforms,” he said.
“Some of our transaction fees are under 1 per cent – 0.8 per cent. So with some of them we are paying 3, 4, 5 per cent, in some scenarios 6 per cent, so huge savings.
Impress!ve is not the first business around the world to accept cryptocurrency payments, with KFC’s Canadian operations announcing it would accept bitcoin payments as part of a promotional offer.
But as Mr Tadros’ experience suggests, accountants have been generally reluctant to advocate for their clients to accept crypto payments, largely because the tax frameworks around these currencies remain a work in progress.
Last month, a spokesperson for the ATO told My Business’ sister publication Accountants Daily that it is currently meeting with tax experts, lawyers and relevant parties “to explore common queries … practical issues and the tax implications arising from cryptocurrency transactions”.
“This will help inform the ATO’s strategy for supporting the community in understanding their tax obligations, including any further advice and guidance required,” the spokesperson said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.