This is an opinion editorial by Matt Maraia, a CPA is focused on how changes in accounting regulations affect the Bitcoin community.
Today, companies spend large amounts of money on credit card fees when processing customer payments, which ultimately cut into margins that are widely scrutinized by investors and management.
But the Lightning Network presents a new payment solution with the ability to process instant payments (using Bitcoin) with almost no fees. It boasts equivalent decentralized network protections to Bitcoin, ultimately using the Bitcoin blockchain, which has not been hacked since its inception in 2009. asset price volatility, this new technology built on top of “Bitcoin rails” provides a unique opportunity for CEOs and CFOs to improve profits.
In fact, you can be anti-Bitcoin and still be able to take advantage of the Lightning Network in your company’s payment processes, avoiding the issues of bitcoin price fluctuations.
Here are some of the biggest advantages of adopting the Lightning Network for businesses:
Improving Margins, Reducing Fees
With massive layoffs swirling around the market, investors and managers understandably keep scrutinizing margins – every dollar counts and can spell disaster without proper planning and foresight.
The Lightning Network helps alleviate these pressures through low transaction fees. On average, payments made by credit card amount to about 3% of the fees owed to intermediary financial institutions. The Lightning Network opens up the possibility to process payments at a fraction of the cost by using micropayment channels. While it’s unlikely that an entire customer base will move quickly through the Lightning Network, even shifting 25% of credit card payments could improve margins.
Benefit from constant innovation
Without going into too much detail about how Lightning works behind the scenes, the innovations made in the space remain constant.
For example, IBEX Pay operates as a web application service that allows merchants to create an invoice on demand, create a QR code that the buyer can scan in any Lightning wallet and process payments via Lightning instantly. immediately. Traders can choose to receive payment based on a user-specified ratio of BTC to USD.
For companies with point-of-sale (PoS) terminals, Strike improves Lightning Network compatibility for most of those while offering the same benefits of the IBEX Pay platform in both efficiency and cost effectiveness. And most of these services do not require a monthly subscription fee.
Another benefit of using the Lightning Network is the near-instant settlement of funds. Companies no longer need to wait two to three business days for ACH/wire payments to access capital via “fiat rails.” Intermediaries are taken to use the Lightning Network, which allows rapid access to capital while limiting counterparty risk.
A Built-In Customer Base
Although customer bases are highly dependent on the goods or services offered by a company, there is a large contingent of Bitcoin supporters who prefer and often seek out vendors who directly or indirectly operate within the environment. in Bitcoin.
Many Bitcoin advocates use websites like btcmap.org and satmap.app to find businesses that accept bitcoin. Given that the Lightning Network is a layer built on top of the Bitcoin network, its adoption can provide you with an ever-growing, established customer base that is hungry to contribute and share the successes of businesses operating under the Bitcoin umbrella.
Limitations And Risks
However, the relative infancy of the Lightning Network means there are potential limitations and risks.
For example, IBEX Pay currently offers a maximum $2,500 transaction size. Additionally, and as with any new technology, as the network gains traction, there are potential risks of bugs and other vulnerabilities. Recent traction in popularity has helped reduce concerns about this proof of concept, but without decades of data points to rely on, there’s no guarantee that issues won’t arise. Finally, a current lack of regulatory clarity in the digital asset realm may lead to more questions later.
All that said, the Lightning Network gives companies a competitive advantage from a financial, operational and technological standpoint, although there are some concerns due to the product’s relative infancy in addition to current limitations. of existing solutions. However, rather than stand by and suffer the future margin pressures that continue to creep into the economy, it is worth taking action and adapting.
My recommendation for outside business owners is to test run the implementation of this solution for at least a small part of your business and create a sufficient sample size to compare with the processes of pay now. What is the worst-case scenario here? You are not reaping the benefits outlined here, but you are not collateral damage to your business. The best? You are a first mover of a technology that aims to eliminate space in payment processing, along with increasing margins and gaining easier access to customer payments.
The decision is yours.
This is a guest post by Matt Maraia. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.