Should Your Restaurant Accept Bitcoin?

What is bitcoin?

Bitcoin was created in 2009, making it the first modern cryptocurrency. It is an all-digital currency that relies on peer-to-peer blockchain technology for tracking and trading. No centralized system, bank or government backs bitcoin. 

Although bitcoin was primarily designed as a payment form, most people currently use bitcoin and its cryptocurrency cousins for investment purposes. Still, bitcoin is by far the most common cryptocurrency businesses accept as payment. 

According to a Pew Research Center survey, about 17 percent of American adults had owned cryptocurrency as of 2023.

How does accepting bitcoin work?

To accept bitcoin in your restaurant, you’ll need to sign up for a bitcoin merchant wallet account via an online platform like Confirmo, BitPay or CoinGate. Many of these crypto wallets integrate with the best POS systems, shopping carts and commerce platforms. Some of the best credit card processors also accept cryptocurrency payments, making it easier for merchants to support bitcoin payments.

A typical restaurant payment transaction with bitcoin would go something like this: 

• The restaurant shows the bitcoin-paying customer a quick response (QR) code. 
• The customer scans the QR code and their personal crypto wallet reads the virtual address to which the payment should be sent. This address is usually a one-time destination code. 
• The customer enters their private key, which is like a password, to verify the transaction.

The best restaurant POS or top accounting software may be able to convert bitcoin payments into United States dollars for easy accounting and tax keeping. 

Pros and cons of accepting bitcoin at your restaurant 

There are several compelling reasons why your restaurant should accept cryptocurrency, but you’ll need to seriously weigh the downsides before making a decision. 

Pros

• Lower transaction fees: Merchant service providers charge up to 4 percent per transaction ― or even more if your diner is from overseas. Crypto fees can be 1 percent or less ― but watch out for transaction fees called gas fees, particularly with ethereum.
• Better cash flow: Even with the best merchant services provider for customer payments via credit card, you may wait days for the payment. With bitcoin, you’ll receive it within the hour.
• No Payment Card Industry (PCI) compliance is required: PCI compliance doesn’t apply to bitcoin transactions. However, this perk doesn’t count for much if you still take debit and credit card payments alongside bitcoin payments.
• Business from bitcoin believers: Many bitcoin holders are enthusiastic about cryptocurrency and its perceived ability to improve the financial system. If you accept bitcoin, these individuals may seek you out to support your restaurant. “For marketing-savvy businesses, it is a differentiator to be able to accept bitcoins and if you are trying to attract an audience that uses bitcoin, you may be perceived as a techno-savvy restaurant or establishment,” according to technology futurist and podcast host Ian Khan.
• No chargebacks: Accepting bitcoin means you can avoid chargebacks. Unlike standard credit and debit cards, consumers can’t contact bitcoin to have a transaction reversed. The only way you’ll ever reimburse a customer is if you choose to do so.
• International customer appeal: Foreign customers, who prefer to use bitcoin rather than converting their currency or using international cards, can avoid additional fees and use your restaurant. Ranveer Brar, owner of the restaurant Kashkan in the United Arab Emirates, explains, “Payments by bitcoin are cheaper compared to other methods, especially when taking payment from foreign tourists.”

Cons

• Price volatility: Cryptocurrency exchange rate swings tend to be much more severe in both directions than traditional currency. Andrew Smith, a financial expert and cryptocurrency consultant, notes, “Bitcoin’s price can fluctuate significantly, so restaurant owners need to be prepared for this risk. Using services that instantly convert bitcoin to fiat currency can mitigate this.”
• Wallet security: You may lose all your cryptocurrency if you choose a fake crypto exchange or if your legitimate provider goes under. In financial terms, crypto is still the Wild West compared to standard financial products.
• Future regulation is a distinct possibility: Future regulations are possible if bitcoin continues to grow in popularity and use. Regulations will likely make handling crypto more difficult and expensive.
• Accounting may be more challenging: Most cloud-based accounting packages aren’t set up to handle bitcoin transactions. This will make bookkeeping more challenging, especially if you’re regularly converting from dollar to bitcoin and vice versa.

Should your restaurant accept bitcoin? 

There are pluses and minuses to making the decision to accept bitcoin. Here are reasons why you should and shouldn’t.

Your restaurant should accept bitcoin if …

• You are located in an area with many millennials or Gen Z customers: These groups are often more familiar with cryptocurrency and more likely to use it. [Related article: Build a Brand That Attracts Gen Z and Millennial Customers]
• Your restaurant is in a tourist hotspot: Tourists, especially international ones, may find it easier to use their digital wallet than find a currency exchange.
• You want to increase your digital footprint: Accepting bitcoin can attract more tech-savvy customers who want to use crypto in their daily transactions. Guillaume Drew, founder of luxury handcrafted goods retailer Or & Zon, observes, “Accepting bitcoin offers an additional payment option for your client, which can improve the overall customer experience. This is particularly important at the luxury end of the market, including restaurants.”
• You host or want to host events or meetings for tech and crypto communities: It’s natural that they’d want to support a venue that shares their opinions.
• You want to reduce your processing fees: Bitcoin transactions often have lower fees than credit card payments.

Your restaurant should not accept bitcoin if …

• You dislike high volatility and financial risk: Businesses with small margins may worry about accepting bitcoin payments only to see their value plummet.
• You can’t see any demand: If no one has come up to you asking to pay by bitcoin, it might make more sense to focus on the payment methods your customers already use, like cards or mobile wallets.
• You don’t want to pay conversion fees: While processing fees might be lower, turning your crypto into dollars might wipe out all those savings.
• You don’t want to complicate your tax position or accounting: In many places, cryptocurrency is treated as property so each transaction could result in a bill.
• You are not confident about cybersecurity: You need to secure your digital wallets and private keys and a breach may cause you to lose everything.

Best practices for adopting bitcoin as a payment method

If you do opt to accept bitcoin or crypto payments from customers, follow these three steps to maximize your return.

1. Be serious about security.

Security is key when dealing with cryptocurrencies, according to Brar. “Restaurants must implement best practices including acquiring reliable and secure payment solutions, confirming two-factor authentication and ensuring the safety of digital wallets,” he says. “Regular staff education regarding fraud incidents and proper supervision of crypto wallets is also essential.”

2. Choose the right payment platform.

Selecting the right payment partner will also ease your transition into accepting bitcoins. Smith recommends, “When selecting a platform, restaurant owners should prioritize seamless POS integration, real-time conversion to fiat currency and robust customer support. Look for platforms that offer low fees, ease of use and strong security features. Additionally, the ability to easily track crypto transactions in accounting systems will help streamline financial reporting.”

3. Market it to receptive customers.

Know who your market is. “Restaurants targeting a younger, tech-savvy demographic or those located in cosmopolitan cities could significantly benefit from accepting bitcoin,” notes Drew. “It can attract an audience that perceives your establishment as techno-savvy.”

Drew also recommends that restaurants and other retail establishments actively promote that they accept cryptos on local listings like their Google Business Profile and in all their advertising.

The individual decision to accept bitcoin

Whether or not you accept bitcoin depends on your business goals, tech savviness, customer base and desire to explore new tech trends. Bitcoin has come a long way since its introduction. Plenty of companies and enthusiasts have made it easier to include cryptocurrency in everyday transactions. 

Weigh bitcoin’s conveniences and risks before deciding to accept cryptocurrency as a payment form for your restaurant. 

Andreas Rivera contributed to this article. Some source interviews were conducted for a previous version of this article.