How to Accept Crypto Payments & Know Feasibility?

How to accept crypto payments and know its feasibility? When you set up a business, apart from considering capital arrangement and other legal requirements, you should also consider your cash-conversion strategy.

This is important because you will have to compete with a large number of establishments that accept payment online.

Also, there are lots of establishments that accept digital currencies, such as crypto coins, as a mode of payment.

Therefore, it is important for you to know the ways to accept digital payments and its feasibility and need today.

Over the years, accepting crypto at a business establishment has become a commonplace.

It is much easier, faster and convenient as compared to the traditional mode of payments.

Therefore, it has become more widespread in the past decade or so. However, the entire process and system set up is much more complicated than you think.

It is not at all as simple as receiving cash individually from the customers. It involves finding whom to take as your payment partner, working through the integration, and lots more.

This article will help you in that aspect. In this article you will come to know about the things that you should consider before you start accepting crypto as a form of payment for your goods or services.

You will also know how to set up a payment system and integrate a payment processor that will help you to make the necessary conversions.

You will also come to know about the merits and demerits of accepting crypto as payment and even the differences between accepting crypto payment and credit card payment.

How to Accept Crypto Payments and Know Its Feasibility?

How to Accept Crypto Payments and Know Its Feasibility

Most of the small businesses accept crypto payments today and if you are not in that bracket, it is high time that you start contemplating on it if you want to keep up with the cutthroat competition.

It is easy for a small business or a big establishment now to accept crypto payments for the goods or services offered.

However, accepting crypto payments is not simply a survival tactic today, especially for the small businesses.

It is also a proven way to increase the efficiency of the business. Accepting crypto payments will help your business in ways more than one such as:

  • It will increase the international reach of your business
  • It will enhance the security aspect of your payment system due to the decentralized nature of crypto
  • It will help you to make faster payments
  • It will lower the processing, transaction, and conversion fees
  • It will eliminate the chargeback fees that typically eat away the hard-earned cash
  • It will offer more diverse payment options to the people which will help you to draw new customers and
  • You will have more opportunity to win because the value of crypto increases over time giving you more when you exchange the coins for cash.

Apart from that, accepting crypto coins, Bitcoin in particular, will help a lot in marketing your Business! Surprising as it may seem, it is true.

Since lots of people today are engaged with crypto, you can make it a part of your business message.

It will establish your brand identity and let people know that you and your business both are innovative and are not afraid to accept new technology.

Here is where reaching out to your target audience comes in. As you may know, people who are engaged with crypto are mostly males within the age group of 25 years and 44 years old.

If you target this specific audience and are selling high-ticket products, accepting crypto should be your top agenda if it fits your brand characteristics.

However, before you get on with the process, it pays to be more knowledgeable about this particular aspect and not jump into it simply knowing the advantages mentioned above.

Just like any other thing, accepting crypto payments also comes with some significant downsides.

High volatility of the coins and the market and the risk of cyber attacks and hacks top the list.

Apart from that, if you decide to accept crypto as a form of payment then you should be ready, or have a dedicated team, to take on the barrage of questions regarding crypto and not your product.

This is actually not according to the deal but is sure to happen because people are very curious and anxious about crypto.

Also, just as crypto gives you the opportunity to win big, it also can cause a significant loss if the value of the coins you hold drops drastically.

However, you can avoid that risk if you do not hold the coins and convert them into a currency of your choice.

But then you may lose on the potential profits you could have made down the lane.

Lack of awareness among people about crypto as a form of payment option as well as its reputation may also drive people away from your site.

They may think that it is a criminal activity or an act of laundering money if you do not make them aware about it.

If you are concerned about the environmental impact of crypto, which is quite high due to its high energy consumption, you may not want to accept crypto as a payment.

You will still need to hold some amount of cash to run your business because there are a few specific expenses that you will need to meet with cash only.

Therefore, if you receive only crypto as a form of payment, you will need to ensure that you also have a steady cash flow.

And finally, you should be very well aware of the tax implications of crypto, and it is much more complicated than your regular taxes.

The Internal Revenue Service or the IRS considers crypto as property and any profit made with crypto is considered as capital gains.

According to an IRS Notice 2014-21, any taxpayer receiving payments in crypto for goods or services offered must consider the fair market value of the coin in US dollars as on the date on which it was received while computing gross income.

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For every payment made with crypto you will need to pay taxes and make this calculation, which will make things very complicated.

However, there is nothing to be depressed about.

You can minimize all these risks and make it a profitable integration by reaping the most benefits out of crypto but that will entirely depend upon how exactly you adopt it.

For that, you will need to be more knowledgeable, which brings to the next important segment of this article.

Getting Knowledgeable

In order to get knowledgeable about accepting crypto payments for your business, you will first need to find answers to some very important questions as follows.

Who accepts crypto?

The major, high-profile tech companies were the first ones to accept crypto payments such as Microsoft and PayPal.

Then it was the shopping websites like Overstock that adopted crypto.

And now even the less techie businesses, such as Whole Foods, the NBA, and Home Depot to name a few, also accept Bitcoin and other types of crypto coins.

Why accept crypto payments?

The most significant reasons to accept Bitcoin and other crypto as a form of payment are that it is quicker and cheaper.

It is an attractive proposition that creates opportunities for newer business models.

Is there a need for a payment tool?

The integral part of crypto is that it allows P2P transactions without needing a third-party payment tool.

However, it is good to use one because creating a payment workflow is demanding and time consuming.

Third-party payment tools will simplify and expedite the process.

Which crypto coins to accept?

There are thousands of different types of crypto coins out there but not all are acceptable.

You can go for the most popular coin, the Bitcoin but there are other Altcoins that are good as well. Research well.

Are there any tax and accounting problems?

As said earlier, crypto tax is quite complicated and so can be the accounting.

Therefore, you will need to take help of a tax consultant, especially if you want to hold on to the coins, and an expert accountant if you want to accept crypto.

Also, make sure that your Point of Sale system integrates with the crypto payments well to send the information to the accountant properly.

When and how to convert cash?

Cash conversion is very important as it will have a huge impact on your business due to wild price swings of crypto coins.

Will you hold or convert to cash immediately or on a scheduled basis are important questions to consider if you rely on steady cash flow for your business operation.

What are the costs?

Though there will be no direct costs when you accept crypto as payments, you will surely have some incurred costs to bear.

These costs can be of different types such as:

  • Cost of reformatting a report
  • Cost to train your staff and customer service
  • Cost of goods returned and
  • Cost to settle disputes.

So, there are lots to consider. And, due to that you may ask why then not accept credit card payments instead of crypto?

Well, the answer to this particular question needs to be made in detail.

Typically, there are a few fundamental differences between crypto and credit card payments, though they both have some similarities.

A side by side comparison will make things clearer to you.

In terms of payments, crypto payments do not need a payment tool but can be a value added service.

These tools come with an easy to use user interface to help the merchant as well as the consumers and help in resolving issues associated with price swings and also provide built-in features to convert crypto to dollars.

On the other hand, credit card payments will essentially need a reliable payment processor to verify the identity of the users and communicate with the banks and card networks to assure there are enough funds.

It will also initiate transfer of money from the bank to the account of the merchant.

In terms of fees, crypto payments involve no fees if it is made directly by the customer but can be about 1% if a payment tool is used.

However, it is always cheaper than credit card payments and the pricing structure is also quite simple.

On the other hand, the standard flat fee charged by credit cards is 2.9% apart from a small fee of about 30 cents for each transaction.

However, these rates can vary depending on the type of processor.

Apart from that, there may be other standalone fees such as compliance fees, PCI, and others.

In terms of security and safety aspects, crypto payments usually have little to no responsibilities regarding compliance or frauds.

It can be used only by those who know the password or are the owners of the private keys and it is entered only once in the device of the customer.

Hence it is safe since data does not move through the systems of the business and there are no compliance requirements.

If the customer loses the keys, the responsibility is theirs and not of the merchants.

On the other hand, in the case of credit payments, there is such responsibility that may reflect in the fees.

Data and information are on the card and therefore anybody who intervenes can make fraudulent transactions.

In terms of customer issues, resolving them is quite difficult in crypto payments because crypto transactions are irreversible.

Therefore, there will be no chargeback. This relieves the merchants but may also result in a lot of unhappy customers.

On the other hand, everything lies in the hands of the network of the card and most of the time it favors the customers.

In case of returns, the merchants can pay back the exact amount to the customers.

Chargeback can also be initiated if the card holder claims that the transaction is unauthorized.

In terms of settlement, it is faster with crypto. Funds can be accessed in about 10 minutes after a transaction.

But, it can also be very volatile leading to risks in conversion.

Stablecoins can however mitigate this risk if accepted because these coins are pegged to US dollars and are less volatile in nature.

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On the other hand, card payments are slow and may take a couple of business days or more for the merchants to use the fund.

However, it is more unwavering because it is usually done in fiat money which is more stable.

In terms of regulatory oversight, there is not much in crypto.

However, some strict regulations are coming up in crypto at the departmental, state, and federal level.

On the other hand, there are lots of rules and compliance requirements for making a card payment.

It is safer but these are administered by the payments industry or the government which comes at a cost of money and time.

In terms of learning curve, accepting crypto payments has a steep learning curve for both the merchants and the customers because it is new technology.

It must be properly integrated with bookkeeping and inventory management which may be quite difficult if you are not tech savvy.

On the other hand, there is not much of it required in the case of card payments.

This technology is quite well-known and mature and is therefore quite easy.

However, the complex payment process may make it difficult for some.

Therefore, you can see that both crypto payments and credit card payments have their characteristic pros and cons.

Still, it is good to go for crypto and here is who you can get started with.

Getting Started

Here is how you should get ready to accept Bitcoin and crypto payments and thrive in the dynamic market of today.

However, before that it is good to know how such payments are made and looks like.

This will ensure that you do not miss out on any important steps in the set-up process.

A typically P2P crypto payment involves:

  • A QR code presented to the customer wanting to make crypto payments which is generated only once
  • The destination address of the crypto is determined by the QR code and instructed to the crypto wallet of the customer or app
  • The customer enters the password or private key to verify the legitimacy of the transaction and
  • When the transaction is made it is verified by the miners all over the world and participating on the network before it is added to the public ledger.

The entire process may take about 10 minutes but those merchants that use a payment processor or firm may have faster transaction completion times.

There may also be some other differences and benefits such as locking the rate for a particular window to limit volatility.

Now, here is how you can set up your payments system to accept crypto payments.

The process involves setting up a crypto wallet to start with. This wallet typically resembles the bank account.

Through this wallet you can receive and even send digital money. It can be any type of wallet such as:

  • Cold wallet
  • Hot wallet
  • Hard wallet
  • Soft wallet
  • Digital wallet and
  • Mobile wallet.

However, when you set up your crypto wallet, just make sure that you choose a multi-currency crypto wallet.

This will be very helpful in the long term because it can hold different types of crypto coins and chances are high that you will have to accept different types of crypto coins from your customers.

Though Bitcoin is the most favored, popular, and widely accepted crypto coin, there are also others that are accepted such as:

  • Bitcoin Cash
  • Ethereum
  • Litecoin and others.

A multi-currency crypto wallet will save you from the inconvenience of opening, setting up and managing several crypto wallets for different crypto coins.

Now, you should not go for any and every multi-currency crypto wallet that is available out there.

There are a few specific factors to look into while choosing your multi-currency crypto wallet to make sure that the one you choose is the best and most suitable one for your business.

These factors are:

  • The types and number of crypto coins supported by the wallet
  • Your affordability in terms of purchase costs and also the transaction fees
  • Its capability to combine with other software wallets
  • The safety aspects of it and
  • Its capability to link with other apps to ensure seamless fund transfer.

Once the crypto wallet is set and is running, you will then need to integrate crypto payments in your website.

You can do this in a lot of different ways depending on the type of your business.

For example, if you are running an e-commerce platform you can use one of the several useful plugins available out there to set up crypto payment processing.

If you cannot find one that is suitable for your business, there are payment gateways you may sign up with.

These processors offer a lot of ways for accepting crypto payments on the website which include invoices and buttons.

If you do not integrate, you can also choose to accept direct payments from your customers in crypto.

You will simply have to provide them with your QR code or wallet address that they can scan or enter, as the case may be, to transfer digital money to your account.

Whichever option you chose, just make sure that you protect yourself against the drawbacks of crypto as well as maintain the value and safety of the coins.

For that, you may instantly convert the crypto coins into cash.

The payment processors will do it for you and help you avoid the reduction of value of your coins due to the volatility issues.

You may even accept Bitcoin and other crypto as payments without any direct contact or exposure if you allow your customers to pay you through the crypto option offered by PayPal.

The payment gateway will credit the money in US dollars in your account once the money is sent.

Now you are ready to accept crypto payments.

Choosing a Crypto Payment Processor

Finally, it is time to know about the payment processor.

As said earlier, this is optional but using a payment processor will surely add value and increase the efficiency of your payment system.

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While choosing a payment processor to integrate with your website, you should typically research and evaluate the available options.

You will also need to consider the following aspects before you finalize on any particular payment processor to ensure that you are getting the best deal.

Transaction fees:

This is the most important factor to consider because if the transaction fees are high it may drive away customers from your website.

Usually, the transaction fee of Bitcoin is usually very low.

Therefore, you will be better off if you accept Bitcoin and use a relevant payment process.

Payout frequency:

For any business, it is very important to get the money quickly.

Therefore, you will need to consider the payment frequency to make sure that it really does allow it.

Most of the crypto payment processors offer daily payouts but there are quite a few that may take several days to process a payment.

You should stay away from these. Ideally, if you need faster business funds, you should go for ACH or Automated Clearing House payments.

Countries supported:

Not every country in this world is open to crypt and its use. For example, China has banned crypto in the country.

Therefore, crypto as such is a very delicate political subject and the rules and regulations around it vary from one country of this world to another.

With such differences, it is important to make sure that the crypto payment processor you choose eventually supports all those countries you want to do business in.

Customer support:

When it comes to anything that is related to tech, it is essential that you choose one that offers continual and best customer support.

You can face a lot of different types of issues unknown to you and unexpectedly at any time whether it is during the set up process or after it when the system goes down while running.

At that time you will need to talk to someone knowledgeable and efficient enough to resolve the issues immediately or else you stand a chance to incur heavy losses.

Security:

This is one important aspect to consider when it comes to receiving or sending money digitally across.

For any business as well as its customers, security plays a significant role.

Therefore, you must make sure that you choose a payment processor that takes the security aspect very seriously and stay updated.

Apart from that you should also ensure regular and proper site maintenance by installing updates frequently and keeping encrypted backups on a regular basis to your wallet.

There are several reliable companies out there which you can choose to integrate into your website to accept Bitcoin or other crypto payments.

You are advised to do your due diligence and research before you choose one.

However, here are some of the best ones that you may consider integrating into your website:

  • BitPay – It offers different ways of payments with hosted checkouts, payment buttons, embeddable invoices, and integrations as well as plugins. It is easy to set up and will also protect your crypto coins from volatility through daily bank payments and its unique Zero Price Volatility feature, all for a transaction fee of 1% only.
  • Coinbase Commerce – It is quick and easy to set up and use. It is compatible with most of the e-commerce platforms and offers high security of coins from volatility, quick conversion of crypto coins to a currency of your choice, and flexible pricing choices.
  • NOWPayments – This is a low fee, easy to use and set up processing option. It is quite popular offering more than 100 different crypto coins, seamless exchange facility to the currency of your choice, good compatibility with some of the most important e-commerce platforms, quite a few great plugins, and an outstanding point of sale solution. Once again, the maximum fee charged is 1%
  • PayPal – This, needless to say, is one of the largest online payment providers in the world. With its entry into the crypto space, it has become even bigger. Millions of customers and merchants use this payment gateway that converts crypto coins to fiat. It is a good choice especially if you intend to accept Bitcoin.

As said earlier, these are not the only payment processors available out there, and this article does not promote any one of them.

You can also choose others and even accept payments manually.

However, when you do your research just make sure that you look for these specific points in the payment processor before you finally choose one:

  • It should support different types of crypto coins
  • It should charge low transaction fees
  • It should be compatible with different platforms that you may use for your business
  • It should protect you and your crypto from market volatility and convert them into fiat money instantly
  • It should not have any payout restrictions or minimum balance requirements
  • It should be able to settle payment in different currencies
  • It should provide other benefits such as recurring payments, invoicing, accounting options and others and
  • It should be safe and secure and support stringent user verification and sign in processes.

And, finally, you should read the reviews of the payment gateway and choose the one that is reliable, reputed and has a lot of good reviews.

Conclusion

In spite of the debates on the merits of crypto, you can still accept these digital coins as payments without exposing them to needless risks.

You just have to follow the right ways and use the right plugins. As this article points out, it is a superb way to add to your brand identity.