As Bitcoin adoption grows, small and large-scale industries are beginning to accept Bitcoin payments as an option for goods and services rendered. This article is an in-depth explanation of how to accept Bitcoin payments for your business.
Cryptocurrencies have risen in popularity in recent years, with assets like Bitcoin, Ethereum, Polkadot, and Litecoin all seeing significant growth. In February 2021, the total market capitalization of Bitcoin, for example, topped $1 trillion.
As a result, it’s no surprise that many of the world’s greatest corporations have begun to accept Bitcoin as a form of payment for goods and services.
According to a nationwide HSB survey conducted in January 2020, 36% of small companies accept bitcoin payments. In addition, according to QuickBooks, 15% of small businesses in the United States now accept cryptocurrencies.
If you cater to a younger, tech-savvy audience, the option to take Bitcoin payments may be a must-have for your business. Nonetheless, elder generations of at least 60 years are catching up, and if you serve the older market, you’ll need to adjust.
As a business owner, accepting bitcoin for your company has a number of advantages, especially as crypto acceptance continues to rise. How can you accept Bitcoin for your business? The answer will be discussed in the following section.
How to accept Bitcoin payments for your business
There are a few procedures to take in order to start accepting Bitcoin payments for your business, which are outlined below.
- Create a cryptocurrency wallet.
- Integrate cryptocurrencies into your website’s payment system.
- Safeguard against crypto volatility
Create a cryptocurrency wallet
You’ll begin by creating a cryptocurrency wallet. A wallet is similar to a bank account in that it allows you to send and receive digital money.
Because you’re likely to accept a variety of cryptocurrencies from different consumers, it’s best to choose a multi-cryptocurrency wallet that can store many cryptocurrencies.
A multi-crypto wallet holds multiple types of cryptocurrency, eliminating the need to open multiple crypto wallets for various cryptocurrencies.
Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Binance are the most popular cryptos among small enterprises. Consider getting a wallet that can contain these well-known cryptocurrencies.
There are several sorts of wallets to consider when selecting a wallet, including hard wallets, soft wallets, hot wallets, mobile wallets, and digital wallets.
A “soft wallet” is sometimes known as a “software wallet.” Soft wallets are less secure than cold or hard wallets, but they may be a viable choice for business owners who expect to convert Bitcoin for cash right away. The majority of software wallets are also digital wallets.
A hard wallet, similar to a thumb drive, is essentially an offline storage device. They’re the safest way to store Bitcoin, therefore they’re ideal for business owners who expect to keep their Bitcoin for a long time. For business owners who plan to accept big sums of Bitcoin, hard wallets may be a good option. A cold wallet is another name for a hard wallet.
Hot wallet: Because hot wallets are linked to the internet, they are more vulnerable to cyber-attacks. Being online, on the other hand, makes trading and spending Bitcoin much easier. This could be enticing to business owners who intend to pay others with their Bitcoin earnings.
Mobile wallet: Some cryptocurrency wallets are only available as mobile apps, but any cryptocurrency wallet you carry on your phone qualifies as a mobile wallet. Entrepreneurs that operate their businesses on the go should think about investing in a wallet that they can use on both their phone and their PC.
Digital wallets: Compared to hard or cold wallets, digital wallets are usually more user-friendly. Coinbase and BitPay, for example, provide extensive APIs that make it simple to connect to major e-commerce platforms. A digital wallet allows business owners to send invoices, accept cryptocurrency payments, give refunds, and more. Users can also generate reports to assist with tax management.
Factors to consider when choosing a cryptocurrency wallet
- Cryptocurrencies that are supported (wallets such as Ledger Nano S and Guarda support more than 30 cryptos)
- Ability to integrate with other software wallets
- Affordability in terms of transaction and purchase fees (for cold or offline wallets)
- Integrating with other apps for smooth money transfers
Integrate cryptocurrencies into your website’s payment system.
Once your crypto wallet is up and running, you may sign up for a crypto payment gateway to incorporate crypto payments into your website.
You may use crypto processors to collect payments on your website in a variety of ways. Payment buttons and invoices are two examples of these methods. CoinBase Commerce, BitPay, and Coingate are some of the most popular cryptocurrency processors in the world.
Choose a cryptocurrency gateway that complies with the following criteria:
- Supports various crypto
- Has a solid reputation and positive feedback.
- Transaction fees are cheap.
- No minimum balance requirements or payout limits.
- Integrate with platforms that are critical to your company’s success.
- Has other features including invoicing, recurring payments, and accounting choices.
Is safe and secure.
You can arrange direct payments with your consumers if you don’t want to integrate your wallet. Your wallet address or your QR code, which you can produce from your wallet, is all they require. To make a payment, your customers will enter your address or scan your QR code.
Safeguard against crypto volatility
Because of the volatile nature of crypto, you can keep your crypto safe and valuable by:
automatically converting your Bitcoin to cash, reducing volatility issues that can lower your crypto’s value. To do this, sign up for payment processors like BitPay and Flexa.
Avoiding direct contact with cryptocurrency – You can accept crypto payments by allowing customers to pay through PayPal’s crypto option. PayPal funds your account with US cash whenever your crypto-holding transfers the digital money.
Advantages of accepting Bitcoin payments
Using bitcoins for business has various advantages. These are some of them:
- Faster payments
- Increased international reach
- Lower fraud risks for buyers
- Varied payment option
- Reduced transaction/processing fees
In the event that a client requests a chargeback, credit card funds might be held for up to a week (or even longer). As a result, payment delays appear to occur for no apparent cause.
This is not the case with bitcoins, in comparison to traditional credit card settlements, they are frequently faster.
Increasing your international reach
Because of the expensive cross-border transaction fees, small internet vendors and retailers rarely sell their services or products worldwide.
However, because Bitcoin is global, it eliminate this pressure once and for all, making payments cheaper, safer, easier, and faster. Accepting payments from customers all across the world is simple with cryptocurrency.
Lower fraud risks for buyers
Bitcoin allows customers to complete transactions without disclosing any sensitive financial information to the seller (such as credit or debit card numbers). As a result, they have a level of financial secrecy that most credit cards don’t provide.
Varied payment option
More payment options may entice new clients, particularly the younger age.
Reduced transaction/processing fees
Transaction fees for bitcoin transactions are much lower than those for credit and debit card transactions. This feature alone should make it a popular choice among small business owners.
Disadvantages of accepting Bitcoin payments
- Cryptocurrency volatility
- Regulatory concerns
- Impact on the environment
- Inadequate brand recognition and reputation
- Crypto tax implications
- security concerns
Bitcoin is extremely volatile, and its value can change dramatically in a matter of hours. The value of the Bitcoin you get may depreciate before you can exchange it for cash.
As stakeholders continue to consult on how to govern the crypto market, you should be prepared to keep up with changing legislation.
Bitcoin mining consumes a lot of energy, much of which comes from coal. As a result, eco-friendly brands may choose to avoid it.
Insufficient awareness and reputation
While the majority of people today are aware of cryptocurrencies, many still regard them as more of an investment than a payment alternative. Many people who are aware that it is a payment option link it to money laundering and other criminal conduct.
Crypto tax implications
All cryptocurrencies, according to the International Revenue Service (IRS), are capital assets that are subject to capital gains tax.
If you use bitcoin to make purchases as a small business, the IRS considers it a crypto sale. If the coins you sell are worth more than they were when you ‘purchased’ them, you’ll have to pay capital gains tax in addition to the sales tax.
Digital wallets can be hacked, and recovering cryptocurrency is difficult.