While many investment gurus initially wrote off cryptocurrency as a fad, in recent years it has established itself as a force to reckon with. Many new coins have come into the market and are now widely used as a means of exchange along with traditional payment methods.
Some well-known eCommerce stores accepting cryptocurrency include:
To grow your business, consider jumping on the bandwagon and adapting your eCommerce site to accept cryptocurrency. Let’s talk about why and how to do so.
Why use cryptocurrency?
Sales training emphasizes that to pull more customers, you should make customer satisfaction a priority. So, consider including various payment methods, such as cryptocurrency, credit card-based, and online wallets. By giving your buyers more options, you increase their convenience, which can help position your business ahead of the competition.
In addition, by accepting cryptocurrency for payments, you can access a wider market. Plenty of people is opting to use cryptocurrency for transacting. Some tech-savvy buyers are likely to drop the purchase if there is no option for digital crypto-wallet payments.
Cryptocurrencies can also allow you to expand your business beyond borders. There are no currency conversion issues, making it easier to buy and sell in different countries.
Additionally, transacting with digital currencies comes with significantly lower transaction costs. The fees associated with digital trading will vary as a result of how you choose to accept payments. For instance, it’s cheaper to accept payments to your personal wallet, but it will cost more to use a middle-man site such as Coinbase.
However, according to the US Chamber of Commerce, it is usually still cheaper than the service fees you pay on most online transaction support services such as PayPal. For instance, PayPal charges about 4% in transaction fees while many crypto processors charge approximately 1%.
Also, the peer-to-peer technology cryptocurrencies use is free of the banking system’s red tape and time constraints allowing for instant processing of transactions. In contrast, credit card providers may take a few days to deposit funds into your account.
The faster transaction speed streamlines the payment process significantly. The earlier the money hits your account, the healthier your cashflows will be, improving the way you do business.
On top of that, blockchain technology allows for transactions to be easily traceable, plus each transaction block is virtually impossible to replicate or recreate, making your payments more secure.
Payment safety is crucial for your business because small businesses are often the target of fraud and identity theft activities. According to the US Chamber of Commerce, small businesses are usually the main target of attempted fraudulent transactions. In 2020 alone, fraud through credit and debit cards increased by 35% and the number is still rising.
Payment disputes are another pain for small businesses that cryptocurrencies can stamp out. If a customer’s bank reverses payment, you are left to face the hefty cost of chargeback fees. With cryptocurrencies, only the retailer can reverse a sale, and even then, no chargebacks fees apply.
How to accept cryptocurrency payments
You can start accepting cryptocurrency by either training yourself to use your wallet or running a payment processor on your site.
Setting up your wallet.
A wallet works in the same way as a bank account. Since there are many different strong cryptocurrencies, you will likely be accepting several options, so consider setting up a multi-currency cryptocurrency wallet.
You can download a wallet such as Electrum, Ledger Nano, Exodus, or Mycelium on your phone or computer. Alternatively, get a hardware wallet to store the currency. Some factors to consider when choosing a wallet include:
- the supported cryptocurrencies as some allow only one while others as much as 30 or more;
- transaction costs and initial purchase price;
- ease of integration with apps and other wallets;
- security from malware and hackers.
Using a payment processor/gateway
A payment processor will handle the entire process on your behalf. Here are some criteria for finding a suitable processor:
- Supports several currencies.
- Charges low transaction fees on sales.
- Easily integrates with other platforms such as your accounting systems.
- Offers instant crypto to fiat money. One major drawback with cryptocurrencies is their price fluctuations. Using a payment processor and immediately converting your funds reduces the risk if the currency’s value tumbles.
- Has no minimum balance and payout restrictions.
- Has a solid reputation and good reviews.
- Has a tight user verification process for security reasons.
Once your payment method is set up, you can integrate it with your website for simple one-click payments. Alternatively, set up a QR code for your wallet.
Handling tax issues
The International Revenue Services (IRS) recognizes cryptocurrencies as capital assets. As a result, selling them attracts a tax on the capital gains (how much you make from the sale).
This can increase your expenses because if you use crypto to pay suppliers, it will be viewed as a sale of an asset.
If the price you “sold” at is higher than what you bought the coins for, you’ll be liable for paying capital gains tax on top of the usual sales taxes.
The IRS regulations for cryptocurrency also require you to keep tabs on the value of each cryptocurrency on the day you received it, and on the day you used it.
This can increase your administrative workload. In addition, it can get quite complicated, especially if you use cryptocurrencies for numerous small amounts. Consider placing a lower limit on the transaction value to shield yourself from these extra costs and complications.
Get ready for 2022 with a cryptocurrency compatible business
Accepting cryptocurrencies on your website allows you to expand your market and offer more convenience to your customers. Your business can also benefit from a faster payment process, easier verification, and lower transaction costs.
To set up the cryptocurrency option for your business, open a personal wallet or choose a payment gateway that can handle the process for you. Remember to keep your eyes peeled when setting up the payment systems to avoid falling prey to crooked gateways.
Once you have the crypto payment system up and running, train yourself to keep tabs on the values of all transactions to stay on track with tax regulations.