Whether your business should accept cryptocurrency payments for goods and services -- regardless of the coin in question -- depends on first, your knowledge and understanding of how cryptocurrency merchant payments work.
Second, it depends on the benefits that your business stands to gain from this smart move. Thirdly, it depends on your business needs. But with cryptocurrencies becoming more and more popular in our world today, it might be the right time for you to set it up at your business and start accepting payments in cryptocurrencies, or at least to understand what it takes to do it and the benefits that could result from it.
Needless to say, there are many benefits to expect when your business start accepting cryptocurrencies. Some of the benefits include benefiting from lower transaction fees than credit card and debit cards, inability to reverse transactions, as well as real-time transactions and balances.
The most pressing question would be what your business stands to gain if you started accepting cryptocurrency payments for goods and services...and the issue of the volatility of course. However, for now, the best way your business can deal with the issue is having the best of both worlds - fiat and crypto payments. We assume you are already using some methods to receive payment for your goods and services -- PayPal, Stripe, Skrill, name them all. By the statement "having the best of both worlds" I mean adding cryptocurrencies as a payment method while retaining your present methods. That's because there are advantages for each of those alternatives for your business right now, and crypto is not yet mainstream but still a niche market.
Adding crypto payment as an alternative method comes with its challenges and learning curves. But it is completely doable, recommended and suitable for your business.
Benefits of accepting cryptocurrency payments at your store
1. It will save you some money
Credit and debit card processing has cost U.S. merchants over $78 billion in fees over the years. And while the main reason for starting to accept cryptocurrency payments for goods and services, for now, is not necessarily to stop using credit and debit cards at all, you might see your business saving two to three percent in transaction cost per each transaction.
Current legacy systems are more expensive for businesses because the transaction fees for each transaction is shared by more than one financial firm -- for instance from PayPal to Bank or other intermediaries .t.c. Cryptocurrency payments, on the other hand, have low fees per transaction and work on a peer-to-peer system without a bank in the middle.
Many cryptocurrency merchant wallets charge a flat fee of around $30.
2. You benefit from quicker transactions
In many cases, having your funds become available in your bank account requires some waiting period. With cryptocurrencies, the transactions actualize in real time in many cases or just within a few minutes.
3. Enjoy a global currency
If your business exports services and goods or purchases materials from other countries, then you might want to listen to this. Digital currencies facilitate payment of goods and services without the expensive foreign transaction fees or exchange rates.
4. You avoid chargebacks
Crypto dependent systems will verify funds and make it impossible to spend more than what you have in the wallet. Both parties will approve the transactions and there is less worry about chargebacks and disputes.
5. Acquire a different and new kind of customers
This is an important point if you regularly deal in digital currencies and assets or are dealing with companies and customers in crypto spaces. Embracing cryptocurrency payments streamlines your business with those of your clients, friends or partners.
Adding more payment options can actually shrink your shopping cart abandonment: 28 percent of shopping cart abandonment happens for lack of the payment option the shopper wanted to use. Therefore, the more the payment options you add, the better. And it offers the customer some flexibility.
6. It prepares your business for the digital revolution of some kind
While cryptocurrencies are just a niche market for now -- with a very small value in the global financial scene -- more and more businesses and companies are embracing them, whether to respond to changes or differentiate themselves from other businesses.
It means (without any promise from this article) cryptocurrencies could play a huge role in the financial, payment and general markets of the future. That point is hard to discredit given our constant need to rush into a more digitilized world. Consider how cryptocurrencies have grown in value over the years with the rate accelerating greatly in the last two years.
7. Position yourself to harvest some real profits
Mention a case in point where you first accept a given cryptocurrency, say Bitcoin, and the value of that specific digital coin or altcoin or whatever grows over time. Then you sell. You stand to gain profits from the growth in value.
So you can attempt to become an early adopter of cryptocurrencies while retaining your current payment method(s) and watch for times when you might benefit by accepting cryptocurrencies. But how do you go about it?
How to accept cryptocurrencies as a payment method at your store
Starting to accept cryptocurrencies is actually simpler than you ever thought or have heard. You can jumpstart the process and set up the entire system within a few days, starting with getting general education to integrating the real thing.
Here are some simple steps to follow.
1. Set up a merchant wallet account
It will take a few minutes to set up these wallets. You get customizable portals and ability to convert cryptocurrency to your base currency. The wallet to set up depends on the cryptocurrency you are dealing with. While some exclusively accept Bitcoins, others are for multiple digital currencies.
The first point to start would be to understand the currency your merchant wallet accepts before setting up the forms of payment to accept. You might want to look at BitPay, Coinbase, CoinGate, Blockchain.info, SpectroCoin, GoUrl.io, and CoinsBank, all of which offer payment processors and gateways for businesses willing to accept cryptocurrency payments for their goods and services. There are many other companies and payment processor gateways that allow you to accept cryptocurrencies at your store.
Other names of companies with processors and tools allowing merchants to accept crypto payments include PayStand, Coin of Sale, PayStand payment & e-commerce checkout system and XBTerminal.
2. Integrate the cryptocurrency option into the point of sale
Having a merchant account and public address, you can now integrate the system to the points of sale. For instance, some merchants use POS that have apps that can generate a QR code that customers can scan to send the cryptocurrencies. The apps are usable on smartphones for instance.
An example is Coinkite and XBTerminal POS systems which come with methods to generate QR codes. With Coinkite, a customer scans (using a phone) a QR code printed from the POS, to facilitate sending Bitcoins. The terminal even alerts the merchant that the transaction is done. With Coinkite, you also get a web wallet and Bitcoin debit card solution offered to regular users. Transactions from the Coinkite users are confirmed instantly. The merchant can customize the number of confirmations needed for payment from other wallets.
With XBTerminal, the customer pays Bitcoins from any mobile Bitcoin wallet through NFC or QR Code scanning method. While these are for Bitcoins, CoinGate API allows the merchants to accept both Bitcoins and altcoins at their stores. In fact, it supports over 40 altcoins, is an immediate solution and there is an instant conversion of altcoins to Bitcoin or fiat. It also offers integration via ShapeShift.
ErosCoin is another example that allows merchants to accept Bitcoin, Litecoin, Dash and 600+ currencies. It also uses the QR Code scanning method. The advantage with it is that it is an entire ecosystem with its own cryptocurrency (that supports free deposits and withdrawals) and has many own and third-party developer built dapps on top of its chain to extend functionality. It allows merchants to generate receipts for customers.
CoinPayments also allows merchants to accept and hold over 440 altcoins. It provides an integrated payment gateway, shopping cart plugins for the popular web carts, fiat settlements to bank accounts for selected regions, mobile apps that allow merchants to access and accept and convert cryptocurrencies, and auto conversion feature for some of the coins which allows merchants to save on conversion fees and time. Just as an example that these methods are popular among merchants today, CoinPayments is being used by more than 961,500 vendors across 182 different countries.
Some solutions such as Coss.io support multiple cryptocurrencies while still carrying onboard their own integrated exchange. Thus you can convert the altcoins to USD, EUR or SGD. It also offers reporting tools that simplifies your accounting, payment gateway and a PoS system. It is a plug-in payment gateway and a web-based and Android app solution.
Havven is also working on a stablecoin that is targeting to reduce volatility, which is revered by many merchants considering accepting cryptocurrencies at their stores. But as we said, volatility is not always a bad thing. With stablecoin, customers, merchants, and suppliers will be able to transact in cryptocurrencies and expect the constant and stable rate of exchange (at a constant dollar rate) for the coins gotten and even avoid the conversion altogether.
These are some of the tools out there demonstrating that receiving Bitcoin and altcoins as payment for goods and services is very easy and doable.
3. Add the cryptocurrency option to your online store
Another way of accepting cryptocurrencies at your store is to add cryptocurrency payment option to your online shopping cart. This is done in the traditional way of adding e-commerce plugins, modules and extensions for your e-commerce shopping cart platforms, and there are many that allow you to receive cryptocurrency payments on your online store.
For those who use WordPress and WooCommerce, there are endless alternatives including CryptoWoo plugin that allows you to accept Bitcoin, Dogecoin, Litecoin, BlackCoin, and Dash. Another example is the All Currencies for WooCommerce plugin that supports 28 cryptocurrencies and 100 languages; WooCommerce VirtualCoin Services Gateway that allows merchants to accept Bitcoin, Litecoin, Dogecoin, and more supported cryptocurrencies and payment methods; and GoUrl Easy Digital Downloads that allows merchants to accept a variety of coins for payment of goods and services including Bitcoin, Bitcoin Cash, Litecoin, Dash, Dogecoin, Speedcoin, Reddcoin, PotCoin, Feathercoin, Vertcoin, Peercoin, and MonetaryUnit. The options are endless here.
4. Share your wallet address for payment or print it out
Another alternative very easy and quick alternative to do without any hussle is just to share your cryptocurrency wallet address and instruct customers to pay via the address. A more advanced version of this method is to print your wallet address as a QR Code on your physical invoices and websites and ask customers to scan and pay with the cryptocurrencies.
5. Link your transactions with accounting software
For those consious of taxation on their cryptocurrency revenues, you can easily link transactions with accounting software. This depends on the jurisdiction in which you are and their taxation laws and regulations.
6. Dealing with conversion to cash or other digital currencies
When you receive cryptocurrency payments for your goods and services at your store, the obvious question is what to do with it. You can spend the crypto by buying goods and services and repacking your store -- especially if you have suppliers who accept crypto (and you bet there are out there). However, you can also trade it for profits if the value increased over time, which means more profit, or even cash out.
May be most merchants would have the wrong notion that it is hard to convert cryptocurrency into Euro or Dollar or any other real world currency. A much bigger worry is that the value of cryptocurrency may drop after they have been paid. But volatility is not always negative -- they might stand to gain. And with the cryptocurrency projects working to deal with volatility, the issue may become a lesser problem in the future. Consider Stablecoin solution which is being worked on.
Otherwise, it is not hard to convert any cryptocurrency out there into fiat and real world currencies. Conversion is extremely easy now a days, whether you are looking for a solution that converts an altcoin to fiat directly or one that first converts your unpopular crypto to Bitcoin or other popular altcoin and then this to fiat. Additionally, majority of merchant wallets convert cryptocurrency to cash. Many offer instant conversion options even for altcoins so you would never have to worry about excessive exchange and conversion fees.
If your payment processor does not support direct conversion of the altcoin to fiat, a popular option for many is to go through a cryptocurrency exchange that supports altcoin to fiat conversions. The other option is to convert the altcoin to Bitcoin or another popular altcoin such as Ethereum, Litecoin or Bitcoin Cash (popular because most popular exchanges support direct conversion of these coins to fiat) and then convert the Bitcoin (or the popular crypto) to fiat, and there are instant solutions for this, especially on popular cryptocurrency exchanges.
Since there are a few exchanges that can help with direct altcoin to fiat conversion and there are a handful of altcoins convertable to fiat, directly, you might want to choose the altcoin you accept carefully and consider if it is convertable but it should be (regardless of the coin or token involved) even through the Bitcoin method by converting it to Bitcoin (or other popular crypto) first then to fiat.
In this case, the market or wallet where your altcoin is will most likely allow you to convert the altcoin or coin or token to a popular altcoin such as Bitcoin, Eth and Litecoin. You can then search for a crypto exchange that allows a direct conversion of the popular altcoin to fiat. Some of the issues to consider here are fee charged and the time it takes to have the transaction through, and of course the genuity of the system. You can read one of our articles on the various cryptocurrency exchanges that you can use for this reason here.
Many people use Coinbase and GDAX to convert altcoins to fiat because the exchanges support the three most popular fiat currencies. Gemini and Kraken are also popular options.
Once you select the exchange, you might want to look at the pairs that they support to convert to fiat. Most will do for popular cryptocurrencies such as Ethereum, Bitcoin, Litecoin, Bitcoin Cash. Then you can select the pair that will make you incur the least cost possible. For instance, you might choose to convert your unpopular altcoin or coin that you accept as payment to Ethereum instead of Bitcoin depending on the network fees for each of these two.
7. Take the game beyond payments only
In addition to linking transactions with accounting software for taxation accounting and other accounting purposes, you can leverage complete ecosystems that go beyond allowing you to just accept payments for goods and services. Complete ecosystems such as ErosCoin have additional decentralized applications available on top of their blockchain-based platforms.
For instance, ErosCoin has in-chat payment features that merchants and customers can use to send payments by simply sending a text message. The request to pay via chat method is subject to approval by the counterparty, friend, family or business. In addition, a smart contract verifies the authenticity and the amount is transferred.
You can also leverage platforms that have mobile wallets that allow you to receive, store, spend and trade your cryptocurrencies. Actually, some apps will allow you to pay bills and purchase properties in cryptocurrencies. You might discover it a lifestyle where you are able to buy the goods you sell to customers using cryptocurrencies threfore eliminating the need for an urgent conversion to cash.
Beside, some platforms allow for product management, order management, and invoice management applications. You are therefore able to use data and analytics and multiple tools to make your business etter.