This world’s financial landscape evolves constantly, and recently, it has seen the rise of cryptocurrency as a payment option. Cryptocurrency is a digital currency existing on a centralized blockchain technology using cryptography to encrypt and secure transactions.
Crypto users are increasing exponentially every day, so it can be worthwhile for small businesses to start accepting crypto as a payment option to get ahead of the competition. It can help companies to enjoy fast and secure transactions with greater security and significantly increase their reach. If you own a small business and are hesitant to adopt cryptocurrency as a payment option or unsure about how to do so, continue reading this article:
How to Accept Cryptocurrency Payments as a Small Business
Setting up a Crypto Wallet
Setting up a crypto wallet will be your first step. This wallet will act like a bank account, a digital repository for sending and receiving digital funds. The crypto market consists of a diverse range of cryptocurrencies, so it’s best to go for a multi-cryptocurrency wallet. This will make administration easy by eliminating the need to manage multiple wallets for different cryptocurrencies.
Integrating Crypto Payments on Your Website
Incorporating crypto payments into your website is the next step. Businesses that run ecommerce platforms like Shopify and Magneto can easily use one of their offered plugins that enable crypto payment processing.
However, if you find it hard to find a suitable plugin, you can register with a cryptocurrency gateway, like CoinBase Commerce or BitPay. These offer multiple crypto integration methods for your website, from simple payment buttons to generating invoices. They also come with the option to convert your cryptocurrency from, say, BTC to USD directly.
Consider Tax Regulations
It’s essential to understand crypto tax implications. According to the International Revenue Service (IRS), all cryptocurrencies are treated as capital assets and are subject to capital gains tax. For small businesses using Bitcoin for purchases, the IRS will consider each transaction as a crypto sale, and you will be liable to pay capital gains tax if the sale value of your coins exceeds the initial purchase cost.
Benefits of Cryptocurrency as a Payment Option
Cryptocurrency is a highly secure payment method. Crypto exists within a blockchain system, which is a decentralized lender using cryptography for each transaction. Encrypted transactions ensure that unauthorized parties or hackers can’t access your data, tamper with it, or gain access to crypto assets.
Additionally, no one, not even you, can access your business’s crypto wallet without its private key, which is also secured through encryption. Your business can further protect its assets by employing services like hardware wallets, multi-signature wallets, and two-factor authentication.
Crypto transactions are also highly transparent. Their records are on a public ledger, making it useful for businesses as it can help them independently verify transactions and account balances and decide if a customer or lender is trustworthy.
Lower Transaction Fees
A significant advantage of crypto payments over traditional ones is that they save you money in transaction fees. Conventional payment providers like credit card processors have a standard fee of 2.9% or higher and $0.30 extra for every incoming transaction. However, crypto payments require very low, or sometimes even no, transaction fees, which can help businesses keep more of their profit. Usually, it does not exceed 1% of overall transaction volume.
Additionally, since each cryptocurrency is connected with a different blockchain, trading in the same currency will allow you to enjoy even lower transaction fees. The only case in which you might face higher costs is when you use a third-party processor to handle payment flow and provide accounting tools.
Lower Risk of Fraudulent Chargebacks
Many companies suffer from fraudulent chargebacks or mistaken consumers. Many consumers don’t keep track of all their transactions and report credit card fraud when there is none. However, this problem does not exist with crypto transactions.
This system verifies funds in your wallet, making it impossible for anyone to spend more than they own, and both parties approve each transaction before making any payments. Additionally, all crypto trades are final, irreversible, and modifiable because they are added to the blockchain via mining. These factors help eliminate false claims of fraud on the purchase end.
Attracting New Customers
Crypto users are only increasing daily, and a small business can get ahead of its competitors using blockchain technology. Providing your customers with this payment option will help you attract a new demographic of customers and widen your reach.
One of the most significant benefits of using crypto payment options is that you can accept payments from anywhere worldwide without hefty currency conversion fees. Crypto transactions are also much faster than traditional payment methods. When using crypto assets, customers’ location does not affect the speed of transactions in any way. In most cases, payments only take seconds as blockchains tend to settle crypto transactions immediately.
Additionally, cross-border payments via multiple banks and accounts can get time-consuming and frustrating as currency conversions are involved, creating additional delays. However, paying in digital currency does not come with such hurdles. All this will attract more consumers from all around the globe to your business.
Cryptocurrency is increasingly becoming popular as a payment option, and small businesses can significantly benefit from adopting it. Not only will it save companies money in transaction fees, but the transactions are also incredibly quick and take only seconds. Crypto can also help you attract a global audience and widen your reach. Additionally, crypto transactions are highly transparent and secure. Along with that, they are irreversible, offering you protection from fraudulent chargebacks.