Cryptocurrencies have been around for a while now, but it’s still not as mainstream as credit card payments. However, some people prefer to use cryptocurrencies over fiat currencies.
If you are one of those business owners who want to accept crypto payments in your business, here is a guide on how to do it.
How do crypto payments work?
Before we get into accepting cryptocurrency payments for your business, let’s look at how this works in general.
Cryptocurrencies – like Bitcoin and Ethereum – are digital currencies that use blockchain technology to keep track of all transactions made with them. So instead of having a central bank or institution managing transactions, there’s an online ledger that records every transaction made with each type of cryptocurrency. This means that anyone can see all transactions currently being made with each type of coin – which makes them so transparent compared with other forms of payment such as cash or credit cards.
There are many types of tokens out there, and they can be used differently depending on their features and functionality. Some have been designed specifically for payment systems, while others have been designed more as investments or assets (such as gold).
Some tokens, such as Bitcoin or Ethereum, can be used as payments and investments; however, most people only use them for one purpose. The intended usage is to buy goods and services with them.
Why should you accept cryptocurrency payments?
There are many reasons why you should accept cryptocurrency payments if you don’t already do so:
It is fast and cheap
With credit cards or PayPal, processing fees can be quite high, especially when compared to crypto transactions which generally have no processing fees. They are also instant, unlike bank transfers which can take days before reaching your account.
You don’t need an account
Cryptocurrency is not tied to any bank or payment system; there is no need for a bank account when accepting Bitcoin or other cryptocurrencies. You only need a simple wallet address where customers can send their cryptocurrencies.
No identity theft risk
Unlike credit card payments, which require your personal information and are stored on a central database that can be hacked into and stolen, cryptocurrencies like Bitcoin do not require any of that information in the first place. Your identity is safe!
It has no chargebacks
Unlike credit card payments, there are no chargebacks with cryptocurrency payments. This means that once you have received a payment from a customer, you can be relatively certain that they will not ask for their money back after making the purchase.
You can accept international payments
If you accept cryptocurrency, you can accept payments from anywhere in the world without worrying about currency conversion fees or foreign exchange rates. This makes it easy for international customers to access your products and services without worrying about currency conversion problems or paying high exchange rates on their purchases.
Cryptocurrencies to consider accepting
- Bitcoin: The first cryptocurrency ever created was Bitcoin (BTC). It has the highest market cap of all cryptocurrencies, currently at around $ 362,600, 75M. It’s also the most stable, having been around since 2009.
- Ethereum: This is another well-established cryptocurrency that’s still worth considering accepting. It has a market cap of over $ 14,715,51M and is often used to fund initial coin offerings (ICOs). Ethereum can also be used for other applications like smart contracts.
- Ripple: Ripple is another high-profile crypto that’s worth considering accepting as a form of payment. This network aims to provide faster cross-border payments than its competitors by using blockchain technology and traditional banking infrastructure. “
The challenges with crypto payments
There are some challenges facing companies that want to accept cryptocurrency payments. The first is the volatile nature of cryptocurrencies. While some may have grown accustomed to the volatility of Bitcoin and Ethereum, it can be hard to predict how much they’ll be worth in two months – or even tomorrow. This makes it difficult for merchants to know how much they’ll be paid when they accept cryptocurrency.
Another challenge is that cryptocurrencies are not yet widely accepted by vendors and merchants. So, for example, if you’re selling T-shirts online and someone wants to buy one using Bitcoin or Ethereum, there’s a good chance that your vendor won’t accept it (yet). This means that you’ll need to find a workaround or convert their crypto assets into fiat currency before you can use them elsewhere.
Steps to accepting crypto payment for your business
1. Understand Crypto Payments
To use cryptocurrencies in your business, you must first understand how they work. These digital currencies are based on blockchain technology and work as a decentralized transaction platform.
You can send or receive these coins through a wallet app or even a physical card. However, if you want to accept them as payment, you must set up a software-based wallet account beforehand.
Cryptocurrencies are based on a blockchain – a distributed ledger technology that records all transactions on a decentralized network of computers worldwide using their own personal computer.
The advantage of using cryptocurrencies is that they offer a more secure way to send money electronically between two parties without relying on an intermediary such as a bank or credit card company, which could potentially be hacked and compromise users’ sensitive data. A lot has been discussed about this above.
2. Set Up a Crypto Wallet or Crypto Gateway
You’ll need a digital wallet or crypto gateway to accept crypto payments. This is a service that allows you to receive and send cryptocurrency payments.
A digital wallet is like an online bank account where you can store your funds, including cryptocurrencies. It’s similar to an online bank account in that it gives you access to your money anywhere in the world. But unlike a bank account, which requires you to give away sensitive information about yourself (such as your identity), a digital wallet does not require personal information.
Digital wallets are usually free to sign up for and easy to use. Of course, you’ll need some technical knowledge of cryptocurrencies, but most wallets make it easy for even beginners to start accepting them.
The two main types of digital wallets are hot wallets and cold storage wallets:
Hot wallets
Hot wallets are connected to the internet and therefore vulnerable to hackers stealing your funds if they’re not properly secured with strong passwords and two-factor authentication (2FA). As a result, they’re best suited for small amounts of cryptocurrency you intend to spend soon.
Cold storage wallet
Cold storage wallets have no internet connection, so they’re more secure than hot wallets because they don’t need passwords or 2FA codes for access – only physical access via USB drives or paper printouts.
Some of the popular crypto wallet platforms:
Coinbase Commerce
A cryptocurrency payment processor that lets merchants accept Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ethereum Classic (ETC). It also offers an API for merchants who want to accept cryptocurrencies directly into their wallets.
BitPay
BitPay is another popular payment processor for bitcoin and other cryptocurrencies. The company allows businesses to accept bitcoin payments from customers using their own wallets or BitPay’s Copay app.
CoinPayments
This platform offers an easy way for businesses to accept more than 700 different types of cryptocurrencies as payment, including BTC, LTC, and ETH. In addition to accepting these currencies, CoinPayments also allows users to convert crypto into gift cards from Amazon or JCPenny or cash out directly into their bank account via ACH transfer or direct deposit.
OpenNode
This wallet is a free-to-use web application that allows users to send, receive and store BTC, LTC, and ETH. It also allows users to send funds directly to other OpenNode wallets without knowing their addresses or private keys.
3. Integrate Crypto Payments Into Your Online Checkout
Now that you have a crypto wallet gateway to receive payment, it’s time to put crypto online checkout on your website.
Third-party payment processors like Coinbase Commerce or BitPay and others listed above are some of the easiest third-party payment processors you can integrate on your website. These providers offer plug-ins that enable users to pay with Bitcoin and Bitcoin Cash at checkout, so there’s no need for any code changes on your end. Plus, they handle all the conversion from fiat currency into crypto and back again for you – all you do is accept the payment and send it to your wallet address when it comes in.
If you have technical skills or someone on staff who does, you can integrate a cryptocurrency wallet directly into your website by using an open-source library like Coinpunk or Bcoin. You can also use something like OpenBazaar if you want full control over how people interact with each other through your site (though this will require some technical know-how).
4. Offer In-person Crypto Payments
For brick-and-mortar businesses like restaurants or clothing boutiques, this means adding a QR code on your storefront window or a cash register that customers can scan with their phones to pay for goods and services with crypto. Consider adding a crypto-compatible QR code scanner like Square’s Cash app or Coinbase Mobile Wallet App. Keep in mind that this method works best when customers are paying at the point of sale – not online – since online payment methods typically require additional processing time before funds arrive in your wallet.
Costs of Accepting Crypto Payments
Here are some of the costs you may incur while accepting crypto payments:
Exchange fees.
If you want to immediately convert the cryptocurrency into fiat money, you need to exchange it on an exchange platform. Many exchanges offer different fees, so you can shop for the best deal.
Hardware wallet fees.
Some wallets charge a fee for services ranging from 0% to 0.4%. Most hardware wallets have their own websites where they list their fee structure transparently on their websites.
Transaction fees.
Depending on how much traffic your website receives and how quickly you process payments, you may be required to pay a small transaction fee to ensure your customers’ transactions go through promptly. In other words, if there is too much traffic or too many payments being processed at once, then there is a chance that your customers’ payments will be delayed until everything clears up again (for example). This can be frustrating for both parties – especially if there is no explanation for why this has happened.
Conclusion
This guide has given some useful ideas for how you can help your business prepare for crypto payments — whether by accepting crypto payments directly or by integrating a crypto payment gateway into your Point-of-Sale system. Either way, the above tips will get you started on the path to accepting crypto payments and make the process easier for your customers.