Does accepting cryptocurrency make sense for your business? More and more merchants are taking a long look at the pros and cons associated with selling their products and services for cryptocurrency. This guide aims to be a complete resource for answering everything you need to know about getting paid in cryptocurrency.
1. It's Faster and Cheaper
Can you believe that it can take up to 10 days to make a bank transfer in 2018? That’s nearly 1/3 of a month! You can safely move a large amount of money quickly and much more affordably using cryptocurrency.
Exactly how fast and cheap will depend on which cryptocurrency you choose to do business in. The difference between an hour and a couple minutes is merely semantics when compared with the legacy banking system.
2. It's Freedom From Chargebacks
Chargebacks exist to protect consumers from shady merchants and identity theft. Unfortunately, chargebacks are often abused by ill-intentioned fraudsters uninterested in paying for the goods and services they desire.
Cryptocurrency transactions are irreversible; there is no central authority with the power to alter transactions. Merchants who deal in cryptocurrency don’t have to worry about the potential of chargeback fraud.
The CEO of Headphones.com recently took to Reddit to explain how this, among other things, has benefited his business:
We don’t have to worry about Visa or Mastercard blaming fraud caused by their own lack of security on us. (FYI if your Visa is compromised and you get reimbursed, that’s coming from the merchant — not Visa. Even though it’s Visa that allowed the money to be spent in the first place)
The point above has given us the freedom to ship products to places we usually would have avoided due to fraud concerns
3. It's Borderless
Cryptocurrencies don’t care where you live, or where your customer is sending their crypto from; they are completely location-agnostic.
The benefits derived from this are plenty for merchants. Never before have you been able to sell a product or service to a truly global audience.
You probably wouldn’t bother integrating support for the Japanese Yen, Indian Rupee, or the Thai Baht for your next ebook launch. By accepting cryptocurrency, however, brands can maximize their global exposure.
4. It's Great Marketing
How can you tell if someone has invested in Bitcoin? Don’t worry, they’ll tell you! Cryptocurrency has a large, passionate following of users and investors who love nothing more than hearing about how existing businesses are adopting their favorite method of payment.
Accepting cryptocurrency is free marketing if nothing else. Don’t be surprised if you find yourself an influx of new customers going out of their way to support your decision after you make it official. Here’s the CEO of Headphones.com again on his experience dealing with cryptocurrency customers:
Every single customer who has paid with Nano has been awesome to deal with. The quality of people we’ve encountered from the Nano community has been astonishing.
Join the Revolution
The cryptocurrency industry maintains a constant buzz of excitement among all of those involved. There is an air of importance which blankets this space. It feels like we’re about to be apart of something big.
Whether you share that belief or not — you’ve made it this far — perhaps it’s worth taking part solely on the off-chance that cryptocurrency does end up causing historical change to our aging financial system. Something you could tell your grandkids about.
Speed Bumps: Reasons to Be Cautious
It’s no secret that we’re pro-crypto — with our crypto invoicing software — but that doesn’t mean there aren’t clear risks associated with accepting cryptocurrency as a payment method. Here are some of the risks you need to be aware of as an early adopter of cryptocurrency.
Nobody wants their paycheck to be worth less today than it was yesterday. The value of cryptocurrency today is heavily influenced by speculation, leaving prices subject to seemingly random fluctuations.
As adoption rises and holders of cryptocurrency turn into spenders of cryptocurrency, volatility is expected to decrease. Until then, it’s important to be mindful of the potential fluctuations your earnings are exposed to.
Avoid Volatility by Cashing Out
Cryptocurrency can be used as a quick and inexpensive vehicle for moving value. By instantly converting incoming cryptocurrency to native (fiat) currency, it’s possible for merchants to profit by minimizing the typical fees charged by payment processors. This also makes sense for high volume merchants who wish to hold cryptocurrency, but a smaller percentage than that which they earn organically.
It’s important to note that this strategy isn’t viable for everyone. Make sure you have access to a cryptocurrency exchange capable of converting crypto into your native currency and withdrawing to your bank. Coinbase should work for Americans, QuadrigaCX for Canadians, and Bitstamp for Europeans, but make sure you double check! A small test withdrawal is never a bad idea.
Lack of Spending Options
We’re a ways away from being able to clear an entire shopping list exclusively using cryptocurrency. Unless you live in Arizona, you can’t (yet) pay your bills in cryptocurrency either. It will likely take a major move by Amazon or Walmart to reach that point where a double digit percentage of your peers are regularly using cryptocurrency for purchases.
In today’s markets you need to go out of your way to find merchants willing to deal in crypto, but they do exist. More and more business owners are becoming aware of the benefits (listed above) accepting cryptocurrency lends to them and their businesses.
Tax advice is outside the scope of this article. We recommend consulting a professional accountant familiar with cryptocurrency. But if you're looking for a guide to crypto taxes, make sure you read our Crypto Tax Accounting Guide.
The Responsibility of Being Your Own Bank
Owning cryptocurrency is empowering: you are your own bank. There is no man in the middle telling you what you can and can’t spend your crypto on.
With great power comes great responsibility. The additional control over your money granted by cryptocurrency also opens up additional opportunities to mess things up and lose your money. There is nobody but yourself to blame if your cryptocurrency gets lost or stolen — that’s on you, my friend.
There’s no denying the margin for error is small, but as long as you’re careful and follow best practices, you should have nothing to worry about.
How to Begin Accepting Cryptocurrency
First, you need to choose which cryptocurrencies you’d like to begin receiving as payment. According to CoinMarketCap.com, there are over 1,600 cryptocurrencies currently in existence!
Only a small percentage of those 1,500+ cryptocurrencies are functional and commonly used for payments today. In this guide we’ll be using Ethereum.
Choosing a Cryptocurrency Wallet
Second, you’ll need a way to receive your cryptocurrency. A cryptocurrency wallet is a software program which enables users to send and receive cryptocurrency*. This is an extremely simplified definition — if you’re interested in learning more about wallets and cryptocurrency safety 101, check out our blog on the best crypto wallets for businesses.
This is where things could get confusing for our least technical readers. Setting up a wallet is just like setting up any other piece of software. If this isn’t something you’re comfortable doing, you’re going to have to trust a third-party (like Coinbase) to manage your cryptocurrency. This can be a dangerous proposition; even competent, trustworthy companies are prone to being hacked.
Make your choice below:
If you trust a company like Coinbase more than you trust yourself; use the Coinbase mobile app as your designated cryptocurrency wallet.
If you’re comfortable setting up an Ethereum wallet on your own, check out MyCrypto.com. Follow the detailed instructions on their site to get your Ethereum wallet up and running now.
Integrating Cryptocurrency with Your Business
Once you have your Ethereum wallet setup through Coinbase (easiest, but reliant on a third-party) or MyCrypto (more technical, less vulnerable to hacks) it’s time to enable your customers the ability to send Ether directly to your wallet.
Receiving cryptocurrency is much like receiving an email. Your wallet has a public address, like an email address, which other people can use to send you cryptocurrency. While you could simply list your wallet address on your website, just as you could with your email address, there are more elegant methods of integration.
Here are the resources worth checking out:
How to Accept Cryptocurrency Anywhere:
- Share your public wallet address
- Generate a QR code for your public wallet address
How to Accept Cryptocurrency as a Freelancer:
- Send crypto invoices to your clients with Gilded Invoices
How to Accept Cryptocurrency on Wordpress:
How to Accept Cryptocurrency on Shopify:
Conclusion: Class Dismissed
That covers the basics you need to know about accepting cryptocurrency as a means of payment for your business. Any further questions? Don’t be a stranger, let us know!