How to Accept Crypto Payments as a Small Business

how to accept crypto payments

It took only four months within the first half of 2021 for the global cryptocurrency usage to double to over 200 million.

In this guide, we aim to equip you with the knowledge required to start accepting cryptocurrency as a mode of payment for your small business.

The wave of cryptocurrency adoption has swept over the globe, as individuals and organizations are becoming increasingly comfortable with this digital asset class.

Riding this wave, several small businesses are proactively aligning their strategies to be able to cater to an expanding consumer base that prefers to transact in crypto.

Accepting Cryptocurrency Payments

According to a January 2020 HSB nationwide survey, 36% of small businesses accept cryptocurrency payments. If your enterprise has yet to join this innovative movement, it could be high time to start mapping out a roadmap to crypto acceptance.

Doing so will not only ensure you stay relevant but also help you stay competitive in the ever-evolving business landscape.

Upon surveying small business owners, it was found that approximately 50% of them decided to accept cryptocurrency due to its wide adoption by significant payment processors and forward-thinking large-scale companies.

This decision was further driven by the desire to stay ahead of the curve and meet evolving customer demands – a sentiment echoed by 35% of the surveyed business owners who confessed that they’ve adopted crypto primarily to keep pace with their competition and cater to consumer needs.

However, it’s important to note that embracing crypto is not simply a survival strategy for small businesses. It goes beyond that, acting as a catalyst for improved operational efficiency.

There are numerous benefits of using bitcoins and other cryptocurrencies for small businesses. These include:

  • Increasing your international reach
  • Better security due to the decentralized nature of cryptocurrency
  • Faster payments
  • Lower processing fees, and 
  • Elimination of the dreaded chargeback fees that eat into your hard-earned cash.

While cryptocurrency payments offer considerable advantages, they do come with challenges. The high volatility of cryptocurrencies and the inherent risk of cyber-attacks are key concerns.

However, these challenges are manageable. By strategizing your cryptocurrency adoption, you can minimize these risks, ensuring a safer business operation. This will allow you to leverage the full potential of crypto, balancing its benefits with the associated risks.

How to accept Crypto

How to Accept Crypto Payments as a Small Business

Accepting crypto payments is easy. Here’s how: 

Set up a Cryptocurrency Wallet

First step is establishing a cryptocurrency wallet. A crypto wallet operates much like a traditional bank account, serving as a digital repository where you can send and receive digital funds.

Given the diverse range of cryptocurrencies in the market, it’s highly probable you’ll be accepting payments in various digital currencies from different customers.

Therefore, it’s advisable to opt for a multi-cryptocurrency wallet.

This type of wallet supports numerous digital currencies, acting as a versatile, all-in-one solution.

It eliminates the need for managing multiple wallets for different cryptocurrencies, offering a streamlined, user-friendly experience.

A multi-cryptocurrency wallet ensures efficient handling of your digital assets, saving you from the hassle and complexity of operating and maintaining separate wallets for each individual cryptocurrency.

Bitcoin is the most popular crypto among small businesses, followed by Bitcoin Cash, Ethereum, Litecoin, and Binance. Consider a wallet that can hold these popular cryptos. 

Other factors to look for when choosing the best multi-cryptocurrency wallet are:

  • Cryptocurrencies supported (wallets such as Ledger Nano S and Guarda support more than 30 cryptos)
  • Affordability in terms of purchase fees (for cold or offline wallets) and transaction fees
  • Ability to integrate with other software wallets
  • Safety (malware – and hack-proof)
  • Ability to link with other apps for seamless money transfer

How to accept Crypto

Integrate Crypto Payments on Your Website

After successfully setting up your crypto wallet, the next step in your journey is to incorporate cryptocurrency payments into your website.

For businesses running e-commerce platforms using services like Shopify, Magento, or Woocommerce, this process is relatively straightforward.

These platforms offer an array of plugins that can be easily installed to enable crypto payment processing, allowing for a seamless transaction experience for your customers.

However, if you encounter difficulty in finding the perfect plugin to suit your specific needs, you have the option to register with a cryptocurrency payment gateway.

These gateways offer a plethora of options for integrating crypto payments on your website, ranging from simple payment buttons to invoice generation.

This flexible approach means you can tailor your cryptocurrency payment process to precisely match the unique needs and preferences of your business and your customers

Some of the top crypto processors in the world are CoinBase Commerce and BitPay. 

Go for a cryptocurrency gateway that: 

  • Supports various types of crypto
  • Has low transaction fees
  • Integrate with platforms that are important to your business
  • Insulates your crypto from market volatility through instant conversion to FIAT money
  • Has no minimum balance and payout restrictions 
  • Can settle your payments in multiple currencies
  • Provides other perks such as invoicing, recurring payments, and other accounting options
  • Has a good reputation and handsome reviews
  • Is safe and secure with tight sign-in and user verification processes 

If you’re unable to or don’t want to integrate, you can organize direct payments with your customers. All they need is your wallet address or your QR code, which you can generate from your wallet. Your clients will enter your address or scan your QR code to make payments.

Methods to Accept Crypto PaymentsAdvantagesDisadvantages
Cryptocurrency Payment Gateways (like CoinBase Commerce, BitPay)Supports various cryptos, low transaction fees, multiple platform integration, insulates from market volatility, other features like invoicing and recurring paymentsDependence on third-party service, potential fees
Direct Payments (Wallet address or QR code)Full control, no transaction feesExposure to market volatility, more responsibility for security
PayPal Crypto OptionNo direct crypto exposure, automatic conversion to USDDependence on PayPal, potential fees

Cushion Yourself Against Crypto Drawbacks When Accepting Crypto Payments

You can maintain the safety and value of your crypto by:

Instantly turning your Bitcoin and other cryptos to cash

In order to immediately convert your Bitcoin and other cryptocurrencies into cash, you might want to consider signing up for payment processors like BitPay and Flexa.

These platforms are designed to automatically convert your Bitcoin into cash, thereby mitigating volatility issues that can cause fluctuations in your crypto’s value.

This method effectively shields your business from potential losses due to sudden market changes, ensuring you receive a consistent cash value for your crypto transactions.

Avoiding direct contact with crypto

In case you wish to stay clear of direct cryptocurrency exposure, you can opt to accept bitcoin payments via PayPal’s crypto option. This arrangement enables your customers to pay using their digital currencies while you receive the equivalent value in U.S. dollars.

Once your crypto-holding customers transfer the digital money, PayPal instantly credits your account with the equivalent USD, keeping your revenue stable and shielded from crypto volatility.

How to accept Crypto

What to Consider Before You Accept Cryptocurrency Payments

Crypto tax implications

It’s important to note that according to the International Revenue Services (IRS), all cryptocurrencies are treated as capital assets and are subject to capital gains tax.

For small businesses transacting in bitcoin for purchases, the IRS considers each transaction as a crypto sale. Should the ‘sale’ value of your coins exceed the initial ‘purchase’ cost, you’ll be liable to pay capital gains tax in addition to the relevant sales tax.

Market Volatility

Cryptocurrencies are known for their price volatility. This can affect the value of transactions and may require dynamic pricing strategies or immediate conversion to stable currencies to mitigate risk.

Technical Infrastructure

Implementing cryptocurrency payments requires technical setup, including digital wallets and payment gateways. Ensure your business has the technical capacity and security measures to handle such transactions.

Customer Education

Given the relatively new nature of cryptocurrencies, some customers may need education or guidance on how to use them for payments. Providing clear instructions and support can enhance customer experience and trust.

Crypto regulation (or the lack of it)

The unique characteristic of cryptocurrencies is their decentralized nature, which means they aren’t regulated by any bank or governmental body.

This absence of stringent regulation can leave your business assets vulnerable. As a safeguard, investing in insurance to cover potential issues such as data security breaches and losses due to cybercrime becomes critical.

Furthermore, you should be prepared to adapt to changing regulations as discussions continue on how to effectively oversee the crypto space.

Your audience

Research indicates that  74% of crypto holders are aged 25 – 44 and 19% fall between ages 44 and 55. 

Indeed, if your business caters to a younger, digitally-savvy demographic, the capacity to accept cryptocurrency payments could become a vital necessity.

This audience is typically more open to embracing newer technologies, including digital currencies, making it a crucial aspect of maintaining relevance in their eyes.

Interestingly, the trend isn’t restricted to just the young. The older demographic, specifically individuals aged 60 and above, are gradually warming up to this digital revolution.

As they catch up to the tech wave, businesses that serve this demographic will also need to adapt and incorporate cryptocurrency payments.

This will ensure inclusivity across all age groups, enabling a broader spectrum of customers to transact with ease and convenience.

How to accept Crypto

Get ahead of the Competition & Dive Into Crypto

Incorporating cryptocurrency payments into your business operations signifies a progressive and innovative mindset, greatly enhancing your brand’s image.

This strategic move not only demonstrates your adaptability to global financial trends but also shows your commitment to embracing modern technology, fostering customer trust and loyalty.

By doing so, you position your enterprise as a thought-leader, keeping pace with advancements, and setting a high benchmark in your industry.

While your customers may not dive into making crypto payments right away, it’s important to learn the A to Z of Bitcoin and crypto and how to accept bitcoin payments. Be ready to grab every opportunity to stand out and thrive in today’s dynamic market. 

Image: Depositphotos

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Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and has been a member of the team for 16 years. A professional journalist with 20 years of experience in traditional media and online media, he attended Waynesburg University and is a member of the Society of Professional Journalists. He has held roles of reporter, editor and publisher, having founded his own local newspaper, the Pottsville Free Press.