How to Accept Bitcoin Payments from Customers in Your E-Commerce Business
If you own an online business, you will have heard of bitcoin, a digital currency not controlled by governmental financial institutions that allow parties to send and receive payments directly without the intervention of traditional financial intermediaries like banks and credit card companies. You will also know that many modem and tech-savvy users are beginning to use this virtual currency for its speed, security, and anonymity, which makes it ideal for online transactions. If you have been wondering whether it is time for you to start accepting cryptocurrency, you need to find out more about how you can do it:
Top Reasons for Online Businesses to Accept Bitcoin
Anyone familiar with the concept of cryptocurrency will know of its various benefits, however, it is of particular interest to online merchants due to the following reasons:
No chargeback
Customers cannot reverse Bitcoin transactions once they have made the payment, which means that once the fund transfer is complete, no customer can reverse it without the permission and knowledge of the recipient merchant. It is in stark contrast to credit card payments, where customers can pay for goods and services and reverse the transaction after receiving them on some pretext. This feature of Bitcoin makes it impossible for people to commit chargeback frauds, ensuring better protection for online businesses.
Nil or low transaction fees
Bitcoin transactions take place directly between the buyer and the online merchant without the intervention of conventional financial intermediaries like banks, credit card companies, money transfer agents, or for that matter, even central banks and governments. The absence of intermediaries in the payment process also means that customers or merchants do not need to pay any transaction costs or fees, unlike credit cards which usually charge between 2-5% of the transaction value as commissions. A typical Bitcoin processor does not charge anything for low-value transactions and may sometimes charge up to 1% where the transaction amount is high.
Increased customer reach
Among the biggest challenges for businesses, especially those operating online, is increasing the number of customers. An increasing number of modern and tech-savvy users have started using cryptocurrency for purchasing goods and services, which means that once you set your business up to accept Bitcoin payments, you can access a whole new audience. Also, importantly, it provides a critical competitive differentiator that can enable a business to grab more market share. Currently, the typical bitcoin users are males between the ages of 25-44; however, with the increasing adoption of cryptocurrencies by customers and merchants alike, you can expect the demographic to broaden.
Potential Issues of Accepting Bitcoin by Online Merchants
Highly volatile
Because bitcoin and other cryptocurrencies are relatively young, they tend to be at the mercy of strong market forces that can quickly affect their value. An owner of an online bitcoin store who is averse to currency risks may not want to accept something that has the potential of depreciating overnight.
Tax implications
According to the U.S. Chamber of Commerce, the IRS considers cryptos as property for taxation, which means merchants accepting Bitcoin must report it as gross income based on its fair value at the time of receipt. It means that apart from the business having to keep detailed records of Bitcoin transactions, merchants also find themselves liable to pay capital gains tax. The tracking, reporting, and accounting may easily be too complicated for small businesses.
Needless to focus on the currency
When a merchant starts accepting bitcoin, it may face many questions regarding cryptocurrency and the payment process. For merchants who want the focus to remain on the goods and services they are selling, it can mean needless distraction. A merchant would prefer customers to focus on the goods and services rather than how to pay for them.
How to Accept Bitcoin Your Ecommerce Platform
Now that you know something about cryptocurrency and its pros and cons, you may consider it worthwhile to accept crypto payments from your customers. Here’s what you need to do to set up your business:
Integrate the online store with a bitcoin payment processor
If you are an independent online store, you will need to tie up with a bitcoin payment processor to start accepting bitcoin payments from customers. However, if you operate through a third-party e-commerce platform, you can integrate your store with a bitcoin processor. For example, online merchants on Shopify can accept BTC payments using cryptocurrency exchange platforms like Coinbase, BitPay, Dwolla, etc., while Magento users can turn to CoinGate, BitPay, and more. You should explore your options and contact your e-commerce platform to find out how you can start accepting bitcoin payments.
Compare and contrast solutions
You need to evaluate the terms and conditions of different bitcoin processors to find an optimum solution. You must pay attention to factors like transaction fees and payout frequency because some processors pay out daily while others may take up to three days.
Currencies supported
While you can spend some of your bitcoin income on purchases using bitcoin, you may need to convert the surplus into various fiat currencies for withdrawal. You must verify that the payment processor will permit you to access your bitcoin funds in the currency of your choice. Similarly, you must ensure that your bitcoin processor can serve your business in the countries where you operate.
Customer support
A first-time user will want a bitcoin processor that will extend comprehensive and prompt support over the phone, live chat, and email.
Conclusion
Once you have set up your bitcoin payment system with a bitcoin payment processor of your choice, you will need to ensure the security of the transaction and your funds. You can do it by making sure you are using the latest versions of solutions, apps, wallets, etc., with up-to-date stability and security fixes and patches. You should also implement a robust system of passwords and use multi-factor verification. Implement further security measures like backing up your bitcoin wallet regularly, encrypting the online backups, and using multiple secure locations for your backups. Using offline or cold storage and not keeping large amounts in the wallet for a long time is also effective for ensuring the safety of your money.
How to Accept Bitcoin Payments from Customers in Your E-Commerce Business
If you own an online business, you will have heard of bitcoin, a digital currency not controlled by governmental financial institutions that allow parties to send and receive payments directly without the intervention of traditional financial intermediaries like banks and credit card companies. You will also know that many modem and tech-savvy users are beginning to use this virtual currency for its speed, security, and anonymity, which makes it ideal for online transactions. If you have been wondering whether it is time for you to start accepting cryptocurrency, you need to find out more about how you can do it:
Top Reasons for Online Businesses to Accept Bitcoin
Anyone familiar with the concept of cryptocurrency will know of its various benefits, however, it is of particular interest to online merchants due to the following reasons:
No chargeback
Customers cannot reverse Bitcoin transactions once they have made the payment, which means that once the fund transfer is complete, no customer can reverse it without the permission and knowledge of the recipient merchant. It is in stark contrast to credit card payments, where customers can pay for goods and services and reverse the transaction after receiving them on some pretext. This feature of Bitcoin makes it impossible for people to commit chargeback frauds, ensuring better protection for online businesses.
Nil or low transaction fees
Bitcoin transactions take place directly between the buyer and the online merchant without the intervention of conventional financial intermediaries like banks, credit card companies, money transfer agents, or for that matter, even central banks and governments. The absence of intermediaries in the payment process also means that customers or merchants do not need to pay any transaction costs or fees, unlike credit cards which usually charge between 2-5% of the transaction value as commissions. A typical Bitcoin processor does not charge anything for low-value transactions and may sometimes charge up to 1% where the transaction amount is high.
Increased customer reach
Among the biggest challenges for businesses, especially those operating online, is increasing the number of customers. An increasing number of modern and tech-savvy users have started using cryptocurrency for purchasing goods and services, which means that once you set your business up to accept Bitcoin payments, you can access a whole new audience. Also, importantly, it provides a critical competitive differentiator that can enable a business to grab more market share. Currently, the typical bitcoin users are males between the ages of 25-44; however, with the increasing adoption of cryptocurrencies by customers and merchants alike, you can expect the demographic to broaden.
Potential Issues of Accepting Bitcoin by Online Merchants
Highly volatile
Because bitcoin and other cryptocurrencies are relatively young, they tend to be at the mercy of strong market forces that can quickly affect their value. An owner of an online bitcoin store who is averse to currency risks may not want to accept something that has the potential of depreciating overnight.
Tax implications
According to the U.S. Chamber of Commerce, the IRS considers cryptos as property for taxation, which means merchants accepting Bitcoin must report it as gross income based on its fair value at the time of receipt. It means that apart from the business having to keep detailed records of Bitcoin transactions, merchants also find themselves liable to pay capital gains tax. The tracking, reporting, and accounting may easily be too complicated for small businesses.
Needless to focus on the currency
When a merchant starts accepting bitcoin, it may face many questions regarding cryptocurrency and the payment process. For merchants who want the focus to remain on the goods and services they are selling, it can mean needless distraction. A merchant would prefer customers to focus on the goods and services rather than how to pay for them.
How to Accept Bitcoin Your Ecommerce Platform
Now that you know something about cryptocurrency and its pros and cons, you may consider it worthwhile to accept crypto payments from your customers. Here’s what you need to do to set up your business:
Integrate the online store with a bitcoin payment processor
If you are an independent online store, you will need to tie up with a bitcoin payment processor to start accepting bitcoin payments from customers. However, if you operate through a third-party e-commerce platform, you can integrate your store with a bitcoin processor. For example, online merchants on Shopify can accept BTC payments using cryptocurrency exchange platforms like Coinbase, BitPay, Dwolla, etc., while Magento users can turn to CoinGate, BitPay, and more. You should explore your options and contact your e-commerce platform to find out how you can start accepting bitcoin payments.
Compare and contrast solutions
You need to evaluate the terms and conditions of different bitcoin processors to find an optimum solution. You must pay attention to factors like transaction fees and payout frequency because some processors pay out daily while others may take up to three days.
Currencies supported
While you can spend some of your bitcoin income on purchases using bitcoin, you may need to convert the surplus into various fiat currencies for withdrawal. You must verify that the payment processor will permit you to access your bitcoin funds in the currency of your choice. Similarly, you must ensure that your bitcoin processor can serve your business in the countries where you operate.
Customer support
A first-time user will want a bitcoin processor that will extend comprehensive and prompt support over the phone, live chat, and email.
Conclusion
Once you have set up your bitcoin payment system with a bitcoin payment processor of your choice, you will need to ensure the security of the transaction and your funds. You can do it by making sure you are using the latest versions of solutions, apps, wallets, etc., with up-to-date stability and security fixes and patches. You should also implement a robust system of passwords and use multi-factor verification. Implement further security measures like backing up your bitcoin wallet regularly, encrypting the online backups, and using multiple secure locations for your backups. Using offline or cold storage and not keeping large amounts in the wallet for a long time is also effective for ensuring the safety of your money.
