The progress of crypto payments has made significant results for small businesses, thanks to the availability of user-friendly platforms and applications. While cryptocurrencies are often associated with investments, they function as a decentralised, peer-to-peer payment system, distinct from traditional credit card transactions that involve intermediaries.
The Advantages for Your Business
Implementing cryptocurrency as a payment option brings several advantages for both customers and merchants. The most notable advantage is the elimination of intermediary fees, leading to reduced transaction costs and increased profits.
Additionally, crypto payments offer enhanced security compared to traditional methods, as they are immune to chargebacks and fraudulent activities. Offering customers a variety of payment options for your products and services can positively influence customer satisfaction and retention rates.
A Step-by-Step Guide to Accepting Crypto Payments
Integrating digital currency into your business operations may seem daunting initially, but with the right knowledge, it can be a straightforward process. To implement this payment method, follow these steps:
- Find Out in Detail the Fundamentals of Cryptocurrency and Its Regulatory Landscape
Cryptocurrency is a digital currency secured through blockchain technology, existing solely in the digital reality and free from government or institutional regulation. As of June 2022, approximately 30% of small businesses have adopted it as a payment method. When considering cryptocurrency adoption, keep the following in mind:
- Comply with the specific cryptocurrency regulations in your state, as some regions have strict rules regarding the crypto industry.
- Review your chosen cryptocurrency platform’s policies to ensure it is legal in your state and supports the countries you do business with. Not all platforms, even if they permit asset conversion to US dollars, are sanctioned in the United States.
- Establish a Wallet or Choose a Payment Gateway
To manage and utilise cryptocurrency, a crypto wallet is essential. However, if you plan to receive cryptocurrency payments and convert them into traditional currency, you’ll need a crypto payment gateway. These gateways offer hosted or noncustodial wallets where customers can store their crypto assets, which can later be converted into fiat currency, such as US dollars, and deposited into your bank account. Utilising crypto gateways also mitigates risk, as transactions occur at the prevailing market rate at the time of the transaction, protecting you from potential losses due to cryptocurrency price fluctuations.
- Integrate Crypto Payments into Your Online Shopping Cart
Once you’ve successfully set up your cryptocurrency wallet and payment gateway, the next crucial step is to integrate cryptocurrency as a payment option in your website’s checkout process. There are two primary methods to achieve this:
- The first method involves using an open-source API that requires custom HTML code to link your crypto platform with your website. This option provides greater control over your website’s design and functionality but requires technical expertise.
- The second method is more straightforward, involving the use of a plugin or app. Many eCommerce platforms offer this option, which entails downloading and installing the plugin/app on your website, eliminating technical complexities and making it an ideal choice for crypto integration newcomers.
- Educate Your Customers and Encourage the Adoption of the New Payment Method
For businesses with physical stores, accepting cryptocurrency offers various advantages. Several platforms are available for in-person crypto payments. To facilitate this payment method, consider incorporating a crypto-compatible QR code scanner or NFC terminal at your checkout counter. If you utilise a mobile point-of-sale system, integrating crypto payments with your existing setup may be feasible.
Benefits of Crypto Payments Over Traditional Methods
- Lower Transaction Fees: The absence of central intermediaries results in substantially lower transaction fees, often less than 1% of the transaction value when accepting cryptocurrency.
- Merchant Protection: Decentralisation safeguards merchants from dispute fraud since cryptocurrency transactions are irreversible.
- Enhanced Revenue: Cryptocurrency enables small businesses to reach global customers and potentially generate substantial revenue.
Calculating the Costs
Regarding payment processing fees for crypto payments, the standard rate is generally below 1%. This represents a significant cost-saving compared to the average credit card processing fee, which typically stands at 3%, and certain ACH direct deposit fees, ranging from 1% to 1.5%. Some providers even offer a lower transaction fee of just 0.5%, like CoinPayments. However, be aware that certain providers may include a network fee on top of the standard 1% transaction fee. Additionally, you should account for potential extra fees, such as currency conversion and withdrawal charges.
Final Remarks
As cryptocurrency continues to gain momentum, it has found favour with some and scepticism from others. Nevertheless, recent data reveals that nearly half of US merchants have adopted cryptocurrency as a payment method, though the majority are larger enterprises.
Regardless of your position on cryptocurrency, understanding how to accept crypto payments is vital to enhance conversion rates and stay competitive. As cryptocurrency becomes increasingly accessible, early adopters can seize a competitive edge and enjoy the benefits sooner. Take advantage of the opportunity to explore this innovative payment method for your business.
