You’ve likely heard a lot about cryptocurrency (or ‘crypto’) and how it’s revolutionising the world of online payments.
An increasing number of consumers are looking to purchase goods or services online using cryptocurrency. So, if you’re looking to get ahead of the curve, now may be a good time to start integrating crypto into your business.
A few businesses have already gone ahead and offered cryptocurrency as a form of payment. Phillip Plein, Whole Foods, Microsoft and Lush all accept cryptocurrency. Individual sellers operating through online marketplaces such as Etsy can also accept cryptocurrency.
If you’re also considering accepting cryptocurrency as a form of payment in your online business or eCommerce store, there are a few things you must know.
Cryptocurrency is a pretty complex topic, but we’re here to help you get your head around it!
In this article, we’ll provide a basic overview of:
- Exactly what cryptocurrency is
- How to accept cryptocurrency as a form of payment in your online business
- Key risks to look out for
- Things to be aware of when selling products on a third party site that accepts crypto
What Is Cryptocurrency?
Cryptocurrency can be tricky for business owners (and, in fact, anyone!) to get their heads around.
Put simply, cryptocurrency is a digital form of currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds.
Cryptocurrency operates independently of a central bank.
Instead, cryptocurrency is stored on computerised databases, where it is protected by strong encryption to:
- Secure transaction record entries
- Control the creation of additional digital coin records
- Verify the transfer of coin ownership.
There are various types of cryptocurrency out there. Some of the more popular cryptocurrencies you may have heard of include:
Of course, there are many other cryptocurrencies beyond those listed above. It’s important that you do your own research into the best cryptocurrencies to accept on your online store.
What Are The Advantages Of Cryptocurrency?
Some of the most commonly-discussed advantages of cryptocurrencies are:
- It’s decentralised: Cryptocurrency is not controlled by a centralised bank, government or corporate board. Instead, it is a peer-to-peer mode of payment.
- It’s borderless: Payments can be sent and received anywhere in the world, so long as there is a computer and internet connection.
- It captures a broader market: Utilising cryptocurrency opens up a broader market of consumers across the world.
- It’s safe: Cryptocurrency data is stored within complex encrypted networks. This makes the data very difficult to breach or hack.
- It’s fast: Transactions and transfers are near instant.
What Legals Should Your Business Have In Place Before Accepting Cryptocurrency?
As a business owner, it’s important to have an efficient, stable and protected online store. We’d advise having your legal basics covered before you even consider accepting cryptocurrency.
One of the key legal foundations of an online business is a solid set of terms and conditions for your site.
A good set of online shop terms and conditions gives clarity to your customers on important points like:
- How payments work
- Refund policies
- Dispute resolution processes
- What happens if something goes wrong with a customer’s order
For more general information on choosing the right payment structure for your online business, check out our recent article.
How To Accept Cryptocurrency On Your Business’ Website
So, you’re ready to take the plunge into the world of crypto? Here’s a step-by-step list of how to accept cryptocurrency as a form of payment on your business’ site.
1. Set Up A Cryptocurrency Wallet
To accept cryptocurrencies on your business’ website, you must have a cryptocurrency wallet.
Your business may wish to accept an exclusive list of cryptocurrencies, or you may decide to accept any cryptocurrency. Ultimately, it is up to you and what best suits your business.
Some cryptocurrencies have their own recommended wallets. For example, Bitcoin recommends you use Bitcoin Wallets.
Generally, cryptocurrency wallets can be stored:
- On your desktop
- On your personal/business mobile
- On physical hardware
There are two main types of cryptocurrency wallets:
- Hot Wallets: This is a hosted wallet, meaning that it is on the internet. While this is a more popular type of wallet, it is less secure and more susceptible to potential hackers.
- Cold Wallets: This is a wallet not connected to the internet. This may be in the form of a physical hard drive, and it is considered to be the safest and most secure type of wallet. Popular cold wallets include Trezor and Ledger Nano S.
Each type of wallet has its pros and cons. However, it’s generally considered that a physical hardware wallet is best when dealing with large quantities of cryptocurrency.
When choosing your wallet, you must ensure that the one you choose enables the cryptocurrencies your store is willing to accept. Importantly, it’s commonly advised to never purchase a second hand crypto wallet off Ebay.
Once you’ve set up your cryptocurrency wallet, you will receive:
- A public address and QR code. Customers will use these details to deposit crypto directly into your business’ wallet.
- A private key. Your private key is your personalised ‘passcode’ to your crypto wallet. It’s super important to keep this private key written down in a secure place. Once it is gone, you may not be able to retrieve your crypto wallet.
2. Integrate Cryptocurrency Into Your Business’ Website
There are a few different ways to integrate cryptocurrency into your website. It is important you consider all options available and select the option that best suits your business’ needs.
Here are some common methods for integrating cryptocurrency into your website.
By using your personal QR code or public address from your cryptocurrency wallet, your customers will be able to easily deposit the relevant cryptocurrency directly into your cryptocurrency wallet.
Popular wallets such as Coinbase Wallet have step-by-step guides on how to integrate cryptocurrency into key areas of your online business’ store.
Have A ‘Pay With Crypto’ Button
Having a ‘pay with crypto’ button on your website will further inform customers that crypto is an accepted form of payment.
Accept Payment Via A Service Provider
Some service providers offer an easy, simplified way of accepting crypto payments.
Popular service providers include:
Using these services can alleviate a lot of the stress associated with accepting crypto on your sire. However, it is important to be aware of the associated expenses.
Key Risks Associated With Accepting Crypto As Payment
Before you make the final decision to accept cryptocurrency as a form of payment on your site, there’s one very important thing you should be aware of: crypto can be volatile!
For example, the value of Bitcoin has been known to fluctuate significantly within the space of a few days. This is why cryptocurrency is often considered a long-term investment.
As such, you may wish to transfer cryptocurrency payments into fiat (normal currency established by a Government, such as pounds) immediately upon transaction.
Some ways you can do this include:
- Manually transferring cryptocurrency funds from your crypto wallet into your fiat bank account
- Using platforms like Coinbase to automate this process
The cryptocurrency will then be transferred into your business’ bank account based on the cryptocurrency exchange rate.
Cryptocurrency is still eligible for tax and it’s likely that capital gains tax will apply when you dispose of your cryptocurrency.
Disposal occurs when you:
- Sell or give away cryptocurrency
- Trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)
- Convert cryptocurrency to fiat currency
- Use cryptocurrency to procure goods or services.
As such, it’s important to be aware of the tax implications associated with accepting crypto on your business’ website.
Selling Products On A Third Party Site That Accepts Crypto
Third party sites are a popular alternative for business owners who want to sell their products online but don’t want the hassle of setting up their own online store.
Even though you’re selling through a third party site, you should still do your research into the possible issues associated with accepting cryptocurrency. As mentioned above, cryptocurrency is very volatile and tax implications must be considered.
It’s also important to review the terms and conditions of your third party site agreement. We can help you draft a set of custom terms and conditions for your Shopify store to ensure you’re properly protected.
Cryptocurrency is an exciting area to delve into. And, as a business owner, it may be worth expanding your accepted forms of payment to include crypto.
We understand that cryptocurrency is an extremely dense and complex area to get your head around. So, we’re here to help!
Whether you want to understand the best payment structure for your online business, need your store’s terms and conditions updated, or have any other questions—get in touch!
For a free, no-obligations chat, contact our team at [email protected] or give us a call on 08081347754.
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