As an ecommerce business owner, you may be on the fence about accepting cryptocurrency. The volatility and many unknowns of Bitcoin and crypto are best approached with caution. However, its increasing popularity could also mean you are discouraging potential customers.
16% of the US population in 2022 owned some form of cryptocurrency. Additionally, a survey revealed that one-third of the total 16 million crypto owners in the US would switch to merchants who offer crypto as a payment option. That’s a lot of potential sales - especially for an online retailer where all your income is digital. Yet Bitcoin, the world’s largest cryptocurrency, plummeted from $40,000 per share to $16,000 in 2022. There are some risks to honoring cryptocurrency worth knowing, and they extend beyond Bitcoin to all altcoins (alternative coins, such as Dogecoin, Etherium, etc..)
With price fluctuations and volatility likely to continue, how should ecommerce owners approach crypto? This article lays out all the details so that you can make the right decision. You’ll also learn how to accept crypto as a business and what you require to get crypto ready!
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What Are Cryptocurrency and Bitcoin?
Cryptocurrency is a digital form of currency that is transferred back and forth electronically between users via digital software and hardware. Since everything about crypto is digital, it isn’t physical currency like the dollars in your wallet. It can, however, be exchanged for hard cash if you like.
A digital coin has a unique, alphanumeric address that is logged in a decentralized (open) system called a blockchain. Each “block” of addresses used for a purchase is recorded with timestamps and embedded functions to chart the movement permanently from one owner to another in the chain. The chain acts as an unchangeable ledger and uses unbreakable cryptography to prevent tampering.
Much like serial numbers on your dollar note, there are a limited number of addresses. Combined with the permanent historical tracking and security measures that guard against counterfeiting or duplicate spending, the currency has value like any other.
Today there are roughly 10,000 different cryptocurrencies worldwide. Here are a few examples of some popular currencies, starting with Bitcoin, the very first cryptocurrency and the most popular.
- Bitcoin (BTC)
- Tether (USDT)
- Etherium (ETH)
- Binance Coin (BNB)
- XRP (XRP)
- Dogecoin (DOGE)
- Cardano (ADA)
- Polygon (MATIC)
- Polkadot (DOT)
- Monero (XMR)
Can You Accept Crypto Payments on Your Ecommerce Website?
You can easily accept cryptocurrency. In some ways, the process is similar to other forms of payment like credit cards and debit cards. A question to ask yourself, however, is whether or not this type of currency is right for your business. Here are some considerations to help you decide.
Benefits of Accepting Crypto Payment
Here is a look at crypto’s biggest benefits.
You Expand Your Customer Base
Having too few payment options is one of the most common mistakes that an online retailer can make. By honoring crypto, you are essentially following the same reasoning as honoring credit cards, debit cards, Paypal, Venmo, wire transfers, etc. The more choices your customer has, the higher your chance of making a sale and beating out your competition.
Crypto Fits Your Target Market
Crypto has a club-like mentality, and being part of that club can pay off. When you share your love for it, crypto fans will love you right back. If your target demographic is 18-29, you stand to benefit even more. Forbes reported in 2021 that nearly half of all men aged 18-29 in the US owned crypto at some point. Offering this form of payment proves beneficial and improves your reputation in this demographic.
Low Transaction Fees
Crypto often has transaction fees between zero and one percent, vs. credit cards that have higher fees ranging from 1.5 to 3.5%. Fewer fees improve profit margins and make the endeavor worthwhile.
A Chance for Higher Returns
Another benefit to crypto is its value in the marketplace. Though crypto has a massive and well-deserved reputation for volatility, that trait might just swing in your direction, providing you with sudden greater returns. It all depends on how long you hold it and when you cash it. The risk is yours, but the rewards are, too.
Challenges and Limitations
If you work with crypto, you better strap in because you’re in for a bumpy ride. Some potential challenges include
A crypto’s worth can drop suddenly. This was especially evident in the collapse of FTX, a company previously ranked in the top 3 in terms of safe crypto investments. Watching the values like a day trader and mentally navigating the fluctuations may be something you prefer to avoid entirely.
A Strain on Customer Support
Crypto has been around since 2009, but it is still a new concept for many users. Your customer service team might have to answer multiple questions on the payment system you set up. They may also demand price changes of your product based on current crypto values.
Navigating Government Regulations
Because crypto is relatively new, financial regulations are still catching up. Different countries have different rules around usage. In the US, regulations vary by state. You will have to learn the rules for tax purposes.
A Hit to Your Image
If the community who typically buys your products has an aversion to crypto, they may shy away from your brand. A good example of this is if you offer environmentally conscious products. Creating and maintaining crypto relies on immense electricity to operate powerful software and hardware – especially when mining for coins (finding crypto addresses and adding them to the blockchain as approved coins.) Unfortunately, crypto is currently not a benefit to the environment.
What Does an Ecommerce Website Require to Become Crypto Ready?
If you like benefits of cryptocurrency and plan to move ahead, the good news is setup is easy, even for small businesses. How to accept crypto payments on your website? You require three key things:
Platform Support from Your Site Provider
Most ecommerce platforms honor crypto thanks to specific plugins for fast and easy setup. Examples include:
You can also use third party tools that work directly with Bitcoin, such as payment buttons and invoice integration.
Crypto Payment Gateway
You are likely familiar with using payment gateways for credit card payments. Similarly, a crypto gateway ensures secure crypto transactions while allowing for a smooth checkout process alongside your existing purchasing systems. You can connect payments directly to invoices and speed up the checkout process.
Crypto Wallets or Crypto Debit Cards
Once the customer has completed the transaction, you may wonder how to get paid in bitcoin and altcoins. For that you’ll require a crypto wallet with crypto debit cards. Here is a quick explanation of each.
A crypto wallet is the equivalent of a bank account. You can hold multiple forms of cryptocurrency in it. You have to set up your crypto payment gateway so that they transfer funds to your wallet. Alternatively, you can also pass wallet details to customers and get them to pay you directly instead of through the gateway.
Crypto Debit Cards
These are physical cards that look and work like bank debit cards, and you process them in a similar way. The cards can be used for online purchases and ATM withdrawals. (Network fees and transaction fees will apply.) Additionally, some crypto debit cards can be used by customers to complete purchases directly on Amazon.
How to Choose the Best Bitcoin Payment Method
There are several crypto gateway companies out there for processing Bitcoin and altcoins. Bitcoin even has its own internal gateway software. The best one depends on how they meet your needs. Here are some traits to look for when shopping around.
Since the main reason to go with crypto is more options for customers, you want to go with a gateway that supports that. Choose a gateway that allows payments in a wide range of approved and authorized alt coins, not just Bitcoin.
Fees vary between providers and not all fees are easy to catch at first. Look closely at the fine print on your gateway plan. This is particularly true for estimated volumes of purchases and dollar amounts.
Some cryptocurrency processors complete payouts in three to five days, but others do it daily, which may be an advantage for your business.
Be sure that the gateway you accept works with cryptocurrencies that are legal in your area. The same approach to staying legal should extend to cryptocurrencies offering internal gateway functions, such as Bitcoin.
The more secure the cryptocurrency and payment processes are, the less risk you experience. Prioritize providers who have an in-depth history in crypto, approach this purchasing type seriously, and ensure your site stays current with all updates. A gateway provider may even freeze crypto rates to simplify your business dealings.
Ease of Set up and Use
If you aren’t technologically savvy, the ease of setup could be your deciding factor. Thankfully, many providers offer easy setups, though some are more convenient than others.
Which Payment Gateway Is Best for Cryptocurrency?
Here is a list of popular gateways and their winning traits:
Are you wondering how to accept bitcoin payments exclusively? Blockonomics is the one to consider because it focuses ONLY on Bitcoin and Bitcoin Cash, and it is extremely popular. Why?
- Strong reputation for reliability.
- Integration with leading website builders.
- Easy setup with helpful guides and strong support.
- Bitcoin payment buttons and automatic invoicing creation within your wallet.
- Low transaction fees of 1%.
- No fees for first 20 transactions.
However, its tight focus on Bitcoin means you’ll need another solution for other cryptocurrencies. You also need a crypto wallet with Bitcoin before you can setup. Blockonomics demopage with buttons shown below.
BitPay is a top-rated option for crypto payments and a leader in the industry for a long list of reasons. You get a broad range of payment receiving and processing options, such as payment buttons and checkout options, automatic invoicing, and much more. It even has its own wallet, so you dont require a separate independent account.
Other benefits include:
- Works with a broad range of crypto, including popular crypto options like Dogecoin, Ethereum, and LiteCoin
- Zero Price Volitility to help you maintain conversion rates.
- Daily bank deposit facility.
- Low 1% transaction fee.
- Offers a debit card for additional fees
The only drawback is that users report that contacting and getting responses from its customer support team isn’t all that easy. Bitpay payment screen on NewEgg ecommerce store is given below
#3. BTCPay Server
Looking to save money? BTCPay Server may be your answer. It is a free payment gateway that you can use however you wish on your own hardware. Benefits include:
- Secure, private, censorship-resistant
- Ultra-streamlined, fully open-source code
- Available as a plugin on WooCommerce, Shopify, and Magento.
- Built-in wallet with hardware wallet support.
The chief drawback is that it doesn’t offer any direct services. It only offers the tools you need and some guides to using them. You have to do all the coding work required for setting up the wallet, buying Bitcoin, converting it to dollars, and aiding with other sales processes. BTCPay code screen is shown below.
#4. Coinbase Commerce
Coinbase is the largest gateway system, and for many reasons. Like BitPay, setup is easy, which is great if you are a beginner. It works with over 170 cryptocurrencies and most ecommerce platforms. It also has an app, which works particularly well. Other benefits include.
- Custom wallet functionality.
- Embeddable buttons that are easy to add to your website.
- Fast and secure exchanges between crypto and other currency
- Multiple pricing options based on usage
With all its benefits, it comes with higher fees than other exchanges on the market. Coinbase checkout screen demo shown below.
Are you wondering how to accept altcoin payments? NOWPayments is one of the most popular providers for the job. It accepts over 100 cryptocurrencies. Each type currency can be easily converted to the currency you prefer. It also has good plugins and point of sale(POS) solutions so you can accept bitcoin payments in physical store locations. Other benefits include:
- Convert crypto to Euros and withdraw directly to bank account.
- Personal account manager with 24/7 support
- Lowest fees starting at 0.4%
- Wide range of merchant tools
The only disadvantage is that they are based in Europe so may not meet all US requirements in every state.
PayPal is a solid choice for cryptocurrency transactions for several reasons. It is already popular. You may already honor PayPal payments, making the transition easy. With so many people already using PayPal, you put crypto payments in easy reach for customers. Additionally, it works with POS systems to convert the crypto directly into US dollars. The only drawback is that Paypal fees are high. You have to shell out 3.49% plus 49 cents per transaction.
Ecommerce merchants have to adapt to new market requirements and changing technologies. Cryptocurrencies are creating a revolution in online retail and you don’t want to be left behind. At the same time, you have to be aware of the risks and challenges that any change brings. Only you can decide if crypto is right for your business based on your current growth stage, customer requirements, and financial analysis.
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People Also Ask
What Is the Cheapest Payment Gateway for Cryptocurrency?
Nothing is cheaper than free, but you also want a provider you can rely on. BTCPay Server is a solid choice. Note that because it is free, it offers fewer services and requires more setup when compared to other options. NowPayments is the cheapest when it comes to a full fledged payment gateway service.
Are There Any Financial Risks in Crypto Payments for ecommerce?
Cryptocurrency is extremely volatile, and you can lose money overnight if value falls. Your customers may transfer the equivalent of $20 but you may end up with $0. Although the financial risks are big, their value can swing both ways. You’ll be better off if you have the capacity to hold on to the crypto without converting to USD. Wait until the next upward swing; however, an upward movement isn’t guaranteed.
How To Spend Your Bitcoins after You Have Earned Them?
Bitcoins can be transferred into the c urrency of your choice such as USD, Euros, CAD and so on. You can also store them in a crypto wallet and use them with a crypto card. Most crypto cards let you withdraw cash and shop similar to a credit card.
Having a modern website is just the first step to ecommerce success. If you want to scale your business further you need data. Learn more about how to use data analytics to grow your ecommerce business step by step!