With more than 580 million crypto users worldwide, it’s never been a better time for businesses to embrace this modern form of currency. Accepting crypto payments can result in faster payment processing times, improved security, and more convenient cross-border payments.
However, many businesses are unsure what technology or tools they’ll need to accept crypto payments and where to even start. This guide will explain everything you need to know about accepting crypto payments and how your business could benefit from this decision.
The short answer is yes — cryptocurrencies are safe to accept as payment. Cryptocurrencies, like Bitcoin (BTC) and Ethereum (ETH), are powered by blockchain technology.
A blockchain is a public ledger that records and verifies all transactions. It can’t be altered by any outside force, meaning it’s completely transparent and secure. In addition, all cryptocurrencies are based on the principles of decentralized finance (DeFi).
This means there isn’t one single entity that owns Bitcoin and other cryptocurrencies. A federal government doesn’t determine their value, and they aren’t subject to inflation. Because of their decentralized nature, cryptocurrencies are highly secure and legitimate forms of payment.
Many people around the world are using crypto to fund everyday purchases, but some businesses are still hesitant to accept these digital tokens as payment. In reality, there are numerous advantages to accepting crypto payments, including:
Since crypto transactions are decentralized and don’t rely on intermediaries to finish processing, they are almost always faster than traditional payment processing.
Traditional payment processing systems, on the other hand, involve intermediaries like brokers, clearinghouses, and banks. As a result, it can take a few days for traditional payments to clear.
In contrast, crypto transactions typically take between 30 minutes and two hours to complete.
Processing payments doesn’t come without costs. Intermediaries charge small fees to process fiat transactions. The more intermediaries involved, the higher these transaction fees will be.
In other words, merchants must pay fees to banks, credit card companies, and other financial institutions to accept traditional payments.
Cryptocurrency transactions don’t involve third parties, so crypto transaction fees are almost always lower than traditional transaction fees.
Compared to credit card transactions, cryptocurrency is a more secure payment method. Fraudsters can steal credit and debit cards and use them to make unauthorized purchases.
In contrast, cryptocurrency is built on the backbone of blockchain technology. Since these transaction records can’t be manipulated or altered, it significantly reduces the risk of fraud and money laundering.
Crypto owners can also safely store their funds in secure digital wallets. These wallets are inaccessible without the key, so they’re much more secure than a credit card that can be lost or stolen.
Accepting traditional currencies can be difficult if you’re running an online business and serving a global clientele. E-commerce retailers typically have to deal with the headache of navigating exchange rates and banking fees.
Cryptocurrencies are fiat-agnostic, meaning you can use them worldwide, without involving any third parties. So accepting cross-border payments becomes more convenient and affordable for all kinds of businesses.
El Salvador is using their Chivo Wallet to facilitate cross-border cryptocurrency payments with their Chivo Wallet, which they partnered with AlphaPoint to establish. The Chivo Wallet allows users to send, receive, hold, or convert bitcoin to dollars. This allows for quick and low-cost international transfers, which is ideal for Salvadorians abroad who want to send money back home — and vice versa for those on the receiving side.
It’s no secret that merchants hate chargebacks, but they usually can’t do anything about them. Chargebacks cost businesses significant time and financial resources to mitigate, even when they’re based on legitimate disputes.
When a customer files a dispute with their credit card company, it leads to a lengthy investigation and often a chargeback. This doesn’t happen with cryptocurrency transactions, since no central authority or intermediaries are involved.
Simply put, crypto transactions happen on a peer-to-peer basis. There is no way for a chargeback to happen.
Convinced that accepting crypto payments is right for your business? If so, here is how you can build an infrastructure to receive crypto payments the right way.
Cryptocurrency regulations vary by country and are subject to frequent changes as adoption increases. So, if you plan to accept Bitcoin payments or other cryptocurrencies, you’ll need to understand the governance and compliance standards in your jurisdiction.
The crypto regulations that apply to your business depend on your location and target audience. If you’re serving a worldwide audience, you should know the crypto regulations wherever your clientele is.
Granted, reviewing all the crypto regulations in your jurisdiction can be challenging. But a crypto regulation professional can help you stay up-to-date on the latest laws and compliance standards.
Next, you need to choose a custody method for receiving cryptocurrency. In other words, how do you want to get paid? There are two methods for accepting cryptocurrencies: a crypto wallet or a gateway.
Here is a breakdown of each of these payment options:
Ultimately, the right choice depends on how well you understand the crypto market and how much personal involvement you want in the transaction process.
While hundreds of different coins are available, not all are widely accepted. So it’s important to consider factors like popularity, market preferences, and alignment with business values when choosing cryptocurrencies.
If you aren’t sure which coins to accept, you can start with one or more of the most popular cryptocurrencies, such as:
A crypto payment processor, like BitPay or CoinGate, allows people to pay your business using cryptocurrencies. When choosing a point-of-sale (PoS) payment processor, here are some features to consider:
To add a cryptocurrency payment method to your checkout page, you’ll have to integrate your payment gateway software.
Fortunately, your cryptocurrency payment provider will provide steps for the integration process via plugins, hosted payment pages, or APIs.
If you’re accepting cryptocurrency payments at your physical location, it’s important to train your team on how to process transactions and deliver top-notch customer service.
For example, they should be familiar with how your payment processor works, how to troubleshoot basic issues, and how to help customers navigate the payment process.
Finally, to protect your business and customers, make sure you create a comprehensive policy covering refunds, returns, and handling of cryptocurrency price volatility.
For example, you should inform your customers that you can’t accept chargebacks. Being upfront about this policy can prevent future customer service issues.
Cryptocurrency transaction fees are much cheaper than traditional fees. For example, PayPal fees are nearly 4% per transaction and credit card fees can get even higher once you factor in all of the interchange, assessment and payment processor fees.
In comparison, most crypto gateway providers charge between .05% and 1% for each transaction, plus an additional .05% or so for exchanges. Equipment fees and ongoing service costs vary by provider, ranging from $0–$200 a month, on average.
Lower cryptocurrency transaction fees incentivize businesses to accept these digital payments, as it can significantly lower payment processing costs.
Payment gateways and crypto-as-a-service (CaaS) providers make it simple to enjoy the affordability and security of crypto payments.
That’s why many businesses have begun accepting crypto payments, creating their own blockchains, and offering crypto custody services. In fact, El Salvador partnered with Alphapoint to create its own Bitcoin wallet, incentivizing people and businesses to leverage cryptocurrencies for everyday use.
If you’re ready to accept crypto payments — or even start a crypto business yourself, AlphaPoint can help. We provide a wide range of crypto solutions, from asset tokenization platforms to brokerage software. Our white-label crypto exchange software helps businesses build and deploy the infrastructure to buy and sell crypto.
Ready to embrace crypto in your business? Check out our exchange software today!
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