Accepting Bitcoin at Your Business
The appeal of instant wealth may overshadow the fact that bitcoin was first used in an everyday transaction – to buy pizza.
Today, even the most delicious piece cannot compare with the 10,000 bitcoins that the order cost in 2010 – an amount that today costs more than half a billion dollars.
Accepting cryptocurrency at enterprises has become easier and more widespread over the past decade. But it’s still more complicated than a simple purchase of cryptocurrency by a private person.
The checklist for getting started includes finding a payment partner (probably), working out integration issues and thinking through a money conversion strategy.
Pros and cons of accepting Bitcoin at a business
- No need to worry about refunds or PCI compliance.
- It can attract business from crypto enthusiasts.
- If you decide to keep Bitcoin, the payments you accept may become more valuable over time.
- Following the rapid changes in cryptocurrency technology and regulation can be burdensome.
- If you decide to hold Bitcoin, you will be exposed to high price volatility. This can lead to significant losses for your business if you have to sell it at a low price.
- You may face complex implementation issues such as tax preparation and customer refund management.
What a Bitcoin or other crypto transaction looks like
To make cryptocurrency transactions fast and easy, the merchant probably uses a crypto payment platform, such as BitPay or Coinbase.
These companies create a user interface that facilitates the transaction, control payments and provide services such as locking the exchange rate for a certain time to limit volatility.
A typical crypto transaction in an enterprise may look like this:
- A client who decides to pay with cryptocurrency receives a QR code.
- This QR code tells the digital crypto wallet or the client’s application where to send the cryptocurrency – a destination known as an address. This address is similar to an email address, however it is usually created and used only once.
- To confirm the legality of the transaction, the client enters his password, called a private key.
- The merchant can choose the method of receiving the payment – in cryptocurrency or in dollars.
What to know before accepting Bitcoin and crypto
Which cryptocurrencies will you accept?
There are thousands of cryptocurrencies, but most crypto payment tools accept only some of them.
The most popular, Bitcoin, is generally supported everywhere. But if you are interested, for example, in accepting Mooncoin or Alice, you may have to look even more.
What tax and accounting issues will you face?
If you are thinking about accepting cryptocurrencies, you should talk to your accountant or accountant.
- First, you should be aware of the tax implications, especially if you plan to store all the cryptocurrencies you receive.
- Secondly, think about how information from your sales system gets to your accountant. For example, if you use a cloud system such as QuickBooks or Xero, you need to know if your cryptocurrency payment tool integrates with it.
Your clients are subject to capital gains tax on any cryptocurrency they use to pay.
Although you are not involved in this process, be aware that this may be one of the factors when deciding on a payment method.
Will payments be converted to cash? When and how?
This can have huge implications for your business, as large price fluctuations mean that the value of your cryptocurrency can rise – or fall – in a short period of time. Will you keep the received cryptocurrencies indefinitely? Will you convert it to cash immediately? Will you convert them on schedule? As soon as you develop a plan, make sure that the cryptocurrency payment service you have chosen will be able to implement it.
How will cryptocurrency affect your business?
Companies dealing with crypto payments can help smooth out some of the problems associated with implementation, for example, tracking price volatility. However, the company will also have to solve operational issues.
By accepting cryptocurrency, you do not incur direct costs, says Don Apgar, director of the trading services advisory service at Mercator Advisory Group, a company specializing in payments.
“But you have incurred expenses: for reformatting the report; for training the support service; what happens if someone wants to return the money; what to do with disputes?”. And time is a limited resource. “Everything you do means something else is waiting,” he adds.
Transactions can’t be reversed
Unlike your funds in the bank, which can be reinvested, withdrawn, confiscated, bitcoin transactions cannot even be canceled.
If the payment is recorded online, it is impossible to change the operation after an hour. A few extra minutes to check the information about the recipient of your transfer are worth your security.
This is a special plus for business owners, as it excludes the possibility of becoming a victim of fraudsters.
Ease of transaction
Bitcoin transactions can be made from anywhere in the world, at any time convenient for you. Your business will no longer depend on time zones and bank schedules or on national holidays of a particular country.
In addition, cryptocurrency transactions are instant, while traditional transfers between accounts take an average of 3-5 working days, and even more with international transfers.
In conclusion, it should be noted that in order to use Bitcoin in business, you do not need to deploy an expensive infrastructure. In the simplest case, it is enough to install a wallet on your smartphone, and you can already receive and send payments.
For example, WELLCOINEX gives you access to all the necessary functions, spending only a few minutes on the registration procedure, so you can forget about bureaucratic problems, difficulties and delays.