Small business crypto payment guide

Are you looking for a small business crypto payment guide to learn how to do business in cryptocurrency? Buying goods and services with – and accepting payment for – goods and services requires a little set-up, just like any merchant account. Luckily, the industry has come a long way in the last 5 years and it’s now possible for businesses to fully transact in crypto.

According to Nerd Wallet, there is $1 billion worth of Bitcoin transactions every day. When you consider all the other cryptos out there, it’s clear that the crypto market is only growing. So if you’re a small business owner, you may want to start accepting crypto as it becomes a more common form of payment. 

But how exactly do you do this? You probably have quite a few questions. 

For example, is it easy to set up if you don’t know anything about crypto? What are the pros and cons of accepting cryptocurrency in your small business? And why should you consider doing so in the first place?

Check out our small business crypto payment guide to learn everything you need to know to confidently accept cryptocurrency payments in your small business. 

3 ways businesses can accept crypto 

Crypto payment processor

By far, the easiest way to set up a small business crypto payment option is by opening a merchant account with a dedicated crypto payment processor, such as Coinbase Commerce or Bitpay.

This method is ideal for beginners because it’s easy to set up and use, can be integrated with popular eCommerce platforms, has low transaction fees, and offers instant conversion to fiat currency for free.

You can use these payment processors to accept payment digitally or in-person through mobile apps, web plugins, and QR codes or send invoices through email. 

Coinbase Commerce

Coinbase Commerce offers two plans: a self-managed plan and a Coinbase-managed one. Each option has a 1% transaction fee and free conversion to fiat currency. 

The main difference is that the self-managed plan gives you the primary responsibility to manage your own wallet and private keys. Also, you must manually convert your crypto to fiat.

With the Coinbase-managed plan, Coinbase manages your wallet and private keys and automatically converts your crypto to fiat. In addition, while you can set up a self-managed account instantly, you will need to apply for a Coinbase managed one, which can take three to four weeks to set up.

Another benefit is that Coinbase Commerce can be integrated with popular eCommerce platforms Shopify and WooCommerce. 

BitPay

BitPay is another popular option. It accepts 12 different cryptos and can support connections to over 90 wallets and exchanges. 

It also charges a 1% processing fee for each transaction and unlimited monthly transactions. BitPay provides free conversion to fiat currency, with the ability to send funds directly into your bank account to help avoid price volatility. 

The platform is structured in three different tiers based on transaction volume. Tier 2 has a daily volume limit of $10,000 and a yearly limit of $500,000. Tier 3 has a daily volume limit of $100,000 and an annual limit of $5 million. Tier 4 is for anything greater than Tier 3’s limits.

To apply for the next tier, you will have to provide BitPay with legal information and documents about your business. 

Direct to your crypto wallet

Another method for accepting small business crypto payment options is directly into your crypto wallet. While this has no transaction fees, you will end up paying fees whenever you go to convert your crypto into fiat currency. 

It is also the most complicated method and is not recommended for beginners. This is because you will have to find a cryptocurrency wallet secure enough to protect your business earnings. 

Since the wallet will be tied to your business income, you’ll want to take extra care to evaluate the company behind the wallet and how they developed it. You should also look into their customer service. Then, assess whether you should have a hot or cold wallet (probably cold) and what recovery features are offered in the event something happens to your wallet.

Then, you simply share your wallet’s public address with your customers to start accepting payments straight into your crypto wallet. For example, this can be done through a QR code.

Crypto option with a traditional payment processor

Another option for accepting crypto is to open a merchant account with a traditional payment processor that offers a crypto option for businesses. This includes popular platforms like PayPal and Square. Other platforms such as Stripe are considering offering cryptocurrency in the future. 

What you should know about accepting crypto

Pros of accepting crypto in your business

According to a study done by Forrester Consulting on behalf of BitPay, businesses that started accepting cryptocurrency as payment saw 40% more sales from customers new to the business, higher average order values, and increased ROI.

This is because offering small business crypto payment options can bring in an entirely new customer base for your business. For example, this could include international customers looking for an easy and free way to make payments or younger demographics who use crypto as their primary currency.

Accepting crypto is especially good for global payments because you can avoid paying fees, long transaction and bank processing times, and dealing with currency exchange rates.

In addition, crypto payment options are simple to set up, even if you are a beginner. You can start almost instantly if you use a third-party system like Coinbase or BitPay. These platforms offer free and instant conversions to fiat currency, making them a great option for small businesses new to crypto. 

Lastly, crypto is more secure than traditional payment methods because every transaction is safe on the blockchain and protected cryptographically. There is also no risk of chargebacks or transactions bouncing because all transactions are instant and unchangeable.

Cons of accepting crypto  

However, there are some downsides to using small business crypto payment options. 

First, the volatility of the crypto market can be risky for any business. This is why opening a merchant account on platforms such as BitPay can offer a degree of safety. Bitpay lets you instantly deposit your crypto into your bank account at the price you received it, which can help mitigate risk in the event the market price of the crypto drops.

If you are using your own crypto wallet, you will be subject to the price fluctuations that crypto is known for.

In addition, if you are using your own wallet for direct payments, then you will have to pay fees when you convert your crypto to fiat currency. This may not be a problem if you plan to hold your crypto as an investment. But if you plan on doing that, you will have to figure out how to pay taxes on the crypto you are holding. 

To this end, it’s generally better to convert your crypto to fiat to make your taxes easier. But even still, you may want to hire a tax accountant for your business who understands crypto taxes.

Working with an accountant may also be a good idea considering that new crypto rules and regulations are being introduced that could impact your business. So make sure either you understand these regulations or hire someone who does.

Other downsides include your customers or staff being unfamiliar with cryptocurrency. If this is the case, then you may have to invest in training your staff on the basics of how to work with crypto. 

Also, consider your current customer base and who your new potential customers could be. Is your current base young and tech-savvy? Do they already understand crypto? If not, could your business attract these types of customers?

Another downside is that because transactions are irreversible and final, it could potentially complicate the refund process. As the owner of the merchant account, only you can process crypto refunds to your customers. 

This is especially the case if you are using your own crypto wallet. Keep this in mind and make sure your customers understand how refunds might be different from traditional payments.

Lastly, another downside to crypto is its impact on the environment. This is why Tesla stopped accepting Bitcoin as payment in May 2021. This is something to keep in mind if your business handles large amounts of crypto transactions each day.

Will small business crypto payment options become more common in the future?

According to QuickBooks, 15% of small businesses in the US currently accept cryptocurrency. Of these, about a quarter are millennial-owned businesses.

As cryptocurrency becomes more popular, these numbers are only likely to keep growing.

So, why should you consider integrating small business crypto payment options in your business? Being an early adopter of crypto could benefit your business financially by bringing in new customers. It’s also a good idea if you genuinely want to support the technology behind the crypto.

It also gives your business the potential to expand globally and gain more international customers, which can help it grow even more.