According to a Zogby Analytics study commissioned by HSB, more than one-third of small businesses in the US are presently accepting cryptocurrency, with more than half of those companies buying digital currency to pay suppliers. But are these organisations paying lip service to technological progression, or are they catering to a serious demand? As bitcoin stabilises and governments begin to embrace the concept, it is looking increasingly like the latter.
The figures back this up, too. Roughly 27m US consumers use bitcoin for their transactions, while, adjusted for populations, these numbers are comparable across Europe and Asia. Therefore, as a business owner, you are putting yourself at a competitive disadvantage if you are continuing to ignore cryptocurrency trends.
So how do you make the transition, and add the option of paying in bitcoin to your checkout? Whether it is allowing customers to pay in bitcoins in person, or installing the necessary infrastructure to facilitate these types of transactions online, the process is actually more simple than you think.
To help, we've compiled a six-step guide on accepting bitcoin as payment in your store, so if you are you ready to enter the new frontier of payment technology, you're in the right place.
First, though, we will clarify why exactly you should be looking to make this change.
Why Should You Accept Bitcoin?
According to Bitcoin Market Journal, approximately 42m bitcoin wallets had been established internationally by December 2019 – a number that is forecasted to only increase in the coming years. At the same time, a dedicated and loyal community has been created, meaning that bitcoin users are more likely to frequent an establishment that accepts such payments.
It's not just about attracting extra customers, though. While transaction costs have admittedly risen in recent years, they are still favourable when compared to debit or credit card transactions, while cross-border fees – a major nuisance for international businesses – are also mitigated. Speed of payment is another factor, with bitcoin transactions verified and executed within a matter of minutes (compared to the days-long wait for debit and credit card payments).
Bitcoin is no longer seen as a risky outsider, either, not just by consumers but, crucially, by governments. Therefore, the level of risk involved is low (for the time being at least), with the currency's algorithm designed to prevent explosive levels of inflation – something that many established cash currencies can't say in the post-COVID world.
So, now that you know the why, it's time to explain the how.
How to Accept Bitcoin in Your Business
Accepting bitcoin as payment is not as complex as many people think, especially if you consider yourself a relative technophobe. To make the most out of the benefits listed above, though, there are certain steps that you need to follow:
1. Make People Aware
Whether you run an eCommerce store or a brick-and-mortar venture (or both), the first course of action is to make sure that people know that you actually accept bitcoin. Therefore, you should display the bitcoin logo clearly on your landing pages (with a supporting statement such as "we accept bitcoin"), or put a sign on the wall (or at the till) in your physical locations.
Don't leave it at that, either. You don't want customers to make this discovery when they are already leads; ideally, you want to use it as a hook to attract new customers in the first place. Therefore, you should incorporate it into your marketing campaigns, and ensure that you regularly make a point of it on your social media accounts. As mentioned, bitcoin users are loyal, and if they see that you offer this capability, they will give you preference.
2. Create a Wallet
In order to accept payments, you will need to create a bitcoin wallet that your customers can pay into. This is a simple process; all you need to do is register with a bitcoin exchange (there are numerous online guides to point you in the direction of a good one), which will then issue you with a string of text and numbers. This jumble of numbers and letters is your bitcoin wallet. You will also be given your private key (this is for encryption and serves a similar purpose to a PIN).
Note that if you want to withdraw bitcoins from your wallet and exchange them into your chosen cash currency, you will need to link the wallet to a bank account.
3. Set Up a Payment Method
For In-Store Payments:
When your customers pay, they are simply transferring the relevant sum from their bitcoin wallet to yours. How does this work in practice, though?
For convenience, it can be done in several ways, including:
- Through a specially designed mobile app: This works by scanning the Quick Response (QR) code given to you when you register your wallet. All you have to do is provide the actual QR code, either as a printed image or on a terminal, and the customer's chosen payment app will scan it and do the rest.
- Through a POS hardware terminal: Some existing payment devices can be modified to accept bitcoin payments, or you can purchase a bitcoin specific device. Either way, they work in much the same way as a traditional payment device.
- Using your wallet address: You can give the customer your wallet string, and they can send the payment manually. This isn't the most convenient option, however.
For Online Payments:
For payments made online through your eCommerce store, you can still use QR codes or provide your wallet string. However, it is much easier – and, indeed, preferable for most users – to utilise a 'Pay With Bitcoin' button on your checkout page.
This will require the embedding of HTML code into your site, so you may need a programmer if you are not too tech-savvy. However, in recent years, several providers have begun to address this, generating a piece of HTML code based on your preferences that you can then copy and paste into your website's source code.
4. Consider Taxation and Compliance
As you can see, the technical process of accepting bitcoin is very straightforward. What isn't so clear, however, is what comes after.
If your eCommerce store has customers from all over the world, then you need to be aware of which countries permit its use before accepting transactions. This, in itself, is a massive grey area, so you may need to consult with a legal adviser before accepting online bitcoin payments.
You may need to consult with a tax expert, too, to fully understand the implications of bitcoin payments for your tax returns. In the US, for instance, bitcoin is classed as property rather than currency, which can make life difficult for many business owners. In such cases, you would need to transfer your bitcoins into cash currencies immediately. As mentioned, however, the regulation surrounding bitcoin is still vague (or, indeed, non-existent) in many locations, meaning that you will need to pay close attention to developments where your business is based before taking the plunge.
This last point highlights the fundamental truth that, in business, everything requires a cost-benefit analysis. However, proponents would argue that the benefits of incorporating bitcoin into your payment structure far outweigh any potential negatives.
That said, you still need to conduct thorough research into the legal details around digital currencies in your jurisdiction, and have a plan in place to deal with them once the payments have been made. The rest, as this article has proven, is simple.
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Additional content provided by Sion Phillpott.