Running a successful business requires keeping up to date with the latest payment solutions that can help bring costs down. One such method is the much-talked-about cryptocurrency. Merchants encounter various fees when accepting credit card payments. These fees can add up to a considerable amount in the long run.
Cryptocurrencies are cheaper in this regard. These digital currencies do not have bank or government backing. However, they use cryptography to provide anonymous and safe payments. Additionally, having cryptocurrency processing options gives customers more online payment solutions.
How To Accept Cryptocurrency Payments
Merchants can accept cryptocurrencies in two ways. Directly and using third-party payment processors. Each method has advantages and disadvantages that the merchant should consider when choosing cryptocurrency processing options.
Third-Party Payment Processors
The easiest method of accepting cryptocurrency payments is through third-party payment processors. Though this service has a few, it is usually less than 1%, and it solves most of the issues one would expect from the direct payment method.
Integrating a merchant’s eCommerce site with a crypto payments processor is easy. They can evaluate the existing options within the eCommerce site. These sites also provide an integration option for crypto. There are documents that merchants can read on the site to find out how to do this.
It is essential for merchants to carefully evaluate all the provided options, which ensures they can get a better deal, especially if it is a high-risk merchant account.
What Makes a Good Crypto Payment Processor
Merchants should ensure that they choose the best payment processor if they select this method. There are various factors they can consider when shopping for one.
First, the cryptocurrency processing service security. An ideal provider should be hacker-proof. They should have strict security measures that protect the merchant’s and customer’s private information.
Additionally, the merchant should look at fees, especially for a high-risk merchant account. Sometimes the cryptocurrency processing fees can be higher than card transactions. The provider can also have charges depending on volumes and other added services.
Customer support is crucial for any online payment processing requirement, as things sometimes go differently than planned. Merchants can read other users’ reviews to assess the provider’s credibility. Notably, it may take time for various payment processors to respond when an issue occurs. It is also crucial to look at the frequency of payouts. These occur when the payment processor sends money to your account after it’s processed.
Other vital factors to consider include volatility insulation as cryptocurrencies are highly volatile, currencies supported, easy user interface, and ease of accepting international payments.
The merchant can also choose to accept cryptocurrencies directly. It is made possible because cryptocurrencies do not have centralized control. The merchant needs to generate a QR code linking to their address or the alphanumeric string identifying the account for this option.
Once the merchant sends the QR code, the customer scans it and enters their private key. After this step, the transaction appears on the public ledger (blockchain), where the computers validate the transaction and confirm ownership of the currency.
It takes about 10 minutes to do this, and there are no fees. However, the eCommerce merchant has to do a lot of administrative work.
The administrative work after a transaction entails; recording it where they can use Quickbooks or Freshbooks or enter them manually. There is also the step of converting cryptocurrency to cash. However, they can hold on to it and watch the performance of the market.
Direct cryptocurrency processing has a few disadvantages. If a merchant misses the window with favorable rates, they can lose money when withdrawing. The merchant must also pay tax on the gains with a fair exchange rate.
Benefits of Accepting Cryptocurrency
There are various benefits of accepting cryptocurrency. First, merchants can enjoy low fees. Often, these fees range between 1% and, when using direct payments, it can be zero.
Merchants’ credit cards, wallets, and other cards average between 1.5% to 3.5%, with higher fees for online payment processing services. Secondly, introducing a cryptocurrency processing option increases the customer base. The transactions are also faster and more secure, and there are no chargebacks if it’s a high-risk merchant account.
Disadvantages of Accepting Cryptocurrency
The main disadvantage of accepting Bitcoin is the highly volatile market. If a merchant is risk-averse, they can avoid this payment option. Additionally, cryptocurrencies are very new in the market.
Cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, and others have proven to the market that they are here to stay. Many people worldwide have now accepted this mode of payment. For this reason, various crypto-payment processors allow merchants to accept this currency as payment. Using the processors also protects merchants from market volatility.
Apart from using processors, merchants can also choose to accept crypto directly. However, this mode entails having to do a lot of administrative work. Whichever option the merchant selects, they should research it to ensure it does not harm the business’ bottom line.