A Beginner’s Guide for Small and Large Businesses

It’s easy to set up a crypto wallet, but there are a few considerations that businesses owners should verify before going much further:

1. If you provide a professional service, such as a lawyer’s practice, check with your professional association for any specific rules, restrictions or recommendations.
2. If you have a corporate liability insurer or any other indemnity insurance, check with your insurance broker to ensure that you will continue to receive coverage.
3. Review your company’s terms and services so that clients are aware that cryptocurrency transactions cannot be reversed.

Pricing & Fees

Regardless of what kind of cryptocurrency your customer base uses, it would be wise to focus on the tokens with the highest market cap — Bitcoin, Bitcoin Cash, Litecoin or Ethereum — and whether you want to accept stablecoins like USDC — tokens pegged to real-world currency and assets.

Taking Transaction Fees into Account

Importantly, Bitcoin and Ethereum come with transaction fees that depend on network congestion. Even a simple peer-to-peer transaction could incur a significant cost on a customer making a small purchase with Ethereum or Bitcoin.

Importantly, your customers need to know those transaction fees are non-refundable, and that fees paid for failed transactions cannot be returned. Other cryptocurrencies and some stablecoins have less volatile transaction fees — Solana for instance touts fees less than a tenth of a cent.

Pricing Your Products and Services

Especially if you plan on going without a third-party payment processing service, figuring out pricing is paramount. The price of cryptocurrency and its exchange rate with CAD or USD is constantly in flux.

You would want to use CoinGecko or an exchange like Coinbase or Kraken to track the conversion rate between fiat and cryptocurrency.

For example:
If the cost of goods and services is $100, you’ll need to have an up-to-date and transparent reference to convert this amount of $USD (or any other fiat) into BTC or other crypto.
Mistakes and improper conversions could lead to a customer underpaying or overpaying (for which you might be legally liable).

Accepting Payments with Your Own Crypto Wallet

This is the fastest, easiest and cheapest method for accepting crypto.

Assuming you’re familiar with the way they work, it’d be easy to set up wallets specifically for your business.

People can pay by sending the correct amount of whichever crypto to your public address.

For in person transactions, this might mean that a customer scans the QR code of your wallet to send their payment directly.

Freelancers and Service Providers (or e-Commerce)

This is advantageous if you’re providing your client with invoices where you need to explicitly state the cost in crypto and highlight any terms, caveats or conditions.

It’s important to state the conversion rates.

For example, you might take the average price from the last 24 hours. Or you could say the USD equivalent of $XX and regardless of when it is paid the corresponding amount of BTC will be used.

You could sell a rare Rolex  for 0.5 BTC assuming that the price of BTC is $40K.

But if the price changes (and it will), the people involved may want to adjust this to reflect the change in price at a given time.

This is especially true if the client takes more than a few days to pay an invoice. The price of the crypto could change  dramatically. You should consider setting a 24 hour limit for accepting BTC or other crypto payments.

Otherwise you can direct your clients to pay using a stablecoin like $USDC.

If you’re running an e-commerce site, this becomes less of an issue because the exchange rate is tied directly to the transaction and time.

Retail and In-Store Purchases

It would be substantially more difficult to accept cryptocurrency — you would need to constantly track the exchange rate and also provide an easy way for customers to copy or scan your public address so that they can pay you. In the case of Ethereum and some other emerging cryptocurrencies, it is possible to associate your wallet with a domain name which could make it even easier to get paid.

Using Third-Party Payment Processing

Due to the potential for logistic headaches, it is far simpler and more productive for larger businesses to use third-party services.

Some freelancers and small businesses may opt for them as well. There are plenty of options for accepting payment, with easy-to-follow online instructions.

It isn’t much different than setting up Stripe as an online vendor.

Here are a few of the big ones:

Circle

A financial technology company that leverages its stablecoin, USDC, to accept payments globally.

• Recurrent Circle fees: $1000/mo
• Cryptocurrencies accepted: USDC
• Transaction Time: Instantaneous

BitPay

This is one of the first companies to process crypto payments and it remains a prominent player in the space.

BitPay accepts multiple types of cryptos and stablecoins.

• Bitpay fees: 1% of each transaction
• Cryptocurrencies accepted: Bitcoin, Bitcoin Cash, XRP, Doge, USDT, Gemini Dollar, Paxos Standard, Binance USD, Wrapped Bitcoin, DAI
• Transaction Time: Usually less than an hour

Coinbase Commerce

One of the largest cryptocurrency exchanges now offers services for small and large businesses. It features a 1% transaction fee, WooCommerce, and Shopify integrations.

• Coinbase fees: 1% of each transaction; contact sales for pricing if you’d like Coinbase to automatically convert the fiat price to cryptocurrency for your customer.
• Cryptocurrencies accepted: Bitcoin, Bitcoin Cash, DAI, Ethereum, Litecoin, Dogecoin, and USD Coin
• Transaction Time: Usually less than an hour

Flexa

This network allows for lightning-quick cryptocurrency transactions, by leveraging AMP staking. It integrates with Shopify and many other eCommerce/hardware/software solutions.

• Fees: Contact Flexa to get set up as an early adopter. It does not charge conversion fees.
• Cryptocurrencies accepted: Algo, BTC, Bitcoin Cash, Dash, DOGE, EOS, Ether, Litecoin, Lumen, Tez, Zcash Celo,  AMP, ATOM, Basic Attention Token, COMP,  Eco, LINK, LRC, Luna, OXT, ZRX, Celo Dollar, Dai, Gemini Dollar, USDC
• Transaction Time: Instantaneous

PayPal

One of the world’s first financial technology companies is expanding into the crypto space.

When clients scan a QR code or pays online, they have the choice of paying with crypto. However, this will be automatically converted to fiat for you.

In the future, businesses will surely be able to accept payments in crypto as well.

• PayPal fees: 1.90% – 2.90% + fixed-fee depending on total transaction value.
• Cryptocurrencies accepted: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash
• Transaction Time: Instantaneous

HODL the crypto payment, or convert to cash ASAP?

It’s your call.

With long-term storage, you’d be able to earn interest through crypto banks like Celsius or BlockFi. You can also use these crypto banks to borrow at very low rates (1%) and use your crypto holdings as collateral.

Storing your crypto will not protect you from market volatility, but it allows you to profit when the values increase – which they tend to do over time.

Alternatively, since the offerings from BlockFi and Celsius have come under regulatory scrutiny in some states, you may want to keep some of your crypto in cold storage (offline).

Using a Ledger or Trezor hardware wallet will keep your crypto HODLed safely and securely.

Taxation is covered in detail in another post (link needed).

Just understand that if you intend to convert your crypto back to cash later on, you’ll need to pay capital gains taxes if they’ve gone up in value. Also you will be required to pay income taxes from any money you’ve earned via sales or interest payments.

Takeaways

Any kind of business can start accepting crypto payments.

Whether that’s a wise decision depends on the business, the goods and services and their customers.

It’s wise to consult any industry-specific guidelines or regulations (if available):

• Professional regulatory body
• Liability or indemnity insurers
• Terms of services because transactions are irreversible

Decide whether you’ll use a “for business” crypto wallet or a 3rd-party processing company. Without a 3rd-party company, you’ll need to have a consistent and transparent method for converting fiat prices to cryptocurrency.

Your customers must understand that any transaction or fees cannot be refunded and transactions themselves cannot be reversed (if they send their BTC to the wrong address).

Of course, you can always refund a payment manually if you choose to.

More and more third-party companies integrate with Shopify or other e-commerce services to allow cryptocurrency payments. Flexa, BitPay, and Coinbase Commerce are recommended because of their features and the number of cryptocurrencies accepted.

Finally, you need to decide whether your business wants to HODL the crypto in a secure wallet, put it in a crypto bank to earn interest or convert it to fiat upon receipt.

With some foresight and planning, adding crypto to your payment methods could appeal to your customers and make it easier to get paid.