How to Accept Crypto & Bitcoin Payments as a Small Business
Meaghan has provided content and guidance for indie retailers as the editor for a number of retail publications and a speaker at trade shows. She is Fit Small Business’s authority on retail and ecommerce.
This article is part of a larger series on Payments.
Forward-thinking small businesses that want to set themselves up for sustainable success may consider accepting bitcoin and other cryptocurrency payments. As many as two-thirds of cryptocurrency owners and more than half of nonowners feel that too few businesses accept crypto payments, and 47% of owners seek out those that do.
In addition to appealing to crypto owners, crypto payments have lower transaction fees than credit cards (1% vs 3%). And since cryptocurrency is unregulated, it appeals to cannabis and other high-risk businesses that banks and traditional merchant accounts decline to work with.
Step 1: Understand Cryptocurrency Payments
Cryptocurrency is a decentralized digital currency built on, secured with, and encrypted by blockchain technology. Unlike traditional physical currencies like the US dollar, cryptocurrency is not regulated by a government or other entity. It exists only online.
Although cryptocurrency owners can trade it for goods and services, crypto is often treated as an investment—something to be bought and held while it builds value and sold for capital gains when its value is high.
Because crypto payments are decentralized and unregulated, they function as peer-to-peer (P2P) payments and are transferred from one digital wallet to another. By comparison, traditional debit and credit card payments are processed through your customer’s bank, the card networks, and your bank.
Step 2: Set Up a Crypto Wallet or Crypto Gateway
You first need to decide whether you want to receive your crypto payments as a cryptocurrency or as fiat money.
Fiat money: Government-issued currency, such as the US dollar, that is not made with or backed by a specific commodity, such as gold.
If you want to collect, store, and use cryptocurrency for your business or personally, you need a crypto wallet. If you want to accept crypto payments but have them converted to traditional fiat money, you will need a crypto payment gateway. Many popular solutions, like Coinbase and BitPay, have both wallet and gateway functionality.
Crypto payment gateways function similarly to crypto wallets, but with added functionality. They typically come with a hosted or noncustodial wallet, which stores funds from customer purchases made with crypto until you choose to convert those funds into fiat money like US dollars and transfer them to your bank account.
Gateways are convenient if you don’t want to invest a lot of time or energy delving into the world of cryptocurrency. They also mitigate risk, as you are paid the market rate at the time of the transaction. If the value of the cryptocurrency decreases while the transaction is being verified, you won’t lose out.
On the flip side, using a payment gateway in your cryptocurrency transaction introduces a third party, which by nature crypto is meant to avoid. Adding in a third party also comes with additional fees. Transaction fees and markups will typically be higher if you use a gateway versus a crypto wallet. While standard crypto transaction fees are around 1%, some gateways charge as high as 5% for currency conversion.
An example of how brick-and-mortar businesses can accept crypto payments in-person using the BitPay Checkout app. (Source: BitPay)
Some of the most popular crypto payment gateways include:
- Coinbase Commerce: Connects with Coinbase wallet and works with popular ecommerce platforms such as Shopify and WooCommerce
- BitPay: Accepts 13 crypto currencies on your website, through invoices or email, and in-person through the BitPay Checkout app
- Coinspaid: Gateway that accepts over 30 cryptocurrencies and can deposit funds as US dollars, euros, and British pounds right into your bank account
Did you know?
Nine of 10 American adults have heard about digital currency, but only 16% have invested in it. Perhaps more meaningful to small businesses considering how to accept crypto as a business is the fact that 57% of crypto owners have paid for at least one purchase with the digital currency in the past year, and nearly 60% of those who haven’t owned it are interested in learning how to use it to pay for purchases in the future. The interest is there—and it’s growing.
Step 3: Integrate Crypto Payments Into Your Online Checkout
Now that you have your crypto wallet and/or gateway set up, it’s time to put crypto on your website and enable it as a payment option in the checkout process. There are two main approaches to doing this:
- Open source API: If you use a crypto platform that offers an open source API, like you’ll often find with self-hosted wallets, you can integrate this with your website using custom HTML code. The upside here is that you have more control over the look, feel, and functionality, though it requires technical resources that not every small business has access to.
- Plugin/app: Depending on your ecommerce platform, there may be an integration available. Crypto integrations make it easy to get set up because they take care of all the technicality for you. It’s simply a matter of downloading the plugin or app and installing it on your website.
Overstock uses BitPay to accept Bitcoin as a payment method on its online checkout.
You can also add checkout buttons directly to your product pages.
Coinbase Commerce allows you to accept crypto payments from multiple wallets.
Some popular crypto payments platforms with API and plugin integration options include:
- Coinbase Commerce: Accept seven different cryptocurrencies, send invoices, and use transaction reporting tools for accounting and reconciliation. Coinbase offers both hosted and self-custody payments and charges a 1% transaction fee for each.
- BitPay: BitPay’s checkout integration isn’t as seamless as that of Coinbase Commerce—instead, it displays a QR code at checkout for customers to scan and head over to an online invoice which they then need to pay. It functions the same way for in-store payments, except the QR code is on the cashier’s mobile device. Like Coinbase, BitPay also charges a 1% transaction fee, but it only works with Bitcoin.
- CoinPayments: CoinPayments has a particularly attractive processing fee of just 0.5% per crypto transaction (1% for token payments). It’s compatible with a wide variety of currencies. You can integrate it into the checkout process, add payment and buy now buttons to any page on your website, send invoices, and use the open API to customize the experience. CoinPayments also has point-of-sale (POS) integrations.
- OpenNode: OpenNode has a hosted crypto checkout via open API, as well as ecommerce platform-specific apps and integrations. You can put OpenNode into the checkout experience, add buy now buttons, and send invoices to your customers. This may not be the best option because, like BitPay, it’s limited to Bitcoin only.
Step 4: Offer In-person Crypto Payments
In-store shoppers can reap the benefits of being able to pay in cryptocurrency as well—if you let them. There are many options to use some of the above platforms to handle in-person crypto payment. Consider adding a crypto-compatible QR code scanner or NFC terminal for in-store checkout. If you use a mobile POS, you may also be able to integrate crypto payments with your existing system—if it supports it.
Though crypto is still relatively new, it’s on the payments industry’s radar. Square, for example, took out a patent for crypto payments technology in 2020, and PayPal has entered the game, allowing people to buy, sell, and hold crypto via their platform and then convert it to USD to pay for purchases. NOWPayments POS supports bitcoin payments, and Coingate is launching a POS app that supports more than 70 cryptocurrencies.
Costs of Accepting Crypto Payments
The standard payment processing transaction fee for crypto payments is about 1%, making it much more affordable than the average credit card processing fee (3%) and even some ACH direct deposit fees (1%–1.5%). Some providers offer even lower transaction fees (CoinPayments is just 0.5%), while others add a network fee on top of the 1%. Potential additional fees include currency conversion fees and withdrawal fees. Accepting crypto payments is certainly a lot more affordable than accepting credit cards.
Pros & Cons of Accepting Bitcoin & Other Crypto Payments
You could argue that accepting cryptocurrency can boost average transaction value and encourage shoppers to make larger purchases and spend more money, though the data varies depending on the consumer’s age. Approximately half of cryptocurrency owners make purchases worth less than $100, though millennials and baby boomers are more likely to use the digital currency for high-value transactions than Gen Z consumers.
In fact, 47% of Gen Z crypto consumers pay for transactions over $100, whereas millennials and baby boomers ring in at 50% or slightly above.
That being said, there are a number of benefits and challenges that are more straightforward when it comes to accepting crypto payments in your small retail business.
| PROS | CONS |
|---|---|
| Capture more sales by accommodating more payment types | May be subject to capital gains tax |
| Fast and easy online transactions, which can help boost conversion rates and lower cart abandonment rates | Limited regulation |
| Low payment processing fees; competitive with other payment types | Volatile and unpredictable valuation and exchange rate |
| No risk of chargebacks | Susceptible to cybersecurity threats |
| Allows for simplified international selling and currency conversion | Requires additional tech stack and setup |
Bottom Line
While cryptocurrency is still largely viewed as a futuristic trend that’s not here to stay, others are going all-in on the new digital currency. Regardless of which camp you’re in, accepting crypto as payment as a small business can help boost conversion rates and keep your business ahead of the competition. As time goes by, cryptocurrency is becoming more widely accessible, and early adopters are in a unique position to reap the benefits early on.
You May Also Like …
- Learn more about traditional merchant accounts
- Read about other recent payment technologies like QR codes and NFC payments
