Is cryptocurrency a scam?
No, cryptocurrency itself is not a scam but anything linked directly to money or finance does attract scammers and fraudsters. It’s our lack of knowledge surrounding it that makes it a little dangerous until we educate ourselves. It’s worth brushing up on how cryptocurrencies work, even if you don’t yet plan to use them personally or accept them through your store. There are plenty of good resources out there for different levels of technical ability. It’s quite a vast landscape and rapidly evolving.
Is it easy to accept cryptocurrency through an online store?
Yes, services like Coinbase Commerce and Coinpayments.net have made it really simple to integrate Crypto Payments into your online store. There are a few really good solutions out there that integrate straight into popular platforms like WooCommerce, Shopify, and even Magento in some cases. In really simple terms you will need a digital wallet, usually referred to as a crypto wallet. This is where you can buy, store and exchange the cryptocurrencies you hold. Then to accept payments you will need a payment gateway that supports the use of cryptocurrency, that is where these providers come in.
For simplicity here, I am going to talk about Coinbase Commerce. This is mainly because it is a well-established and relatively simple way to get started taking Crypto payments. The fees for Coinnbase Commerce are not the cheapest and it doesn’t have the most payment options but it is a good option for those starting out. The interface is nice and simple and they offer a lot of resources and advice on how to start using cryptocurrencies.
Coinbase Commerce supports both WooCommerce and Shopify with direct integrations. It’s as simple as creating an account, creating an API key, and linking it to your e-commerce store under the alternate payment gateways area. Be sure to follow the security steps by saving your key phrase somewhere safely and using a secure password. You will be storing money here, so be sure to use secure passwords.
I am not going to go into depth here doing a tutorial on how to integrate it because Coinbase Commerce may not be the right fit for your store. The setup for Coinbase Commerce is also different from other providers and the documentation around them is changing all the time. At the time of setting up your crypto payment gateway, always use the official documentation on their website.
Which crypto payment gateway is right for my store?
There is obviously not a simple answer to this as all online stores are different in so many ways. But the first thing to consider is which ones have a direct integration into the selling platform you are using. This will give you a relatively hassle-free setup and provide a smooth payment experience for the customer and give you the post-payment tools you need as the store owner.
The next thing to think about is what cryptocurrencies you want to accept, all providers support different types, so be sure the one you choose offers the ones you need. Some will also offer integrations into 3rd party wallets if this is something you need. Just be sure to do your research here and find what is right for your business, you can always change this later down the line, you should still be able to use the wallet you set up initially. You can even combine multiple gateways, although this is a little messy for the customer.
Can I convert the crypto into cash or other coins?
Yes, if you use Coinbase Commerce then you can connect it to a Coinbase account to transfer and exchange the currencies from there.
You can sign up for a Coinbase account here. Coinbase has to abide by the same regulations as other financial institutions and this means you will need to provide proof of ID and residence, this is usually in the form of a passport or driving license.
Should I use a VPN when dealing with crypto?
Crypto payments are different from regular transactions in that our personal details are not supplied. Although an IP footprint can be left in public ledgers. Using a VPN can disguise this by spoofing the IP address you are using. VPNs often spoof visits from different countries and this can be problematic when signing up for crypto services. This is because they need to verify your location for tax purposes and this can cause issues. But this is only in the initial setup process.
Is there a minimum amount of Crypto you can withdraw?
The minimum amount is a nominal amount, so you do not have to worry and there is also no maximum limit on what you can withdraw. So you can rest easy that when you want to convert your Crypto into cash you can do so in whatever way suits you or your business.
What are the charges to accept crypto?
Coinbase commerce charges a 1% transaction fee and then it is free to transfer the crypto across to your Coinbase wallet account. Coinbase charges small fees to exchange crypto for cash. This is about £2 to every £50 but this is at the discretion of Coinbase. So all in all the charges are slightly less than you would pay through most other traditional payment providers.
Can you refund customers who pay with cryptocurrency?
Yes, Coinbase Commerce supports refunds. You can open up an order and there is an option to process the refund. Customers who pay with crypto are not able to do chargebacks on their end.
Refunds are charged at around 1% per transaction and will go back to the customer in the Cryptocurrency they paid with initially.
How stable is cryptocurrency?
Cryptocurrency is incredibly volatile, one minute it can be up and the next minute is down. I only have a small but diverse crypto wallet with Coinbase but it has been as much as 35% down at times. On the other side of it, holding firm with your crypto payments can lead to them gaining momentum and being worth more money.
One of the main factors that make us wary of cryptocurrencies is the unpredictability of it all. One news announcement can change its value significantly. I think if you decide to accept crypto payments then you need to accept the risk that comes with it. A phrase you see a lot in relation to cryptocurrencies is ‘HODL’, meaning hold on for dear life. Some cryptocurrencies are more akin to stocks in that you ride out the lows holding your assets to then sell at the highs. It gives you less liquidity in your business’s cash flow but by holding you could see significant returns that hugely surpass traditional interest rates.
You can see in the graph below in the last year the value of Bitcoin went up to all-time highs around £51k and down to lows of around £20k, so that is a £30k (around 40 thousand US Dollars) difference in price all within just 12 months. There are cryptocurrencies in the market called stablecoins and they can be a much better choice for the risk-averse. They offer a happy medium by allowing customers to still use their crypto wallets to pay while reducing the risk of price fluctuation on the merchant’s side.
What are stablecoins?
Stablecoins are coins that are tied to an underlying currency like the US Dollar, so they tend not to fluctuate much in value. Tether (USDT) and USD Coin (USDC) are good examples of this, you can see in the graph below how much more stable their value is in comparison to something like Bitcoin. You can see in the graph below, using Tether as an example, it only shifted in value around 5 pence (a few cents) in the last year. Some store owners may choose to only accept stablecoins if they are risk-averse.
What crypto payments should I accept online?
Personally, I accept Bitcoin and Ethereum as crypto payments, as both are well established. This does still come with risks but the amount of people that pay me in crypto is relatively low, so I am happy to hold on to those payments long-term if needed. If it shifted to a higher percentage then I would likely rethink it and consider stablecoins as an option. You can accept more types of cryptocurrencies even including Dogecoin if you want. Using the example of Coinbase Commerce, at the time of writing this post they accept Bitcoin, Bitcoin Cash, DAI, Ethereum, Litecoin, Dogecoin, and USD Coin. Just be sure to research them and make sure you are happy to accept them, you can pick and choose which you wish to accept on your store.
You aren’t technically turning people away by accepting fewer currencies because it is easy for customers to trade coins for the ones you accept and this tends to have no charge for smaller amounts.
How long do crypto payments take to process?
This is what makes crypto a little different to a bank transaction. In the case of a bank transaction, you authorise a payment, the bank authorises it and it goes through. With crypto, depending on the currency you use, you will have to wait for the transaction to be verified by other users on the blockchain. This can take longer than a traditional bank transaction but the payment will go through as pending until it is authorised. Once it is authorised Coinbase Commerce will make a call to the Shopify or WooCommerce store and it will change the payment status to ‘paid’.
Do you pay tax on crypto payments?
Yes, crypto is taxed in the same way as any other currency, you will be taxed on the amount you receive and will be subject to capital gains tax on any crypto you dispose of. You can also report losses of crypto. Your accountant will be able to advise you on how to do this.
What are the advantages of accepting cryptocurrencies in my store?
Cryptocurrency in e-commerce is an odd one because if you physically ship items to customers then the anonymity of it becomes nullified. This can put people off but crypto is about more than that, it makes payment amounts unified and removes the need for buyers to convert funds for payment. For store owners that predominantly or exclusively sell digital products, it can be a no-brainer.
At the end of the day, you are just opening up your store’s payment gateways to the widest possible audience, much the same as accepting Apple Pay or PayPal payments. But crypto payments do transfer some additional processes to the seller side, such as withdrawal fees and a different refund process for that customer set.
What are the disadvantages of accepting cryptocurrencies in my store?
There can be higher risk profiles associated with crypto payments and you need to make sure that it is right for your store. If you predominantly sell high-value items to customers within a small nearby location, then it is probably not the right fit. Then on top of that, for some cryptocurrencies, there are fluctuations in the value we previously discussed. So make sure if you decide to accept a currency like that, you can either afford the loss or afford to have the funds tied up for a while.
Aside from that, it is just a case of educating yourself and knowing what is out there, and getting a core understanding of how it works. You will need to invest some time in researching it as a whole and into specific currencies. You will also need to open a digital wallet, so you have a place to accept payments, this will then need to be connected to one of the crypto payment providers as mentioned before. But this is quite a simple process and shouldn’t put you off considering it as an option.
So should I accept cryptocurrency through my online store?
It’s obviously completely up to you whether you want to accept crypto payments. Do I think it will deter a large number of customers by not having it? Right now, probably not. Do I think its popularity is on the rise? Absolutely, I think having it in place just ensures that you are catering to all users. But before taking the leap into accepting crypto payments just be sure to do your research and make sure you are happy with fees, currencies, and risks before taking the plunge.
If you struggling to get your store set up and need some help along the way, feel free to get in contact using the form below.
Please note: This article does contain Coinbase referral links, I am not associated with them in any way. You will not pay any extra by clicking on the links in this article, instead, you receive an offer. If you do decide to use the link, you will receive £7.50 ($10.00) in Bitcoin when you deposit £75 ($100) into your account and I get the same, a good deal for everyone.