Things to Know Before Taking Bitcoin Payments
A 2020 HSB survey revealed that 36% of small-medium businesses in the United States accepted Bitcoin payments. Other reports indicate almost a quarter of small businesses in nine countries around the globe plan to accept crypto payments in 2022. That shows Bitcoin payments are on the rise, with small-medium companies leading the way. Many experts believe Bitcoin will soon become a mainstream currency due to its prompt, secure, and low-cost transactions.
Although Bitcoin payments offer unique benefits to businesses, crypto is a new frontier with unusual turns and twists. Thus, you should know a few things before accepting Bitcoin payments. Here are the things to keep in mind when planning to adopt Bitcoin in your business.
Bitcoin Wallet
You require a Bitcoin wallet to receive, send and store Bitcoin. Several online platforms offer different offline and online crypto wallets from which to choose. Some are free, but others cost a small amount of money. An online wallet would be the most convenient for daily transactions but it could also be vulnerable to cyber threats. Offline wallets are the most secure since they don't link to the internet. Nevertheless, choose a reliable Bitcoin wallet with enhanced security and accessibility features.
Payment Processing
Before accepting Bitcoin, the first thing you should consider is whether you will process the payments independently or through a third-party provider. Bitcoin allows you to use any of the two options. Processing payments through your wallet is the most cost-effective option, enabling you to receive funds free of charge. You could even send Bitcoin at no cost.
However, building a crypto payment processing system could be time and cost-intensive. Thus, you may want to consider using a third party. Processing Bitcoin payments through a third party such as bitcoin circuit is more efficient but will attract minimal charges. Nevertheless, the transaction costs are relatively lower than using credit cards or debit cards.
Tax and Accounting Implications
Today, many governments consider Bitcoin investments as property, subject to tax like other ordinary assets. Therefore, talk to your accountant or crypto expert to understand the tax implications, especially if you plan to hold onto the payments received. Besides, think about how to integrate Bitcoin payments into your point-of-sale and accounting systems.
Currency Conversion
Bitcoin is a highly volatile currency with huge and rapid price swings that could impact your business in various ways. A sudden drop in Bitcoin price could mean lower value for your funds, while higher prices add more excellent value. Therefore, consider whether you will hold on to the received Bitcoin payments or convert them to cash immediately. Those are important questions to consider if your business relies on consistent cash flow to keep things going.
While some of your suppliers and distributors may accept Bitcoin payments, others may not. That means you may need to convert some of your Bitcoin funds into local currencies to pay for supplies and distribution. However, study the markets and Bitcoin price movements to know the best times to sell your Bitcoin for fiat currencies without being exposed to volatility risks.
Setting Prices
Accepting Bitcoin payments means you will have to also set prices worth the particular goods and services offered in your store. However, this can be challenging due to Bitcoin's constant price fluctuations. You should constantly check the rates on multiple crypto exchanges to set the correct prices in Bitcoin that complement the actual value of your products. You will need to adjust the costs based on the crypto market conditions and Bitcoin's value.
Overall, Bitcoin payments have unique pros and cons. However, the above article has discussed the most important things to consider before accepting Bitcoin payments.