Should you Accept Bitcoin on your Website?
In this article we will discuss some of the advantages of accepting Bitcoin as payment for Products or Services on your Website, as well as some of the common fears and misconceptions that some may have about accepting Cryptocurrencies.
Below is a summary of what we will discuss.
The Benefits of accepting Bitcoin.
- No Chargeback Risk.
- Fast Transaction Times.
- Little to no Transaction Fees.
- Reduced Risk of Fraud to the Seller.
- No Middleman in Control of your funds.
- Accepting Bitcoin can bring you new customers.
Possible Disadvantages of accepting Bitcoin.
- High Market Volatility.
- How Cryptocurrency sales are Taxed.
- Coding Crypto into your store can be difficult.
How to Accept Cryptocurrency on your Website.
- What Payment Gateway Options are there?
- What is CryptocurrencyCheckout.com?
- What Websites do you integrate with?
- Can I accept Donations on your platform?
- What Cryptocurrencies can I accept?
- Do you charge fees?
The Benefits of Accepting Cryptocurrencies:
No Risk of Chargebacks for your business:
One of the hardest hitting financial challenges for E-Commerce Businesses, or any Business that Sells Products or Services online is Credit/Debit Card Chargebacks.
The estimated industry standard for transactions that a business will receive a chargeback for is around 1%. This statistic can be significantly higher for businesses that sell Digital Goods. Worst of all it is estimated that around 80% of chargebacks are “friendly fraud”, where a legitimate customer forgets they bought something, doesn’t recognize a transaction, or decides they don’t want to pay for something.
Unfortunately Credit Card Companies like Visa, Mastercard, Discover Card, or American Express all live in the Stone Age when it comes to Chargebacks, and this is especially true for companies that sell Digital Goods online like: E-Books, Gift Cards, Mobile Refills, Subscriptions or Services.
Quite simply if you cannot provide a Courier Tracking Number or Courier Signature Confirmation proof for higher value items, you will lose a Chargeback case 99% of the time. And unfortunately this means you’re out the cost of the item, you’re out the refunded amount, and a chargeback fee that can average $25-30 per chargeback case.
An example of this outrageous snowball effect is if you were to sell a $40.00 item for $50.00, losing a chargeback case could cost you the $40.00 item that the customer claims they didn’t buy or never received, the $50.00 amount you must refund to said buyer, and a $30 Chargeback fee you must pay to the bank to process the case. Costing your business a whopping $120.00! for an item you would’ve only made a $10 profit on.
This is where accepting Cryptocurrency like Bitcoin can be extremely beneficial to your business. Quite simply, Cryptocurrencies like Bitcoin cannot be charged back, the only way a fraudulent purchase can cost your company money is if you personally choose to send the funds back to the customer.
This allows your customer service to work with your customer on what the best resolution is for your business and your customer instead of your customer going behind your back and filing a chargeback with their credit card company because they changed their mind about the item and don’t want to go through the hassle of sending it back.
Transaction Times for Cryptocurrencies.
One of the biggest Benefits of accepting Cryptocurrencies like Bitcoin is that once a payment is passed by your customer to the Blockchain the currency will be in your wallet within minutes. For Bitcoin you will generally receive your first confirmation within 10-12 minutes.
Once you have 2-3 Confirmations on the Blockchain it is generally considered safe to process the order to the buyer. Or you can wait until the funds are spendable in your wallet which will typically take 30 minutes to an hour depending on what wallet you are using.
Cryptocurrencies have little to no Transaction Fees.
Cryptocurrency like Bitcoin on average have very low Blockchain transaction fees, these are the fees that are paid to the miners for processing all of the transactions on the Blockchain. As of November 2018 the average transaction fee is around $0.20 USD, also note that these fees are also almost always paid for by the sender, not the receiver. Meaning that these fees should be of little or no cost to your business.
Take note that as the Blockchain gets more congested these fees can increase significantly, but this can be easily negated by simply using a lower fee coin to make your payments or transfers, such as Litecoin or Ethereum.
This is why it is beneficial to accept multiple Cryptocurrencies, it will allow your customers to use what has the most reasonable fees at the time.
Reduced Risk of Fraud to the Seller.
Although you hear a lot about scams in Cryptocurrencies in the news. Cryptocurrencies like Bitcoin are actually extremely secure, and it’s almost impossible to be scammed as long as you check and cross reference all of your transactions before you ever send a product. If somebody says they sent you a payment but you do not see it in your wallet, you can simply verify if the transaction really happened on the public ledger by simply checking any Bitcoin Block Explorer, all records of every transaction is available to the public for everyone to see, and it’s nearly impossible to fake or hide a transaction on the blockchain. It is also impossible to send Bitcoins you are not directly in control of. Since there is no black market of people selling other people’s Bitcoin Wallet Private Keys like there is a Black Market for Credit Card numbers or Identities.
As well as like we discussed earlier with there being zero chargeback risk, it’s pretty safe to say if the transaction checks out and the customer fully intended to pay for the item then you are safe to process the order without any financial risk to your business.
No Middleman in Control of your funds.
Since Cryptocurrencies like Bitcoin are fully Decentralized, this means that any funds you receive are yours to do with as you please. There is no third party/counterparty risk from banks or governments in control of your funds saying what you should or should not receive, and as long as you securely protect and backup your wallets, there is little to no risk for you.
Customers have Bitcoin, and they’d like to spend it.
It is estimated that there is currently over 22 Million Bitcoin Wallets, and over 5 Million people with Bitcoin. A large majority of those are trying to find ways to spend their cryptocurrencies directly, instead of cashing it out to fiat currency like USD, GBP, or Euros.
But not many stores have started accepting Cryptocurrencies yet, this means there is a very large Customer base looking to spend, and very few stores with items to spend it on. Also many customers looking to buy with Cryptocurrencies are also willing to pay full price, rather than shopping for the best deal, this means that stores accepting Cryptocurrencies can sell at a premium and still bring in new customers, instead of having to advertise the lowest prices around to gain any interest in their products.
Not only will accepting Bitcoin introduce you to an untapped niche market willing to pay more, but it also offers great advertising potential as people will be much more likely to look around your store for things they might not otherwise buy, simply because you accept Bitcoin.
Possible Disadvantages to think about before accepting Bitcoin.
High Market Volatility, will I lose money?
Although it is true that Bitcoin is a very Volatile Market, and the price is constantly going up and down. There is just as much potential to increase your profits if the market goes up, as there is to lose money if it goes down.
But there is ways around Market Volatility, quite simply if you do not want the risk of the Bitcoin you received losing some of its value, you can quickly and easily sell it to Fiat currency such as USD, Euro or GBP on many Cryptocurrency Exchanges like Coinbase, Kraken, or Bitfinex for fees that are typically well under half a percent or even no fees at all.
Or if you prefer to stay in Cryptocurrency you can trade your newly received Bitcoin for a US Dollar backed Stable Coin like Tether USDT or Coinbase’s new Stable Coin USDC. Of course there is slightly more counterparty risk to stable coins then to actual fiat currencies, but it’s an option to consider.
Another possible option which may be confusing to understand at first but can be an extremely fast way to ensure you don’t lose any value on your newly received Bitcoin is what is known in investment trading as “short hedging”. This is where you “short” equally against the bitcoin you received, which any Bitcoin you hold is considered a “long”.
A “long” is where you are holding Bitcoin and betting the price goes up, and a “short” is where you are betting the price goes down. By “Short hedging” and betting equally that Bitcoins price will go up and equally betting that Bitcoins will go down at the same time, it will make for a break even when you close the positions or sell.
The benefits of this being that you can quickly “hedge” your newly acquired bitcoin with a few clicks in a matter of seconds, instead of having to wait half an hour or so to transfer your coins to an exchange and sell.
In this article we won’t go too far into “Short Hedging” as it can be quite complicated to grasp at first, but we hope that with a few google or youtube searches and further research this option will make much more sense to you.
How are Cryptocurrencies Taxed.
Please be aware that taxes for cryptocurrency can change from country to country, this is not tax advice and for specifics on the matter you should consult a tax professional or your accountant in your area.
With the lack of information and ever evolving laws regarding Cryptocurrencies and Taxes, it can be quite confusing to keep up with it all. Through our research of US Tax Laws we have found to the best of our understanding that if you purchase Cryptocurrencies like Bitcoin they are classified as an asset. Therefore any Short Term or Long Term Capital Gains or Losses are calculated at the time you sell the Cryptocurrency back to fiat currency such as USD, GBP, or Euros.
However, if you are a business, and you accept Cryptocurrencies as payment for goods or services, similar to being paid in foreign fiat currencies (like British Pound, Euro, Peso or any other currency not of your home Country.) the Crypto you receive is then considered Income or Cost of Goods Sold, and is taxable at the price and time you initially received it.
For instance if you sell an item for $100 worth of Bitcoin you must then count that as $100 worth of income on your taxes, what the price of Bitcoin does above and beyond that is considered against Long or Short Term Gains/Losses. An example of this would be you receive $100 worth of Bitcoin for an item, it then must be considered $100 worth of income on your taxes, if the price of Bitcoin goes up 10% and your $100 worth of bitcoin becomes $110 dollars, then you will be responsible for the taxes of $100 of income, and $10 of capital gains when you sell it. Or in the instance the price of bitcoin goes down 10% and your $100 becomes $90, you will be responsible for $100 of Income tax, and -$10 of Long/Short term Capital Losses when you sell it.
One suggestion to make accepting cryptocurrencies easier for taxes is to always list your items for sell in local currency values such as USD, Euro or British Pounds, and then during the checkout process have it converted to real time Cryptocurrrency market prices. For instance you list a shirt for $25 USD, your customer pays you $25 worth of bitcoin at the current market price which would be 0.00390820 Bitcoin (at the current market price of $6395 per Bitcoin). That way when it comes time to do your taxes you know that shirt sold for $25 dollars, you don’t have to keep track of the 0.00390820 Bitcoin on this date, and this time of day. The Cryptocurrency Checkout Platform makes it easy to have USD values converted to real time Bitcoin Prices during checkout. Our platform will also record what the price of bitcoin was at the time of payment as well for your records. Then all you need to do when you go to sell that 0.00390820 Bitcoin to USD in the future, is know that if you sell it for $30 dollars you made $5 on capital gains, or if you sell it for $20 dollars you lost $5 on capital losses.
Hopefully this helps you to better understand how to keep track of your sells and Cryptocurrency for Tax Season.
So how can I easily start Accepting Cryptocurrencies like Bitcoin on my Website?
What Options are there out there?
There are quite a few Crypto Payment Gateway platforms out there, like CoinPayments, CoinGate, Coinbase Commerce, BitPay, among others but most require lots of coding experience, put a middleman in charge of your coins, charge high per transaction fees, Setup fees, and/or even Monthly Subscription Fees to use their service.
What is different about CryptocurrencyCheckout?
Here at CryptocurrencyCheckout.com we have introduced a Payment Gateway that we feel not only is one of the easiest way to add Cryptocurrency Payment Methods to your Website with Custom Generated Code that you simply copy and paste into your website, but also easy to use guides to assist you in installation, your coins stay Decentralized, and we charge absolutely zero transaction fees to you or your customers, and our basic platform features are completely free for Stores and Customers to use.
We have simple to add website integrations for:
- Any Site with HTML Code.
- Bigcommerce Stores
- Magento Stores
- Shopify Stores
- More Coming Soon!
Can I accept Donations with your platform?
Yes, we have many integrations for Donations Available.
We have Donation links for:
- More Coming Soon!
What Cryptocurrencies can I accept?
- Bitcoin (BTC)
- Litecoin (LTC)
- Ethereum (ETH)
- Dash (DASH)
- SocialSend (SEND)
- More Coming Soon!
Do you Charge Fees?
We never charge Stores or Customers a fee to use our platform. The Basic Platform is Completely Free for you and your customers to use.
How does CryptocurrencyCheckout Make Money?
Our Platform is mostly donation based, and Altcoins/their community can pay to integrate their currency into our platform.
Our Final Thoughts.
We hope that we have helped answer some questions and eased your mind about Cryptocurrencies, or at the very least given you enough information for you to do some further research on rather accepting Cryptocurrencies is the right move for your business.
And if you have any further questions feel free to contact us at any time!