With the buzz around cryptocurrency, Web 3.0, NFT and the blockchain, you may have considered taking Bitcoin as payment for your eCommerce business. Even if you don’t, it pays to familiarize yourself with how crypto changed the eCommerce landscape.
While cryptocurrency prices have been relatively volatile, many companies support crypto payments. Major eCommerce service providers like WooCommerce, BigCommerce and Shopify accept crypto payments through digital wallets like BitPay and Coinbase Wallet.
In this article, we cover the advantages and disadvantages of implementing cryptocurrency payments in your eCommerce business. We also provide a guide to accepting cryptocurrency on your eCommerce website.
What is Cryptocurrency?
Cryptocurrency is a digital currency (i.e. lines of computer code) not issued by a bank or government, allowing users to spend money anonymously. Bitcoin is one of the most prominent cryptocurrencies, which can be traded on crypto exchanges like Coinbase. Some businesses also accept bitcoin and other cryptocurrencies as payment.
Bitcoins are stored in a digital wallet, available online through cryptocurrency exchanges or offline in a flash drive-like device. You use this wallet in crypto transactions by transferring funds from your digital wallet to the vendor.
Top 4 Cryptocurrencies to Know
According to the major cryptocurrency exchanges, these are the four most popular cryptocurrencies:
- Bitcoin: The most well-known modern cryptocurrency
- Ethereum: An energy-efficient alternative to Bitcoin and the second-most valuable cryptocurrency
- XRP (Ripple): Boasts lower transaction fees and often used for international fund transfers
- Bitcoin Cash: Offers an unlimited supply unlike Bitcoin, which makes it a better choice for transactions
Stores That Accept Bitcoin and Cryptocurrency
Bitcoin and cryptocurrency in general has been widely adopted these past few years. Here are some businesses that accept crypto:
Is Cryptocurrency a Viable Option for eCommerce Stores?
Many large eCommerce companies accept cryptocurrency as payment, but is it a good idea? Let’s discuss the advantages and disadvantages.
Why Should Your eCommerce Brand Adopt Crypto Payments?
Adopting crypto payments for your eCommerce brand helps you reach more clients and finish transactions faster. Here are four reasons to start taking cryptocurrency payments:
Reach a Broader Market
Taking digital currency payments means reaching a new market of tech-savvy clients. Moreover, accepting crypto means you don’t have to go through the hassle of converting currencies when doing business with international clients.
However, expanding your client base to other countries means you may need to make international deliveries, so make sure your shipping and last mile delivery solutions can handle them.
Process Transactions Faster
Credit cards and bank transfers take hours, sometimes even days to process. Cryptocurrency transactions only take minutes to arrive in your digital wallet, letting you access the money faster.
Get Lower Transaction Fees
Credit card companies and most payment processors can charge up to 5% in transaction fees. Crypto transaction fees tend to fluctuate, but they generally don’t go higher than 1.5% per transaction. This number may seem small, but it stacks – giving you considerable savings in the long run.
Reduce Risk of Fraud
Cryptocurrency transactions are transparent because they’re recorded on a publicly viewable digital ledger called the blockchain. Additionally, crypto transactions are very hard to reverse, so clients can’t ask to withdraw money from your account without your consent, preventing fraud.
Online Merchants That Accept Bitcoin
Many major brands accept bitcoin and other cryptocurrencies. Here are several examples of online retailers and stores that take bitcoin as payment:
- Microsoft Store
- AMC Theatres
Benefits of Cryptocurrency in eCommerce
Lower Transactions Fees
Credit card companies and payment apps like Stripe or Square charge transaction fees anywhere from 3-5% on each transaction. Many eCommerce companies build these fees into their online store prices. Cryptocurrency transactions often don’t have fees or are as low as 1%. However, there are cryptocurrency conversion fees when transferring cryptocurrencies to national fiat currencies like USD.
For Anonymous Transactions and the Bank-Averse
Cryptocurrency allows for anonymous online purchases by using encrypted wallet addresses — it’s basically like using unmarked cash. This allows your clients to purchase items without compromising their personal information and allows you to do business without worrying about any privacy regulations.
Reduce Fraud and Chargebacks
Contrary to popular belief, developers built cryptocurrency’s blockchain technology specifically to reduce fraudulent activity. By accepting cryptocurrency, money is exchanged immediately, it cannot be rescinded and it cannot be forged; therefore, the ability for fraudulent chargebacks or returns is drastically reduced.
Disadvantages of Cryptocurrency in eCommerce
The value of cryptocurrencies tend to fluctuate wildly, compared to the relatively stable movements of fiat currencies. If crypto values drop, you may experience cash flow issues and difficulty in daily operations.
Lack of Buyer Protection
Credit card companies and banks usually have strong client protection measures to safeguard you from unauthorized spending. However, cryptocurrencies have no buyer protection, so you may need to build trust with clients before they warm up to crypto payments.
Bitcoin is produced through mining, an energy-intensive task that consumes more electricity annually than the entire country of Argentina and has a large carbon footprint that equals New Zealand. These issues can hurt crypto prices, like the bitcoin price drop that happened after Elon Musk and Tesla refused to accept bitcoin as a form of payment because of its environmental impact.
Although Bitcoin isn’t subject to regulations, the government requires you to report your Bitcoin transactions and the revenue/loss from holding the “property” – as declared by the IRS.
According to the IRS, “a taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received.”
Accepting Cryptocurrency Payments on Your Website
If you’re planning to take cryptocurrency as a payment method on your website, you need to prepare these things first:
You need a digital wallet to receive, send and store many cryptocurrencies like bitcoin and Ethereum. For eCommerce users, we recommend cryptocurrency exchange wallets like Coinbase because they let you make transactions faster.
Adopting cryptocurrency means you’re opening yourself to international clients. Review your shipping capabilities to prevent any delivery issues and ensure you can handle orders from abroad. If not, upgrade your 3PL software, and don’t promise two-day shipping unless you can guarantee it.
Many eCommerce platforms like Shopify and WooCommerce already offer cryptocurrency payment integrations. If your platform doesn’t offer it, look for a crypto payment gateway that suits your needs.
You need to announce that you’re accepting cryptocurrency payments. Do this through your eCommerce website, social media and other marketing tools at your disposal.
How to Accept Bitcoin on Your Site
To start accepting Bitcoin on your eCommerce site, simply integrate a BTC payment processor into your store. Many major eCommerce providers like Shopify and WooCommerce already have BTC payment processor integrations, so you can implement them immediately.
Different BTC payment gateway solutions offer different features, so examine the following when making your pick:
- Cryptocurrency transaction fees
- Batch payout frequency
- Supported cryptocurrencies
- Supported regions and countries
- Client Support
Once you accept BTC as payment, market your progressiveness and tech-savviness to your consumer base. You can display signs on your site that say, “Bitcoin accepted here.”
What If Direct Integration Isn’t Possible?
If a direct integration isn’t possible, consider alternative options such as the following:
- Payment buttons: Add a payment button to your website; consider using the Coinbase API to create your Bitcoin buttons.
- Custom cryptocurrency payment integration: Create a custom-made Bitcoin API that integrates with your eCommerce platform’s shopping cart
- Invoices: Invoice your clients instead of using shopping carts. Coinbase even has an invoice generator tool.
Wrap it Up
If you decide to accept Bitcoin and cryptocurrency on your online store, you’ll want to ensure that your system, transaction and funds are all as secure as possible. So, use strong passwords and multi-factor authentication (MFA) for your crypto exchanges and wallets. Also, regularly update, backup and encrypt your systems and crypto wallet.
To keep your cryptocurrencies safe, buy an offline Bitcoin wallet and put your funds into it regularly. This way, you won’t lose a lot of money if something happens to your crypto exchange account.
While new technologies can be confusing and a bit scary, cryptocurrency has the opportunity to transform eCommerce and international trade as we know it. So while you may not be comfortable with this, at least you’ll have a deeper understanding as the internet and eCommerce landscape continues to evolve.
Cryptocurrency and eCommerce FAQs
How to accept cryptocurrency payments on your eCommerce website?
You must integrate a payment gateway on your eCommerce website to accept cryptocurrency payments. Some eCommerce platforms have built-in integrations, but, in some cases, you may need to make custom buttons or build your own integrations.
Where did cryptocurrency come from?
The first modern cryptocurrency is Bitcoin, created in 2009 by a pseudonymous programmer, Satoshi Nakamoto. As the cryptocurrency space developed, more digital assets like Ethereum and Cardano started appearing.
How is crypto changing eCommerce?
Crypto is changing eCommerce by enabling fast transactions with low fees and improving fraud protection. Additionally, adopting cryptocurrency lets businesses reach a larger market of tech-savvy clients.
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