Implementing a Cryptocurrency Payment Strategy into Your Business in 2023
Updated: Nov 26, 2022
The cryptocurrency market is booming and there are more and more businesses looking to implement a cryptocurrency payment strategy. If you're thinking of doing the same, there are a few things you need to keep in mind. In this article, we'll go over what you need to consider before implementing a cryptocurrency payment strategy into your business.
Start with the basics.
To get started, it's important to understand what cryptocurrency is. Cryptocurrency is a digital currency that functions as an alternative to cash or credit cards. Each type of cryptocurrency has its own unique features and characteristics, but they all share the same basic concepts:
Transactions are made without any middleman—banks or payment processors—and usually occur over peer-to-peer networks (similar concept to file-sharing programs).
The transfer of cryptocurrencies from one person or entity to another occurs through blockchain technology.
Understand the risks.
One of the biggest risks is that cryptocurrency is a new technology, which means it's still in its infancy. As such, there are several concerns about how reliable and trustworthy it is. The currency itself isn't backed by any central bank or government; instead, it relies on blockchain technology—a decentralized ledger that records transactions and prevents them from being altered or forged. Because cryptocurrency has no insurance or regulation, you run the risk of losing your money if an exchange goes bankrupt or gets hacked.
Assess cryptocurrency market volatility.
It is important to assess cryptocurrency market volatility. This means determining whether or not you are willing to accept the risk associated with receiving payments in this form. One way to minimize the risk of market volatility is to use a third-party crypto payment processor that provides instant or daily fiat payouts. Consulting firms, like CryptoConsultz, can help you select a reputable crypto payment processor that meets your business needs.
Understand the Regulations.
Understanding the cryptocurrency regulations in your business area is important as regulations vary by state and country. Speak to your accountant about tax implications surrounding accepting cryptocurrencies in your area. At CryptoConsultz we offer cryptocurrency tax consultation and guides when implementing cryptocurrency into your business.
Decide if you want an in-house or third-party payment processor.
If you have the resources, and are comfortable with the technology, building your own cryptocurrency payments solution is a possibility. That said, there are other numerous third-party payment processors that will help you implement a cryptocurrency payment strategy into your business. When choosing a provider, look for one who integrates seamlessly with your eCommerce platform or business so that all transactions can be completed in real-time.
Investigate how cryptocurrency payments will affect accounting and taxes.
Before you start accepting cryptocurrency payments in your business, you should understand how it will affect your accounting and taxes. When receiving crypto as payment for business purposes, they are taxed as business income but if they HODL (hold on for dear life) in a digital wallet and later used to pay for business expenses and pay bills, it will create a taxable event for the business owner.
Choose a payment processor that integrates with your e-commerce platform.
When choosing a payment processor, you should consider the integration capabilities of the software with your e-commerce platform. The same goes for accounting software and tax software. It's also beneficial to find a processor that pairs well with your cryptocurrency wallet so that you can accept payments without any holdups (or extra fees).
It's important to think about how easy it will be for customers to use as well—and if they're already familiar with one type of cryptocurrency over another, they may want their preferred currency available in order to make purchases.
The cryptocurrency market is growing rapidly and more and more businesses are starting to accept it as a form of payment. It may be difficult to understand at first, but if you’re looking for a way to keep up with the competition or just want another payment option for your customers, then implementing a cryptocurrency payment strategy could be just what your business needs. Need help or more information about getting started in accepting cryptocurrency for your business? Schedule a consultation with us at CryptoConsultz