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Culver's, Brian Addotta Franchise: Financial Accounting Outsourcing


“Do you take crypto?”: Accepting cryptocurrency as a form of payment

Jul 22, 2020

Most of us have used the Venmo app to split pizza or send rent money, but how about to buy Bitcoin? I think it’s also safe to assume that we’ve all been to a CVS to pick up some quick necessities — but did that trip also include a quick Bitcoin purchase? 

Soon, these will be a possibility. News has recently come out that mainstream payment providers Venmo and PayPal are working towards offering their users the ability to buy or sell cryptocurrency on the platforms. Even more recently, it was announced that 20,000 7-Eleven, CVS and Rite Aid locations will now be home to Bitcoin ATMs, which allow customers to buy Bitcoin with cold, hard cash. 

Everyone please welcome cryptocurrency to mainstream adoption. 

As Bitcoin and cryptocurrency in general pick up steam, business owners need to make sure they are up to speed on how to accept it as a form of payment. Fortunately, it’s just as easy to accept crypto as it is to buy crypto, and there are multiple ways to do it. 

Without doing a deep dive into the technology, we have highlighted below a few ways that will allow you to accept Bitcoin and other cryptocurrency, and each way has a different level of exposure to the risks and benefits of transacting in crypto. And while we have primarily stuck with Bitcoin in our examples, the ways below open up the door to not just Bitcoin but also hundreds of other cryptocurrencies. 

1. You could … do nothing

The customer swipes their crypto debit card, pays for the item and off they go. You’re none the wiser that they just quickly converted their crypto to local currency. There are a number of payments companies in the marketplace today that focus on consumer payments and allow customers to spend funds directly from their cryptocurrency wallets for everyday purchases. Most of these cards also allow ATM cash withdrawals using crypto. In this scenario, the customer is paying the crypto transaction fee, and you’re stuck paying the same old debit card processing fee but not touching the crypto.

2. Direct peer-to-peer (P2P)

P2P payments are Bitcoin in its truest form — no third parties required. P2P payments were the original premise of the Bitcoin white paper and use a dizzying mix of cryptography, hashing, proof-of-work, etc. to get the transaction done. We won’t get into all that, but know that’s running in the background. 

From your perspective, you just need a crypto wallet. To very much oversimply the process, the customer transfers the currency directly to your crypto wallet via your public wallet address. Your public wallet address is very similar to your bank account number. 

Along with the pubic address, there is a private key. The private key is the key to your wallet and how you authorize sending payments. This is very similar to your bank account password. However, unlike a bank account password, there is no third party (i.e., a bank), so if you lose your private key or someone steals it, access to your wallet and any funds are most likely gone forever. So remember, with your private key — keep it, and keep it private. 

Since wallet addresses are anywhere from 25-36 characters, your public address can be converted into a QR-code, which can be scanned by the customer when sending payment. Once the P2P payment is made and validated (in a matter of minutes), the transaction is posted on the Bitcoin blockchain public ledger showing a payment from the sender’s public address to your public address. 

This is the true intent of why Bitcoin was created: P2P payments without an intermediary. This is full exposure to Bitcoin and blockchain technology, and that payment is logged forever on the blockchain. 

However, be careful with that Bitcoin you just received, as it’s subject to significant price volatility at the time of this article. (If volatility is your biggest concern though, google: “stablecoins.”) Just like anything else, you must understand the risks!

3. E-commerce, brick & mortar, invoicing

With the acceptance of crypto as a viable payment option, various payments companies have advanced the premise and technology of P2P payments described above. These advancements now allow you to accept crypto on your website, in-person in your brick-and-mortar store or through sending invoices. To put it short, however you typically accept payments, there are now ways to do it in crypto. 

E-commerce: If you run an e-commerce store, most platforms have already partnered with payment processors and have existing integrations to allow you to accept crypto payments. If yours does not, you can instead add payment buttons or create custom integrations. Shopify, for example, has partnered with companies such as Coinbase Commerce and BitPay. There is a page devoted just to cryptocurrency on Shopify’s help center describing the advantages to merchants of accepting crypto. 

Brick & mortar: Payments companies offer both crypto-specific payment terminals and APIs to allow integration with your current POS system. The POS system will display the invoice or bill, typically via a scannable QR-code, with the amount locked-in at the appropriate exchange rate. The customer scans the code, signs off on payment and the crypto is transferred from their wallet to yours. All you really need to do is train your staff to say “cash, credit or crypto accepted here.”

Customer invoice: Many companies also allow you the ability to send invoices to your customers in crypto, typically over email, where you can elect which cryptocurrency you would like to be paid in. The customer pays the invoice at a locked-in exchange rate and, once validated, the crypto is transferred from them to you. 

Based on the method of payment and the payments company you work with, both your exposure and access to funds will change. Some companies are cryptocurrency-only services, meaning that they will simply facilitate the invoicing process but are not part of the actual transaction between you and the customer. The crypto flows from the customer’s wallet to yours, and they have no interaction. And these companies often do not support conversion to fiat or withdrawals to a bank account either. 

Put more simply, payments made in crypto will be received by you in crypto, and in order to withdraw to USD, for example, you’ll have to find another route — most likely sending to an exchange linked to your traditional bank account. This, however, is a very simple process to get set up. 

If you’re just interested in accepting the crypto part of the transaction, but not receiving or holding the crypto, there are companies that allow that option too. BitPay, for example, will facilitate the invoicing process in the same manner described above, but when the customer pays, the funds flow through them, and they will convert the payment into local currency and initiate a bank settlement to you the following day. This option isn’t as fast and requires the use of an intermediary, which charges a fee, but fees can be as low as 1% flat rate. Depending on your risk tolerance, this fee and use of an intermediary may be worth the comfort of knowing you have no risk exposure to crypto price volatility.

What else you should know about how to accept cryptocurrency

As you can see, there are many different ways to accept cryptocurrency, and you can ultimately decide your exposure to the crypto itself based on your comfort level. 

So why would you consider crypto payments — other than as a request from a customer? Well, transacting in crypto solves many of the headaches and pain points merchants experience with today’s legacy payments processes. With crypto, transactions settle in minutes, so the funds you receive are yours to spend now, not in the current 3-5 days settlement period. 

Additionally, traditional debit and credit cards have high processing fees and risks of chargebacks and identity theft. With crypto there are low processing fees that are charged to the sender. Also, there are no chargebacks. I’ll repeat, no chargebacks. Accepting and transacting in crypto allows you to not only transact locally but also open up your products and services to anyone on the globe. Crypto opens up new markets. 

But before you even start thinking about your global empire through crypto, you need to remember that crypto is here and it’s now. Your current customers and local markets have started adopting crypto as a consumer, and at the risk of losing business, business owners need to accept that it’s time to accept crypto as a form of payment before it’s too late. 

To learn more about blockchain and other financial technologies, click here. On continue reading on:

Blockchain for small business: Stay alert for changes ahead

5 blockchain trends CPAs need to know

Why you need system testing and model validation for blockchain-based smart contracts


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Wipfli Editorial Team