How to Manage Your Bitcoin Merchant Account
More people are embracing cryptocurrencies, contributing to the growing use cases of Bitcoin and other altcoins. An increasing number of businesses are accepting crypto payments, which come with its unique merchant account services. A Bitcoin merchant account lets you process crypto transactions the same way you would with credit cards or other payment methods. In this article, ‘Bitcoin’ covers all other digital coins because it remains the most popular cryptocurrency. Learn about the payment processing requirements if you intend to support crypto payments.
Pros and Cons of Having a Bitcoin Merchant Account
As you consider investing in suitable merchant account services, you should know what to expect from cryptocurrency payments. One advantage is the chance to expand your payment options. Supporting virtual coins gives your customers more ways to pay for goods and services beyond the common fiat solutions.
With crypto available at the checkout, your online store can easily participate in global commerce because you can accommodate buyers from all over the world.
Since blockchain transactions are irreversible, you don’t have to worry about high chargeback volume. PCI compliance is also not an issue.
On the flip side, accepting Bitcoin and altcoins makes you a high-risk merchant. The payment option carries various risks, including price volatility. Some banks even decline to handle Bitcoin merchant accounts.
Despite the growing use of digital currencies, they are still novel to many consumers. A majority of the people who deal with crypto view it more as an investment than a payment solution.
What Bitcoin Transactions Look Like
Crypto payments gateways allow merchants to accept different coins. You need a platform such as Coinbase to provide the interface for digital currency transactions. The company you pick is also responsible for tracking the payment. Typical Bitcoin payment processing starts with the customer choosing to pay with the virtual coin. The customer gets an address where to send payments, usually generated on the website or by a QR code. A private key authorises the transaction on the customer’s end, and then you have to accept the payment as the merchant. Next, your chosen gateway transfers the payment into your preferred digital or fiat currency. The funds then become available in your merchant account, and you can move them as necessary.
What to Clarify Before Creating a Bitcoin Merchant Account?
Although processing Bitcoin payments is not that much different than handling credit cards, you must understand the distinct requirements beforehand. One thing to decide on is the types of payments. Are they online or offline? Some payment processors only cater to online Bitcoin transactions, while others are more suitable for retail payments.
If your payment processing includes a POS, then you must incorporate a Bitcoin gateway. Accepting cryptocurrency doesn’t mean you have to change the entire point-of-sale system. You can download an extension for the payment gateway. Alternatively, you can get a POS with full features, allowing you to accept Bitcoin and credit cards.
When getting a Bitcoin payment gateway, you must decide if it is crypto to crypto or crypto to fiat. The choice depends on whether you want to receive funds in digital currencies or fiat currencies after a transaction is complete.
You should be aware of the tax implications that come with accepting Bitcoin. For example, in the US, the IRS taxes cryptocurrency as property. Consult with your accountant to find out what to expect from Bitcoin payments. You should also factor in the tools you have to integrate into your system to report to your accountant.
Another consideration when supporting Bitcoin payments is the location of your bank account. Some cryptocurrency companies cater to merchants with bank accounts in specific countries. If you have an international business, then find exchanges that serve global clients, such as Bitpay.
How to Choose the Right Bitcoin Payment Provider?
Cost should be at the top of your list when considering offering Bitcoin as a payment option. How much will you have to pay for the merchant account and gateway? Since you qualify as a high-risk merchant, expect to pay a premium rate for reliable merchant services. Compare costs between three or four providers to land the best deal. Look at how different processors structure payments and pick the simplest one to monitor.
The types of coins accepted matter a great deal. Most providers offer Bitcoin and other popular altcoins like Litecoin, Ethereum, and Dogecoin. The list of supported currencies determines the banking solutions you avail to buyers. Therefore, consider these options carefully.
Ensure your merchant account services come with effective customer service. If you have questions about how Bitcoin payments work, your provider should be able to answer them promptly. A decent company should have 24/7 customer support and a knowledgeable technical team to help with different issues.
A provider’s reputation should be part of your selection criteria. You want to work with a credible partner who contributes to the growth of your business. Be aware that the reputation of a payment provider can affect your brand image because customers see it as part of your business. So, read reviews and client testimonials to learn how a particular processor delivers services.
Digital currencies are gaining a lot of traction as payment methods, which is why more sectors are accepting varied coins. Bitcoin and other cryptocurrencies have several advantages over traditional transactions. They are fast, low-cost, and safe. As a merchant, accepting crypto means dealing with little to no compliance or chargebacks. Many online enterprises, including software vendors, online gambling, and e-commerce sites, support virtual coins. If you decide to support Bitcoin payments, ensure you work with the right merchant account services. Also, understand the risks of dealing with blockchain payments.