Offering bitcoin merchant services enables businesses to tap into the growing bitcoin economy. Providers make accepting and managing bitcoin payments easy. This guide examines everything involved with bitcoin merchant services.
What Are Bitcoin Merchant Services?
Bitcoin merchant services provide the tools for businesses to take bitcoin as a payment method. They allow merchants to receive bitcoin, convert proceeds to traditional currency, and settle into business bank accounts quickly.
How Do Bitcoin Merchant Services Work?
The process looks like:
- Customers pay with bitcoin via a checkout option
- Merchants receive bitcoin in linked wallets
- Providers exchange bitcoin to fiat currency
- Fiat cash is deposited into the merchant’s bank
Reputable merchant services handle volatility risk, security, integrations, customer support and more so businesses can focus on sales rather than crypto complexities.
Why Accept Bitcoin Through Merchant Services?
Top benefits include:
- Attract customers interested in paying with bitcoin
- Tap into a $2 trillion global crypto market
- Benefit from small transaction fees
- Avoid risks like fraud chargebacks
Top-Rated National Insurance Companies Providing Merchant Services
Industry leaders in merchant solutions make bitcoin acceptance secure and practical:
As one of the largest crypto payment solutions, BitPay offers robust services including:
- Payment settlement within 1 business day or less
- Support for over 15 blockchain payment types
- No setup, subscription, or monthly fees
Trusted crypto brand Coinbase also provides merchant tools:
- Instant currency conversion to stabilize prices
- Plugin integrations with platforms like WooCommerce
- Accept payments from 200+ countries
How Much Do Bitcoin Merchant Services Cost?
Fees average 1% per transaction or less – far below credit card rates. Some pricing considerations:
- Per-transaction processing charges
- Conversion costs if exchanging bitcoin to fiat
- Potential monthly subscription fees
Leading merchant providers publish pricing clearly upfront. Competitive rates encourage bitcoin adoption. Volume discounts are common.
Can Merchants Accept Other Coins Through These Services?
Many bitcoin payment processors support multiple popular cryptocurrencies like Bitcoin Cash, Ethereum, Litecoin, and Tether.
Some support small altcoins too. BitPay enables accepting over 15+ cryptocurrency types beyond bitcoin alone.
Broad crypto acceptance lets merchants capture more customers who prefer coins besides bitcoin when paying.
How Do Providers Handle Bitcoin’s Volatility Risks?
Bitcoin’s frequent, unpredictable price moves can deter merchants from exposure to its volatility. Providers use two common stabilizing strategies:
Instant Currency Conversion
Converting bitcoin to fiat currency right away locks in the sale price. Merchants avoid holding bitcoin long-term or withdrawing later at an uncertain price.
Billing in Fiat
By billing customers in USD or other currency equivalents, prices appear stable despite bitcoin’s underlying volatility in the merchant’s wallet.
Tax Implications with Bitcoin Merchant Services
Receiving business income in bitcoin introduces unique tax considerations:
Capital Gains Requirements
If held before sale, bitcoin accrues interest resulting in capital gains obligations when sold. Failing to report this results in IRS penalties.
Varying Sales Tax Laws
Specific sales tax collection requirements around bitcoin transactions differ by state. Research laws in states where business is conducted.
Even when immediately converted to fiat currency, bitcoin payments still count as taxable income for the business.
An integrated crypto-aware accounting platform helps merchants easily track and manage these nuanced taxes accurately.
Frequently Asked Questions About Bitcoin Merchant Services
What should I look for in a provider?
Consider fees, integrations, payment guarantees, speed of fiat settlement, and fraud prevention capabilities when comparing offerings.
Is accepting bitcoin risky from a security standpoint?
No, bitcoin offers increased security and fraud protection vs credit cards since payments can’t be disputed or reversed. Leading providers also utilize thorough KYC verification.
How easy is it for customers to pay in bitcoin?
Reputable providers equip merchants with various tools to simplify bitcoin payments. Invoice QR codes, wallet address APIs, and technical solutions improve customer checkout.
Do I need to collect customer info with bitcoin payments?
No, a benefit over credit card payments is that bitcoin transactions don’t require acquiring sensitive personal customer data. This reduces fraud liability.
Bitcoin merchant services enable easy access to new crypto-savvy customer markets by streamlining bitcoin acceptance. Consider volatility protection features, tools for customer convenience, and tax accounting integration when researching providers that best enable your business goals.