Accepting crypto in your own business

In this document you will find the why and how of accepting cryptocurrencies in your business

Zeb Lelie
Zeb Lelie
Jul 25, 2017 · 12 min read

Blockchains have been around for awhile now, almost 10 years. You may hear a lot of promising stuff being hyped around this new phenomena. But what are the use cases right now? What are people using blockchains for?

Why?

At the moment the killer app of blockchain is still money. Bitcoin is the most well known crypto, but many alternatives are getting more and more attention. With all these new people investing in crypto it’s getting more and more interesting for business owners to cater to their demand. You see, at this point, the amount of crypto holders is still a lot bigger than the amount of businesses offering crypto as a payment solution. The list is growing by the day, but there is still a lot of unfulfilled potential on this front.

Since most crypto fans are in it for ideological reasons, many of them will gladly spend their crypto at stores, just to support this new decentralized ecosystem!

So where there is demand, step in with some supply!

Plus, crypto has a couple benefits in itself:

  • It eliminates the extra costs of bank or credit card transaction fees, which gives you higher profit margins.
  • Transactions are completed instantly. And there are no chargebacks possible
  • If you use a intermediate, which I will talk about in a bit, it pays you within 24 hours (instead of the 72 hours with credit card companies)
  • And of course you will be partaking in the future of a decentralized world.

And that’s worth something right?

How?

Accepting Bitcoin/Bitcoin Cash and/or other cryptocurrencies in your store is as easy or difficult as you yourself want to make it. The difference lies in how far you want to go with the automation of tracking your transactions and how much taxes you have to pay versus keeping your funds as safe as can be and no external parties looking at your transactions.

Small shop or just wanting to try it out?

Let’s say you want to experiment and think you will have a small group of customers that might be interested in using this payment option. Complex/expensive systems might be an overkill then.

To start experimenting with accepting crypto you could:

  • Download the cryptocurrency wallet of the currency that you would like to start accepting. Just google the name of the crypto + “wallet” and you will find links for sure. If you would like to accept Bitcoin for instance, you can download the Blockchain.info wallet, the Airbitz wallet, or one of the many other possibilities. After having installed a wallet on your computer you can create an address to which customers can start sending their coins. This is your public key.

After having created an address you can print out the QR code to this public key and put this next to your counter. People will only have to scan the QR code and then can start paying for your services.

This is a fairly easy way of accepting crypto, however, you will have to download a wallet for each different crypto you would like to accept. Plus you need a computer that is safe and has room to install the full blockchain (which can grow quite big, like 200 gigs).
There is another way that circumvents this issue.

  • Start with your own cryptocurrency wallet in the form of an app on your tablet or even phone. A very easy to use beginners app for this purpose is the Jaxx or Exodus wallet. Since this whole cryptocurrency thing is still pretty new, Jaxx has had problems with delays, plus their desktop version has bugs. Their mobile app is safe and easy to use. You can find the app on https://jaxx.io/ . This wallet supports a variety of well known crypto’s. The exact amount depends on which system you use (tablet, mobile telephone, android, ios). Having one app on a device next to the counter makes it very easy to start accepting crypto. People just come up to pay, you create a QR code with the amount you would like to recieve they scan the QR code right from the screen with their own app and pay. Jaxx has a good FAQ if you have any problems with their app https://decentral.zendesk.com/hc/en-us Jaxx does not work with accounts so it is quick to start with.
  • There is also a Jaxx type of wallet for your desktop, called Exodus this one has multiple currencies and a strong password, it surpasses Jaxx’s desktop version but has no mobile version as of now.

If you want more information on which wallet or client you want to choose to receive and store your crypto, you can check out my document Starting your own portfolio. Over there I have gone into this subject way more.

So now you have been able to see a couple ways of storing your crypto. Now let’s see how a actual transaction takes place between you and your customer! In the next couple pages we will look at it step by step.

A transaction in 4 pictures

For this example I am using the Blockchain.info wallet. Since I downloaded this in Holland, it is partly in Dutch, but I will provide the translations. This is a wallet for bitcoin that you can have on your computer, tablet or phone.

Overview

What we now see is the intro screen of the app. In the bottom left corner it says “Verzenden” or sending, on the right bottom of the screen it says “ontvangen” or receive. Since we are a store here, we do not want to spend Bitcoin but want to receive it. Let’s see what happens when we push that button.

Receive

This is what you can expect to see in a wallet when you press receive. You will see a QR code with your wallets address. A place to type in the amount of bitcoin (also known as BTC) or the amount of euro you want to receive and a button to create the QR code (in this example picture called “verzoek”).

Let’s say the customer needs to pay 10 euro’s. The app will automatically check the exchange rate and calculate how much Bitcoin. As you can see, the QR code has changed to a new code that when scanned will ask the scanners wallet to pay 10 euro’s to your address. By scanning this code the customer automatically gets your invoice.

When we type in 100 as the amount of euro’s, the QR code again slightly changes. It will always create a unique code with the requested amount that you require.
You can either let the customer scan it right from your computer, tablet or phone screen with their wallet app. Or you press something like Yes, Finish, Ready, etc. In this Dutch example it was “klaar” (Done). This will give you the option to copy it or share it anyway you want to.

And that’s it! Just open the app. Press receive. Type in the amount. Let the customer scan it with his or her mobile wallet. The customer checks the invoice you created and can press send, often followed by a confirm. And the transaction is finalized. It’s that easy!

Backups

Well you have now earned your first crypto money! Better be careful with it. It might even grow in value. So you want to be sure you can always access your funds and keep them safe. If your computer or tablet breaks down, or worse, gets stolen! What will happen then?
Well the developers of these technologies have thought of this and created a solution that makes sure you can always access your funds. Even if your hardware is gone.

This is done by creating a backup. This can be a file, a backup “phrase”, different wallets have different solutions. A backup phrase, or seed, as it is also called, can be used when your device crashes or gets stolen. You just download the wallet on a new device and type in your seed and the app will bring back your backup.

https://decentral.zendesk.com/hc/en-us/articles/218374517-Why-is-it-important-to-secure-my-Backup-Phrase-immediately-after-creating-a-new-Jaxx-wallet-

Pretty sure you will have a lot of transactions?

If you have a large business, or a particular large group of crypto fans as customers, having all those crypto transactions might overwhelm you. How to keep track of all those transactions? What to do with the VAT you have to pay? How to make sure you do not get in trouble because of this new technology?

There are multiple companies that offer services that help you accept Bitcoin (and a growing number of altcoins, some offer support for more than 100 crypto’s). These companies will keep records of your transactions for you and will give you data that can help you pay your VAT taxes on all those transactions.
You could also read that last sentence in another way: These companies will keep records of all your transactions of you, and might sell that data or get pressured/hacked. Having a third party is always a bigger risk than having control yourself. This all depends on how much time you have for bookkeeping and how much you care and/or paranoid you are.

To accept crypto all you really need is a wallet at your counter and tell the customer the amount he has to pay. You could even create a QR code, just like I showed above. Herby you create a QR code for them via your app with a request with the precise amount. However, keeping track of all the transactions and taxes can be a hassle. So these companies can have their value.

Examples of apps to start accept bitcoin

Solutions for smart phones and tablets:

  • https://airbitz.co/bitcoin-wallet/ Airbitz Merchant Mode for Android and iOS
  • bitcoin.co.th mobile Bitcoin Point of Sale for Thailand
  • BitcoinPay, Mobile payment terminal with EUR, USD, PLN and CZK settlements.
  • BitKassa accept Bitcoin on mobile phone, tablet, computer; converts to Euro/Bitcoin (any percentage)
  • BitPay Mobile Checkout
  • Blockchain Merchant for Android
  • CoinCorner — Point of Sale solution available that allows physical retailers to easily accept bitcoin and automatically convert that to fiat, removing the risk of holding bitcoins.
  • CoinGate Bitcoin Point of Sale apps for Android, iOS and Bitcoin Point of Sale web app which can be accessed from any internet enabled device directly in a web browser.
  • Coinify Bitcoin Point Of Sale
  • Coin Of Sale — device-independent Bitcoin POS payment system
  • CoinBox Bitcoin point of sale for Android
  • Coinsnap European Bitcoin Payment Provider
  • Cryptopay HTML5-based bitcoin POS
  • Paxful Simplest Point of Sale, No Fees and a peer to peer market to buy bitcoin instantly
  • GoUrl Bitcoin Mobile Checkout
  • Rocketr Sell digital products online and accept BTC, ETH, and more. Utilize their IPN/API for seamless integration into your website or app.

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. This can be done automatically by BitcoinPay, BitPay, https://blockpay.ch/, Coinbase, CoinGate, Coinify, SpicePay

When someone makes a crypto payment, do they have to wait in store until it has a confirmation?

A question I often get from customers is the following: “Do I have to stand at the counter for 10 minutes and wait until the transaction gets confirmed?”

In this case we are talking about the 10 minute block time of Bitcoin. Each cryptocurrency has different block times, Ethereum 15 seconds for instance. But let’s use Bitcoin since it is still the most known and by far the most accepted at stores.

The answer to this question depends on what the shop owner uses to accept Cryptocurrency. If they use an intermediary (like Coinify or another one out of the list above) it will be instantaneous, since the payment processor will accept the payment at zero confirmations and carry the risk of a double-spend.

In case they have their own infrastructure, it depends on the amount that is being transacted. The effort to successfully pull off a double-spend in the Bitcoin network is disproportionate to the cost of paying for, let’s say, a couple cups of coffee. Not only is the time window smaller than 10 minutes, but when the double spend actually works, you might not be able to go back to that coffee shop.

Therefore, the risk of accepting such a small transaction with zero confirmations is acceptable for a store in order to save the customer the time to wait around, and stores usually should accept your payment with zero confirmations i.e. as soon as the store’s device shows the incoming transaction.

If a huge sum, say more than 1000 euro, is involved, it would probably be acceptable to the customer to wait for at least one confirmation.

Contract

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For instance, the party sending payment is responsible for paying any transaction fee that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn’t confirmed quickly.
Other items that might be addressed in a contract:
Requirement and handling of escrow through an escrow service.
Jurisdiction for disputes.
Refund policy (particularly with the exchange rate being volatile)

Paying taxes on Crypto income

Tax compliance is a topic of concern for small businesses. We aren’t accountants or lawyers, and can’t give legal or accounting advice.
But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn’t leave a paper trail, yet is widely used in commerce every day.
Ask yourself how you would handle a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The answer for Bitcoin should probably be the same.

As for how to decide what a Bitcoin transaction is worth… your local Tax office has probably never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or “cash equivalents”. We imagine the accounting would be similar.

With Bitcoins, there’s likely to be some difference between the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you decide to do so. This scenario, likewise, would be no different if you accepted foreign currency or gold as payment. Under some scenarios, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the whole thing at the time of exchange.

Perhaps you might talk to your accountant. You don’t need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can probably get all the answers you need. What would you ask your accountant if you decided that you wanted to accept Berkshire Bucks or 1-ounce gold coins as payment?

Get noticed by potential customers!

A website that is often used by bitcoin enthusiasts is coinmap This website has mapped all bitcoin accepting stores. If you want to start accepting Bitcoin and the like, make sure you are visible on websites like these! It will help potential customers to find your store and spend their crypto.

Another way of attracting new customers is by putting up a sticker at your entrance or counter that says “we accept crypto!”. Or put this message up on your website.

## Extra

This link goes in depth into how you can start accepting Bitcoin in English
https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses
This link explains it quite well in Dutch, but there are many to be found on the internet.
http://bitcoinspot.nl/accepteren.html

If you liked this information and want to learn more about crypto in general or want to start your own portfolio, check out the rest of my Crypto Info for tips. There is even a Cryptocurrency wiki that explains typical jargon, goes into the many cryptocurrencies and maps the links between the well known players and all the organisations and companies that the landscape now consists of. You can find all these posts either here on Medium or you can check them out at https://drive.google.com/open?id=0BwMY5c2YLl8mblBnT04zc1ZIbm8.
You can also just email me with questions at zdl@protonmail.com

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