Understanding crypto accounting can be challenging, especially when learning how to accept crypto payments as a business. This guide will help you manage your crypto transactions efficiently and generate actionable reports.

Use Acctual's crypto accounting software to simplify your crypto accounting tasks. This tool will optimize your business's financial performance and simplify crypto accounting.

Table of Contents

• What Are Crypto Payments?

• Crypto Payments vs. Credit Card Payments

• How To Accept Crypto Payments As A Business

• Costs Of Accepting Crypto Payments

• Bitcoin And Crypto Payment Providers

• What Are The Pros & Cons Of Accepting Crypto Payments?

• How Taxes Work When Converting Crypto To Cash

• Know The Laws & Regulations Regarding Digital Assets

• Pay Your Bills In Crypto With Our Crypto Accounting Software Today － Book A Demo To Learn More

What Are Crypto Payments?

Digital assets are digital means of payment that happen virtually and without physically owning the money. Tradable securities and payment methods are the most common utilities of digital assets.

Accepting crypto payments is becoming more popular in e-commerce, virtual stores, and online service providers. Crypto payments are instant and peer-to-peer, which means they happen directly between users and are not processed through an intermediary like banks.

Crypto transactions use blockchain technology, which works like a public ledger where all transactions are logged. Users can track transactions using blockchain scanners. Companies use crypto payment by adding a Bitcoin payment gateway, where transactions happen almost instantly from the buyer’s crypto wallet to the merchant.

This way, businesses receive payments faster, avoiding additional taxes or transaction fees imposed by credit card payments. The only charges associated with crypto transactions are the gas fees. These transactions work similarly to online payment providers like PayPal, Skrill, and other digital wallets. However, decentralized payments incur lower costs and fewer intermediaries, which makes them cheaper and highly convenient.

Related Reading

• Blockchain Payment Processing
• Crypto Bookkeeping
• Fiat To Crypto
• Fasb Crypto
• Crypto To Fiat
• Accounting For Cryptocurrency
• Crypto Payroll
• Bitcoin Merchant Account
• Get Paid In Crypto
• Crypto Wallet For Business
• Crypto Payment Processors

Crypto Payments vs. Credit Card Payments

Accepting bitcoin or crypto payments will require paying fewer fees than credit card payments. However, there is a higher learning curve for accepting crypto, requiring patience to set up. Bitcoin is a decentralized payment method, which means if there’s an error, you will not be able to call anyone to resolve it. There is a higher responsibility on the merchant, as opposed to a credit card processor, where you can get your questions answered by phone.

While credit card processors typically side with the customer in a dispute and merchants pay a chargeback fee, Bitcoin functions more like cash. Once the payment has gone through, no third party can intervene with the transaction.

While Bitcoin transactions are usually instant, sometimes they can take time to confirm and reach the sender, depending on the network activity. However, once payment is initiated through the network, it cannot be reversed. On the other hand, credit card payments are processed immediately, but customers can dispute payments after they’ve been processed.

Acctual - The Best Crypto Accounting Software Solutions

Acctual is crypto accounting software for businesses and freelancers transacting in digital assets. It simplifies accounts payable and receivable, making it easy to pay bills and send invoices in crypto. Our flexible options let you pay in crypto while vendors receive fiat, receive crypto while clients pay in fiat, or receive fiat while clients pay in crypto. We also integrate with your accounting system, saving you time on month-end reconciliation.

Key features:

Multi-level approvals for bills

Fiat-to-crypto and crypto-to-fiat payments

Built-in AML screening

Crypto invoice links

Automatic payment notifications

With our smooth AP/AR process, automated bookkeeping, built-in internal controls, and flexible payment options, you can simplify your financial operations with us.

Book a call with our team today to learn how you can pay bills and send invoices in crypto with our crypto accounting software!

How To Accept Crypto Payments As A Business

1. Understand Crypto Regulations in Your Area

Before accepting digital assets for your business, it's essential to consult with an accountant to comprehend the tax implications involved. Regulations can vary significantly by state and country. These regulations also affect how you plan to record crypto payments in your accounting system. Ensuring compliance with local laws is crucial to avoiding potential penalties or legal issues.

2. Set Up an Account on Acctual

The first step towards accepting crypto payments involves setting up a crypto gateway on Acctual. A gateway provides greater flexibility, allowing you to choose whether to keep the crypto or convert it to another form of payment. Acctual simplifies the process of receiving payments by offering a variety of options. 

You can receive your preferred crypto or stablecoin, send the funds directly to your bank account, or enable clients to pay using fiat currency such as USD or EUR. Acctual also provides a convenient crypto income generator, enabling you to send invoices and receive payments effortlessly.

3. Integrate Crypto Payments With Your Accounting Software

To streamline your accounting processes, it's essential to integrate crypto payments with your existing accounting software. This integration ensures that all financial transactions, including crypto payments, are recorded in a centralized system. 

Acctual simplifies this process by directly integrating with ERP systems, automatically importing critical information such as general ledger categories, vendor details, and tracking categories. This integration eliminates the need for manual reconciliations and enhances the accuracy of your financial records.

4. Prepare for Crypto Volatility by Converting Crypto to Cash

Crypto prices are notoriously volatile, posing a risk to businesses that accept crypto payments. To mitigate this risk, consider converting crypto payments to cash immediately upon receipt. This strategy shields your company from potential price fluctuations and helps stabilize your cash flow. 

Acctual's platform allows you to deposit your crypto payments directly into your bank account, protecting against market volatility and ensuring a consistent cash flow for your business.

Costs Of Accepting Crypto Payments

The standard payment processing transaction fee for crypto payments is about 1%, making it much more affordable than the average credit card processing fee (3%) and even some ACH direct deposit fees (1%–1.5%). Some providers offer even lower transaction fees (CoinPayments is just 0.5%), while others add a network fee on top of the 1%. Potential additional fees include currency conversion fees and withdrawal fees. 

The standard payment processing transaction fee for crypto payments is about 1%, making it much more affordable than the average credit card processing fee (3%) and even some ACH direct deposit fees (1%–1.5%). Some providers offer even lower transaction fees (CoinPayments is just 0.5%), while others add a network fee on top of the 1%. Potential additional fees include currency conversion fees and withdrawal fees.

Bitcoin And Crypto Payment Providers

Coinbase

Coinbase charges a 1% transaction processing fee and locks in the exchange rate for customers from initiation until checkout. Integrations with Shopify and WooCommerce make e-commerce transactions more smooth, and merchants can choose to have Bitcoin converted automatically to cash or manually through Coinbase Exchange.

BitPay

BitPay applies a 1% transaction fee and sets an exchange rate for customers once the payment process is initiated. This rate is available for 15 minutes, giving customers ample time to complete transactions.

PayPal

PayPal simplifies crypto payments for customers, automatically converting crypto to U.S. dollars for merchants. This option supplements standard fiat currency transactions, offering customers more payment choices.

What Are The Pros & Cons Of Accepting Crypto Payments?

Cons of accepting crypto

Meeting customer demand

More and more people want to pay in crypto. In 2022, 3.6 million US adults were expected to use crypto to make a purchase — a 68.6% increase from 2021. This is especially true in emerging countries with high financial exclusion rates. Businesses that offer consumers popular digital assets at the checkout are likely to be more competitive in these markets.

Fast, always-on settlement

Though many national banking networks enable fast payments within a country, this is not the case when merchants sell abroad. Most payments today rely on the international banking system  Swift and can take several days to settle, particularly when moving funds in and out of emerging markets. 

Finance teams may have to resort to pre-funding or suffer cash flow pressures. Settlement on blockchains using digital assets can be near instantaneous and carried out 24/7 (though you’ll need to add time if you want to convert the crypto for fiat), eradicating the cash flow gap between the selling costs and the sales revenues.

Cost efficiency

Merchants can expect to pay up to 3.5% in fees to process credit card payments; and more in chargeback penalties and associated costs if a transaction is queried. Cross-border consumer payments can carry an extra cost from the role of intermediary banks (also known as ‘corresponding’ banks) that are required to support the path of a payment. 

In comparison, crypto payments are less expensive. Most crypto payment processors charge just 1%, and sometimes less. The payer also pays a network fee, which depends on blockchain network congestion (in July 2023, someone making a payment via the Bitcoin blockchain would pay an average of US$1.3.15).

High average transaction value

BVNK merchants in industries like FX trading report that the average deposit value for digital assets can be up 5-10x higher in some markets than for other payment methods like credit and debit cards.

Predictable

Blockchain settlements are complete and final, with no facility for customers to request chargebacks. Therefore, friendly fraud and the associated costs and administration are eliminated. The predictability of crypto transactions also makes financial reporting and planning more accessible, giving merchants confidence in their numbers.

‍Reliability

Over many years, the leading digital assets have been proven to be a method for securely making transactions. The volumes being transferred daily on the most popular crypto blockchains show that they are a reliable and trusted medium of exchange.

Adoption ease

As illustrated in the previous section, merchants can quickly adopt digital asset payments. An entire crypto-enabled payments operation can be outsourced to a third party, giving a business all the benefits with none of the risk or compliance obligations of holding them as assets on its balance sheet.

Transparency and traceability

While blockchains don't directly reveal payer and payee information, they allow for the traceability of transactions through public addresses and the publication of immutable records. This provides a high degree of visibility on the status of a payment and aids payment reconciliation, financial record-keeping, and analysis. A blockchain also provides a powerful tool to track the provenance of funds and detect and prevent illicit payment activity. 

Cons of accepting crypto

Accepting crypto may come with certain risks, including:

Changing regulations

Digital assets are relatively new and innovative and subject to changing regulations. Businesses need help keeping up with new rules, tools, and even forms of crypto in the market.

Value volatility

Like stocks, the price of crypto fluctuates based on demand. This can affect how much businesses earn from each transaction, primarily if they immediately exchange their crypto for traditional dollars.

Technical complexity

Merchants may have to get set up with new technologies like crypto wallets or gateways to start accepting crypto. 

Related Reading

• Blockchain Billing
• Blockchain For Accounting
• Crypto Compliance
• Crypto Auditing
• Crypto Escrow
• Crypto Recurring Payments
• Crypto Invoicing
• How To Send Crypto
• Crypto Accounts Payable
• Crypto Treasury Management
• Crypto Payment Gateways

How Taxes Work When Converting Crypto To Cash

When converting crypto to cash, it's essential to understand how taxes work. The IRS considers crypto to be "property" for tax purposes, meaning that if you accept crypto, you must report it as gross income based on its fair market value when it was received. This implies that each time you sell, buy, or use Bitcoin, you are subject to a capital gains tax.

The IRS rules for accepting crypto also require you to keep track of the value of each crypto on the day it was received and the day it was sold. This can get complicated quickly, especially when managing several transactions a day. It may be more practical to consider accepting crypto for items over a specific dollar value rather than for daily sales.

The IRS provides guidance on virtual currency transactions, which can help you understand the tax implications of converting crypto to cash. By staying informed about these rules and regulations, you can ensure compliance and avoid potential issues when converting crypto into cash.

Know The Laws & Regulations Regarding Digital Assets

Digital assets aren’t regulated in the same way as traditional currencies. Depending on your location and your type of business, you may need to follow money laundering, tax reporting, and consumer protection laws. Some countries, like the United States, classify crypto as assets or commodities, leading to specific regulations for their exchange and investment.

Crypto regulation currently falls under the following U.S. laws and taxation policies:

Securities Laws

The U.S. Securities and Exchange Commission (SEC) regulates securities issuance, sale, and trading, including specific coin offerings (ICOs). The SEC determines whether a particular crypto qualifies as a security.

AML and KYC Laws

The Anti-Money Laundering (AML) and the Know Your Customer (KYC) Laws impose certain obligations and due diligence for businesses.

Taxation

The Internal Revenue Service (IRS) treats digital assets as property for tax purposes and requires taxpayers to report and pay taxes on their crypto holdings.

Commodity Regulation

The Commodity Futures Trading Commission (CFTC) oversees the regulation of derivatives and commodities, including certain types of digital assets.

Consumer Protection Laws

Accepting crypto means you still must adhere to consumer protection regulations enforced by the Federal Trade Commission (FTC). The FTC policies deceptive and unfair practices in pricing, refund policies, disclosure of terms and conditions, fraudulent coin offerings, Ponzi schemes, misleading marketing, and other dishonest activities. 

The regulations surrounding crypto can be quite complicated to understand, which is why it's best to use platforms and service providers that ensure compliance and help users do the same.

Related Reading

• Bitwave Crypto Alternatives
• Mural Alternatives
• Cryptoworth Alternatives
• Fractal Crypto Alternatives
• Request Finance Alternatives
• Bitpay Alternatives
• Crypto Accounts Payable
• Best Crypto Accounting Software
• Cryptio Alternatives
• Tres Finance Alternatives
• Bitwage Alternatives
• Ledgible Alternatives
• Integral Crypto Alternatives

Pay Your Bills In Crypto With Our Crypto Accounting Software Today － Book A Demo To Learn More

Acctual is crypto accounting software for businesses and freelancers transacting in digital assets. It simplifies accounts payable and receivable, making it easy to pay bills and send invoices in crypto. Our flexible options let you pay in crypto while vendors receive fiat, receive crypto while clients pay in fiat, or receive fiat while clients pay in crypto. We also integrate with your accounting system, saving you time on month-end reconciliation.

Key features:

• Multi-level approvals for bills

• Fiat-to-crypto and crypto-to-fiat payments

• Built-in AML screening

• Crypto invoice links

• Automatic payment notifications

• With our smooth AP/AR process, automated bookkeeping, built-in internal controls, and flexible payment options, you can simplify your financial operations with us.

Book a call with our team today to learn how you can pay bills and send invoices in crypto with our crypto accounting software!