Digital currencies like Bitcoin, Dogecoin and Auroracoin, continue to develop and it is vital that businesses take notice and make necessary changes to meet the evolving needs of their customers. Bitcoin, as a prime example, has gained a great deal of media coverage for its growth as it continues to expand into the market.
We’ve created this short guide to help you prepare your ecommerce business for a future of Bitcoin.
What is Bitcoin
Similar to PayPal, it provides users with an alternative payment method to traditional options like cash or credit card.
Who is using it
Businesses are slowly starting to accept cryptocurrency payments. Research from the Journal of the Royal Society: Interface show that there is a correlation between the 10,000 per cent increase in Google searches for Bitcoin, and the significant value increase in digital currencies.
It is becoming increasingly regular to see ecommerce sites advertising that they accept digital currencies. More recently Dell started accepting Bitcoin, the third largest seller of PCs worldwide.
Why should you use it
- Personal information is kept secure and never shared.
- No transactions/foreign exchange feesmake it a cheaper option than bank transfer.
- No security checks or regulations, just wallet security, also knock down the price.
- Digital currencies are accessible anywhere in the world, provided an internet connection.
- It is non-reversible and so businesses can avoid returns.
- It hasn’t been widely adopted yet.
- The value is easily influenced making it a volatile currency option.
- There is no (easily discoverable) trail of transactions for retailer, though this creates ahigh level of security.
- The wallet can be accessed easily if someone gets access to the private key; undermining the otherwise high level of security.
How businesses can prepare
If, after weighing up the pros and cons, you decide that accepting this virtual currency will benefit your ecommerce site, it is essential that both you and your customers are prepared for the change.
Tell your customers
Before you accept, it is vital that your customers are aware of this payment option. You can make this information available to your customers by adding a Bitcoin badge to your site. However, it could be more beneficial to your business and customers if you include an introduction to the service, similar to Dells announcement. Whats more, adding a description will meet the needs of your customers who arent familiar with virtual currencies.
As Bitcoin opens your e-commerce site up to customers worldwide, being able to accept a range of currencies is important. We’d suggest a merchant solution such as:
These platforms accept and automatically convert the currency used to pay into your preferred currency. For e-commerce sites, utilising a merchant solution means you get access to payment platform plugins to ensure quick, easy payments.
Where payments are involved, being able to achieve a high level of trust between the customer and your business is of paramount importance. Using secure SSL or HTML to provide your customers with a secure link away from your site will make fraud less likely.
Whether the payment is from card, cash or digital currency it’s a struggleto log a transaction while keeping your customers details are completely secure. For this reason, we would advise printing out most of the address used in the Bitcoin payment, and filing it. This is to maintain a high level of security for your customers by storing all of your transaction history.
As the value of digital currencies can fluctuate it is important that you are setting prices that will not lose money for your business, yet will give your customers the best deal. Merchant services like BIPS automatically set the prices for you, by using the current market rate to create the most reasonable quote at that time.
Declaring the Payment
You will need to declare that your business is using Bitcoins so as to pay the right amount of tax. Entering this type of transaction usually comes at a cost as:
- There is no evidence to prove you received the payment.
- The nature of the transaction is disguised.
Your accountant should be able to best advise you on how your business should go about declaring a payment.
To fully understand how Bitcoin works, you should approach it as you would cash. These two payment options are similar in the following ways:
- How you handle transactions.
- How you accept transactions.
- How you pay tax.
Therefore, your business needs to pay tax on any income from Bitcoin payments. We would always recommend talking to your accountant about this, as there is however a slight difference between the two payment options.
Research suggests digital currencies are the future of e-commerce and may become one of the most favoured payment options for consumers today, so it is vital that you provide your customers with a virtual payment option to meet their needs. However, whether you opt for Bitcoin or an alternative, the first step you need to take is preparing your both business and customers for the future of your site.
Nick Pinson is the Managing Director at ecommerce web developer agency iWeb Solutions.