5 considerations for businesses evaluating crypto payments solutions
Introduction
Crypto payments are here. Individuals, businesses, and even some governments are now using crypto payments in exchange for goods and services. Global acceptance, low fees, and near-instant settlement make crypto payments an ideal choice for businesses that are increasingly engaged in global commerce.
For those businesses that are new to crypto payments or just starting to explore how to accept crypto payments, this article is for you. Below, we discuss 5 factors to consider when receiving payment in crypto and how you can implement the ability to accept crypto seamlessly.
Getting started with receiving crypto payments
To start receiving payment in crypto, you will of course need a crypto wallet. There are a number of options and considerations when it comes to selecting what type of crypto wallet to use. Depending on your business, the volume of funds being received, and your organizational structure, different wallets may suit you better than others. To learn more about crypto wallet types like EOAs, multi-sigs, MPCs, and custodial options, there are several great primers out there like this one from Bitsgap.
While it’s one thing to have a crypto wallet to receive funds, you will most likely also want a crypto payment provider that offers a checkout interface. Among a variety of benefits, crypto payment processors (like us here at Loop Crypto) help ensure your customers send the right amount of the right token, on the right chain, to the right wallet. In the section below, we detail the important considerations when evaluating crypto payment processors as you start to receive crypto.
5 factors to consider when evaluating crypto payments solutions
(1) Ability to record and track transaction hashes
Transaction hashes, or transaction IDs, are unique identifiers assigned to each transaction on a blockchain. They consist of alphanumeric characters that are unique to every transaction and can easily be referenced. The transaction hash contains all relevant information about the payment processed, including the sender and receiver wallet addresses, the amount paid, and the time of payment. This provides proof that a transaction took place at a specific time. The ability to generate and track transaction hashes when receiving crypto payments makes the process transparent and safe for both sender and receiver.
As you evaluate crypto payment processors be sure to understand how they capture and store transaction hashes. Does the platform automatically sync transaction hashes with invoice records? Are payment details presented in a human-readable manner? Can you export the payment records along with the payment metadata to your other finance and accounting tools? Too many businesses waste hours every month hunting down transaction hashes and reconciling crypto payments to invoices. Make sure you use a system that can automate this work for you and makes it easy to analyze your incoming revenue.
(2) Ability to handle various pricing models
You should consider whether the payment provider can handle various pricing models before using them to receive or send crypto payments.
For one-time payments, a simple checkout interface will do; however, not all providers can handle complex pricing models like pay-per-usage, pay-per-seat, or flat-rate subscription tiers. You want to ensure the crypto payment provider you are utilizing has built the complex logic to be able to handle all of these various pricing iterations.
You should also evaluate any additional features like coupon codes, free trials, and discounts that a solution offers. All of this functionality is critical for ensuring that your crypto payment experience is as seamless as possible for your user and offers a comparable or better experience than paying with fiat.
(3) Availability of tokens and networks
Crypto assets are volatile and fluctuate based on market trends. If you’re paid in Bitcoin, for example, the value is obviously prone to move up and down day by day. To mitigate this risk, many businesses prefer to accept stablecoin payments in tokens like USDC or USDT. Alternatively, you can convert crypto to fiat currency immediately and transfer it to your bank after receiving payment in crypto. Depending on your needs for on-chain assets, businesses can deploy a variety of strategies with the crypto funds they receive. In general, you want to ensure your crypto payment processor can handle a range of networks and tokens including stable and non-stable tokens so that you can meet the payment demands of your customers.
(4) Storage of funds
Once you receive payment in crypto, you need to determine how you will store and potentially use the funds for working capital. Many companies operate on a chain where they have expenses related to gas, minting, RPC usage, indexing, etc. In this case, they may want to keep the crypto they earn on the chain and utilize it to make expense payments. Other businesses, may want to off-ramp all or a portion of their crypto revenue into fiat. In this Web 2.5 world, most businesses have expenses denominated in both fiat and crypto. If you do need to off-ramp crypto, there are a range of off-ramp services. When evaluating these services, it is important to consider their fees, geographic coverage, and rigor around compliance.
(5) Accounting, taxes, and regulation
Financial laws, tax policies, and accounting standards vary across regions. Therefore, it is essential to stay up to date on your region's latest rules and regulations. Working with an accounting firm specialized in crypto accounting can remove some of this operational burden and ensure you are always staying up to date.
To learn more about the accounting side of receiving payment in crypto, we suggest you check out our two part series on crypto accounting. In part 1, we discuss tooling known as a crypto subledger and why this tool can be helpful if you’re transacting on chain. In part 2, we dive deeper into the world of crypto accounting and explain how you can automate much of the work related to managing crypto payments.
Final Thoughts
Crypto payments offer a new rail or transaction layer to move value seamlessly across the globe extremely quickly at a low cost. There is tremendous potential for businesses adopting this technology to simplify the way they manage payments and save billions of dollars in transaction fees. We hope this primer gave you a starting point as you consider accepting crypto payments. If you want to learn more or are curious about how Loop Crypto works, please reach out and schedule a call.
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About Loop
At Loop Crypto, we build infrastructure to unlock truly programmable money and create an open financial system. We enable crypto payments for 50+ of the top web3 companies, including Pinata, Neynar, Paragraph, Kaito, ETHGlobal, and ENS, supporting millions of dollars transacted and saving thousands of hours.
Whether the payment is one-time or recurring, Loop supports a broad range of payment use cases: subscriptions, one-time charges, recurring bill pay, loan repayments, and donations. Our integrations with Stripe, QuickBooks, and Xero make it easy to implement crypto payments within your existing operations.
If you’re ready to get started, book a call with our team to get started in minutes.
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