Accept Crypto on Shopify: A Step-by-Step Guide for Merchants
As a business owner, you are constantly searching for fresh methods to be creative, differentiate yourself, and offer exceptional offerings to your clients. With the increasing popularity of digital currencies such as Bitcoin, Ethereum, and Litecoin, now is the perfect opportunity to consider integrating cryptocurrency payments into your Shopify store. By accepting cryptocurrencies, you can expand your potential customer base, decrease transaction fees, accelerate payment processing, and safeguard your business from chargebacks.
In this comprehensive guide, we’ll dive deep into the world of crypto payments on Shopify, covering everything from choosing the right payment gateway to managing transactions and securing your digital assets. So, buckle up, and let’s explore the future of e-commerce together, one Satoshi at a time!
What is cryptocurrency?
We can make a wild guess that you already know what crypto is since you are already here, but let’s take a quick look at it again.
Cryptocurrency is a digital or virtual form of currency that uses cryptography for security, ensuring safe and transparent transactions. Unlike traditional currencies, cryptocurrencies operate on decentralized networks called blockchain technology. This peer-to-peer system eliminates the need for a central authority, such as a bank or government, to manage transactions. As the adoption of cryptocurrencies continues to grow, more businesses are recognizing the potential benefits of accepting these digital assets as a form of payment.
Does Shopify Allow Crypto Payments?
Shopify recognizes the potential of cryptocurrencies and the impact they can have on the future of e-commerce. As a result, Shopify has integrated support for crypto payments, allowing you to accept a variety of digital assets from your customers. The platform doesn’t have a built-in crypto payment solution, but it does support third-party payment gateways that specialize in handling cryptocurrency transactions.
Shopify started a partnership with CoinPayments, BitPay, and Coinbase Commerce in 2020, which allowed them to introduce innovative digital payment alternatives for their Shopify merchants. Being a seller on the Shopify platform, you are able to take advantage of these crypto payment solutions by easily accepting over 1,800 various cryptocurrencies as online payments for your goods.
What are the benefits of accepting cryptocurrency on Shopify?
Let’s examine some of the vast benefits of accepting cryptocurrency as a payment method.
Access to new markets
Customers from all over the world are able to make payments without the interference of banks or payment institutions. If you would like to increase your revenue, certainly a bigger market reach and multiplying the number of clients would help.
Enhanced customer experience
Your goal is to present an unprecedented experience to inspire clients to visit your website more often (and build up their lifetime value ( LTV)). If you implement crypto payments, you will be able to offer versatility to your clients, which would induce a pleasurable experience.
Low transaction fees
Compared to traditional payment processors, cryptocurrencies are connected with lower processing fees which suggest increased gross profits.
Pro tip from Coinlabz’s team: To understand the probable savings, you would have to determine your profit margin using varying transaction fees and compare the ensuing figures.
When it comes to international payments, they take a few days to process. Compared to crypto payments, which are prompt and carry out at once.
One of the main challenges which your business faces are customer disputes and chargebacks. They can lead to a drop in revenue and be quite tiresome. In the world of crypto, they simply don’t exist. Only the merchant can decide if a transaction is going to be reversed.
Blockchain technology verifies and records each transaction, making it impossible for someone to get access to your personal information without authorization. This makes it the more secure payment method compared to the other payment methods, as it also does not need third-party verification.
How to accept Crypto Payments on Shopify
It is quite easy to start accepting payments in cryptocurrency on Shopify
1 ) You can start by creating an account at one of the digital currency platforms that are compatible with Shopify.
Then link this account to Shopify by going through these instructions:
Head to your Shopify admin and click on Settings in the bottom left. After that, go to the Payments tab.
Go to the Additional payment methods area and hit the button to add more payment options.
Browse for a suitable cryptocurrency payment system, click on Activate button and then press Connect.
Enter your login info, pick the crypto you want to accept, and hit Activate to turn it on.
It’s completed. Your clients can select this payment option when they check out.
What should you know about the payment gateways that are supported by Shopify:
Some of the most popular crypto payment gateways supported by Shopify are Crypto.com, Coinbase and Bitpay.
Although they all have their pros and cons, the process of implementing them into your Shopify site is quite simple and straightforward:
Crypto.com is one of the most popular crypto exchanges used by more than 80 millions users worldwide.
Integration is quick and easy. First, you need to create a Crypto.com Pay account from here.
Then install Crypto.com Pay plugin from the Shopify app store. Here is a link to it – https://apps.shopify.com/crypto-com-pay-for-business
The next step is to login into the Shopify admin panel and select Crypto.com as a payment provider from the settings menu.
Check the complete step-by-step guide here:
Now you can accept payments in more than 20 cryptocurrencies, including ETH, BTC and Stablecoins. You can also choose to convert the crypto you are paid with directly to FIAT money – this is a great way to take advantage of the benefits of the cryptocurrency payments, but also to avoid the volatility of the crypto.
What is great if you decide to use Crypto.com Pay is that the installation is completely free, and they don’t require any subscription. Also, there are no transaction fees. You pay only settlement fees for 0.5% of your transactions.
Coinbase is one of the leading crypto exchanges. Trading volume on their exchange grew from 193 billion USD in 2020 to 830 billion USD in 2022. They also offer a platform that enables merchants to accept crypto payments all around the world, called Coinbase commerce.
The process is identical to setting up Crypto.com Pay – you need a Coinbase Commerce account, then add Coinbase as a payment provider from your admin panel in Shopify.
They support the most popular coins, including BTC, Bitcoin cash, ETG, Dogecoin, Shiba Inu, USDC, USDT, Polygon and a few more.
Coinbase charges 1% fee for their services, and no installation fees are required.
An interesting feature offered by Coinbase is its Self-managed commerce. With this option, you have full control of your coins by controlling the private keys. The transaction fee is still 1%, though.
Here you can find more information about Coinbase commerce integration on Shopify:
BitPay is a popular and reliable cryptocurrency payment gateway founded in 2011. It enables you to accept various cryptocurrencies on your Shopify store. Integrating BitPay with Shopify is a straightforward process.
Start by signing up for a BitPay Business account, then navigate to the “Payment Methods” section in your Shopify admin panel. Click on “Alternative Payments” and select BitPay from the list. The last step is to go back to your BitPay account and finalize the integration.
Once integrated, your Shopify store will be ready to accept cryptocurrency payments through BitPay, giving your customers the flexibility to pay with their preferred digital assets. You can manage transactions, refunds, and other aspects of your cryptocurrency payments directly from your BitPay dashboard, simplifying the process and ensuring a seamless experience for both you and your customers.
Here you can find more info on how to integrate Bitpay with Shopify:
Bitpay charges a transaction fee of 1%+25c on every transaction.
Popular Cryptocurrencies for accepting E-commerce payments
It’s quite difficult to keep an eye on all cryptocurrencies in the world, as currently, they are more than 22,000 and new ones are being added each day.
For e-commerce businesses, it’s important to pay attention at least to the top 10 cryptos at the moment because they are the most widely used ones and more likely that your clients have them as well and pay with them.
These are the top five cryptocurrencies that eCommerce companies accept now.
1. Bitcoin (BTC)
Bitcoin is the first cryptocurrency and is the most widely used one. It was created by Satoshi Nakamoto, who wrote a whitepaper named “A Peer-to-Peer Electronic Cash System” in 2008, aiming to decentralize the financial industry and hand over the control of digital transactions to people.
2. Ethereum (ETH)
The second position is occupied by Ethereum, which was created by Vitalik Buterin. His thoughts were aimed at the belief that Bitcoin and blockchain technology could be used to decentralize the financial system. The result was the establishment of Ethereum.
It verifies and logs all transactions by being a distributed public record. Users can create, monetize, distribute and use apps on the platform as well as pay with Ether cryptocurrency.
Recently, Ethereum has made it to PoS, which brings plenty of opportunities as well as challenges for the coin.
3. Dogecoin (DOGE)
Starting as a joke currency and backed by popular figures like Elon Musk and Mark Cuban, Dogecoin has become vastly accepted and now can be viewed as a legitimate way of payment. Furthermore, companies like AMC Theatres are already accepting Dogecoin as a means of payment.
Next on the list is Litecoin, created in 2011, which is only two years after Bitcoin. Litecoin is the code of Bitcoin with an increased number of units to 84 million coins.
The name came at its launch after it was labeled the lite-version of Bitcoin by the crypto community. The recent rank of Litecoin has dropped down as the crypto market continues to evolve. Having faster transaction speed and limited coins still makes it a preferred choice for payment for many eCommerce merchants.
5. Ripple (XRP)
XRP operates on its decentralized, open-source blockchain known as the XRP ledger (XRPL), and transactions are facilitated by the Ripple transaction protocol (RTXP). Unlike most cryptocurrencies, XRP is pre-mined, with a maximum token supply of 100 billion. Because of its consensus protocol, XRP is able to process transactions in seconds at a low cost and with minimal energy. This makes it one of the more environmentally friendly cryptocurrencies.
Aside from the coins mentioned, there are plenty of other options you could consider for your eCommerce site. However, it’s strongly advised that you take some time to look into these currencies before adding them as a payment option. There are a few things you need to consider before starting to accept a particular coin as payment, like transaction fees, liquidity, volatility and others. Making a plan in advance of what you will do once you receive the cryptocurrency is quite important as you can store it for a longer period of time or convert it to fiat money directly. After doing extensive research into different coins and still haven’t made up your mind about which ones to implement and why we recommend talking to a professional financial advisor.
How to educate Your Customers About Crypto Payments
So, you’ve jumped on the crypto bandwagon and integrated a payment gateway into your Shopify store. Now, it’s time to spread the word and make sure your customers are well-informed about this new payment option. After all, the more your customers know about the benefits and convenience of crypto payments, the more likely they are to use them. Let’s explore some strategies to educate your customers about this exciting development.
Adding a dedicated crypto payments information page to your Shopify store
Creating a dedicated page on your store’s website is a fantastic way to provide customers with essential information about cryptocurrency payments. This page can cover topics like:
- The cryptocurrencies you accept
- The benefits of using crypto for transactions
- Step-by-step instructions on how to complete a crypto purchase
- FAQs related to cryptocurrency payments and your store’s policies
Make sure this page is easily accessible from your store’s main menu or footer, so customers can find it without any hassle.
Promote the availability of crypto payments through marketing channels
Spread the word about your new crypto payment option through your regular marketing channels. Announce the news on your social media profiles, send out email newsletters, and create eye-catching banners or pop-ups on your website. Highlight the advantages of using cryptocurrencies and encourage your followers to give it a try. You can even offer special promotions or discounts for customers who pay with crypto to create buzz and drive adoption.
Provide resources to help customers understand cryptocurrencies and how to use them
While many people have heard of cryptocurrencies like Bitcoin, not everyone fully understands how they work or how to use them for transactions. To narrow this knowledge gap, provide resources and educational content that help demystify cryptocurrencies for your customers. This can include:
- Blog posts or articles that explain the basics of cryptocurrencies and blockchain technology
- Tutorials on setting up crypto wallets and making transactions
- A list of reliable sources and tools for tracking crypto prices and staying informed about the market
By taking the time to educate your customers about the world of cryptocurrencies and how they can benefit from using them, you’ll build trust and credibility while encouraging more people to embrace this innovative payment method on your Shopify store. Happy crypto shopping!
Managing Crypto Transactions and Accounting
Embracing the world of cryptocurrencies is exciting, but it also comes with some unique financial and accounting challenges. As an e-commerce owner, it’s crucial to stay on top of your crypto transactions and ensure your books are in order. Let’s dive into some key aspects of managing your crypto transactions and accounting.
Tracking and recording crypto sales
Keeping accurate records of your crypto transactions is essential for both financial management and tax compliance. Here are some tips to help you stay organized:
- Use your chosen payment gateway’s dashboard or reporting tools to monitor incoming crypto transactions and settlements.
- Categorize crypto sales separately in your accounting software or spreadsheets to differentiate them from traditional sales.
- Record the value of each transaction in your local currency at the time of the sale to accurately reflect your revenue and monitor fluctuations in crypto prices.
- Get in touch with an accountant that is familiar with cryptocurrency taxes to make sure you have set up everything correctly.
Cryptocurrency and taxes
Your income is subject to tax at the same rates whether you receive cash or crypto. The main difference arises when you use cryptocurrency to pay for purchases, sell it, or trade it for another type of crypto.
The IRS treats cryptocurrencies as ‘virtual currency’, which is treated as property for tax purposes. It basically means that whenever you somehow dispose of the coin (by using it to purchase something, selling it, or trading it), the disposal results in a capital gain or loss for your business and should be reported on Form 8949 and filed with your tax return.
The IRS allows two methods to allocate your cost basis to a specific sale:
- FIFO (first in first out), or
- Specific identification
Without getting into too much detail, for both methods, you’ll need to keep records of how much the crypto was worth on the date of each transaction you made.
Don’t worry – not all crypto transactions are taxable. Buying cryptocurrency with cash is not taxable, and neither is transferring units of a particular cryptocurrency between wallets you own. There are also some exceptions for gifting and donating cryptocurrencies, which may not be taxable either.
When starting out, make sure you speak to a professional so you can avoid a showdown with the IRS.
Securing Your Crypto Payments and Mitigating Risk
As you dive into the world of cryptocurrency payments, it’s essential to prioritize security and minimize potential risks. After all, the digital nature of cryptocurrencies makes them a prime target for hackers and bad actors. By following best practices and implementing robust security measures, you can protect your hard-earned digital assets and keep your business safe. Let’s explore some essential security tips and tricks.
Best practices for wallet security and management
Crypto wallets are the backbone of your cryptocurrency payment infrastructure, so keeping them secure is a must. Here are some best practices for wallet security and management:
Use a strong, unique password for your wallet and enable two-factor authentication (2FA) for an extra layer of protection.
Create backups of your crypto wallet and private keys to protect against data loss or system failures.
Keep your store’s security systems up to date, including firewalls, anti-virus software, and SSL encryption.
Be cautious when using public Wi-Fi networks or untrusted devices to access your wallet.
Implementing multi-signature wallets and hardware wallets
Multi-signature wallets and hardware wallets can add an extra layer of security to your cryptocurrency storage:
Multi-signature wallets: These wallets require more than one person to sign off on a transaction, reducing the risk of unauthorized access or theft. They’re ideal for businesses with multiple stakeholders or those looking for a more secure solution.
Hardware wallets: These are physical devices that store your private keys offline, protecting them from hacking attempts and malware. They’re considered one of the most secure ways to store cryptocurrencies.
By implementing strong security measures and staying vigilant, you can secure your crypto payments, protect your digital assets, and keep your Shopify store safe from potential risks.
If you are having second thoughts or in doubt about starting to accept crypto payments on Shopify, we can say that you are a bit late, but you can still catch up to your competitors. For Shopify merchants, there are plenty of benefits starting from widening their customer base and faster payment processing to lower transaction fees and protection of revenue by eliminating chargebacks. Luckily Shopify has made the integration smooth and straightforward for everyone interested in receiving crypto payments for their goods.
With thousands of cryptocurrencies on the market, it’s normal to be cautious when choosing the right one for your needs. We recommend making a safe bet in the beginning by going with the most popular ones, like Bitcoin and Ethereum. You still have to keep into consideration the taxes if you don’t want the IRS knocking at your door and the security of your assets – we recommend the hardware wallets as they are offline.
The popular saying “What we don’t understand, we fear” is quite accurate when it comes to accepting crypto payments online. If you would like to put the traditional payment methods in the rearview mirror and embrace the future, you have to educate your client base with blog posts, articles and tutorials to understand the benefits. This would pave the way for stable and significant growth for your revenue.
Cryptocurrency payments for Magento 2 e-commerce
Zornitsa is the Editor-in-chief at Coinlabz. She is involved in researching the impact of blockchain technology and the way crypto is transforming peoples’ perceptions of finances.