Should your small business accept digital currencies?

As a small business owner, it’s important for us to stay on top of ways we can offer our customers payment solutions and accepting cryptocurrencies will be the next option people will be looking to pay with.  Whether it's google pay, apple pay, venmo or other methods that gain in popularity, it’s crucial for us to stay ahead of the curve, offer frictionless payment options and adapt. 

Educate yourself on the “why” of crypto payments and understand how accepting tokens like USDC (pegged to the US Dollar $1:1) would be a huge improvement to your bottom line as adoption increases.  You don’t need to accept tokens that move +/- in the market.  All of the current payments rails for accepting crypto can autoswap any token someone pays with into USDC.  We pay our bills in our local fiat currencies, so it’s best to leave this option selected.  You can choose to accept other tokens, but I’d hold off on that until you get a better understanding of the space.  It can seem confusing because there are multiple ecosystems, but the top two for payments to focus on will be Solana and Ethereum.  

Blockchain technology has a lot of huge upside for small businesses.  A great book to check out (free if you have Spotify) is Chris Dixon’s Read Write Own, which talks about the importance and revolutionary aspects of using blockchains.  We are all being gate kept right now by all of the big companies and blockchain and web3 will be our time to take back control.

 

Learning how to get a wallet address and properly execute receiving USDC will take deeper research on how to make accounts, but this article is intended to raise awareness and bring up the idea to consider for yourself.  At Alchemy Merch, we have been accepting digital currencies on all orders for about 2 years, but I have been heavily involved in web3 for a few years and have done the research to see if it fits our brand and how to implement it safely.  

You pay 2.5-3% on every transaction to Visa/Mastercard and another +1% to accept AMEX when someone buys an item in your store.  That adds up to a lot of fees we pay as small business owners to corporations and there are other alternatives.  Current adoption for payment types like USDC are not as widespread, but you should be prepared and take the time to learn how to accept these types of payments.  The current fee taken for a payment from a customer in USDC is around 0.5%.  If you process $50,000 of orders a year and lose an average of 2.5% to credit card processing fees, that amounts to $1250 in fees per year.  If everyone paid in USDC, that would be $250.  If you are processing a few hundred thousand dollars a year, this number jumps up very quickly.

What can you do to accept USDC in your store?  If you use Shopify, there are some easy payment options to add such as Coinbase Commerce and SolanaPay.  Stripe has said they will integrate USDC payments as an option this fall as well.  

Does your business need a special account with an exchange?

Talk to your tax professional, but if you are a sole proprietor who files your business taxes along with your personal, you may be able to have a normal Coinbase account vs needing an institutional account.

As a business, you may need to look into creating an institutional account with a Centralized Crypto Exchange like Coinbase.  This can be your on/off ramp of converting USDC to US Dollars for your bank account.  I suggest Coinbase if you are US based because they are a publicly traded company, trusted by most of the Bitcoin & Ethereum ETFs and more heavily regulated and watched than other exchanges.  You do not need to put money into a Coinbase account, but they do KYC(know your customer) checks when you create an account and will have to link a checking account so that you could convert your USDC to cash and send it in fiat (USD) into your account.  More and more options are popping up that allow for you to go directly from your USDC to fiat USD deposited into your bank and are being integrated.    

In order to accept crypto, including USDC, you will need to have a wallet address.  If you sign up for coinbase, you can use your address for the specific tokens you want to accept for USDC on Solana or Ethereum.  Your wallet address is similar to your bank account number.  If I’m sending you an ach or wire, I need to know the bank routing number (ecosystem such as Solana or Ethereum) and your account number (wallet address).  If you wanted to pay Alchemy directly, I could tell you the amount to send and to send USDC on Solana to alchemymerch.sol just like sending other methods of payment we are familiar with.  

Securing your brand's address.

If you are using Ethereum, or Solana, you can purchase a domain name address for your receiving address to your wallet.  In reality, your website is a string of numbers for the address, but when you buy a domain, such as alchemymerch.com, it allows people to find you based off of your brand.  Similar things can be done, such as obtaining yourbrand.eth or yourbrand.sol for easier receiving.  It's not very expensive and if you want to add digital currency payments, is worth looking into.

Solana Name Service (secure your brandname.sol - costs about $20) to receive funds to vs a long string of letters and numbers as an address

Ethereum Name Service (secure your brandname.eth - costs vary)   to receive funds to vs a long string of letters and numbers as an address

 

Accepting USDC payments directly from customers

If you run a local business such as a coffee shop, sell at live events, etc, you can accept direct payments with no transaction fees.  A crypto wallet gives you an address which is like your account number or venmo/zelle contact, etc.  You can get the QR code of your receiving address within the wallet to print out and people could scan to send easily for direct payments.  You could also attach the QR code to an invoice for people to pay directly as well.  Vanity addresses can be purchased on Solana (sns.id) or Ethereum (ens.domains).  For instance, you could send a payment to alchemymerch.sol or alchemymerch.eth and we’d receive the payment with no transaction fees. A vanity address allows you to use a simple name instead of a long string of letters and numbers.  

Accepting USDC on Solana

SolanaPay (https://solanapay.com/) uses the Solana network to accept USDC.  Solana is a high transaction, low cost network and perfect for people using it for online purchases.  You can add SolanaPay through your Shopify store under Settings > Payments > add payment method > search for SolanaPay.  It’s run by Helio (https://www.hel.io/) and when you sign up for an account and connect your storefront, you can choose to use your own wallet, or they can create one for you using only your email address.  

In order to get payments in USDC, you need to have accounts to receive payments into and crypto wallet addresses. Both commerce options allow you to choose to accept other tokens or to have other tokens used for payment automatically swapped into USDC for you.  As business owners, being paid in a stable asset typically makes the most sense, but you have options available to adjust your risk curve as much as you’d like.   

Solana Links

Solana Pay Official Site -(integrates with Shopify)

Phantom Wallet - popular wallet for Solana - learning information

Solana Ecosystem - Official Solana website

Helio - Company behind SolanaPay integration

Solana Name Service (secure your brandname.sol - costs about $20) to receive funds to vs a long string of letters and numbers as an address


Accepting USDC on Ethereum (and Layer 2’s such as BASE)

In addition to adding Solana Pay as a checkout option, you can also integrate Coinbase Commerce.  This can allow you to accept USDC or other tokens.  As mentioned prior, I would suggest you select the option to have any token used for payment auto-swapped into USDC unless you are more knowledgeable about the space and understand the risks and/or benefits of possibly accepting other tokens.  Coinbase operates their own blockchain called Base and have been putting a lot of resources into building it out and to bring more businesses into accepting payments on crypto rails.  They also have their own stand alone wallet (Coinbase Wallet) that can be used to receive payments.  

Ethereum Based Learning

Metamask Learn - Web3 101 Learning 

Ledger Academy - Web3 Learning (multiple chains)

Coinbase Commerce - integrates with Shopify (for accepting usdc on multiple chains/ ETH, BTC and others)

Coinbase Wallet (self custody) but can link to your main coinbase account.

Ethereum Name Service (secure your brandname.eth - costs vary)  to receive funds to vs a long string of letters and numbers as an address

Circle - Creator of USDC - learn more about stable coins

TLDR

You may not be ready to jump into it quite yet, but learning the principles and potential benefits to your business is an important step to be prepared.  It’s such a massive shift for small businesses, and it’s not fully mainstream, but it will come.  Major institutions are adopting crypto payment rails and we need to be up to date on ways we can accept customer payments.  The web will be moving into its “Own” phase with web3 and knowledge is power.  Learn about it and the “why” behind it and decide if it’s time for you or not.  It never hurts to learn more about something that could benefit your business.  I’m just scratching the surface in this article to help initiate awareness and to give you steps to educate yourself.  Over 40 million Americans own cryptocurrencies, and although they aren’t all fully on-chain, it’s a good early signal of what’s to come. Blackrock and others are embracing this new technology and bringing it more into the forefront for investors and into the public eye in ways far beyond the notion of just Bitcoin.  The traditional systems that feed upon small businesses are primed for a shake up that puts the power back into the hands of the owners and not the institutions.   

Back to blog