Accepting Crypto: What Marketplace Sellers Need to Know
Online marketplaces are constantly evolving, so to keep up with the change, sellers must always be looking for ways to stay flexible, reduce friction, and reach more buyers.
Over the last few years, an increasing number of people have started accepting cryptocurrency as a form of payment. This is a smart move because, with over 6 million Australians currently owning Bitcoin, Ethereum, or other digital assets, and around 560 million worldwide, there are plenty who might potentially want to pay for products with them.
However, while some sellers see it as a future-facing payment option, others are a bit more unsure. That is why we have put together this guide specifically for the latter.
In it, we will outline what accepting crypto really means for marketplace sellers. We’ll also look at how it works in practice and what they need to consider before offering it as a payment option.
Why Are More Online Sellers Considering Crypto Payments?
Many online marketplace sellers are becoming increasingly global. Indeed, plenty already ship internationally and regularly deal with customers across different time zones and currencies. By allowing buyers to pay in crypto, it offers sellers a way to accept funds without relying on exchange rates and traditional banking systems.
One of the big benefits of accepting crypto is that transactions tend to be processed much more quickly. Primarily, this is because you do not need to wait days for banks to clear the funds. Some sellers also appreciate the lack of chargebacks. Once they are confirmed, crypto transactions are final. This eliminates the potential for fraudulent claims by the buyer.
While the number of people who choose to pay with crypto is currently relatively small, it is growing. So, sellers who accept this form of payment early can establish themselves better in competitive marketplaces.
How Do Crypto Payments Work for Marketplaces?
Sellers who accept crypto payments allow buyers to pay for goods with digital currencies such as Bitcoin, rather than traditional payment methods.
For sellers, this usually involves either setting up a crypto wallet or using a payment provider that supports cryptocurrency payments. In simple terms, the buyer sends digital currency directly to the seller’s wallet address during the checkout process. The payment is complete once the transaction is confirmed on the blockchain.
Some sellers choose to hold the crypto they receive. However, others convert it into Australian dollars straight away through an exchange. For sellers who want to explore this option, you will first need to purchase Bitcoin from bitcoin.com.au or a similar currency from another platform.
Which Cryptocurrencies Are Most Commonly Used by Sellers?
Bitcoin is the most popular cryptocurrency in the world, so it is the one that most online sellers accept. The main reasons for this are that it is widely supported, trusted by buyers, and easy to convert into local currency. Indeed, Bitcoin payments for online sellers are commonplace in international transactions.
That said, stablecoins are gaining traction among sellers who want more predictable pricing. These digital currencies are pegged to traditional currencies. Therefore, they help sellers avoid sudden price movements.
Depending on buyer demand, some sellers may accept other cryptocurrencies, such as Ethereum, Tether, USD Coin, and Binance. However, they are fewer and further between.
Whatever cryptocurrency you accept, the most important factor is to choose one that is easy to manage, widely accepted, and supported by reliable tools.
What Tools or Platforms Do Sellers Need to Accept Crypto?
If a seller wants to accept crypto, they will need to have a digital wallet. They store the private keys that allow them to receive, send, and manage their cryptocurrency. Wallets can be “Hot”, in other words, software-based or hosted through third-party providers. Or they can be “Cold”, i.e. stored offline, through hardware like Ledger Nano X and Trezor Safe 3.
To make things easier for them, many sellers choose to use crypto payment gateways. These platforms handle tasks such as creating your wallet, confirming payments, and converting currencies. Additionally, crypto payment gateways often integrate with ecommerce tools to ensure even smoother transactions.
Whatever tools or platforms sellers use, it is vital that they have good security. This should include strong authentication to protect their funds and transaction data.
What Are the Risks of Accepting Crypto on Marketplaces?
There is a learning curve involved in accepting cryptocurrency on your online marketplace or Shopify site. This includes understanding transaction confirmations, managing wallets, and meeting customer expectations.
Additionally, if you do want to accept crypto payments as a seller, you should be aware of the risks involved in doing so. They can be:
- Price volatility
- Irreversible transactions
- Security vulnerabilities
- Complex regulatory and tax obligations
One of the biggest takeaways is that sellers must protect their wallets and private keys. That is because lost access can mean lost funds. It is also essential to use reputable tools and follow basic security practices.
How Do Refunds, Returns, and Disputes Work with Crypto Payments?
Once confirmed on the blockchain, all crypto transactions are final. This means that any refunds, returns or disputes are handled manually by the seller.
If a customer returns an item, it is the seller’s responsibility to send the crypto back to the buyer’s wallet in accordance with the agreed amount. They should make it clear how refunds are handled before a transaction is made.
It is also essential that they clarify whether amounts are based on the original crypto value or the equivalent Australian dollar value at the time of refund.
What Are the Tax Considerations for Sellers?
The Australian government is quite clear about the tax obligations of sellers when accepting crypto. They must keep records of all crypto transactions they make. Just like they would with other forms of income. This should involve noting down transaction dates, values in Australian dollars, and wallet addresses.
Depending on how the crypto is used and converted, other tax implications can include capital gains or income reporting. If you want more guidance on your obligations as a seller, it is worth seeking professional advice from an accountant or a lawyer.
