Crypto curious? What to know before accepting digital payments

They can help lower transaction fees, but plenty of due diligence is still required.

Once primarily the financial darling of tech geeks and the dark web, cryptoassets such as bitcoin and dogecoin have emerged as household names in the past few years, thanks in part to extensive media coverage of their rollercoaster valuations. All the exposure — especially with a big business name such as Elon Musk repeatedly making investment waves — may have more companies than ever wondering if they should join the crypto club.

So what do crypto curious finance departments need to know when deciding whether to accept bitcoin and its digital brethren? This article breaks down key considerations CGMA decision-makers should keep in mind regarding accepting crypto payments. (Editor's note: The potential perks and pitfalls of corporate crypto investments are legion and beyond the scope of this article.)

Accounting technology consultant Amanda Wilkie notes a number of potential advantages to taking payments in cryptoassets. At the top of the list, cryptoassets provide users with the opportunity for real-time settlements, lower transaction fees, and a way to generate revenue across borders without having to deal with currency conversions.

Days of future past

Bitcoin, introduced in January 2009, is the oldest and by far the most widely used cryptocurrency, with a market cap north of $800 billion as of this writing. Ether is a distant second to bitcoin but still considerably more popular than tether, dogecoin, and the rest of the thousands of cryptoassets on the market.

Wilkie thinks getting into cryptoassets now — a little over a decade into their development — can give companies a competitive advantage akin to the one that some tech-savvy companies gained in the early days of the internet.

Whether for those reasons, or simply to attract more tech-savvy customers, many companies have dipped their toes into the crypto waters. AT&T, Microsoft, Rakuten, and Sotheby's are among the big names that accept crypto payments. But the use of crypto isn't limited to large multinationals.

In the US alone, about one-third of small and medium-size companies accepted payments in cryptocurrency, according to a January 2020 study funded by HSB, a subsidiary of insurance giant Munich Re.

"The intro into accepting crypto is becoming much easier," noted Wilkie, who is based in Alexandria, Virginia, in the US and works at Boomer Consulting Inc. "You don't have to spin up mining rigs."

That's a reference to bitcoin mining, in which miners compete to validate and add a block of transactions to a blockchain. The miners compete through the use of a computer to solve complex equations, and the winning miner is then entitled to transaction fees and/or a block reward (that is, newly created bitcoin).

The inner workings of cryptoassets and blockchain can seem opaque to nontechies with its talk of tokens, wallets, and hashes. Even its origins are shrouded in mystery, with no one really sure who is behind the alias of bitcoin creator "Satoshi Nakamoto".

Payment processors can help

But Wilkie says companies don't need to understand the technological minutiae if they use a payment processor, which can accept payment in various cryptoassets and then convert it to a fiat currency before it even hits the company's books.

Companies can choose from among many crypto payment processors. One of those, BitPay, has been used since November 2017 by APMEX, based in Oklahoma City, Oklahoma, in the US — a company that sells coins and precious metals to retail investors and collectors. Since signing up with BitPay, APMEX has conducted $93 million in crypto transactions, with those deals typically making up about 3% of the company's annual sales.

One benefit of using a crypto payment processor is the speed, said APMEX CFO Doug Sterk. BitPay deposits US dollars into APMEX's account within one day after receiving the payment in bitcoin or another cryptocurrency. This allows his company to quickly send out the goods to buyers instead of having to wait for a cheque to arrive and to clear the bank.

"We have to make sure the funds are good," Sterk said. "Nobody stays in business long selling free gold."

Sterk also likes that the fee he pays to BitPay is only around 1% of the transaction.

By contrast, credit card processing fees are typically 1.5%—3.5%, according to Companies also can pay 4%—6% fees for international wires, noted Jagruti Solanki, CPA, CGMA, the CFO of Atlanta-based BitPay. Solanki, whose company processes about $1 billion in transactions annually, adds that there is no risk of chargebacks. That's another major plus for CFOs such as Sterk.

"That chargeback is a four-letter word," he said.

Due diligence still needed

While using a payment processor can help to mitigate many risks, companies still must perform due diligence before accepting crypto payments.

Companies first should investigate whether there is existing consumer demand for paying in crypto — or if accepting crypto might attract new clientele.

Then, companies need to do their homework when picking a processor to make sure that it is reputable and its technology systems are secure. Companies also still need to practise the KYC, or "know your customer", philosophy. Since crypto can be harder to track than, say, bank transactions, it's crucial to ensure you aren't dealing with money launderers or entities with financial sanctions.

There's another consideration for giant companies: That 1% processing fee can go to almost zero if a company builds its own processing capabilities, said Howard Greenberg, president of the American Blockchain & Cryptocurrency Association (ABCA), a trade association based in Washington, D.C. For that reason, it may make sense for companies that engage in an enormous number of transactions to build their own payment collection system.

Building your own processing system obviously entails additional upfront costs, as well as specialised technology skills. Therefore, it is less likely to make sense for small or even midsize organisations. "There is still a technological barrier to entry," added ABCA board member Ted Kowalsky. "For a company to implement all of this from scratch, this is not an easy lift."

Operating without a payment processor also entails more than just cybersecurity challenges, especially for finance departments. First is the volatility — cryptoasset valuations can change quickly. Companies that keep crypto on their books as part of their cash flow strategy could see wild swings in its worth and should address that in their risk management strategy.

For companies using a payment processor like BitPay that accepts crypto on behalf of the company's customer and settles to the company in fiat currency, the tax and accounting is no different from the way they record transactions today — there is no impact of cryptocurrency on the company's books. Companies holding cryptocurrency or receiving cryptocurrency must keep track of the cost basis of the asset and calculate realised losses and gains. This could be complicated by the fact that there is a dearth of guidance in some countries regarding how to treat gains and losses.

"It can be an accounting and tax nightmare if it is not done properly from the start," Solanki said.

Chris Baysden is an FM magazine associate director. To comment on this article or to suggest an idea for another article, contact him at


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