If you’ve been thinking about accepting cryptocurrency in your business but fear paying high Bitcoin transaction fees, fear no more. A few simple steps can help you avoid these fees and make your brand more attractive to a wider audience.
1. Choose a Point of Sale System That Reduces Fees
As a merchant, your point of sale (POS) platform allows you to accept payment from your customers. Some Bitcoin POS providers charge their own processing fees on top of market transaction fees, a scenario that can quickly add up. What you want instead is a POS provider that reduces rather than compounds fees so you can keep more of your sales.
Is this really possible? In short, yes. Some POS providers charge a transactional fee based on a percentage of your sales and nothing else. This shields you from fluctuating Bitcoin transaction fees so you can better budget what you pay-out. It also makes Bitcoin payments much more affordable.
Why It’s Important Your Business Accepts Bitcoin
More than 150 million people across the globe now use cryptocurrencies, and Bitcoin is at the forefront of this movement. It’s even gaining in popularity with baby boomers and Gen Xers; accepting this payment method in your business lets customers know you are relevant. You can also eliminate certain kinds of payment fraud, increase transparency with your brand, and attract younger consumers moving away from credit and debit cards.
2. Encourage Customers to Pay With Bitcoin
With the right Bitcoin POS in place, you can actually save on processing fees compared to credit cards. Fees for card transactions range from 0.5 to 5%, plus a 20 or 30 cent flat fee for each transaction processed. The key, then, is to encourage customers to pay with Bitcoin instead of their credit cards. This isn’t a way to save on bitcoin transaction fees, per se, but you will save on credit card fees to keep more money in your pocket at the end of the day.
Save More Money
Bitcoin payments can save you money in other ways, too. For instance, they eliminate the risk of charge-backs that are common with credit cards. Initiated by a cardholder’s bank, these forced transaction reversals take money out of your account and, depending on your bank, may even incur additional fees.
Under IRS law, you can deduct the cost of acquiring cryptocurrency on your annual tax returns. For instance, if you pay $1 in network fees and $15 in exchange fees, you can deduct the entire $16 from any capital gains the transaction may provide. What you cannot deduct are transfer fees because they’re not related to the cost of acquiring cryptocurrencies.
3. Batch Multiple Transactions at Once
Batching refers to the number of transactions you submit into the limited space available on Bitcoin’s blockchain. Combining multiple payments into a single operation is both cost- and space-efficient.
Essentially, batching allows you to reduce your per-transaction fee by aggregating multiple transactions into one. This practice is common among merchants who have a number of Bitcoin transactions in a day or week and are willing to trade immediacy for efficiency. And following this protocol not only benefits you but also keeps transaction fees low across the board for everyone.
4. Wait Until the Network Is Less Strained
The Bitcoin network gets strained during rush hour just like an expressway. When the network is handling the highest transaction volumes, you’re bound to pay higher transaction fees. You can avoid this by waiting to submit your charges. Many merchants follow this path, and their patience usually pays off.
The blockchain tends to be less congested on the weekend, when businesses are closed and fewer overall transactions get submitted. But if it’s Monday or Tuesday and you don’t want to wait until the weekend, you can submit your transactions later in the night. This is when the blockchain has greater clearance space. The longer you’re willing to wait, the less congestion – and lower transaction fees – you’ll encounter.
5. Enter a Custom Fee
All Bitcoin transactions get sent to the mempool, where they wait for miners to confirm (process) them. This is why we have Bitcoin fees in the first place; they support miners with extra incentives and help prioritize transactions.
That’s right – Bitcoin transactions largely depend on their transaction fees for confirmation. And as you likely already guessed, those with higher fees get processed more quickly. If your transaction is not time-sensitive, however, and your POS software allows you to enter a custom transaction fee, you can manually input one that’s lower than the market average. If you choose to do this, just know your transaction could take a longer time to confirm.
You’re the Manager
By reducing your fee below market standards, you distantly manage your transaction. The trade-off is slower processing. This sounds like a gamble, and in a way it is; but the good news is some transactions get confirmed faster than expected. In addition, if the confirmation time stretches beyond what you find acceptable, you can always bump up your fee to push the transaction along.
6. Watch the Bitcoin Mempool
Without getting too technical here, you can access different websites that display the fees others have paid to get their transactions confirmed. This gives you an estimation for priority, which in turn can help identify the fee you’re willing to pay to meet your timeline. You can also see when mining is moving quickly – meaning transaction fees will temporarily drop – and when it’s slowing down, which will cause fees to increase.
In a digital world, currency is also becoming increasingly mobile. Checks are almost obsolete, cash is growing less common, and plastic is susceptible to fraud. The solution is Bitcoin – both transparent and convenient. But to accept this payment method, your business first needs a reliable POS. We lead the way in streamlined POS solutions while reducing the fees you pay. Learn how our systems can galvanize your brand by contacting ForumPay today.