Also called: Convertible virtual currency, Cryptoasset, Digital asset
What virtual currency is
Virtual currency is a digital representation of value that people use to exchange, measure value or store value. Bitcoin is one example. It is not issued or guaranteed by a government and does not have legal-tender status in the United States. No law requires your business to accept it.
The term covers different systems. Transactions can be recorded on a centralized or distributed ledger, and wallets use addresses to receive funds and private keys to authorize transfers. Some virtual currencies use a blockchain, but the label alone does not tell you how a payment works or who controls it.
The amount quoted to your customer is not necessarily the amount your business receives after conversion and fees.
How a virtual-currency payment reaches your business
Some merchants accept virtual currency for goods and services. Depending on the arrangement, a payment processor can collect virtual currency from a customer and transmit virtual currency or funds to your business. Confirm whether you receive the currency itself or a converted amount, and when the transfer is considered complete.
There is no universal exchange-rate setter or standard merchant fee. Before accepting payment, identify the rate used, any markup or transaction fee, and the refund terms. Those details determine the amount you keep and what you owe if a customer receives a refund.
What it means for your costs and risk
Virtual-currency costs do not follow the three-part card model of interchange, network fees and processor markup. Fees and conversion terms depend on the service and transaction. Compare the amount you receive after all charges with the invoice amount, rather than assuming virtual currency costs less than card or cash.
If you keep the currency instead of converting it, its value can change before you spend it. A transfer to the wrong wallet address can be difficult or impossible to recover, and some transactions do not offer a reliable reversal. Virtual-currency transactions do not appear as card transactions, so do not expect a card-processing statement to show them.
U.S. sanctions rules apply to digital-currency transactions as well as dollar transactions. If your business handles these payments, include appropriate sanctions screening and procedures for blocked property in your risk controls.
What you can actually change
You decide whether accepting virtual currency suits your business. If you do, set clear rules for conversion, payment confirmation and refunds before offering it at checkout.
- Compare the exchange rate with a separate market reference and identify every markup or transaction fee.
- Choose whether payments convert to dollars or remain in virtual currency, and document when you recognize the payment as complete.
- Verify the recipient address before sending funds, and establish wallet access, key protection and backup procedures.
- Set written refund terms and add sanctions screening and blocked-property handling to your payment procedures.
- Price the conversion. Record the exchange-rate source, conversion timing and each charge before you enable virtual-currency checkout.
- Set payment rules. Write down when you consider a transfer final and how you handle cancellations, refunds and price changes.
- Secure the wallet. Limit access to wallet credentials and verify the destination address before authorizing each outgoing transfer.
Frequently asked questions
Is virtual currency legal tender in the United States?
No. Virtual currency does not have legal-tender status in the United States and is not issued or guaranteed by the U.S. government. Your business is not required to accept it as payment.
Does accepting virtual currency cost less than accepting a card?
There is no standard virtual-currency fee or universal exchange rate to compare with card costs. Check the exchange rate, markup, transaction fee and any conversion charge, then compare the net amount your business receives.
Can a virtual-currency payment be reversed?
Do not assume a transfer can be reversed after it is sent. A mistaken wallet address can make funds difficult or impossible to recover. Set refund terms before accepting payment and verify the address before sending currency.