You've decided to take crypto, or you already do, and now the harder questions show up. When does the money land, in what form, what happens if the price drops before you convert, and how do you refund a customer who paid in ether three weeks ago?
Settlement is where crypto acceptance actually lives
Accepting crypto at checkout is the easy part. A plugin or hosted invoice handles it in an afternoon. The decisions that affect your margins, your books, and your tax bill all happen after the customer pays.
Every merchant taking crypto ends up choosing one of three settlement models, or a blend: instant conversion to dollars, settlement in stablecoins, or holding the crypto you receive. Each carries a different risk profile, and each looks different to your accountant.
The real question isn't whether to accept crypto. It's who carries the price risk between the moment a customer pays and the moment you can spend the money.
Option one: convert to dollars instantly
Most crypto payment providers can lock an exchange rate when the invoice is created and then pay you in dollars to your bank account. The customer pays in crypto, and you receive a predictable fiat amount minus the provider's fee.
This is the closest thing to card processing. Your price exposure shrinks to the short invoice window. Your bookkeeping stays mostly in dollars, and your bank sees ordinary deposits from a known payment company rather than transfers from an exchange.
The tradeoffs are fees and dependency. You pay for the conversion, and your settlement now relies on a third party that must keep its own banking relationships healthy. Ask how the provider is licensed, which bank sends your payouts, and what happens to funds in flight if it pauses service.
Option two: settle in stablecoins
Stablecoins aim to hold a one-to-one value with the dollar. Settling in them gives you crypto-native speed, often around the clock, without most of the volatility that comes with bitcoin or ether.
The GENIUS Act, signed on July 18, 2025, created a federal framework for payment stablecoins. It limits issuance to permitted issuers, requires one-to-one reserves in cash, deposits, short-term Treasuries, and similar assets, bars issuers from paying yield to holders, and brings issuers under the Bank Secrecy Act. Regulators proposed implementing rules during 2026, and the law takes effect no later than January 2027.
For a merchant, that matters in two ways. Not every stablecoin is equal, so ask whether the coin you hold comes from a regulated, permitted issuer. And the statute governs issuers, not you, which means it reduces reserve risk without removing the depeg, custody, or counterparty risk on your side of the ledger.
Stablecoin settlement suits businesses that already pay overseas suppliers or contractors in stablecoins. If every dollar you earn eventually goes to US payroll and rent, converting right away is usually simpler.
Option three: hold the crypto
Some merchants keep part of their crypto receipts as a treasury position. That's an investment decision, not a payments decision, and it deserves to be treated like one.
If you hold, you own the price risk on your operating revenue. A strong month of sales can shrink before rent is due. You also own the custody risk, because private keys, exchange logins, and access controls become part of your financial operations.
A practical middle ground is a fixed split: convert most receipts at the point of sale and keep a small, defined percentage. Write the rule down, so a volatile week doesn't make the decision for you.
Questions to ask before you sign with a crypto payment provider
Whichever model you choose, the provider sitting between your customer and your bank shapes your risk. Get clear answers to these before you integrate:
- Payout timing. How many days from customer payment to dollars in your account, and does that change on weekends or holidays?
- Rate lock window. How long is the quoted price valid, and what happens when a customer underpays or pays late?
- Licensing. Is the provider registered with FinCEN as a money services business, and how does it cover the states you sell into?
- Reporting. What transaction exports and tax forms will you receive, and in what format?
- Refund handling. Can the provider issue refunds for you, and at what rate?
Vague answers on payout timing or licensing are a signal. Your settlement is only as stable as the company holding your money in between.
How the IRS treats the crypto you receive
The IRS treats virtual currency as property, not currency. Under Notice 2014-21, a business that receives crypto as payment for goods or services includes its fair market value, in US dollars on the date received, in gross income. That same dollar value becomes your basis in the coins.
Here's the part that catches merchants off guard. If you hold the crypto and later sell or spend it, you have a separate gain or loss measured against that basis. A merchant who holds bitcoin through a rally and then pays a supplier with it has two tax events: the original sales income and the later gain.
Instant conversion keeps this simple, because receipt and conversion happen at nearly the same price. Holding creates a basis-tracking job for every single payment. Even small gains count, and spending crypto on a business expense is itself a taxable disposition.
Form 1099-DA and what it means for you
Digital asset brokers now report sales on Form 1099-DA, starting with gross proceeds for transactions on or after January 1, 2025, and adding cost basis for certain assets acquired from January 1, 2026. Processors of digital asset payments fall under the rules too, though they generally don't have to report a customer's processor payment sales of $600 or less for the year.
There's also an optional de minimis rule for qualifying stablecoins. A broker using it doesn't have to report a customer's designated stablecoin sales when that customer's total gross proceeds stay at or below $10,000 for the year. If you convert through a provider, expect forms to arrive, and reconcile them against your own records rather than assuming they match.
Accounting basics
For businesses following GAAP, FASB's ASU 2023-08 requires in-scope crypto assets such as bitcoin to be measured at fair value, effective for fiscal years beginning after December 15, 2024. Many redeemable stablecoins fall outside that standard's scope, and their treatment is still being worked out. If any crypto sits on your balance sheet, your accountant needs to know which bucket it belongs in.
Whatever you choose, keep a per-transaction record: date, coin, amount, dollar value at receipt, and what happened to it afterward. Most provider dashboards export this, but the export is only useful if someone downloads and reconciles it every month instead of every April.
This is general information, not tax or legal advice. Bring your CPA in before you choose a settlement model, not after your first year-end close.
Refunds in crypto: decide the rule before you need it
Card refunds are simple. The original amount goes back to the original card. Crypto refunds are messier, because the price has moved and no network can reverse the original payment for you.
Your written policy should answer three questions:
- What value gets refunded? The dollar value at the time of purchase is the most common and most defensible choice. Refunding the same number of coins hands the price swing back to you.
- Where does it go? Customers often pay from exchange addresses that can't receive funds back. Require a confirmed refund address and verify it before sending.
- Who pays network fees? State it plainly, so nobody argues about a few dollars later.
Publish the policy at checkout and repeat it in the order confirmation. Clear terms prevent the complaints that turn small problems into account reviews.
Crypto acceptance and card processing aren't either-or
Crypto checkout doesn't replace cards for most merchants. Card buyers can dispute charges and crypto buyers mostly can't, which tempts some owners to push everyone toward crypto. Customers notice the pressure, and conversion rates fall.
The healthier setup runs both. Cards and ACH bank payments carry most of your revenue, backed by solid dispute management, while crypto serves the customers who prefer it. If your business sells crypto rather than simply accepting it, the underwriting is a different exercise, and our merchant services for cryptocurrency businesses are built for that file.
When your underlying product is high-risk, the card side deserves as much attention as the crypto side. Our guide to avoiding account holds covers the habits that keep processing stable through busy seasons.
Pick your settlement model, then build around it
Choose instant conversion, stablecoin settlement, or a defined holding rule, and write down why. Set your refund policy, bring your CPA into the loop, and make sure your card processing is steady enough that crypto stays an option rather than a lifeline. If you want help running the card and ACH side next to crypto-aware payment processing, we can map it out with you.
Ready to set it up properly? Talk to Karma Card Payments about your payment stack.