Payment methods are one of the areas where P2P trading excels, do you know how to choose the right payment methods so you can catch the best trades?
Picking a payment method to add to your list of trade offers isn't something to do at random or just based on popularity. It's something that it pays (literally) to put a little time and effort into. Finding the best options for your circumstances and matching your customers' needs helps you grow into a sustainable, profitable P2P vendor.
Access to Almost Any Payment Method
Unlike centralized exchanges that are extremely limited in the ways you can deposit or withdraw funds, P2P trading mitigates this frustrating limitation. While some payment methods like gift cards can be more challenging to manage in this regard, there's a range of region-specific and international payment methods that you can take advantage of while you trade. Not everyone has access to the same payment methods, one of the areas where P2P trading shines.
Things to Consider When Choosing Payment Methods
Choosing the payment methods you will be offering is one of the essential parts of becoming an established P2P vendor. While it may seem difficult given the extensive range of options out there, there's a shortlist of key points you can focus on when helping to create a shortlist or to rule out any specific options you were considering.
Chargeback Risk:
While many payment methods come with the risk of chargeback, some payment providers make this easier than it should be or show a strong bias towards buyers. PayPal is a prime example of this; if you consider offering to allow people to buy bitcoin with PayPal from you, ensure you are operating at a high enough margin to help account for this risk, and consider lower trade limits. You will commonly see PayPal trade offers with 15% or higher premiums with relatively small trade limits for this reason. If you are willing to provide these higher-risk payment methods as a seller, buyers will frequently be happy to pay the price of convenience for immediate purchases of a small amount of bitcoin.
Proof of Payment:
Some payment methods can be more challenging to deal with if a dispute is raised where a seller claims you haven't provided payment. While some payment methods are quite straightforward as they record transaction history, others aren't so obvious how you can best protect yourself.
A good example of a fantastic payment method that comes with a need to take some extra precautions is cash by mail. When trading cryptocurrency with cash by mail, it's essential to ensure that you keep evidence of you sending payment or receiving payment in the event you need to dispute the contents. If you are buying, you can record yourself sealing up the package and ideally posting it. When selling, it can be a worthy precaution to record yourself opening the package and counting the money inside.
Whatever payment methods you are considering offering, spend a little time ensuring that you can comfortably prove payment receipt. If you need to do anything out of the ordinary, it's better to work that out before running into a dispute down the line. While some payment methods require a little extra caution, P2P trading can be extremely safe if you take a little care in how you transact.
Demand and Margins:
The economics of supply and demand come into play in just about everything, including P2P trading. Optimizing your selection of payment types and the margins you trade them at is extremely important if you want to receive the most trade requests. If demand is high, you can often receive a higher margin for providing specific payment types. If a payment method is relatively common, it'll be more important you can be competitive with those offering similar prices. This is where your margins come into play; circumstances vary between traders, resulting in you not being able to compete with other traders' margins.
There's nothing wrong with offering similar pricing to those with similar trade offers, but if you struggle to compete, you put yourself at risk of a trade that results in a net loss. Slim margins can be significant at higher volumes. Still, it can also be stressful and challenging to maintain profitability if you don't consider your circumstances and what you can realistically provide.
Region Specific Payment Methods:
Some payment methods are only suited to specific regions. For example, Venmo is restricted to US residents, so it doesn't make a lot of sense trading bitcoin with Venmo to someone in the United Kingdom or Australia. Alternatively, some payment methods have very high usage in certain regions. The payment types you've used in the past or see people using around you in your local area may be very different from what you might see in another region or country. This variance is significant because you can attract more potential trades by offering payment types with higher use rates in your area.
You may also find that you have access to payment methods heavily used in regions that struggle with access to cryptocurrency; you can fill this need. While, at the same time as providing a service to these communities, you can often make a healthy profit as well by being more competitive than alternative sources of cryptocurrency in these areas. P2P trading helps connect the world via cryptocurrency, and more region-specific payment methods can be a valuable tool to help do that for both vendors and those that trade with them.
The Best Payment International Payment Methods
Great Payment Methods for Local Traders
Higher Risk but Higher Margin
What Payment Methods Aren't Suitable for P2P
If receipt of payment can be verified, that payment method can almost always be used during P2P exchange. If you are using LocalCoinSwap and find a payment type you'd like to use that isn't currently listed, it can be requested. Payment methods can be reviewed for addition at any time, and if they are verifiable, they can be added to the platform rapidly. If you can prove that you sent a payment to another party, that payment method can likely be used for P2P trading.