Most merchants, businesses, and non-profits are eager to learn more about how to integrate Bitcoin into their businesses, but the majority also think that it is not feasible for them to do so.
The most common misconception is that, in order to accept Bitcoin at your business, you must create a Bitcoin wallet and accept actual Bitcoin. If this were the case, you would stand a chance of losing (or gaining) value as the price of Bitcoin changes during the time window between making the purchase, receiving the Bitcoin, and selling it at a later point. It would also require every merchant or business to be well versed in managing a wallet and exchange account.
Fortunately, there are now a number of ways to avoid the hassle and risk of accepting Bitcoin while still offering clients, customers, and donors the ability to make payments using Bitcoin.
Bitcoin payment processing services and merchant tools offer a way to accept Bitcoin but receive direct fiat payments for an extremely low fee. Using these tools is often no different than using PayPal. Both are easy to use and efficient, so merchants can think of these services as Bitcoin, simplified.
To help you better understand what happens when you incorporate a Bitcoin payment processor into your business, we will outline how it works and which companies offer the best services.
Working with a Bitcoin payment processor is a simple process and involves the following steps:
- You register an account with the service provider, complete KYC/AML verification and supply your business bank account and routing number.
- The payment processor supplies you with a link or payment button for your website that clients can use to make payments.
- When a client wants to pay with Bitcoin, the payment processor will supply them with a Bitcoin payment address which the client uses to make a Bitcoin payment. At this time the payment processor locks in payment value in fiat currency that the payee will receive regardless of any price fluctuations in Bitcoin. The customer additionally pays a service fee (usually 1 percent) to the payment processor to use the service.
- Once the Bitcoin payment is made, the payment processor then transfers the payment value directly to the bank account that is associated with your account.
This process is no different for a merchant than accepting a credit card or using PayPal. A customer makes a payment through a third party service, pays a small fee, and the merchant receives a cash deposit in the associated bank account.
Bitcoin payment processors ensure that any business can accept Bitcoin without advanced technical knowledge and at low to no cost.
When more businesses accept Bitcoin, it normalizes its use as a means of payment. Many customers who would pay in Bitcoin don’t even ask because it is typically not an accepted means of payment. However, when additional businesses use these free tools to allow them to easily accept Bitcoin, it increases the frequency of Bitcoin use. This stimulates the Bitcoin ecosystem and helps customers and businesses because they can now use Bitcoin as a means of payment that cannot be stopped or frozen like other means of payment (credit card, PayPal, bank transfers).
Just ask Uber what happens when banks shut down payments to your business. Recently, in Argentina, Uber turned to Bitcoin to allow customers to pay for rides when banks tried to stop the ride-sharing service from operating within the country. The uncensorable nature of Bitcoin is a key reason why it’s important to be able to accept Bitcoin payments.
There are a large variety of payment services to choose from. We will outline what you need to know about the top five payment processors to consider for your business.
- BitPay: Bitpay is one of the most popular and well-known payment processors out there. It is used to accept Bitcoin by schools such as the University of Nicosia in Greece and New College of Florida in the US. It is also used in Seminole County, Florida and the entire state of Ohio to allow citizens to pay taxes in Bitcoin. Additionally, companies like Microsoft and NewEgg use Bitpay to simplify Bitcoin payments for their clients. Since it’s inception, Bitpay has processed over $2.8 billion in Bitcoin payments for its users. It charges a 1 percent transaction fee and offers merchants a variety of options, including email notifications, different speeds of payments, and account security. It is extremely easy to use and set up.
- Coinbase: The popular Coinbase cryptocurrency exchange also offers tools for merchants and businesses to accept, not just Bitcoin, but a variety of cryptocurrencies as well. Coinbase offers these services under the Coinbase Commerce toolkit. It is important to note that Coinbase commerce assigns you your own wallet and does not immediately convert your cryptocurrency payments into fiat. This means it does not offer the same utilities as BitPay, but it still represents a simple way to accept a number of cryptocurrencies. Conversion of cryptocurrencies into cash is relatively simple as they can be sold via the Coinbase exchange. While Coinbase Commerce still requires you to sell any cryptocurrency, it is also a free service. It charges no fee to simplify accepting cryptocurrencies; however, using the Coinbase exchange to sell cryptocurrencies incurs a fee unless done properly. A “maker order” on Coinbase Pro is totally free. This means that Coinbase Commerce is a fantastic tool for the more advanced user, and by charging no fee, it can save your customers money.
- Coinify: Coinify is another well-known cryptocurrency payment processing service that allows business to accept up to 15 different cryptocurrencies. Coinify uses the payment processing process described in the above checklist and deposits fiat directly into a bank account after a customer makes a cryptocurrency payment. Coinify charges a variable fee dependent on market conditions, so the cost of using the service can vary. Coinify also offers merchants a full invoice service and the ability to use Coinify at point-of-sale.
- Coingate: Coingate is a cryptocurrency payment processing service that allows customers to pay in Bitcoin and over 50 other cryptocurrencies. Coingate charges a 1 percent processing fee on payments, however, the recipient of the payment pays this fee, not the customer. Coingate also offers a point-of-sale app for merchants and a variety of e-commerce plugins. Payments accepted by Coingate do not instantly transfer to your bank account and instead sit in a holding account. When you want to withdraw you will pay the costs of wire transfer.
- Cash App: Square’s Cash App is the most well-known tool for offering a Bitcoin payment option and its associated services; however, it does not offer full merchant tools yet. Cash App allows users to buy, sell, and transfer Bitcoin but does not offer payment processing or point-of-sale services yet. Regardless, Cash App has been one of the most popular ways for people to purchase Bitcoin and some customers would likely be happy to make payments using Bitcoin via Cash App. Using Cash App in this way would require more manual steps to convert any received Bitcoin into cash, but some customers may appreciate being able to pay using Cash App.