How to Accept Bitcoin For Your Small Business

This article will introduce you to ways of selling your products and service in exchange for bitcoins and other digital currencies. You will also learn about accepting and receiving payments in cryptocurrencies for business transactions.

 

After you learn about why digital currencies exist in the first place and what benefits they bring to the marketplace, you may feel like introducing your family, friends, and customers to bitcoin and other cryptocurrencies. While this is definitely something you can do, this is not what this article is about. This article is about using new tools and new ways of selling your products and services to audiences, not simply introducing bitcoins as a new method of payment to your existing customer base.

 

Selling on cryptocurrency auction sites

Selling products in exchange for bitcoins and altcoins is almost as old as bitcoin itself. The most obvious place to sell products for digital currencies would be a website like eBay that permits to complete transactions in cryptocurrencies instead of regular currencies. At the time of this writing, very few auction websites allow transactions in bitcoin and other cryptocurrencies. The main reason for it is that bitcoin transactions are non-reversible. This means that there are only two ways for cryptocurrency auction websites to protect their users: keeping a log of history and ratings or users and offering escrow services.

Here’s how escrow services work: when you sell something on a bitcoin auction website, buyers send the funds to a third-party. The party holds the funds until the buyer verifies that he or she is satisfied with the product. Once this happens, the third party releases the funds to the seller. This system ensures that the buyer pays the full amount and the seller delivers the product to the buyer. Some of the most popular bitcoin auction websites as of the writing of this article are Glyde and Bitify.

 

Selling via your own online store

Another way to use digital currencies in business is to create an online store where you will be accepting payments in bitcoins and possibly some other cryptocurrencies. Creating such a store is easy because most of the online ecommerce platforms, one of which you are probably already using if you have an online store, have plugins for working with cryptocurrencies.

If you have a site that runs on WordPress, you can start accepting cryptocurrencies by installing a plugin by WooCommerce or WP E-Commerce. You can see a list of plugins for WordPress that allow you to accept bitcoin at https://wordpress.org/plugins/search/bitcoin/ .

Other popular bitcoin payment solutions include BitPay and Coinbase.

 

Working with BitPay

BitPay is a provider of bitcoin payment solutions. The company has headquarters in Atlanta, Georgia. BitPay also has offices in New York City, San Francisco and Saint Petersburg, Florida. The business provides its services globally and works with merchants and sellers in 240 countries.

BitPay has been in business since 2011. It was one of the first companies in the world to embrace digital currencies as a method of payment for businesses and it remains a leader in the cryptocurrency payment processing space today.

In 2012, it became the official bitcoin merchant for WordPress Foundation. In 2014, the company was processing over $1 million in cryptocurrency payments daily. Bitpay has partnerships with Microsoft, NewEgg, TigerDirect, and Warner Brothers. It has created two open-source bitcoin projects. They are BitCore and CoPay.

BitPay provides both buyers and sellers with a lot of benefits. When making a payment with bitcoins, buyers can scan a QR code created by BitPay, copy the bitcoin transaction destination address manually or click a link that will allow them to pay using bitcoin software installed on their device.

For merchants, BitPay offers extreme convenience when accepting payments in bitcoin. All a merchant has to do to start accepting bitcoin is paste a few lines of code into a certain place on the website. BitPay also offers a service that converts bitcoins into a regular currency instantly, allowing merchants not to worry about the volatility of the cryptocurrency rates. For most sellers this is critically important because they are not in the business of currency trading. They typically pay salaries in a regular currency and need funds in regular currency to pay their suppliers and vendors.

Because bitcoin transactions are non-reversible, BitPay can pay merchants faster than a typical credit card processing company. Usually, merchants that work with BitPay see funds in their account in regular currency on the next business day. This is a big advantage of using cryptocurrencies for merchants because receiving the funds quickly allows them to pay their suppliers quickly, order more inventory and conduct more business.

BitPay offers all of these services for free as a part of its starter package (some functions may not be available in all countries). You can choose this package if you plan to be conducting up to 30 transactions a month in bitcoin, up to $1,000 daily or $10,000 annually. If you cross the limit of transactions, BitPay will charge you 1% transaction fee for its services.

Coinbase is another popular solution that allows merchants to buy and sell assets using digital currencies and accept payments in bitcoin and altcoins.

 

Working with Coinbase

Coinbase has headquarters in San Francisco and has been in business since 2012. As of May 2017, the company had over 7 million users. In addition to providing digital currency merchant services, the company brokers exchanges of bitcoin, ethers, Litecoin and other altcoins. The services of Coinbase are available in 190 countries.

Coinbase is a very well-funded company. In January of 2015, it closed a $75 million round of funding. The participants included the New York Stock Exchange, the United States Automobile Association and several major banks. In January of 2017, Coinbase obtained a license from the New York State Department of Financial Services that authorizes the business to conduct transactions in virtual currencies in New York State.

Coinbase merchant solutions are similar to the merchant solutions that BitPay offers to its customers. However, its fee structure is very different from other cryptocurrency merchant services providers. Receiving payments in cryptocurrencies on Coinbase is free up to $1,000,000 in sales worth of digital currencies. After your business passes $1 million in sales, 1% transaction fee will apply. This makes Coinbase a great solution to try if you are just getting started with accepting cryptocurrencies. If your business surpasses the $1 million a month in sales with payments in bitcoin and altcoins, you will be able to get volume discount processing.

Coinbase offers instant exchange feature, allowing converting all-digital currency sales to a local currency immediately after a sale goes through.

 

Most digital currency merchant services providers won’t even charge a fee for converting a digital currency into a local currency.

Once you do sign up with a digital currency merchant service provider, the process of checkout while paying with a cryptocurrency is extremely simple. The provider will instantly convert your store prices into bitcoins. On the payments page, your customers will see a QR code. They can scan the code with a mobile device or copy and paste the bitcoin address into a bitcoin client they have on their computer.

 

Accepting bitcoins in brick-and-mortar businesses

Similarly to accepting bitcoin payments online, you do not need to buy any additional hardware or software in order to accept a digital currency in your brick-and-mortar location. All you need is an Internet connection, and a device such as a desktop computer, a laptop, a tablet or a smartphone. Most brick-and-mortar locations today have all of this already, which means that they can start accepting payments in bitcoin within minutes after going through a simple set-up procedure.

All you need to do is sign up with a bitcoin merchant services provider. The provider will give you access to a mobile app that will make accepting payments in bitcoin easy and simple. Just like with online stores, paying with bitcoin in a brick-and-mortar location most often involves scanning a QR code with a mobile device. The QR code contains a designated bitcoin wallet address and payment amount. The buyers can then use either an app or a web interface to complete the transaction. Once the buyer scans the code with a mobile device or enters the information about the transaction into a bitcoin wallet and confirms the transaction, the payment will complete within a few seconds.

 

Governments and use cryptocurrencies in business

Most governments have issued warnings about use of cryptocurrencies, but do not consider cryptocurrencies illegal. Bitcoin and altcoins are banned in Bangladesh, Bolivia, Vietnam, Kyrgyzstan, and Ecuador. Some countries, such as Iceland and China, have issues regulations about exchange trading with digital currencies and about initial coin offerings but do have not banned peer-to-peer transaction between individuals. Most countries are keeping an eye on digital currencies and their effects on the economy but do not rush to create extensive regulations.

One of the biggest concerns of the governments is that there is no central authority that controls bitcoins. This means that parties can conduct transactions independently of any government. At the same time, most countries allow such transactions because in certain instances they can categorize payments in cryptocurrencies as wages or income and tax them.

One of the biggest worries of bitcoin enthusiasts is whether their governments can classify them as money transmitters. “Money transmitter” is a term that describes a business providing money transfer services. In most countries, such businesses are very heavily regulated.

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