How to accept payments in bitcoin: methods, difficulties, and consequences
Is it legal?
The development of cryptocurrency legislation is close to the final phase. More and more states are speaking out their straightforward "yes" or "no" in the governing documents. To the joy of crypto community, payments in bitcoins are more often legalized than forbidden. Anyway, some countries haven’t made up their mind yet. Somewhere the attitude toward cryptocurrencies is more cautious, somewhere it is less. To accept bitcoin online in your business, you need to learn the laws and market practices in the particular country. There may be bans concerning mining, not transactions. You have to understand the onsequences if you’re going to accept bitcoin on a website. After all, if a customer pays for goods in cryptocurrency, the country's budget may not get a profit tax. It is a violation of the law with all the consequences: a warning, a fine and even the closure of the company.
If you don’t understand but still ask: “how do I accept bitcoin properly” — try to establish contacts with the local cryptocurrency community somewhere at the nearest conference. Also, you will learn a lot of new and useful information.
Money, processors, and wallets
When the issue of legalization is worked out, you need to understand the equipment settings to receive payments.
Michael Kordvani from Fueled says “Accepting Bitcoin as payment is actually very easy. All you need to do is sign up for a software wallet, or buy a hardware wallet and make sure it’s connected to the Internet. Then, you append it to your website, set up a Bitcoin payment option, add a calculator to calculate the current price of bitcoin, and request the customer to send bitcoin to your wallet address.”
A wallet is required for any method of payment. In most cases, a payment processor is added. Let's consider both options: with the processor and without it.
1. Payment processors
The third party appears in this case. Processors convert the resulting cryptocurrency into a fiat. Payment processors bring together sellers and sources of money — just like a currency exchange service. It works like this: the customer comes to the store and pays for the goods in bitcoins. The payment processor takes these bitcoins, sells them on the exchange and receives dollars. The store gets a transfer in fiat currency. The payment processor takes approximately 1% as a reward for the whole process.
John Brodsky, Finder.com regional manager, confirms the fact that setting options is straightforward. “To accept Bitcoin on your website, you will simply include the processor of your choice (such as BitPay) as a payment option similar to credit card or PayPal. It’s relatively easy to set up, but its important business owners understand the process thoroughly before adding it as an option to consumers.”
Chase J. Olson, the founder of the project Coinlookup also has a positive attitude towards payment processors: “There are a handful of ways to accept Bitcoin payment using your online store. For Instance, there are Coinbase plugins for both the Shopify and Wordpress website management systems. Coinbase is the largest distributor of Bitcoin, Ethereum & Litecoin in the world, so using their products will guarantee a certain percentage of user acceptance. In addition, you can use Coinbase's API to build your own integration fairly easily. As a contractor for services, you can use written agreements the same way that you would use for fiat currency. All you need to do is offer your public address”.
2. Cryptocurrency wallets
This option has got a much more straightforward mechanism. The client transfers cryptocurrency to the wallet of the seller, and that is all: the payment is completed. Transaction time is somewhat significant. “The main difference between accepting Bitcoin to Litecoin or Ether is that transactions might cost more and might take longer as well”, says Hyun Lee Communications & Marketing Director.
This method is not suitable for payment in a store near the house, but only for Internet payments. It is also of little use for companies with a significant flow of customers. Neil Andrew, Marketing Manager, PPC Protect Limited says that “If we didn't have a payment processor then we would have to manually get customers to send to our wallet and check we've received the money. Since we have lots of clients, that obviously isn't a feasible solution”.
If you start accepting cryptocurrency, it will attract customers even among those who used to pay by cash or by card. The signs "we accept bitcoin here" are still rare. People can choose this store or salon among others, probably just because of cryptocurrency.
If you don’t want to install a payment processor and choose using wallets only, then follow the advice from Manny River, globalbitcoininvestors.com co-founder. “There are two types of wallets, a hardware (cold) wallet, and a software (hot) wallet. I recommend using both of them. I think of the software wallet like a checking account, essentially a wallet that I would use for day to day transactions. More popular software wallets include Coinbase, Blockchain.info, and Bitpay. I think of the hardware wallet more like a savings account where I will keep the majority of my cryptocurrencies. The 2 hardware wallets I would recommend are the Trezor and the Ledger Nano S. Both types of wallets will allow you to generate a BTC address or other Crypto Currency address”.
Regardless of the wallet type, you should remember about security, especially when you have to deal with cryptocurrency. Vladimir Gorbunov, CCO, Co-founder of Crypterium Cryptobank says “You must not disclose your private key to anyone, or you will risk losing your money. Cryptocurrency wallets can be specific to one currency or may support multiple cryptos. When deciding what type of wallet to open, I would recommend exploring this issue thoroughly, basing your decision on your country of residence”.
In general, the question of how to pay in bitcoins for any goods will not cause difficulties. The more difficult task is to take a close look at taxes, accounting and primary documents for reporting. In Europe, there are stores that not only accept payment but also set the price of their goods in the cryptocurrency. So, the problems are solvable.