Bitcoin has been around since 2009, but it only started gaining mainstream attention in 2017. Merchants who accept Bitcoin as payment can enjoy several benefits, such as lower processing fees and the ability to receive payments from anywhere in the world. However, there are some risks associated with accepting Bitcoin payments, so it’s essential to understand how to accept them safely. In this blog post, we’ll discuss the benefits of accepting Bitcoin payments and outline some safe ways you can do exactly that.
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The Upsides
As a merchant, you can enjoy lower processing fees when you accept Bitcoin payments. Credit card companies typically charge around 3% per transaction, while Bitcoin payment processors usually charge much less. This can lead to significant savings, especially if you process many payments. For example, Coinbase’s merchant processing fee is only 1%.
Another advantage of a Bitcoin payment system is that it can be used to accept payments from anywhere in the world. This is because Bitcoin is not bound by any geographical restrictions. So, if you have customers in different countries, you can easily accept payments from them without worrying about currency conversion or other cross-border issues.
Since Bitcoin payments are peer-to-peer (P2P), a significant advantage is that they cannot be reversed. This is in contrast to credit card payments, which can be chargebacked by the cardholder. This means that, as a merchant, you don’t have to worry about fraudulent chargebacks when you accept Bitcoin payments. Furthermore, no third party is involved in Bitcoin payments, so you don’t have to worry about dealing with a bank or other financial institution.
Since Bitcoin is decentralized, security is another upside of accepting Bitcoin payments. When accepting payments via credit card, you essentially give the customer your bank account information. This puts you at risk of being hacked and having your money stolen. With Bitcoin, however, there is no need to give out your bank account information since the payment is made directly from the customer’s wallet to yours.
Lastly, accepting Bitcoin payments can be an excellent way to hedge against inflation. When the value of fiat currencies (i.e., government-issued currencies like the US Dollar) goes down, Bitcoin usually increases. This means that if you hold onto the Bitcoin you receive, it’s likely to increase in value over time.
The Downsides
While there are many advantages to accepting Bitcoin payments, there are also some risks.
First, the value of Bitcoin is very volatile. This means that the price of Bitcoin can go up or down a lot in a short period of time. For example, in early January 2018, the price of Bitcoin dropped by almost 50% in just a few weeks. As a merchant, this volatility can create some challenges. For example, if you accept a Bitcoin payment today for $100 and the price of Bitcoin drops tomorrow, you may end up losing money on the transaction.
Another downside of Bitcoin is that it’s still not widely accepted. This means that only a limited number of merchants accept Bitcoin payments. This can make it difficult for customers who want to pay with Bitcoin to find places to spend their money.
Bitcoin is still largely unregulated so that in itself is a risk. A government or financial institution does not back Bitcoin, so there is no guarantee that you will be able to redeem it for cash or other assets. Additionally, because Bitcoin is not regulated, there is no customer protection if something goes wrong, such as if an exchange platform is hacked or goes out of business.
Lastly, accepting Bitcoin payments can be a bit technically challenging. This is because you will need to set up a Bitcoin wallet and learn how to use it. Additionally, you will need to find a reliable Bitcoin payment processor. While many options are available, they all have different fees and features, so it’s essential to do your research before choosing one.
Overall, accepting Bitcoin payments can be a great way to expand your customer base and avoid some of the risks associated with other payment methods. However, it’s crucial to weigh the pros and cons carefully before deciding if it’s right for your business.
How to Accept Bitcoin Payments?
Suppose you, like many other merchants, have decided that the plusses of taking Bitcoin far outweigh the minuses. What is the next step? How do you actually start taking Bitcoin payments? The process is fairly simple and can be broken down into a few steps.
First, you will need to set up a Bitcoin wallet. This is where you will store the Bitcoin that you receive as payment. There are many different types of Bitcoin wallets available, so it’s essential to do your research to find one that is right for you. Some wallets allow you to store your Bitcoin offline, which can be more secure, while others are online and more convenient. You’ll also want to consider ease of use when choosing a wallet, as some can be more complicated than others. Once you’ve selected a wallet, you can generate a Bitcoin address, which you will use to receive payments.
It’s also important to remember that you are responsible for the security of your own Bitcoin wallet. This means keeping your private keys safe and secure and backing up your wallet in case you lose access to it.
Next, you will need to find a Bitcoin payment processor. This service will handle the transaction between you and your customer. Many different Bitcoin payment processors are available, so it’s important to compare fees and features before choosing one. You may want to consider transaction fees, ease of use, and supported countries.
To receive payments in Bitcoin, you will need to provide your customers with a Bitcoin address. This is where they will send the payment. You can either generate a new address for each transaction or use the same address for multiple transactions. If you use the same address for multiple transactions, keep track of all the incoming and outgoing payments to avoid confusion.
Once the payment is sent, it will be processed by the payment processor and added to your wallet. Depending on the processor you choose, you may also be able to have the funds immediately converted to your local currency.
For most payment processors, the funds will be added to your wallet within a few minutes. However, some payment processors may take up to 24 hours to process the payment and add the funds to your wallet. If you need the funds immediately, you may want to choose a processor that offers instant conversion to your local currency. Otherwise, you can simply wait for the funds to be added to your wallet and then convert them at your convenience.
Once the payment is processed, you can see it in your wallet. From there, you can either keep the funds in Bitcoin or convert them to your local currency. To convert the funds, go to the “convert” section of your wallet and select the currency you want to convert to. The funds will then be transferred to your account in that currency. Depending on the exchange rate, you may either gain or lose money when converting Bitcoin to another currency. However, over time, the overall value of Bitcoin has been increasing, so you are likely to see an overall gain if you convert your Bitcoin to another currency and hold onto it for a long period of time.
That’s it! You’ve now successfully accepted a Bitcoin payment.
Final Verdict
Overall, the pros of taking Bitcoin far outweigh the cons. With its ease of use, low fees, and security, it’s no wonder that more and more businesses are starting to accept Bitcoin payments. If you’re looking for a way to make your business more convenient for your customers and more profitable for yourself, accepting Bitcoin as payment is a great option.
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