Bitcoin is a digital currency that is accepted as a form of payment by many businesses around the world. Similar to credit cards, transactions can be done on websites or as a point of sale purchase less the hefty transaction fees.
If you’ve thought about integrating Bitcoin as a payment source for your business, the process of accepting digital currency is just as easy as accepting Visa or Mastercard.
Accepting Bitcoin as a form of payment on your website or at your business can be done with a Bitcoin payment processing gateway. Some popular options inlude:
- • Coinbase Commerce
- • BitPay
- • CoinGate
- • Blockonomics
Coinbase Commere and BitPay are two of the bigger brands for Bitcoin payment processing while CoinGate and Blockonomics may not be as well known. However, a bigger brand doesn’t necessarily translate into a better payment processor.
This is because supporting technology for Bitcoin or any other cryptocurrency is still relatively new. It’ll take many more years before one processing company establishes itself over another as the dominant player.
In fact, even the way transactions are made can change with the progression of technology of cryptocurrency. For now, it is important to look at the pros and cons of each Bitcoin payment processor option in order to choose the best platform for your business.
BENEFITS OF ACCEPTING BITCOIN AS PAYMENT
Bitcoin, often referred to as digital gold, was created in 2009 after the financial crisis caused by collapse of the housing market. However, it took almost another decade before it exploded into mainstream media in 2017.
According to Google Trends, “What is Bitcoin” was one of the top search phrases in 2018. Undoubtedly, a large percentage of the population likely knows what Bitcoin is or at least has some interest in it.
Even large corporations like Microsoft, Amazon and AT&T accept Bitcoin as a form of payment on their platforms. If you’re on the fence about getting on board, here are some benefits to consider for implementing Bitcoin or any other cryptocurrency payment option for your business.
NO FRAUDULENT CHARGEBACKS
All Bitcoin and cryptocurrency transactions are final. A transaction cannot be reversed after a customer has already paid for a product or service. This is great for items sold on websites because it eliminates the possibility of fraudulent claims filed by customers.
LOW TRANSACTIONS FEES
Transaction fees are very low when compared to credit cards because there aren’t any banks in the middle processing payments. Processing a credit card payment typically costs around 3% of a transaction while the fee of a Bitcoin payment processor is 1% or less.
NO SALES TAX ON PURCHASES
Bitcoin transactions are decentralized so they are not tracked by any government entities. For this reason, sales tax isn’t added onto any purchases made.
Not having to pay sales tax on purchases was a significant contributor to the growth of ecommerce – a major advantage for the consumer most people can relate to.
USER PRIVACY AND ANONYMITY
All purchases made with Bitcoin are anonymous. Transactions are never linked to an individual’s personal information so in theory, it is similar to a cash purchase but done digitally.
A consumer using Bitcoin for purchases never has to worry about identity theft like with credit cards.
INTERNATIONAL SALES WITHOUT CONVERSION FEES
International transactions are much easier and cheaper with Bitcoin as transfers are done from peer to peer. Conversion to local currency isn’t needed because Bitcoin is a universal currency.
Thus, there aren’t any wire fees or intermediary bank charges because banks aren’t processing transfers.
WORKS LIKE A PAYPAL BUTTON
Integrating a “Pay with Bitcoin” button works the same way as a PayPal payment or donation button. A Bitcoin payment button can be added right next to a PayPal button so it’s easy to offer multiple payment options on a website.
This can be very beneficial for merchants who sell digital goods to international customers.
TRANSPARENCY ON THE BLOCK CHAIN
All Bitcoin transactions are recorded on the block chain for everyone to see along with the public wallet address it was transferred to. However, personal information is never displayed.
It is easy to verify all transactions at any given time because the block chain is one giant ledger. Once a transaction is recorded on the block chain, it lives there forever and there aren’t any outside entities that can alter or manipulate the information.
BITCOIN PAYMENT PROCESSING GATEWAYS
There are many payment processing companies for accepting Bitcoin and other cryptocurrency. However, here are 4 options to consider if you’re looking for a more established company to process your Bitcoin transactions.
They more or less work with popular ecommerce platforms like Shopify, Woocommerce, Wix, OpenCart, Magento, HTML sites and many more.
Coinbase was once synonymous as one of the most popular exchange to buy and sell Bitcoin and other select crytpocurrency. They are an online platform based in San Francisco, California providing services as an exchange, a digital wallet and as a payment gateway.
Coinbase didn’t start as a payment gateway. However, to fulfill the demands of online businesses, they have since created a way for merchants to accept Bitcoin and other digital currencies through Coinbase Commerce.
Coinbase and Coinbase Commerce are two different things. Coinbase Commerce is a Bitcoin payment gateway while Coinbase is an exchange to buy and sell Bitcoin and other cryptocurrencies.
Coinbase Commerce does not charge any fees for accepting Bitcoin or other cryptocurrency. Integration is supported by many popular ecommerce platforms such as Shopify and WooCommerce.
One caveat is that in order to withdraw funds from your digital wallet, you have to transfer it to an exchange and convert it to fiat before withdrawing to your bank account.
Although Coinbase Commerce doesn’t charge any processing fees, most exchanges will charge a fee for conversion to fiat.
HOW DOES COINBASE COMMERCE WORK?
To simplify, the process goes like this:
- 1. Sign up with Coinbase Commerce and Coinbase.
- 2. Add a “Pay with Bitcoin” button on your website or accept payment as point of sale.
- 3. Payments from customers gets transferred to your Coinbase Commerce wallet.
- 4. To withdraw, transfer Bitcoin from your Coinbase Commerce wallet to an exchange like Coinbase.
- 5. Once transferred to Coinbase, convert Bitcoin to fiat and withdraw to your checking account.
WHO IS COINBASE COMMERCE SUITABLE FOR?
Coinbase Commerce is better suited for merchants who prefer to keep Bitcoin in their wallet and aren’t sensitive to price volatility. Investors in Bitcoin or other cryptocurrencies may prefer Coinbase Commerce because they do not charge a processing fee.
It is less ideal for merchants who want to convert Bitcoin into local currency and withdraw to their checking account. This is due to the 3% conversion fees an exchange can charge. Also, the process of withdrawing funds to their bank account isn’t automated and requires a manual effort.
Bitpay is another Bitcoin payment gateway based in the United States. They are one of the pioneers in the industry and have been around since 2011. Unlike Coinbase Commerce, Bitpay isn’t an exchange.
Rather, its primary utility is for processing and settling Bitcoin, Bitcoin Cash and Ethereum payments. Using BitPay is likely the simplest option for most merchants who want to accept Bitcoin payments on their websites or as a point of sale.
BitPay’s advantage over Coinbase Commerce is that it isn’t necessary to first transfer Bitcoin to an exchange and convert it into fiat before withdrawing to a bank account.
Everything happens automatically and internally within BitPay’s platform. You can even customize how frequently you want to auto-withdraw funds to your checking account.
It does however come with a 1% transaction fee for all payments received, which is the industry standard for using a Bitcoin payment gateway. This fee is still cheaper than the 3% conversion fee most exchanges will charge.
A debit card is also available if you want to use your Bitcoin balance for cash purchases and ATM withdrawals.
HOW DOES BITPAY WORK?
The process of receiving payment and withdrawing funds is more simplified.
- 1. Sign up with BitPay.
- 2. Receive Bitcoin payments on your website, by email or as point of sale.
- 3. Payments received from customers get transferred to your BitPay wallet.
- 4. Funds are automatically converted to local currency and deposited into your bank account.
WHO IS BITPAY SUITABLE FOR?
BitPay is suitable for non-techie merchants who want to accept Bitcoin payments but does not care to understand technical aspect of it. This type of merchant is also very sensitive to Bitcoin’s price fluctuations and would prefer to instantly convert it to fiat and withdraw funds to their bank account.
Bitpay is less ideal for merchants who want to keep their Bitcoin and other cryptocurrency in their digital wallet as an investment. It is ideal for merchants who don’t want to deal with the manual conversion process at an exchange and would prefer automated cash deposits into their bank account.
CoinGate’s platform share many similarities with BitPay along with some key differences. It is a payment gateway for accepting Bitcoin with the availability of accepting many other Altcoins (any coin other than Bitcoin). This is possible because CoinGate is an exchange as much as it is a payment gateway.
Launched in 2014, Coingate is a Bitcoin payment processing company based out of Lithuania. The platform makes it easy to accept payments in cryptocurrency and withdraw to a linked bank account in fiat currency.
Aside from using CoinGate as a payment gateway, it is also possible to buy and sell over 50 different types of cryptocurrencies within their built-in exchange. The fee to buy and sell within their exchange is 3% while, like BitPay, the merchant processing fee for accepting Bitcoin payments is 1%.
CoinGate is a one stop shop that combines the utility of a payment gateway and an exchange available to many countries but unfortunately does not provide services for merchants in USA. Here is a list of supported countries.
HOW DOES COINGATE WORK?
The process of receiving payment and withdrawing funds is similar to BitPay.
- 1. Sign up with CoinGate.
- 2. Receive over 50 different types of cryptocurrency payments on your website or as point of sale.
- 3. Payments received from customers get transferred to your CoinGate wallet.
- 4. Choose whether you want funds your funds to be kept in an exchange or automatically converted to fiat and deposited into your bank account.
WHO IS COINGATE SUITABLE FOR?
CoinGate is suitable for merchants who want to accept payments in many different types of cryptocurrency in addition to Bitcoin. This type of merchant would also like the option to instantly withdraw funds to their bank account or keep it in an exchange as an investment.
CoinGate is ideal for international merchants outside of the United States.
Blockonomics incorporates payment processing for digital currency with a different approach. Its platform is decentralized so payments are made directly to your wallet instead of through a payment gateway.
They take the middleman out of a Bitcoin transaction while still acting like a payment processor. Blockonomics launched in 2015, headquartered in the Asia-Pacific area.
They provide compatibility with popular ecommerce platforms like WordPress, OpenCart, Wix and custom HTML sites to accept Bitcoin. Like CoinGate, it is also possible to accept Altcoins but does require an integration of an exchange called ShapeShift.
Blockonomics is more geared towards ecommerce rather than as a point of sale solution. A 1% transaction fee is levied on all payments received and they do not offer an option for instant fiat conversion for withdrawal.
Similar to Coinbase Commerce, withdrawals have to be done manually through an exchange.
HOW DOES BLOCKONOMICS WORK?
The process of receiving and withdrawing payments is similar to Coinbase Commerce:
- 1. Sign up with Blockonomics.
- 2. Install a plugin to add a Pay with Bitcoin button on your website.
- 3. Payments from customers get transferred to your Blockonomics wallet.
- 4. To withdraw, transfer Bitcoin from your Blockonomics wallet to an exchange like Coinbase.
- 5. Once transferred to an exchange, convert Bitcoin to fiat and withdraw to your checking account.
WHO IS BLOCKONOMICS FOR?
Blockonomics is suitable for merchants who want to own and hold digital currency in their own wallet rather than in a central wallet hosted by a payment gateway company.
If you don’t trust a company to hold your cryptocurrency in their central wallet, Blockonomics is the best choice in this list. It is less ideal for merchants who require instant fiat conversion and withdrawal to their bank account.
Although funds can be automatically sent to a Bitcoin exchange, withdrawals have to be manually processed like Coinbase Commerce.
WHICH BITCOIN PAYMENT GATEWAY IS THE BEST?
As we’ve discussed, each Bitcoin payment gateway mostly serves the same purpose but has it advantages and disadvantages. The answer to which digital currency processor is the best really depends on your needs and your country of residence.
- • Coinbase Commerce is the best option if you don’t want to incur any payment processing fees and would prefer to withdraw funds manually through an exchange.
- • BitPay is the best choice for people in the United States who want a no-hassle solution for accepting and withdrawing funds in USD.
- • CoinGate should be the preferred payment gateway for non-US merchants who want the option to either automate withdraws in fiat or leave it in an exchange.
- • Blockonomics is the only option for people who want full control of their wallet instead of storing their digital currencies in a central wallet.