Before starting this guide,
Accept Bitcoin Directly or Indirectly
How to Accept Bitcoin Directly
(More effort, more profit, more risk, no third party taking a cut)
Synala is a free, open-source PHP script that runs on your server to allow you to accept Bitcoin payments online. It comes with a configurable admin panel and is fairly easy to use. You can find out more at the link, where I’ve written a more full review of their service.
Blockchain has two services you will want to use: Wallet and Receive Payments. Both services are free. The former lets you set up a secure Bitcoin “bank account” without storing the data on your computer. They do everything for you, and their security is top-notch. Follow their recommendations when setting up–especially the bit about the private key, which should be written on paper and stored safely. They also provide you a mnemonic phrase, which should be stored safely separately from the key. Consider it a backup. In addition, I strongly recommend you set up a Google Authenticator account on your phone and tie your Blockchain Wallet to it. If you do all of this, your bitcoins will be very secure.
Once you’ve set up a wallet, you’ll need to set up the Blockchain receive payments API on your website. Blockchain provides a very thorough guide as well as free, fully-usable demo PHP and Java versions. After that, you can add it to checkout or make it its own page. Blockchain tracks everything for you, and figures out how many bitcoins a customer needs to pay you by doing the exchange rate calculations.
Doing it yourself has you end up with bitcoins from your customers. You can keep them or exchange them into fiat currency or useful goods.
Exchanging bitcoins to fiat and withdrawing them will cost you between 0.2% and 0.7%, depending on exactly which exchange you use and where you live. This requires setting up an account and getting verified (similar to using a stock exchange, you must submit identification–a passport and a utility bill will work, takes 3-5 days processing time generally). If you’re interested in this option, take a look through my review of Bitcoin Exchanges and find the best option for you. For most people, Bitfinex would be the cheapest option–costing .1% to sell the bitcoins on the exchange with a limit order and .1% for an international wire transfer. If you choose to exchange them into fiat currency like this, you’ll likely want to set up the Bitcoin address for your payments to be the exchange wallet for your account instead of the wallet you set up earlier on Blockchain.
There is a better deal available for most people, though: Gyft.com, and specifically, Gyft.com points. Each point is worth $.01, and you get 3 points for each dollar you spend in bitcoins on Gyft–so 3% off. Gyft sells gift cards to pretty much everywhere–Amazon included. There are plenty of other places to spend bitcoin online, many of which offer pretty nice discounts and deals. So don’t jump straight to getting rid of your bitcoins you receive for USD! Consider spending them–they work just as well, if not better, than dollars.
What’s the downside to accepting it directly? Something called ForEX risk: the risk that someone spends $50 of bitcoin with you, and then before you do anything with it, the price changes. If it goes down, then you have received less money than you should have. If it goes up, then you’ve profited on the ForEX risk. As always, no risk comes without the potential for upside. However, it’s up to each individual business owner what risks they would like to take on at any particular time. If you’re interested in avoiding that risk, this next section will explain how.
How to Accept Bitcoin Indirectly
(Less effort, less profit, no risk, third party taking a cut)
To accept bitcoin indirectly, you simply need to find and work with a company that will take on the ForEX risk for you. How do they do this? By guaranteeing you a price for your incoming bitcoin payments, based on the exchange rate at the time of payment. If a customer pays you $50 in bitcoin, they essentially step in, buy the bitcoin from the customer, and pay you $50, less any applicable fees. So what options are available, and what are the differences between them?
There are four major companies that will provide this service for you: Coinbase, Bitpay, Moolah, and GoCoin. Each offers different packages, but they all accept the ForEX risk for you, for a price.
- Accept Bitcoin for free (like Blockchain’s receive payment API, just with Coinbase)
- They will swap the bitcoin for USD for you for a 1% transaction fee + $0.15 ACH transfer fee.
- They have an ongoing promotion: 0% fees on your first $1,000,000 (yes, million) in bitcoin transactions.
- The most trusted and well-known name in the Bitcoin payment space
- Very low-effort design: they manage most things for you. When something goes wrong, their support can be a little sluggish, but they do solid work.
- Accept Bitcoin for either $0 a month and 0% fees (they also offer more expensive plans with added features for larger businesses)
- That’s it for fees. They’re direct and up-front about everything.
- A solid runner-up to Coinbase for trust and brand confidence, as well as their primary competitor.
- Offer cheaper plans, better pricing to encourage customers (the Bitcoin Best Bid rate, or BBB), and more flexibility
- Not as low-effort, but a more responsive customer service team.
- If you’re a 501C3 charity, they will do everything for free for you.
- Accept not just Bitcoin, but also alternative cryptocurrencies: Litecoin, Dogecoin, and Peercoin.
- Transaction fees start at 1% but decrease with increasing volume, beginning at $2,500 USD/month.
- A solid competitor that offers alternative cryptocurrencies, but not much else to entice merchants unless you do a high transaction volume in cryptocurrency.
And there you go. Everything you need to know to start accepting cryptocurrency for your business.