Bitcoin is constantly becoming more mainstream. It has genuinely become an accepted means of exchange and is now permitted as a form of payment by both online and offline retailers. Perhaps you have a store and want to learn about Bitcoin POS systems. There are many to choose from, and implementing them into your e-commerce or physical shop is not as hard as you might think.
The Acceptance of Bitcoin
2017 saw some explosive growth in the value of Bitcoin. Along with that bull market came a lot of renewed interest in the digital token. More people want to learn about it, own it, and allow others to buy things with it. It is fair to say that interest in cryptocurrency is at an all-time high right now, and it’s only going to get better. Those merchants who start accepting Bitcoin now are going to be ahead of the curve.
Some merchants like the idea of accepting Bitcoin because it marks them as progressive. It says that they are in step with the times and willing to move forward with new technologies. The advantage of this kind of thinking is that it can help to attract new customers, ones that want to move away from traditional fiat currencies.
The problem is that few merchants know where to start when it comes to accepting Bitcoin as a means of payment. There has been far less focus on implementation than there has on the currency itself. Cryptoswede has prepared this basic guide that will cover some of the most popular methods of accepting Bitcoin as a retailer.
Offline Methods of Accepting Bitcoin in Your Store
We’ll start with the most obvious of the methods. First, a caveat. This method of accepting Bitcoin for your store is only viable if you have a very low volume of sales. It will not be a good idea if you are a retailer with hundreds or thousands of customers each week. Offline acceptance is suitable for the mom and pop retailer who is on a first-name basis with all of their customers.
Offline acceptance of Bitcoin is nothing more than having your customer transfer money to your Bitcoin wallet for their purchase. To do this you only need to provide the customer with your public wallet address or key. You will agree upon the amount of Bitcoin that needs to be transferred, and the customer will send it to your wallet. Once you have received the Bitcoin, the customer takes the goods they have paid for.
There are some problems with this method. For one, it can be a little tedious to transfer your Bitcoin to cash that you may need to run your business. You’ll need to use some type of cryptocurrency exchange for that, and that can involve separate fees. If you aren’t careful you could end up getting less than your goods are worth when you make a sale.
Doing this type of transfer could also create some record-keeping headaches when it comes time to pay your business taxes. An offline transfer is probably best when you often sell single items to someone. Let’s say you are someone that goes to antique sales and then “flips” a piece of merchandise. In this situation you could easily use Bitcoin for a single transaction.
Apps for Mobile Devices
The next step up the ladder would be to use some type of app for your mobile device. There are apps being developed for this kind of transfer everyday. Some of the more popular ones include:
- Blockchain Merchant
- CoinFly
- CoinBox
- CoinGate
- BitPay
BitPay is probably the most recognized and most successful of this lot. Some of the mentioned apps are only available for the Android operating system.
Here is how most of these apps work. You will need to have a Bitcoin wallet that you can link to the app. Once this is done you can use the app to create a POS terminal. You will put in how much the goods cost, and the required amount of Bitcoin will be calculated on the basis of a current exchange rate. You will then be given a QR code that the customer can scan to send the Bitcoin to your wallet. A signature by the customer is usually required to complete the transaction.
When it comes to cryptocurrency, mobile apps offer some of the weakest security out there. This is one of the glaring flaws with this type of method. Your tokens and keys might be at risk to data thieves when you use apps to complete transactions.
Hardware POS Terminals
This type of platform is for the serious merchant. A hardware Bitcoin POS terminal functions similar to a regular credit card terminal. It uses an API that is specially designed for Bitcoin, and the various types of terminals all act somewhat differently. Some of the popular terminals include:
- Revel
- Coinkite
- BitPay
- XBTerminal
Some of these terminals function with Bluetooth. Others use QR codes. Some even require programming that can integrate them with the store’s regular POS system. If you decide to use this method, it is recommended that you choose a professional to handle to setup. It would be very easy to make mistakes if you have no prior experience with a Bitcoin POS.
Accepting a Bitcoin Gift Card
We finish our list of ways for your store to take Bitcoin with a Bitcoin Gift Card. There are many services our there which provide these gift cards to customers. Here are a few:
- eGifter
- Gyft
- YestoBitcoins
- Paxful
Basically a person would visit these sites to purchase a Bitcoin gift card. The gift card is essentially a wallet address that has been funded with Bitcoin. The address can be used to send the Bitcoin to a merchant. In many cases it is even possible to use a simple paper wallet as a Bitcoin gift card.
Accepting Bitcoin in Your Online Store
Using A Bitcoin Button
It can be much easier for retailers to accept Bitcoin in their online store. The simplest method is to download a button from one of the many services that are available online. A button is very easy for your customers to use. All they need to do is click on the button and the process of transferring Bitcoin to your wallet for the goods will be initiated.
Most buttons can be placed on your website by simply copying and pasting some code. In some cases you may need the assistance of a programmer to help you configure the button. You can get Bitcoin buttons from:
- Coinbase
- BitPay
- Stripe
- CoinGate
Invoicing for Services
If you are a service provider it may be possible for you to create Bitcoin invoices that you can use to request Bitcoin payments from your customers. You can use a service such as Invoiced or BitPay for this, but you can easily create your own invoices with many different types of office software.
On the invoice you would list the good received and the amount of Bitcoin needed to satisfy the bill. You would also provide your receive address so that the individual could send you the Bitcoin that is needed to pay the invoice.
The Legality of Accepting Bitcoin in Your Business
Most countries are amenable to a shopkeeper accepting Bitcoin as a form of payment. But there are some jurisdictions where all cryptocurrencies still fall into a legal abyss. This comes from governments not really knowing how to handle digital tokens. Financial regulators are engaged in a battle to find our where Bitcoin should fit within the monetary scheme of things.
Bitcoin is legal and unregulated in a great number of jurisdictions. At the present time it is perfectly legal for you to accept Bitcoin as a means of payment. But this can vary from country to country, and the laws are changing all the time. The best course of action would be to consult with a lawyer or someone else that is up top speed on current regulations before you make the decision to accept Bitcoin from your customers.
There are a few locations that have banned Bitcoin and other types of cryptocurrency. These regions are:
- Bangladesh
- Bolivia
- Ecuador
- Kyrgyzstan
- Vietnam
Some speculate that Russia and China could also implement bans at some point in the future, but the atmosphere in China seems to be one of interest in government regulation as opposed to an outright ban.
Dealing With Taxes
If you are running a legitimate business then there is no way around taxes. Just because Bitcoin is an unregulated and decentralized currency doesn’t mean that you won’t have to include it in your reporting. But, this is also a gray area. Some countries are treating Bitcoin as property instead of currency. This can have an impact on how it is reported or whether or not it is reported at all. The treatment of Bitcoin in terms of taxes can vary wildly from country to country. You should consult with a professional to determine what the right course of action is in your country.
In the US it can be difficult to manage taxes when accepting Bitcoin. The US is one of those jurisdictions that regards it as property and not money. This means that you must declare the value of the property when you receive it. If you later exchange this property for money or something else of value, you may be taxed on any increase in the value of the Bitcoin. In other words, you receive Bitcoin from a customer today that is valued at $600. A month later you see that the value of the Bitcoin has gone up and it is now worth $800. When you exchange that Bitcoin for cash, you have a taxable gain in the eyes of the IRS.
As you can see, keeping records on Bitcoin can be a nightmare for the shopkeeper. The best advice that we can give you is to have a firm plan in place before you start accepting the tokens. It is going to be vital that you keep accurate records right from the start. Otherwise you could be in line for some serious penalties somewhere down the road.
Pros of Accepting Bitcoin
- No need to set minimums like with credit or debit cards
- Multiple ways to accept the token
- Possibility that the coin will increase in value
Cons of Accepting Bitcoin
- Can present bookkeeping issues
- Can present tax problems
- May not be legal in some countries
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