For those interested in accepting Bitcoin payments, there is a question of what type of payment processor to choose.
Should you go the traditional route and go to a big company that accepts payments in a similar manner to PayPal?
Or should you look into a direct to wallet payment gateway? These questions are important to consider when choosing a payment processor for your store.
What is a Traditional Bitcoin Payment Gateway?
PayPal and Stripe have long dominated the fiat currency payment market, and Traditional Payment Gateways for Bitcoin operate just like them. They act as a middle man, controlling the payments and handling them entirely.
The merchant doesn’t see any Bitcoin until they withdraw the Bitcoin from the “wallet” on the payment processor’s website. There can be added fees on the withdrawal process, and there is a longer wait time to process that Bitcoin.
Any of the woes you’ve experienced with PayPal? You’re going to experience them here too. PayPal has even entered the Bitcoin market.
Are Traditional Payment Gateways worth it?
But with the negatives of the traditional system, there are some positives. The set-up process is often quick and easy, although there is a lot of time lost in the KYC process.
Getting your ID checked can be a pain, especially if you don’t have the proper form of ID. But these processors can be plug in and go, the payment system itself for customers often works acceptably.
The merchant just has to deal with the process of withdrawing Bitcoin.
These businesses are also often more established. That means they know how to help with your taxes, they know what tax documents you might need. But it also means they are prone to attacks and hacks.
They keep large quantities of Bitcoin in the same wallets, this makes it tempting to criminals. You have to depend on the company’s security.
What are Direct to Wallet Payment Gateways?
These offer the alternative to traditional payment gateways, that include companies like Blockonomics and BTCPayServer. They are often smaller, but that means they are a labor of love.
The people running these companies often care about Bitcoin as a technology and a currency rather than looking to get a quick buck. They succeed by listening to customer feedback and implementing it, just like any small business.
What does this mean?
This means several things:
- You Are In Control: Direct to Wallet means you are your own bank. You control your funds, you control where they go, and no one else touches them. When a sale occurs, the Bitcoin is sent directly to your wallet, no middleman involved.
- Transactions are Fast: Because it goes directly into your wallet, the start to end process is much quicker. You don’t worry about the Bitcoin going through multiple wallets, so you get that Bitcoin in your hands faster.
- It is Cheap: Traditional payment processors have a lot more touch points to serve you with fees. There’s the transaction and then the withdrawal. Hence, fees generally stack up when using them. Comparatively, Direct to Wallet has only one touch point, the transaction, and they often charge a low fee for that. Blockonomics, for example, charges 1% after the first 10 payments.
Direct to Wallet payment processors are becoming more and more popular. As Bitcoin continues to grow into the popular mindset, small businesses have to ask themselves who they want to facilitate their Bitcoin sales.
Small businesses need to stick together and support each other, whether it’s for Bitcoin payments or other services.
What should you use?
At the end of the day that still depends on you. There are plenty of reasons to go the traditional route, but just understand what you are getting yourself into. It might be worth it to take a look at the Direct to Wallet route to see if the benefits to your business outweigh the very few negatives.