How to harness the power of Bitcoin in your e-commerce

Bitcoin.pl notes that big players in global economy such as USA and China are becoming more interested in using Bitcoins, and that fuels the interest. Also we observe such events as Bitcoin Black Friday, which encourage new ways of paying for goods.  

We believe that the number of transactions utilizing Bitcoin as means of payment will be rising, and will encourage e-shop owners to implement a payment system enabling Bitcoin transactions.

Bitcoin Wallet

The smallest Bitcoin (BTC) subunit is Satoshi wich is 0,00000001 Bitcoin. On the day of publication the exchange rate of 1 USD is 0,001113 BTC, and of1 PLN is 0,0003665 BTC.

(Data gathered on 9th of December 2013) 1 BTC = 893,7 USD = 2723,2 PLN

Bitcoins are gathered in so called wallets, which are kind of similar to bank accounts. We virtually have two wallet options. We can install a client to store the wallet on our computer or we can establish a wallet on-line. Either way, if we want to gather bitcoins, perform transactions and track their history we will need to have one.

Before you choose your wallet we advise you to search some additional information on the web: https://en.bitcoin.it/wiki/Software.

Bitcoin transaction methodsm

• Direct deposits
  You can send Bitcoins directly to other user’s wallet address number. However when we are considering on-line transactions this method may only serve for digital goods selling. This kind of transactions is anonymous, they do not contain any additional information like for example shipping address, which is a great obstacle while selling tangible products. It was one of the reasons why a range of programming libraries, protocols or even services and applications for supporting and modification of data related to the transaction.
• Micropayments
  There are some solutions for handling really small transactions already available on the market. Their simplicity provides the website owners, bloggers and others with an option to place a QR code or a small button so a visitor can make a donation. It can definitely help non-profit causes to maintain their operations.
• Payment systems and operators
  Another way is to use third party systems which work on the similar basis as for instance PayPal does, or PayU wich is better recognized on polish market. Using them means that the transaction is facilitated and maintained by an operator, who provides ready to use solutions that can be implemented in various e-commerce systems. Usually we also get additional benefits like possibility to create invoices, receiving additional data along with payments (eg. shipping address) or automatic connection with our wallet. There still aren’t many players on the market, but we already can point out some interesting ones:

1. BitPay (www.bitpay.com)

1. BitPay is a system focused mainly on payments made with Bitcoins and their exchange to different currencies, which are supported. It’s main advantage is a wide range of plugins for different e-commerce systems (e.g. Magento, Drupal, Wordpress), APIs and libraries for programming languages like PHP, Ruby or Node.js.
2. Payments can be made through so called 3rd party checkout – which means you don’t have to implement any changes in your e-commerce system, because BitPay opens an outside hosted checkout window, where an invoice with the price, current exchange rate and wallet address is displayed. Payment confirmation is provided within seconds.
3. BitPay offers few different paid plans which are tailored to different needs.
4. BitPay is used by 12 000 e-shops and service providers all over the world, and thanks to the variety of plugins it’s fairly easy to implement.
5. MtGox (www.mtgox.com)

1. MtGox is a first and one of the biggest cryptocurrency stock exchange in the world. In addition to its core business they have created an easy to use API to facilitate implementation of Bitcoin payments in any e-commerce system. Before using this means of transactions you have to establish an account on MtGox, but the buyers doesn’t have to have one. There are no transaction fees.
2. The owners of e-shops based on Magento platform, can use a ready to use module instead of implementing  API for Bitcoin transactions.
3. BTC Merch (www.btcmerch.com)

1. This solution enables Bitcoin transactions through variety of plugins for the most popular e-commerce systems (Drupal Ubercart, Magento, Wordpress e-Commerce, Woo commerce) and API for PHP and JavaScript.
2. The system also provides paste-in HTML code for micropayments, and a gateway for mobile devices. We can also find a sandbox mode for tests, which is a really useful feature. Installation and use are free of charge, but the operator charges transaction fees. Payments made in Bitcoins are send directly to owners Bitcoin wallet address.
3. BIPS (www.bips.me)

1. A complex payment system offers ready to use modules to most popular e-commerce systems (Woo Commerce, Shopify, Prestashop, Magento, Zen Cart and more), shopping cart modules, mobile payments and brick and mortar solutions. It’s use is free of charge, but some fees may be adds for currency exchange and bank transfers.

Bitcoin payment systems comparison

*only available for paid plans

Plugins and solutions for developers

There are multiple ways for enabling Bitcoin transactions in our e-store. Instead of implementing payment systems provided by operators it is possible to find plugins and programming libraries to facilitate the custom implementation and adjust it to our needs.

Here are some worth mentioning:

• Bitcoin (JSON RPC) – Magneto module which allows QR code generation, invoice generation and checkout options
• UC Bitcoin – Drupal plugin for Ubercart.
• Commerce Bitocin – another Drupal plugin, but dedicated to Commerce system
• Django-bitcoin – addition to Django framework; it allows to create different kinds of applications utilizing Bitcoins

Bitcoin became very popular, therefore now we have a very easy access to the knowledge about it, ready to use plugins, libraries and specifications. Creation of new solutions like Bitcoin exchange, payment system or a wallet is not very difficult.

Bitcoin and taxes

In Poland we still don’t have clear legal regulations regarding virtual currencies. Therefore it is not easy to give a proper advice on the taxes matter. Nevertheless the Ministry of Finance made a statement published on one of the polish web portals where we read that income tax is imposed when we gain from selling cryptocurrencies.

When selling goods and service we have to calculate the value of income from the transaction and we should pay the tax according to the standard rules.

What should we have in mind before we choose the way to implement Bitcoin payments?

Before choosing the method itself we have to take into account some additional factors:

• transaction security
• how the exchange to our currency is conducted and what are the risks
• setup costs and fees
• payment confirmation time and how we receive payments
• if the mechanism is difficult to understand and implement
• transaction history records

How to start receiving Bitcoins?

To implement Bitcoin transaction in our  e-store we have to:

• choose the right system or other way of implementation
• implement the new module or plugin
• test how the transaction works
• inform your customers about the possibility of paying with Bitcoins

Bitcoin is not one and only cryptocurrency in the world. Over the internet users may find other interesting ones like Litecoin or Goldcoin, but the list is still growing what can be seen on this website: http://com-http.us.

Maybe soon one of them will become such popular that it will be profitable to enable it in your e-shop?

About the author: Maciej Stempniak, is a project manager in Merixstudio – interactive agency from Poznan . He manages internet realted projects for 5 years now (also e-commerce projects with focus on Magento platform). He also advises the companies and organisations in Poland, USA, Great Britain, Ireland, Germany and arab countries in areas of UX, new technologies and brand image creation in the web.