A few months ago, while redesigning my online store, I decided the timing was good to add Bitcoin payment option. Cryptocurrency has long been a hype and I was attracted by its promise of low transaction fees and marketing potential. New to the crypto world, I saw it as an opportunity to learn and become an active member of the community. My website is an online store for curated wall art and designer lighting and a segment of its target is likely a subset of the cryptocurrency crowd.
Adding Bitcoin payment to the online store
This has been a straightforward process. I weighed in the pros and cons of adding direct payment with cryptocurrency vs. using a 3rd party service like BitPay or CryptoPay. The service provider does all the processing and sends funds directly to my bank account or Bitcoin address. Furthermore, they protect my business against that volatility of the cryptocurrencies by exchanging the bitcoins for the cash value of the order as it happens. I decided I didn’t want to deal with the accounting complications that can potentially arise from accepting direct payment with cryptocurrency, so I went for the payment provider and I chose bitpay mostly because of a friend’s recommendation. They have an out-of-the-box integration with many eCommerce solutions and integrating it with WordPress eCommerce was smooth and easy.
First payment with Bitcoins
We tested the payment on live. The process worked fine, but the customer was charged 15€ for payment and mining fees, for a product that might have costed 20€ or even less. A few days later I paid 5$ in fees for a 6$ subscription for spendabit — a search engine for things you can buy with Bitcoin. Small businesses will often have a small deals size and transaction fees can be critical for the buyers’ decision to use Bitcoin for payment or not.
Why are Bitcoin payment fees so high today?
The high transaction costs today are due to the high price volatility of Bitcoin and the high-velocity transactions happening in an environment with a limited computing power. All parties involved in the process are hedging against the risks associated with quickly changing exchange rates and/or failed transactions. All this leads to high transaction costs which on their end are likely to discourage users from paying with bitcoins.
Today one of the major cryptocurrency promises — low transaction fees, doesn’t exactly hold true. Yet it should attract more small businesses and users to adopt cryptocurrency and establish it.
Note: The transaction fees have gone down significantly in the past few months. We can only hope it will stay that way as the network and community grows.
How is this controversy resolved?
When an innovative technology is making its way, the early adopters are more likely to experience its imperfections than the users of the technology after it has hit mainstream. It’s fixing the imperfections that makes the technology better and helping it carve its way to mass adoption. Yes, transaction costs for Bitcoin payments can be high for small deals’ size and revenue from this channel can be slow. Yet, I see no reasons for my small business not to accept cryptocurrency payments.
Next I’ll be writing about how to reach the audience that is willing to pay with Bitcoins.