Integrating Bitcoin payments
Unless you’ve been doing business under a rock, you’ve heard something about Bitcoin or BTC, a type of digital currency that eliminates the middlemen (banks and governments). Instead, people can pay each other directly and anonymously with fewer fees — making it an increasingly attractive payment option.
Namecheap has a long history of supporting Bitcoin. We were the first domain name registrar to offer it as a payment method via BitPay in 2013. And in 2020, we added a new Bitcoin payment provider, BTCPay, on top.
In light of this new partnership, our COO Hillan Klein linked up with Matt Odel of Bitcoin Magazine and BTCPay’s Rockstar Dev to discuss the merits of integrating Bitcoin payments — and you can view the Livestream here.
The Q & A raised some points we’d like to elaborate on: our motivation behind accepting Bitcoin, if we’re holding it, and the future of the merchant-friendly lightning network. And If all the chatter around Bitcoin this year alone has prompted you to ask yourself whether you too should start accepting Bitcoin payments, stick with us; we’ll answer that too.
Let’s dive in.
An introduction to Bitcoin
Cryptocurrency (or ‘crypto’) is a form of digital money, and Bitcoin is the most popular crypto out there. In recent years, Bitcoin has made waves into mainstream consciousness, and people want the option to pay this way.
Given the growing preference to pay via Bitcoin (among other cryptocurrencies), several services that facilitate making and receiving payments in crypto have emerged. For the sake of brevity, we’ll call them crypto PSPs (Payment Service Providers).
Thanks to crypto PSPs, many established businesses accept Bitcoin payments. It’s now possible to use Bitcoin to pay for your latte at Starbucks, buy a high-end washing machine at Sears, and of course, subscribe to hosting by one of the world’s most trusted domain registrar, Namecheap.
We’re a freedom-loving registrar
Our journey with Bitcoin began in 2013. At the time, we were the fifth-largest site in the world accepting it, after WordPress.com, the Internet Archive, 4Chan, and Reddit. We’re proud of our innovative approach and this accomplishment. However, accepting BTC was more than merely offering a new way for our customers to pay for our products.
It all started with the Stop Online Piracy Act or SOPA — a controversial bill that was dangerous for freedoms and liberties on the Internet. SOPA was aimed at taking down websites that infringed on copyrighted material. If the act passed, the U.S Department of Justice could seek court orders requiring internet service providers like Namecheap to block infringing sites’ domains.
This law would have effectively made sites hosting user-generated content like Reddit and YouTube illegal. During this pivotal time, an industry-wide boycott ensued, and freedom-friendly businesses emerged, Namecheap included.
Back then, our community manager Tamar Weinberg summed up Namecheap’s stance nicely.
“We’re a freedom-loving registrar. We donated over $100,000 to the Electronic Frontier Foundation to help keep the fight for Internet freedom alive with the introduction of SOPA and CISPA.”
While we held firm against SOPA, the same can’t be said of domain registrar GoDaddy, who backpedaled on its support of the law, causing irreversible damage to their reputation.
At this point, you might be thinking, well, that’s great, but what does this have to do with Bitcoin? Well, this nasty business with SOPA spurred us on to integrate Bitcoin payments. We woke up to what matters: Internet freedom.
Coincidentally, Bitcoin matters for Internet freedom. After all, the purpose of Bitcoin is to provide a viable decentralized alternative to the current mainstream financial infrastructure.
This happens through a publicly available ledger called the blockchain, which enables spending with full transparency. In doing so, Bitcoin stands for the broader causes; privacy, freedom of speech, and net neutrality, which Namecheap champion.
As you can see, adopting cryptocurrency is more than just offering another payment method or jumping on a trend for us at Namecheap. We’re one of the early adopters and have stood firm ever since.
We’re striving to deliver privacy by default
Klein describes our commitment to promoting Internet freedoms and safety, and a long shot more than our competitors.
“We’re putting our words into action and actively trying to fight for the values I believe the Bitcoin community aligns themselves with because we believe in it too. It’s not just about corporate responsibility. It’s at the heart of our business.”
Furthermore, Klein said,
“We’ve made our position clear over the years and made efforts to bring everyone on board. Alongside training videos, infographics, and blogs to educate our customers, we’ve gone one step further than most and made all our privacy products free.”
He’s talking about domain privacy. Typically, every owner of a domain has to submit their data as an ICANN record. We block it for free with domain privacy.
“We’re striving to deliver privacy by default over the standard publicly available information, such as adding your name and address as an ICANN record when registering a domain. It’s become standard to have this information available to anyone. That’s where your information is being made public by default — a world which we want to step away from.”
Pushing forward with our commitment to the coin, we’re now accepting payments via BTCPay, a popular open-source tool for accepting Bitcoin payments.
You spoke, we answered
What was the motivation behind adding a second means to pay by Bitcoin? BTCPay sets itself apart from other payment providers. It’s designed with a focus on security, privacy, and inclusion. With their software, small merchants can integrate Bitcoin with ease — for free. It’s for these reasons that BTCPay appealed to our customers and us.
BTCPay is supplementing the adoption of Bitcoin without compromising the narrative, and that’s why we wanted to add BTCPay payments. There’s also the not so insignificant fact that many of our customers said they preferred that payment processor over its competitor BitPay, which we have long supported (and will continue to do so. Klein noted
“Our pride is our customers, and we are completely focused on doing what it takes to make you happy. That’s why we integrated Bitcoin initially, and now BTCPay.”
Integrating BTCPay has been an enormous success. Hilan divulged that between eighty and ninety percent of our customers have moved to BTCPay from BitPay. With so many of our customers using BTCPay Server, we will continue to invest resources into it.
The state of Bitcoin merchant service adoption
As the world’s most popular cryptocurrency, we know that people are increasingly using crypto. But, we’re not here to talk about adoption in general terms. Who specifically is adopting digital currencies, and how they accept payments this way.
How widespread is merchant adoption?
It’s unclear just how many merchants accept Bitcoin, but with significant moves into the mainstream, we know merchant adoption is on the rise. In 2020 as many as 36% of small businesses in the US accept Bitcoin payments.
The most comprehensive measure of how widespread are cryptocurrency payments is from Coinmap. This site lists over 16,000 global retailers and crypto ATMs. It’s worth noting that Coinmap is an open-source project, so many retailers aren’t accounted for. That’s certainly the case for new merchants jumping on board, thanks to the increasing availability of crypto Point-of-Sale (POS) technology. (the hardware and software that allow businesses to accept transactions).
How do merchants accept Bitcoin payments?
There was a time when the humble cash register was all you needed to make a sale, then came check readers swiftly followed by credit card readers, and now crypto wallets — which require their own POS. Why go out of your way to ‘move with the times’ when your existing options are far more straightforward to use.
Bitcoin payment services such as have responded by providing a user-friendly and viable alternative. Now, merchants with little to no experience with Bitcoin can now get their hands on convenient features such as invoicing, refunds, and compatibility with e-commerce. By broadening opportunities for crypto adoption within e-commerce, projects like BTCPay Server are critical to the future success and adoption of Bitcoin.
What is a Bitcoin payment service?
Bitcoin merchant services or Bitcoin payments services enable individuals and merchants to receive payments for their goods and services in Bitcoins. Like a standard payment service via debit or credit card, some added specifics to cryptocurrency are detailed in the infographic below.
Cryptocurrencies remove the middle man, eliminating any security holes. With direct P2P payments, transactions are cheaper and more efficient.
Whether swiping a card in-store or paying for an item online, the same payment service system is at play, working behind the scene to authenticate and process your payment.
As you can see, the experience is not unfamiliar to paying with regular fiat currency for someone paying with and receiving Bitcoin. That goes for paying online or in-store. Just this time, the payment involves Bitcoin, where every transaction is recorded on the blockchain, and neither buyer nor seller needs to understand the complicated process behind executing the payments.
How do Bitcoin payment services work?
There are two major differences between traditional payment processing and cryptocurrency payment processing. First, a client pays via a digital wallet, not a credit card. Second, he/she pays in cryptocurrency, not in physical currencies like USD, AUD, etc. These wallets are much like bank accounts. The main difference is that they are decentralized.
With these services, merchants can now accept payments across mediums they are familiar with. For example, BTCPay Server provides solutions to integrate with WordPress, Drupal, and several e-commerce platforms, including WooCommerce and Shopify. Brick-and-mortar stores can leverage Point of Sale apps for accepting crypto payments.
So, whether you’re an e-commerce giant or a small retailer, you can use one of these services to receive Bitcoin payments from your customers, wherever they are, over transaction mediums they are already familiar with.
Setting up cryptocurrency payments
When you take your first payment via Bitcoin — whether that’s in-store, over the web, or through an app — the transaction takes place over the following steps.
Alternatively, you choose to keep your payment in a Bitcoin-Wallet, instead of exchanging it for currency.
Why should e-commerce merchants care about Bitcoin?
As noted, cryptocurrencies have made significant steps into the mainstream for making purchases. In recent weeks the value, as well as the popularity of BTChas, skyrocketed. As more people invest in cryptocurrencies looking to use them to pay for services and products, the list of businesses accepting them is snowballing. Does this mean that your business should start accepting crypto? Here are some of the benefits to consider:
- Offer existing customers new ways of paying, or gain new customers who prefer using cryptocurrencies to pay for goods and services
- Allow customers a discreet payment method without appearing on credit card statements
- Gain secure payments that are retained indefinitely on the blockchain ledger
- Reduce the costs that come with other payment methods such as credit cards
The main downside to Bitcoin is volatility. Bitcoin is driven by the market, just like investing in stocks and shares, so if you’re risk-averse, BTC payments may not be the right choice for you. However, you can always convert Bitcoin payments to your local currency if you’d rather not hold Bitcoin because of these market fluctuations.
These days, payment providers facilitate the immediate transfer of Bitcoin and alternative currencies into fiat currency (a government-issued currency) in a flash, and that’s all thanks to the lightning network.
The lightning network
Today, lightning network compatible wallets like BTCPay allow you to convert Bitcoin to any other currency, easily. Best of all, these wallets eliminate the technical barriers associated with opening a payment channel directly and funding it. Anyone can seamlessly make lightning Network payments without having to invest much time into fully understanding the protocol. Besides bringing volatility closer to zero, lightning network integration brings several benefits to payment processing.
The lightning network is a second layer on Bitcoin’s blockchain that handles transactions independently without recording each action on the blockchain every single time. With these transactions occurring away from blockchain, the Bitcoin network is less congested, speeding up transaction processing, decreasing associated transaction fees, and facilitating micropayment channels at scale.
Small payments are perfect for daily transactions consumers depend on. David Hamilton of Bitcoin Lightning summed it up: “imagine going to buy a $.50 pack of gum with Bitcoin. If you attempted this purchase on the mainnet, your fees would be more than your transaction.”
Bitpay doesn’t provide a solution to this, BTCPay does; with their second layer network on top of Bitcoin; the lightning network. By working with micropayments, the lightning network solves the issue of scalability. And for this reason alone, many believe it can begin to compete with the likes of Visa and other well-known card payment networks favored today.
A threat to existing card processing services
We mentioned that it’s more than a bit tricky to go it solo, and take BTC payments without an established crypto PSP. Well, imagine asking that of customers. It’s just out of the question for most people who want the convenience of everything handled by a familiar experience.
Picture the scene? You’ve got a customer ready to pay with Bitcoin, and you slow down the process by asking them to make a direct payment to an individual Bitcoin wallet. Customers will no doubt find going through an established payment provided a more trustworthy route to proceed along and close the sale. And that’s the value merchants get from these crypto PSP services, like BitPay, BTCPay, and Coinbase.
Embrace the future of payments
Regardless of whether your reasons to integrate Bitcoin payments are ideologically fuelled, or if you’re interested in widening your customer pool and saving on transaction fees — there are countless benefits for the merchants that boldly do so. Crypto PSPs have uncomplicated the process so that anyone can accept payments via digital currency.
By integrating services like BTCPay, you’re offering your customers more options to pay for your goods and services. If they’re keen to use crypto, all they have to do is select your chosen crypto payment merchants such as BTCPay at the online checkout screen, or, scan a QR code on your POS in-store.
If you’re concerned about volatility, remember that all popular digital payments services handling Bitcoin provide the option to transfer to fiat currency, straightaway, eliminating any volatility risk. You can even be bold and hold, just like we are here at Namecheap.
For more information on integrating cryptocurrency payments, check out what’s available for your content management system. As mentioned, there are plenty of options available for popular CMS and ecommerce solutions.