Impossible for buyer to commit fraud
As all Bitcoin transactions are irreversible, the buyer will not be able to receive the product and ask for a refund, as is the case with PayPal. Likewise, the seller does not need to worry about being protected against criminal activity.
Bitcoin transactions are subject to some of the lowest fees around. As EZ Flash IV payments are processed without intermediaries, fees per transaction can be 0 (however, such a transaction will take a long time to be processed). Using payment systems such as BitPay the fee is just 1% or 30$ per month (as preferred by the seller). Such a low fee is more attractive than traditional payment systems whose fees range from 3 – 5%.
Ease of installation
Disadvantages of Bitcoin payments
Bitcoin price volatility
Taking into account significant fluctuations in value, 1 Bitcoin received tofay can have a completely different value the next. This can burden price scaling, accountability and financial planning. However, certain systems (for example BitBay) allow sellers to add fiat money to the account immediately (for example USD) to which the service converts bitcoins at the point of payment. In this setup, the seller will never have Bitcoin funds in their wallets.
Volatility in demand for Bitcoin
Intense price fluctuations also lead to the fact that the consumer can reduce spending in Bitcoin (in the scenario that the price of bitcoins increases), or the other way around, start spending more (if the price drops). The activity of buyers who make payments with bitcoins can thus depend on the current rate dynamic. Nevertheless, even with extreme upward or downward leaps, consumers will still continue to be paid with bitcoins.
Manual processing of Bitcoin payments
The system of using manual mode is somewhat similar to using an email account.
- 1. By downloading a Bitcoin wallet and obtaining an address, you can make this known to your friends or buyers. This is done as follows: click on the “create” icon next to your Bitcoin address and send it to your customer. It should be noted that for each recipient different addresses are created, so it is therefore easy to know exactly who has paid for the service or product.
- 2. Customers in turn send bitcoins to your address. This can be done very simply. In their wallets they click on “send to recipient”, input your address and confirm the amount. You will see the money in your wallet almost immediately. Following payment you send the customers a product or perform a service. It is recommended to wait for 6 confirmations from the network for each transaction in order to eliminate the risk of fraud.
- 3. A controversial issue in commercial relations is the event of a refund. This function is also available in the Bitcoin wallet. In order to recoup the funds, you will need to obtain the Bitcoin address of the payer and send them the coins. In this case, do not be surprised if the Bitcoin address is different to the original – this is normal.
Automatic processing of Bitcoin payments
With small sales volumes it is possible to use the method described above to receive Bitcoins manually. There are problems when a large sales volume is more important than the ability to use the manual method of receiving bitcoins. Consequently, in this situation automatic methods of receiving payments are more suitable.
Bitcoin addresses generated in advance
You can accept bitcoins with the aid of the Bitcoin API. How does this work? The customer on your site automatically receives a unique address. All that needs to be done is wait until the moment when the customer is going to place a product in the basket and pay for it. Likewise information about the name of the product and its unique address from which the payment is sent is safeguarded in the database of your site. Thanks to this data, you can easily identity a completed transaction.
What is needed to generate addresses? It is necessary to use utility programs: Pywallet, which creates a wallet.dat file, or Bitcoin Address Utility which creates a CSV file. In these two cases, the list of Bitcoin addresses and their corresponding private keys will be created. Note that the server only downloads Bitcoin addresses without private keys.
You can verify receipt of payment with the following programs: the Bitcoin wallet or for example, Blockchain.info. In the latter case, the link to the site is as follows: “https://blockchain.info/address/user’s_address“. To send a numeric product it is desirable to have instant sending to the recipient. The possibility of using external resources, for example Bitcoin Monitor or the Blockchain.info tools, which include receipt of payment to your server, are designed for this. This type requires the use of API technology.
Use of an external plugin
You can likewise use a basket from your online shop to receive coins. For this it is necessary to install Bitcoin client JSON-RPC API, which can receive payments automatically. If you want to use such a method, pay attention to the following stages:
1. When the customer orders something from your site, the program makes a record of:
- The Bitcoin address to which the payment was sent;
- Details of the order, delivery requirements, etc.;
- Return payment address, if required;
- Payment amount.
2. When payment is received, the program informs you about the correct amount and other details.
- Accordingly you send the product to the customer and note your actions in the system;
- Or you can refuse to send the product for various reasons, noting the ‘refusal’ or ‘return’ in the program which reimburses customers for the time being.
3. Transfer funds to the selected Bitcoin address.
Payment systems today (for example eBay) allow direct receipt of Bitcoin as well as payment with conventional currencies. In the first instance, the system converts automatically bitcoins into the necessary currency and sends it to the owner of the shop.
Always add an address to each order. If not, external parties can see the order details and use them to their own ends. Such an error does not come from these unique addresses.